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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K/A
AMENDMENT NO. 2 TO ANNUAL REPORT
(Mark One)
[X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended March 31, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________________ to _________________
Commission file number 0-19349
SOFTWARE SPECTRUM, INC.
(Exact name of registrant as specified in its charter)
TEXAS 75-1878002
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2140 MERRITT DRIVE, GARLAND, TEXAS 75041
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (972) 840-6600
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, par value $.01 per share
(Title of Class)
Indicate by check mark whether the Registrant (l) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value on June 26, 1996 of the Registrant's voting
securities held by non-affiliates was $84,437,370.
At June 26, 1996, the Registrant had outstanding 4,357,441 shares of its Common
Stock, par value $.01 per share.
DOCUMENTS INCORPORATED BY REFERENCE
There is incorporated by reference in Part II of this Annual Report on Form
10-K the information contained in the registrant's proxy statement for its
annual meeting of shareholders to be held August 15, 1996 and in Part II of
this Annual Report the registrant's annual report to shareholders for the
fiscal year ended March 31, 1996.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K
This Form 10-K/A is being filed to reflect modifications to exhibits
10.3(a), 10.3(b) and 10.3(d) filed as exhibits to Software Spectrum, Inc.'s
(the "Company") Form 10-K for the fiscal year ended March 31, 1996. The
Company previously requested confidential treatment of certain information
contained in the exhibits referenced above and has subsequently modified its
request for confidential treatment of the information contained therein.
Exhibits 10.3(a), 10.3(b) and 10.3(d) are refiled herewith in their entirety as
modified.
(a) FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS
(1) and (2) - Index to Financial Statements and Schedules - The
information required by this portion of Item 14 is set forth in a
separate section following Part IV of this Report.
(3) - The following documents are filed or incorporated by reference
as exhibits to this Report:
2 Asset Purchase Agreement dated as of March 23, 1996 by and
among Software Spectrum, Inc., Egghead, Inc. and DJ&J
Software Corporation, as amended by First Amendment to
Asset Purchase Agreement dated May 13, 1996 (incorporated
by reference to the Company's Current Report on Form 8-K
dated March 26, 1996).
3.1 Restated Articles of Incorporation of the Company, filed
with the Secretary of State of Texas on May 12, 1989, as
amended (incorporated by reference to the Company's
Registration Statement No. 33-40794 on Form S-1).
3.2 Restated Bylaws of the Company, as amended (incorporated by
reference to the Company's Registration Statement No.
33-40794 on Form S-1).
10.1(a) House Account Agreement (U.S.), dated as of September 4,
1986, as amended, between Lotus Development Corporation and
the Company (incorporated by reference to the Company's
Registration Statement No. 33-40794 on Form S-1).
10.1(b) Amendment to House Account Agreements dated as of June 25,
1992, between Lotus Development Corporation and the Company
(incorporated by reference to the Company's Annual Report
on Form 10-K for the fiscal year ended March 31, 1993).
10.1(c) Educational House Account Agreement Addendum dated as of
March 23, 1994 between Lotus Development Corporation and
the Company (incorporated by reference to the Company's
Annual Report on Form 10-K for the fiscal year ended March
31, 1994).
10.2 Lotus Passport Reseller Authorization Agreement dated March
31, 1994 between Lotus Development Corporation and the
Company (incorporated by reference to the Company's Annual
Report on Form 10-K for the fiscal year ended March 31,
1994).
10.3(a) Microsoft 1995/1996 Channel Agreement dated July 1, 1995
between Microsoft Corporation and the Company, including
Addenda dated July 1, 1995 (Appointment as a Direct
Reseller) and Addenda dated July 1, 1995 (Appointment as a
Large Account Reseller).
10.3(b) Large Account Reseller Rebate Addendum to the 1995/1996
Microsoft Channel Agreement dated July 1, 1995, as amended
by Amendment No.1 dated January 1, 1996.
<PAGE> 3
10.3(c) Microsoft Government Select Government Contractor Addendum
to the 1995/1996 Microsoft Channel Agreement dated as of
July 1, 1995 (incorporated by reference to the Company's
Form 10-K for the fiscal year ended March 31, 1996).
10.3(d) Rebate and Marketing Fund Addendum to the 1995/1996
Microsoft Channel Agreement dated as of July 1, 1995, as
amended by Amendment No. 1 dated January 1, 1996.
10.4 Microsoft Corporation 1995/1996 Authorized Government Large
Account Reseller Agreement dated April 1, 1995 between
Microsoft Corporation and the Company (incorporated by
reference to the Company's Form 10-K for the fiscal year
ended March 31, 1996).
10.5(a) Commercial Lease Agreement, dated May 1, 1990, between CIIF
Associates II Limited Partnership and the Company
(incorporated by reference to the Company's Registration
Statement No. 33-40794 on Form S-1).
10.5(b) Amendment to Lease Agreement dated March 31, 1995 between
CIIF Associates II Limited Partnership and the Company
(incorporated by reference to the Company's Annual Report
on Form 10-K for the fiscal year ended March 31, 1995).
10.6(a) Commercial Lease Agreement dated as of April 19, 1993,
between Kancro, L.P. and the Company (incorporated by
reference to the Company's Annual Report on Form 10-K for
the fiscal year ended March 31, 1993).
10.6(b) Amendment #2 - Expansion Agreement to Lease Agreement dated
as of June 20, 1994 between Kancro, L.P. and the Company
(incorporated by reference to the Company's Annual Report
on Form 10-K for the fiscal year ended March 31, 1994).
10.6(c) Third Amendment to Commercial Lease Agreement dated
effective April 1, 1995 between Kancro, L.P. and the
Company (incorporated by reference to the Company's Annual
Report on Form 10-K for the fiscal year ended March 31,
1995).
10.7 Industrial Building Lease dated as of June 7, 1993 between
LaSalle National Trust, N.A. and the Company (incorporated
by reference to the Company's Annual Report on Form 10-K
for the fiscal year ended March 31, 1993).
10.8 Form of Call Center Lease (Spokane) (incorporated by
reference to the Company's Current Report on Form 8-K dated
March 26, 1996).
10.9 Loan Agreement dated as of September 30, 1994 between the
Company and NationsBank of Texas, N.A. (incorporated by
reference to the Company's Annual Report on Form 10-K for
the fiscal year ended March 31, 1995).
10.10 Promissory Note dated September 30, 1994 executed by the
Company in favor of NationsBank of Texas, N.A.
(incorporated by reference to the Company's Annual Report
on Form 10-K for the fiscal year ended March 31, 1995).
10.11 Credit Agreement dated as of May 3, 1996 between the
Company and Texas Commerce Bank, National Association, as
Agent (incorporated by reference to the Company's Current
Report on Form 8-K dated May 23, 1996).
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<PAGE> 4
10.12 1989 Stock Option Plan of the Company, as amended
(incorporated by reference to the Company's Registration
Statement No. 33-40794 on Form S-1).
10.13 Software Spectrum, Inc. Employee Stock Purchase Plan
(incorporated by reference to the Company's Registration
Statement No. 33-53284 on Form S-1).
10.14 The Software Spectrum, Inc. 1993 Long Term Incentive Plan
(incorporated by reference to the Company's Annual Report
on Form 10-K for the fiscal year ended March 31, 1994).
10.15 Employees' Profit Sharing Plan of the Company, Adoption
Agreement dated December 14, 1994 (incorporated by
reference to the Company's Annual Report on Form 10-K for
the fiscal year ended March 31, 1995).
10.16 Lease Agreement dated March 8, 1996 by and between
Riverport Commerce Center, Inc. and the Company
(incorporated by reference to the Company's Form 10-K for
the fiscal year ended March 31, 1996).
10.17 Lease Agreement dated April 26, 1996 by and between
Beneficiaries of American National Bank Trust Number
104601-03 and the Company (incorporated by reference to the
Company's Form 10-K for the fiscal year ended March 31,
1996).
10.18 Non-Employee Directors' Retainer Stock Plan (incorporated
by reference to the Company's Quarterly Report on Form 10-Q
ended December 31, 1995).
11.1 Statement regarding Computation of Primary Earnings Per
Share (incorporated by reference to the Company's Form 10-K
for the fiscal year ended March 31, 1996).
11.2 Statement regarding Computation of Fully Diluted Earnings
Per Share (incorporated by reference to the Company's Form
10-K for the fiscal year ended March 31, 1996).
13 Software Spectrum, Inc.'s 1996 Annual Report to
Shareholders (incorporated by reference to the Company's
Form 10-K/A dated August 2, 1996).
16 Letter dated June 29, 1994 from Coopers & Lybrand LLP
addressed to the Securities and Exchange Commission
(incorporated by reference to the Company's Current Report
on Form 8-K/A dated June 11, 1994).
23 Consent of Grant Thornton LLP, Independent Accountants
(incorporated by reference to the Company's Form 10-K for
the fiscal year ended March 31, 1996).
24 Power of Attorney (incorporated by reference to the
Company's Form 10-K for the fiscal year ended March 31,
1996).
27 Financial Data Schedule (incorporated by reference to the
Company's Form 10-K for the fiscal year ended March 31,
1996).
99 Purchase and Sale Agreement dated as of April 2, 1996 by
and among Software Spectrum, Inc., Software Spectrum (NZ)
Limited and Essentially Group Limited, Essentially Group
(NZ) Limited, Essentially Software (Wellington) Limited,
The McNabb Family Trust, McNabb No. 2 Family Trust, McNabb
No. 3 Family Trust, RMAD Trust, David Colvin and Gary
McNabb (incorporated by reference to the Company's Form
10-K for the fiscal year ended March 31, 1996).
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(b) REPORTS ON FORM 8-K
During the three months ended March 31, 1996, a report on Form 8-K was
filed by the Company on March 26, 1996, reporting the Company's entry
into an Asset Purchase Agreement with Egghead, Inc. and DJ&J Software
Corporation.
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<PAGE> 6
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized.
SOFTWARE SPECTRUM, INC.
By /s/ Judy O. Sims
-----------------------------------
Judy O. Sims, Chief Executive
Officer and President
Date: July 28, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Judy O. Sims Chief Executive Officer, President and July 28, 1997
- ---------------------------------- Director (Principal Executive Officer)
Judy O. Sims
/s/ Richard G. Sims* Senior Vice President and Director July 28, 1997
- ------------------- --------------
Richard G. Sims
/s/ Deborah A. Nugent* Vice President of Finance and Treasurer July 28, 1997
- --------------------- ------------ (Principal Financial Officer and
Deborah A. Nugent Principal Accounting Officer)
/s/ Mellon C. Baird* Director July 28, 1997
- ------------------- --------------
Mellon C. Baird
/s/ Carl S. Ledbetter Director July 28, 1997
- ----------------------------------
Carl S. Ledbetter
/s/ Frank Tindle* Director July 28, 1997
- ---------------- -----------------
Frank Tindle
*By: /s/ Judy O. Sims Attorney-in-Fact July 28, 1997
------------------------------
Judy O. Sims
</TABLE>
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
- -------
<S> <C>
2 Asset Purchase Agreement dated as of March 23, 1996 by and among Software
Spectrum, Inc., Egghead, Inc. and DJ&J Software Corporation, as amended by First
Amendment to Asset Purchase Agreement dated May 13, 1996 (incorporated by
reference to the Company's Current Report on Form 8-K dated March 26, 1996).
3.1 Restated Articles of Incorporation of the Company, filed with the Secretary of
State of Texas on May 12, 1989, as amended (incorporated by reference to the
Company's Registration Statement No. 33-40794 on Form S-1).
3.2 Restated Bylaws of the Company, as amended (incorporated by reference to the
Company's Registration Statement No. 33-40794 on Form S-1).
10.1(a) House Account Agreement (U.S.), dated as of September 4, 1986, as amended,
between Lotus Development Corporation and the Company (incorporated by reference
to the Company's Registration Statement No. 33-40794 on Form S-1).
10.1(b) Amendment to House Account Agreements dated as of June 25, 1992, between Lotus
Development Corporation and the Company (incorporated by reference to the
Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1993).
10.1(c) Educational House Account Agreement Addendum dated as of March 23, 1994 between
Lotus Development Corporation and the Company (incorporated by reference to the
Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1994).
10.2 Lotus Passport Reseller Authorization Agreement dated March 31, 1994 between
Lotus Development Corporation and the Company (incorporated by reference to the
Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1994).
10.3(a) Microsoft 1995/1996 Channel Agreement dated July 1, 1995 between Microsoft
Corporation and the Company, including Addenda dated July 1, 1995 (Appointment as
a Direct Reseller) and Addenda dated July 1, 1995 (Appointment as a Large Account
Reseller).
10.3(b) Large Account Reseller Rebate Addendum to the 1995/1996 Microsoft Channel
Agreement dated July 1, 1995, as amended by Amendment No.1 dated January 1, 1996.
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
EXHIBIT
- -------
<S> <C>
10.3(c) Microsoft Government Select Government Contractor Addendum to the 1995/1996
Microsoft Channel Agreement dated as of July 1, 1995 (incorporated by reference
to the Company's Form 10-K for the fiscal year ended March 31, 1996).
10.3(d) Rebate and Marketing Fund Addendum to the 1995/1996 Microsoft Channel Agreement
dated as of July 1, 1995, as amended by Amendment No. 1 dated January 1, 1996.
10.4 Microsoft Corporation 1995/1996 Authorized Government Large Account Reseller
Agreement dated April 1, 1995 between Microsoft Corporation and the Company
(incorporated by reference to the Company's Form 10-K for the fiscal year ended
March 31, 1996).
10.5(a) Commercial Lease Agreement, dated May 1, 1990, between CIIF Associates II Limited
Partnership and the Company (incorporated by reference to the Company's
Registration Statement No. 33-40794 on Form S-1).
10.5(b) Amendment to Lease Agreement dated March 31, 1995 between CIIF Associates II
Limited Partnership and the Company (incorporated by reference to the Company's
Annual Report on Form 10-K for the fiscal year ended March 31, 1995).
10.6(a) Commercial Lease Agreement dated as of April 19, 1993, between Kancro, L.P. and
the Company (incorporated by reference to the Company's Annual Report on Form 10-
K for the fiscal year ended March 31, 1993).
10.6(b) Amendment #2 - Expansion Agreement to Lease Agreement dated as of June 20, 1994
between Kancro, L.P. and the Company (incorporated by reference to the Company's
Annual Report on Form 10-K for the fiscal year ended March 31, 1994).
10.6(c) Third Amendment to Commercial Lease Agreement dated effective April 1, 1995
between Kancro, L.P. and the Company (incorporated by reference to the Company's
Annual Report on Form 10-K for the fiscal year ended March 31, 1995).
10.7 Industrial Building Lease dated as of June 7, 1993 between LaSalle National
Trust, N.A. and the Company (incorporated by reference to the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1993).
10.8 Form of Call Center Lease (Spokane) (incorporated by reference to the Company's
Current Report on Form 8-K dated March 26, 1996).
</TABLE>
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<PAGE> 9
<TABLE>
<CAPTION>
EXHIBIT
- -------
<S> <C>
10.9 Loan Agreement dated as of September 30, 1994 between the Company and NationsBank
of Texas, N.A. (incorporated by reference to the Company's Annual Report on
Form 10-K for the fiscal year ended March 31, 1995).
10.10 Promissory Note dated September 30, 1994 executed by the Company in favor of
NationsBank of Texas, N.A. (incorporated by reference to the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1995).
10.11 Credit Agreement dated as of May 3, 1996 between the Company and Texas Commerce
Bank, National Association, as Agent (incorporated by reference to the Company's
Current Report on Form 8-K dated May 23, 1996).
10.12 1989 Stock Option Plan of the Company, as amended (incorporated by reference to
the Company's Registration Statement No. 33-40794 on Form S-1).
10.13 Software Spectrum, Inc. Employee Stock Purchase Plan (incorporated by reference
to the Company's Registration Statement No. 33-53284 on Form S-1).
10.14 The Software Spectrum, Inc. 1993 Long Term Incentive Plan (incorporated by
reference to the Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1994).
10.15 Employees' Profit Sharing Plan of the Company, Adoption Agreement dated December
14, 1994 (incorporated by reference to the Company's Annual Report on Form 10-K
for the fiscal year ended March 31, 1995).
10.16 Lease Agreement dated March 8, 1996 by and between Riverport Commerce Center,
Inc. and the Company (incorporated by reference to the Company's Form 10-K for
the fiscal year ended March 31, 1996).
10.18 Non-Employee Directors' Retainer Stock Plan (incorporated by reference to the
Company's Quarterly Report on Form 10-Q ended December 31, 1995).
10.17 Lease Agreement dated April 26, 1996 by and between Beneficiaries of American
National Bank Trust Number 104601-03 and the Company (incorporated by reference
to the Company's Form 10-K for the fiscal year ended March 31, 1996).
11.1 Statement regarding Computation of Primary Earnings Per Share (incorporated by
reference to the Company's Form 10-K for the fiscal year ended March 31, 1996).
</TABLE>
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<PAGE> 10
<TABLE>
<CAPTION>
EXHIBIT
- -------
<S> <C>
11.2 Statement regarding Computation of Fully Diluted Earnings Per Share (incorporated
by reference to the Company's Form 10-K for the fiscal year ended March 31,
1996).
13 Software Spectrum, Inc.'s 1996 Annual Report to Shareholders (incorporated by
reference to the Company's Form 10-K/A dated August 2, 1996).
16 Letter dated June 29, 1994 from Coopers & Lybrand LLP addressed to the Securities
and Exchange Commission (incorporated by reference to the Company's Current
Report on Form 8-K/A dated June 11, 1994).
23 Consent of Grant Thornton LLP, Independent Accountants (incorporated by reference
to the Company's Form 10-K for the fiscal year ended March 31, 1996).
24 Power of Attorney (incorporated by reference to the Company's Form 10-K for the
fiscal year ended March 31, 1996).
27 Financial Data Schedule (incorporated by reference to the Company's Form 10-K for
the fiscal year ended March 31, 1996).
99 Purchase and Sale Agreement dated as of April 2, 1996 by and among Software
Spectrum, Inc., Software Spectrum (NZ) Limited and Essentially Group Limited,
Essentially Group (NZ) Limited, Essentially Software (Wellington) Limited, The
McNabb Family Trust, McNabb No. 2 Family Trust, McNabb No. 3 Family Trust, RMAD
Trust, David Colvin and Gary McNabb (incorporated by reference to the Company's
Form 10-K for the fiscal year ended March 31, 1996).
</TABLE>
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<PAGE> 1
EXHIBIT 10.3a
MICROSOFT CORPORATION
1995/1996 CHANNEL
AGREEMENT
This Microsoft Corporation 1995/1996 Channel Agreement ("Agreement") is entered
into as of the 1st day of July, 1995 between MICROSOFT CORPORATION ("MS")
having its principal place of business at One Microsoft Way, Redmond, WA
98052-6399 and SOFTWARE SPECTRUM, INC. ("CUSTOMER") having its principal place
of business at 2140 Merritt Drive, Garland, TX 75041.
1. DEFINITIONS
All capitalized terms included in this Agreement are as defined in Schedule A
attached hereto.
2. TERM OF AGREEMENT
2.1 TERM
This Agreement shall take effect on the date indicated above and shall continue
until June 30, 1996.
2.2 TERMINATION
Either MS or CUSTOMER may terminate this Agreement and/or any amendment hereto
at any time, with or without cause, upon thirty (30) days prior written notice.
Neither party shall be responsible to the other for any costs or damages
resulting from the termination of this Agreement. Rights to payment of money
which have accrued prior to termination shall survive termination. Any Product
acquired by CUSTOMER pursuant to this Agreement which is in its Possession as
of the termination of this Agreement shall be distributed by CUSTOMER subject
to the restrictions in this Agreement, or may be returned to MS only within
sixty (60) days of termination as authorized herein. CUSTOMER shall make a
final report to MS within ninety (90) days of termination of this Agreement.
Termination of this Agreement shall automatically terminate any amendments
hereto.
3. CUSTOMER OBLIGATIONS
3.1 FINANCIAL STATEMENT
CUSTOMER will provide to MS' credit management, quarterly Financial Statements
within forty-five (45) days after the end of each calendar quarter. CUSTOMER
Financial Statements will be used by MS' credit department solely for the
purpose of establishing and reviewing CUSTOMER's credit. Financial Statements
should be forwarded to attn. Credit Manager, Finance, Microsoft, One Microsoft
Way, Redmond, WA 98052-6399.
3.2 NO OTHER PRODUCT WARRANTIES BY CUSTOMER
Neither CUSTOMER nor any of its employees or agents shall have any right to
make any other warranties or promises for the use of Product which are not
contained in the written warranty document accompanying the Product. CUSTOMER
may, however, make representations and give instructions for the use of the
Product which are contained on the Product label or container, or End User
documentation provided with the manual or MS product literature denoted by a MS
part number or authorized in writing by MS.
3.3 NO ALTERATIONS OF PRODUCT
CUSTOMER shall not alter the Product or Product packaging, and shall have no
authority to make copies of MS diskettes or documentation. CUSTOMER shall
distribute Product to its customers in unopened packages as shipped by MS.
Microsoft Confidential - Disclosure Prohibited
<PAGE> 2
3.4 USE OF TRADEMARKS
The appropriate trademark symbol (either "(TM)" or "(R)" in a superscript
following the Product name) shall be used whenever a Product name is first
mentioned in any advertisement, brochure, or other material circulated or
displayed by CUSTOMER. MS' current trademark list is available upon requested.
3.5 AUTHORIZED DISTRIBUTION
Product acquired under this Agreement shall be distributed only within the
Territory. CUSTOMER shall not, without the prior written consent of MS,
distribute Product to any Reseller or End User whom they have reason to believe
may re-distribute such Product outside of the Territory.
3.6 TAXES
CUSTOMER shall be liable for all sales, use, value added, duties, tariffs or
other similar taxes of any nature whatsoever associated with the distribution
of the Product, and shall indemnify and hold MS harmless from any such taxes or
expenses.
4. MS OBLIGATIONS
4.1 ASSISTANCE WITH REPORTING
Upon request, MS shall use best efforts to assist CUSTOMER in data reporting,
and will work with CUSTOMER's MIS department to facilitate the data reporting
process.
4.2 NO WARRANTIES FOR PRODUCT NOT MANUFACTURED BY MS
MS makes no warranties as to items distributed under a third party name,
copyright, trademark or trade name which may be included within the retail
package of a Product sold hereunder.
4.3 AUDITS
During the term of this Agreement and for a period of two (2) years following
its termination, MS may audit the applicable records and operations of CUSTOMER
as is reasonable to verify CUSTOMER's compliance with the terms of this
Agreement. CUSTOMER shall promptly correct any errors and omissions disclosed
by such audit. Any audit will be conducted during CUSTOMER's normal business
hours in such a manner as not to unreasonably interfere with CUSTOMER's normal
business activities.
5. CUSTOMER AND MS OBLIGATIONS
5.1 PRODUCT WARRANTY; LIMITATION OF LIABILITY
(a) MS warrants its software and hardware
Product to End Users as defined in the written limited warranty document
accompanying each Product. All replacement Product is delivered subject to the
terms of the MS limited Product warranty. THE ABOVE LIMITED WARRANTIES ARE IN
LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, OR STATUTORY, INCLUDING
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND
OF ALL OTHER OBLIGATIONS OR LIABILITIES ON MS' PART.
(b) NEITHER MS NOR ANYONE ELSE WHO HAS BEEN
INVOLVED IN THE CREATION, PRODUCTION, OR DELIVERY OF ANY PRODUCT WHICH ARE THE
SUBJECT OF THIS AGREEMENT SHALL BE LIABLE FOR ANY DIRECT, INDIRECT,
CONSEQUENTIAL, OR INCIDENTAL DAMAGES (INCLUDING DAMAGES FOR LOSS OF BUSINESS
PROFITS, BUSINESS INTERRUPTION, LOSS OF BUSINESS INFORMATION, AND THE LIKE)
ARISING OUT OF THE USE OR INABILITY TO USE ANY PRODUCT EVEN IF MS HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Microsoft 1995/1996 Channel Agreement Software Spectrum Page 2
<PAGE> 3
(c) IN ANY CASE, THE LIABILITY OF MS (i)
UNDER ANY PROVISION OF THIS AGREEMENT; (ii) FOR ANY DAMAGES CAUSED BY A PROGRAM
DEFECT OR FAILURE IN ANY PRODUCT OR (iii) ARISING FROM A COURT OF PROPER
JURISDICTION HOLDING ANY OF THE ABOVE WARRANTIES OR DISCLAIMERS OF WARRANTIES
INADEQUATE OR INVALID SHALL BE LIMITED TO THE AMOUNT ACTUALLY PAID BY CUSTOMER
TO MS UNDER THIS AGREEMENT. MS' LIMITATION OF LIABILITY IS CUMULATIVE WITH ALL
OF MS' EXPENDITURES BEING AGGREGATED TO DETERMINE SATISFACTION OF THE LIMIT.
THE EXISTENCE OF CLAIMS OR SUITS AGAINST MORE THAN ONE PRODUCT LICENSED UNDER
THIS AGREEMENT WILL NOT ENLARGE OR EXTEND THE LIMIT. CUSTOMER RELEASES MS FROM
ALL OBLIGATIONS, LIABILITY, CLAIMS OR DEMANDS IN EXCESS OF THE LIMITATION.
5.2 SEMESTER PROGRAMS
(A) MARKETING FUNDS
Each Semester, MS may allow CUSTOMER to participate in programs which provide
the opportunity to earn marketing funds. CUSTOMER's participation in such
programs shall be governed by CUSTOMER's then current Microsoft Rebate and
Marketing Fund Addendum to this Agreement, and Microsoft's Marketing Fund
Guidelines, as such may be promulgated and modified by MS, in its sole
discretion, from time to time.
(B) REBATES
Each Semester, MS may allow CUSTOMER to participate in programs which provide
the opportunity to earn rebates as described in CUSTOMER's current Microsoft
Rebate and Marketing Fund Addendum to this Agreement, and CUSTOMER's Rebate
Program Guidelines, as such may be promulgated and modified by MS, in its sole
discretion, from time to time.
(C) ELECTRONIC DATA INTERCHANGE
MS shall require CUSTOMER to provide weekly and monthly sales reporting during
the term of this Agreement. Such sales reporting shall be submitted to MS in
accordance with the Electronic Data Interchange (EDI) Guidelines as provided to
CUSTOMER by MS, from time to time.
6. PATENT, COPYRIGHT AND TRADEMARK INFRINGEMENT
MS shall defend and pay the amount of any final adverse judgement against
CUSTOMER, or settlement to which MS has consented, resulting from claims of
infringement of any United States patent, copyright, trademark and/or service
mark with respect to a Product, provided that the Product has not been altered,
and provided further that MS is notified promptly in writing of such a claim
and has sole control over its defense or settlement, and CUSTOMER provides
reasonable assistance in the defense of the same.
7. DELAY IN PERFORMANCE
Neither party shall be liable for failure or delay in the performance of any of
its obligations under this Agreement, except obligations for the payment of
money, if such delay or failure is caused by circumstances beyond the control
of the party affected. Strikes or other labor difficulties which are not
capable of being terminated on terms acceptable to the party affected shall not
be considered circumstances within the control of such party. In the event of
Product shortages, MS shall have the right to allocate available supplies of
the Product in its sole discretion.
8. NO WAIVER
None of the provisions of this Agreement shall be deemed to have been waived by
any act or acquiescence on the part of MS, CUSTOMER or their respective agents
or employees, but may be waived only by an instrument in writing signed by an
authorized officer of the waiving party. No waiver of any provision of this
Agreement shall constitute a waiver of any other provision or of the same
provision on another occasion.
Microsoft 1995/1996 Channel Agreement Software Spectrum Page 3
<PAGE> 4
9. NO PARTNERSHIP OR AGENCY
Nothing in this Agreement shall be deemed to create or constitute a
partnership, joint venture, franchise, agency, or contract of employment
between MS and CUSTOMER
10. ATTORNEY'S FEES; GOVERNING LAW
In the event an action is commenced to enforce a party's rights under this
Agreement, the prevailing party in such action shall be entitled to recover its
costs and attorneys' fees. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Washington. CUSTOMER consents to
non~exclusive jurisdiction and venue in King County, Washington.
11. ENTIRE AGREEMENT
This Agreement and all attached Amendments, Addenda and Schedules constitute
the entire agreement between MS and CUSTOMER, and supersedes and terminates any
and all prior agreements or contracts, written or oral, entered into between
the parties relating to the subject matter hereof. Any representations,
promises, or conditions in connection therewith not in writing signed by both
parties shall not be binding upon either party. This Agreement shall control
any provisions in purchase orders which are inconsistent with this Agreement.
12. U.S. GOVERNMENT RESTRICTED RIGHTS
Any Product which CUSTOMER distributes or licenses to or on behalf of the
United States of America, its agencies and/or instrumentalities (the
"Government"), are provided to CUSTOMER with RESTRICTED RIGHTS. Use,
duplication or disclosure by the Government is subject to restriction as set
forth in subparagraph (c)(1)(ii) of the rights in Technical Data and Computer
Software clause at DFAR 252.227-7013, or as set forth in the particular
department or agency regulations or rules which provide MS protection
equivalent to or greater than the above-cited clause. CUSTOMER shall comply
with any requirements of the Government to obtain such RESTRICTED RIGHTS
protection, including without limitation, the placement of any restrictive
legends on the Product software, Product documentation, and any license
agreement used in connection with the distribution of the Product. Manufacturer
is Microsoft Corporation, One Microsoft Way, Redmond, Washington 98052-6399.
Under no circumstances shall MS be obligated to comply with any Governmental
requirements regarding the submission of or the request for exemption from
submission of cost or pricing data or cost accounting requirements. For any
distribution or license of the Product that would require compliance by MS with
Governmental requirements relating to cost or pricing data or cost accounting
requirements, CUSTOMER must obtain an appropriate waiver or exemption from such
requirements for the benefit of MS from the appropriate Governmental authority
before the distribution and/or license of the Product to the Government.
13. CONFIDENTIALITY
CUSTOMER expressly undertakes to retain in confidence the terms and conditions
of this Agreement, and all information and know-how transmitted to it by MS and
make no use of such information and know-how except under the terms and during
the existence of this Agreement. CUSTOMER shall guarantee and ensure its
employees' compliance with this paragraph. CUSTOMER's obligations under this
paragraph shall survive any termination of this Agreement and shall extend to
the earlier of such time as the information is public domain or five (5) years
following the termination of this Agreement.
14. NO ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, provided that CUSTOMER may
not assign its rights or obligations under this Agreement in any way without
the prior written consent of MS.
Microsoft 1995/1996 Channel Agreement Software Spectrum Page 4
<PAGE> 5
15. NOTICES
All notices sent by MS or CUSTOMER alleging, regarding, responding to, or in
any way connected with any claim of breach of this Agreement or any other legal
obligation related hereto, shall be sent via U.S. certified mail (return
receipt requested), or via overnight courier (e.g., Federal Express, or DHL),
and addressed as follows:
If to MS: Microsoft Corporation
One Microsoft Way
Redmond, WA 98052-6399
Attn: Sr. Vice President, Microsoft North
America
With cc to: Law and Corporate Affairs
If to CUSTOMER:
Software Spectrum, Inc.
2140 Merritt Drive
Garland, Texas 75041
Attn: Vice President of Operations
16. SURVIVAL
Sections 2.2, 3.2, 3.3, 3.4, 3.5, 3.6, 4.2, 4.3, 5.1, 5.2(c), 11, 12, 13, 14
and 16 shall survive any termination of this Agreement.
IN WITNESS WHEREOF, the parties have signed this Agreement on the dates
indicated below. This Agreement is not binding until executed by MS.
MICROSOFT CORPORATION ("MS") SOFTWARE SPECTRUM, INC.
("CUSTOMER")
By: /s/ JOHN LIEDGREN By: /s/ KEITH R. COOGAN
--------------------------- ----------------------------
John Liedgren Keith R. Coogan
- ------------------------------ -------------------------------
Name (please print) Name (please print)
Director, Channel Policies Vice President of Operations
- ------------------------------ -------------------------------
Title Title
6/27/95 June 19, 1995
- ------------------------------ -------------------------------
Date Date
Microsoft 1995/1996 Channel Agreement Software Spectrum Page 5
<PAGE> 6
SCHEDULE A
DEFINED TERMS
"DISTRIBUTOR" is defined as any MS customer which purchases MS
Product directly from MS, and distributes said Product to Resellers.
"END USER" is defined as the ultimate consumer of Product.
"FINANCIAL STATEMENT" is defined as a Balance Sheet as of the
last day of the calendar quarter, and an Income Statement and Statement of Cash
Flows for the quarter and year-to-date, prepared in accordance with Generally
Accepted Accounting Principles ("GAAP"). Any deviation from GAAP in the
quarterly statements shall be clearly noted. These statements must be signed
by an officer of CUSTOMER as being representative of the books and accounts of
CUSTOMER.
"PRODUCT" is defined as any MS Stock Keeping Unit ("SKU") listed
on CUSTOMER's then current Price List.
"PURCHASE CREDIT" is defined as a dollar amount credited to
CUSTOMER's account with MS, which amount may only be used by CUSTOMER in the
manner set forth in this Agreement.
"RESELLER" is defined as any software retailer which purchases
Product from MS or a MS authorized Distributor.
"SEMESTER" is defined as a six month period. There are two (2)
Semesters during the term of this Agreement, January 1 through June 30, and
July 1 through December 31.
"TERRITORY" is defined as the geographic boundaries of the United
States of America, excluding all United States territories, possessions, or
protectorates.
Microsoft 1995/1996 Channel Agreement Software Spectrum Page A1
<PAGE> 7
ADDENDUM TO THE
MICROSOFT 1995/1996
CHANNEL AGREEMENT
(APPOINTMENT AS A DIRECT RESELLER)
This Addendum ("Addendum") entered into as of the 1st day of July, 1995,
modifies that certain Microsoft 1995/1996 Channel Agreement ("Agreement")
between MICROSOFT CORPORATION ("MS") having its principal place of business at
One Microsoft Way Redmond, WA 98052 and SOFTWARE SPECTRUM, INC. ("CUSTOMER")
having its principal place of business at 2140 Merritt Drive, Garland, TX
75041. The Agreement is supplemented as follows:
1. PURPOSE
The purpose of this Addendum is to set forth the framework by which MS appoints
CUSTOMER as a non-exclusive Direct Reseller in the United States of America for
the MS Product listed on the CUSTOMER Price List attached hereto as Schedule B.
For purposes of this Addendum, capitalized terms not otherwise defined herein,
shall have the same definition as set forth in the Agreement.
2. DEFINITIONS
For purposes of this Addendum, capitalized terms are as defined in Schedule A
attached hereto.
3. CUSTOMER OBLIGATIONS
3.1 DISTRIBUTION TO END USERS ONLY
Product distributed pursuant to this Addendum shall be distributed solely to
End Users located in the Territory, and not to Resellers of any kind.
3.2 LICENSING PROVISIONS
CUSTOMER acknowledges that the Product are distributed to End Users subject to
the terms of the applicable Microsoft End User License Agreement. CUSTOMER
shall make commercially reasonable efforts to prevent distribution of Product
to End Users who intend to copy or reproduce the Product in violation of the
Microsoft End User License Agreement.
3.3 PRODUCT PURCHASES
Product acquired by CUSTOMER shall be purchased only from MS or MS authorized
Distributors.
3.4 PAYMENT TERMS
Payment terms are net thirty (30) days from the date of MS' invoice, subject to
approval of open terms by MS. All invoices outstanding over thirty (30) days
may be assessed a finance charge of the then current prime rate plus two
percent (2%) per month of the legal maximum, whichever is less. Failure by
CUSTOMER to meet payment terms may result in a hold by MS of all pending
CUSTOMER orders.
Microsoft Confidential - Disclosure Prohibited
<PAGE> 8
All payments to MS by CUSTOMER pursuant to this Addendum shall be in the form of
a bank wire transfer, sent to the following:
First Interstate Bank of Washington
Seattle Main Branch
ABA: #125 000 286
Beneficiary: Microsoft Corporation
Account No. 001 025865
3.5 SHIPMENT SHORTAGE CLAIMS
CUSTOMER shall submit all claims for shortages and/or variances in shipments to
MS in writing within fifteen (15) days of CUSTOMER's receipt of the shipment.
All such claims not submitted in writing to MS within the fifteen (15) day
period shall be deemed waived by CUSTOMER. CUSTOMER shall be responsible for
all such claims made with respect to freight collect shipments, and shall not
withhold payment to MS a result of such claims.
3.6 PRODUCT FORECASTING
From time to time, MS may require Product forecasting for CUSTOMER. CUSTOMER
shall comply with all Product forecasting requirements designated by MS from
time to time.
4. MS OBLIGATIONS
4.1 NEW PRODUCTS; PROMOTIONAL PRODUCTS
MS may elect at any time during the term of this Addendum to announce new or
Promotional Product to which the terms and conditions of this Addendum do not
apply. In the event MS elects to announce Promotional Product, MS shall provide
CUSTOMER with thirty (30) days prior written notice of such announcement.
4.2 INVENTORY PRICE PROTECTION
During the term of this Addendum, MS shall grant CUSTOMER a price adjustment
against Product price reductions made by MS, which price reductions are made on
an indefinite basis, on all CUSTOMER's inventory which CUSTOMER reports as in
its inventory as of the day of the reduction. Such price adjustment shall be in
the form of a Purchase Credit equal to the difference between the lowest price
paid by CUSTOMER during the six (6) months prior to the price reduction and the
reduced price, and shall be paid no later than thirty (30) days after CUSTOMER
provides proof of inventory. Special temporary prices and promotional
offerings, which may include price reductions or free goods, shall not be
considered a price reduction to which this Section applies.
5. CUSTOMER AND MS OBLIGATIONS
5.1 PRICE SCHEDULE
CUSTOMER prices are set forth on the CUSTOMER Price List attached hereto as
Schedule B. MS may modify the CUSTOMER Price List at any time upon thirty (30)
days written notice to CUSTOMER. MS may offer, without prior notice, temporary
"special" prices on any or all Product.
Microsoft 1995/1996 Channel Agreement Software Spectrum Page 2
Direct Purchasing Reseller Addendum
<PAGE> 9
5.2 DELIVERY AND PRODUCT DISTRIBUTION
Product shall be invoiced and shipped Free On Board ("FOB") Bothell, Washington,
and CUSTOMER shall be responsible for freight charges. Should CUSTOMER desire to
specify its own carrier, delivery shall then be "freight collect."
In any month CUSTOMER participates in the MS Rate Based Distribution Program,
for all CUSTOMER warehouses that receive a minimum of $200,000 of Product in MS
Master Carton quantities calculated on the basis of CUSTOMER's net prices from
MS, and MS chooses the carrier, the freight costs of delivery of Product to
those CUSTOMER warehouses for that month will be paid by MS.
In any month CUSTOMER's Rate Based Distribution Program participation exceeds
seventy five percent (75%) of eligible product shipments, CUSTOMER will be
allowed to adjust CUSTOMER's forecast of two (2) MS Product SKU's. Such
adjustments to the forecast shall not exceed fifty (50%) upward or one hundred
percent (100%) downward from the final forecast, four weeks prior to the first
ship date.
5.3 ORDER PROCESSING
CUSTOMER shall order Product from MS by written or electronically transmitted
purchase order. All orders by CUSTOMER shall be in Master Pack quantities only.
MS shall have ten (10) days from receipt to reject any purchase order. MS shall
fulfill unconditional written or electronic purchase orders from CUSTOMER
subject to CUSTOMER's credit limits, current payment status, and approved
Average Payment Days ("APD") guidelines as determined by MS.
Except as provided herein, CUSTOMER shall have the right to change or cancel
any purchase order, provided that CUSTOMER notifies MS of the change or
cancellation no later than twenty-four (24) hours prior to the order shipment
to CUSTOMER by MS. Should CUSTOMER choose to change any purchase order line
item, CUSTOMER shall be required to submit a new purchase order to MS, clearly
indicating which line item(s) are changed. Line item changes shall not affect
the remaining items on CUSTOMER's purchase order. Should CUSTOMER choose to
cancel a purchase order, CUSTOMER must provide MS with a written cancellation
request.
MS may elect, during the term of this Agreement, to require CUSTOMER to
implement order management via EDI. Should MS require such order management
change, MS shall provide CUSTOMER with no less than one hundred twenty (120)
days prior written notice.
Notwithstanding the foregoing, MS reserves the right to limit order quantities.
5.4 DEFECTIVE PRODUCT CREDIT
At MS' sole discretion, MS may determine that a Product or Product shipment is
Defective. Should MS determine that a Product or Product shipment is Defective,
MS shall provide CUSTOMER with a replacement for all Defective Product
destroyed at CUSTOMER's location. MS shall pay freight costs for shipment of
replacement Product from MS to CUSTOMER.
5.5 INVENTORY BALANCING
To reduce its inventory risk CUSTOMER shall be entitled to balance its Product
inventory in accordance with the following:
(a) Product inventory may be balanced only during the
Months of March, July, and November, and within thirty (30) days of the date of
issue of the Return Authorization;
(b) Product may be balanced only if, at the time of
balancing, it is listed on the then current MS Price List;
Microsoft 1995/1996 Channel Agreement Software Spectrum Page 3
Direct Purchasing Reseller Addendum
<PAGE> 10
(c) Product may be balanced only if CUSTOMER's Product
return is accompanied by a new Product order in an aggregate dollar amount equal
to or greater than the aggregate dollar amount of the Product return;
(d) The aggregate quantity of Product that may be returned
shall be limited to; (i) in the case of Product classified by MS as "Consumer
Product" (excluding, however, the Microsoft Mouse Product), ten percent (10%) of
net dollar shipment of such Consumer Product for the four full Months
immediately preceding the inventory balancing request, (ii) in the case of
Microsoft(R) Windows(R) 95, two and five tenths percent (2.5%) of net dollar
shipments of Microsoft(R) Windows(R) 95, (iii) in the case of Microsoft(R)
Office for Windows(R) 95, two and five tenths percent (2.5%) of Microsoft(R)
Office for Windows(R) 95, and (iv) in the case of all Product other than that
referred to in clauses (i) through (iv) above, to two and five tenths percent
(2.5%) of net dollar shipments of all other Product for the four full Months
immediately preceding the inventory balancing request, where net shipments shall
not include any Microsoft Variable Licenses, Microsoft Enterprise Licenses, or
Microsoft Maintenance;
(e) Promotional Product may not be balanced;
(f) Product to be balanced may only include Product
purchase by CUSTOMER from MS;
(g) Unresaleable Product may not be balanced; and
(h) Product is subject to inspection by MS or an MS
authorized agent prior to return by CUSTOMER to MS pursuant to the terms of MS'
then current Return Processing Guidelines.
CUSTOMER must submit a written or electronic MS Return Authorization to return
Product for the purpose of inventory balancing, summarizing the quantities of
each Product to be returned. Upon verification that CUSTOMER has met its
inventory balancing terms, MS shall issue a Return Authorization Number, which
shall expire thirty (30) days from the date of issue.
If the foregoing conditions have been met, CUSTOMER shall return Product to MS
freight prepaid in cartons clearly marked with the Return Authorization Number
and a packing slip attached to the outside. Any Product returned to MS which
does not comply with the provisions of this Section may, at MS' sole discretion,
be returned by MS to CUSTOMER subject to a five percent (5%) inspection fee and
the freight costs incurred by MS in returning such Product, which shall be paid
immediately by CUSTOMER to MS upon receipt of an invoice therefor.
Upon receipt of Product which complies with the conditions set forth in this
Section, MS shall issue a Purchase Credit for the returned Product in an amount
equal to the lowest price CUSTOMER paid for the Product in the six (6) Months
prior to the return. In no event will cash refunds be given for exchanges,
replacements, or returned merchandise hereunder. CUSTOMER shall pay all freight
and other costs of replacement Product in the same manner and on the dame terms
as new Product purchased by CUSTOMER under this Addendum.
Microsoft 1995/1996 Channel Agreement Software Spectrum Page 4
Direct Purchasing Reseller Addendum
<PAGE> 11
5.6 PRIOR VERSION CREDIT
When MS ships a new version of a Product or a Discontinued Product to CUSTOMER,
CUSTOMER shall receive a Purchase Credit for prior version of the Product,
provided CUSTOMER complies with all of the following:
(a) Product shall be destroyed at CUSTOMER's location
once every other Month;
(b) Product for which CUSTOMER receives a Purchase Credit
must be offset by a new Product order in an aggregate dollar amount equal to or
greater than the aggregate dollar amount of the Purchase Credit, and is solely
for the new version of the Product for which CUSTOMER has received such
Purchase Credit;
(c) CUSTOMER shall be eligible to receive a Purchase
Credit for up to one hundred eighty (180) days from the date the new version of
such Product first ships from MS to CUSTOMER;
(d) Promotional Product is not eligible for credit
pursuant to this Section;
(e) Product must only include Product purchased by
CUSTOMER from MS;
(f) Unresaleable Product is not eligible for credit
pursuant to this Section; and
(g) Product shall be limited to the version number
immediately prior to the new Product version.
MS shall use its best efforts to notify CUSTOMER within thirty (30) days prior
to the shipment of any new Product version, or the existence of a Discontinued
Product which would be subject to this Section.
It the foregoing conditions have been met, Product shall be destroyed at
CUSTOMER's locations pursuant to the terms of MS' then current Return
Processing Guidelines.
5.7 UNRESALEABLE PRODUCT ALLOWANCE
CUSTOMER shall be eligible to receive a Purchase Credit of up to one percent
(1%) of CUSTOMER's net purchases, excluding Microsoft Variable Licenses,
Microsoft Enterprise Licenses, and Microsoft Maintenance, for the previous two
(2) Months. Such Purchase Credit shall be to compensate CUSTOMER for Product
held in CUSTOMER's inventory which is no longer resaleable, provided that
CUSTOMER agrees to destroy or recycle all such Product, and provide MS with a
full report of all Unresaleable Product. Unresaleable Product may not be resold
or donated.
5.8 PRODUCT AUTHORIZATION CATEGORY PROCEDURES
From time to time, MS may classify certain of its Product by Product
Authorization Category, which Product may only be obtained and distributed by
CUSTOMER upon written authorization from MS. Such written authorization from MS
may be specific to the particular CUSTOMER outlet location. CUSTOMER may apply
for such authorization by completing the applicable Reseller Authorization
Application and/or Agreement process required by MS. MS may by prior written
notification terminate CUSTOMER's authorization to obtain and distribute
Product Authorization Category Product with respect to one or more CUSTOMER
outlets. For each Product Authorization Category Product distributed, CUSTOMER
shall complete and return to MS all requested customer registration documents.
Microsoft 1995/1996 Channel Agreement Software Spectrum Page 5
Direct Purchasing Reseller Addendum
<PAGE> 12
6.0 SURVIVAL
Sections 3.1, 3.2, and 3.4 shall survive any termination of this Addendum.
IN WITNESS WHEREOF, the parties have signed this Addendum on the dates
indicated below. All terms and conditions of the Agreement not amended herein
shall remain in full force and effect. This Addendum is not binding until
executed by MS.
AGREED AND ACCEPTED TO BY AGREED AND ACCEPTED TO BY
MICROSOFT CORPORATION ("MS") SOFTWARE SPECTRUM, INC.
("CUSTOMER")
By: /s/ JOHAN LIEDGREN By: /s/ KEITH R. COOGAN
---------------------------- ----------------------------
Johan Liedgren Keith R. Coogan
- ------------------------------- -------------------------------
Name (please print) Name (please print)
Director, Channel Policies Vice President of Operations
- ------------------------------- -------------------------------
Title Title
6/27/95 June 19, 1995
- ------------------------------- -------------------------------
Date Date
Microsoft 1995/1996 Channel Agreement Software Spectrum Page 6
Direct Purchasing Reseller Addendum
<PAGE> 13
SCHEDULE A
DEFINITIONS
"DEFECTIVE PRODUCT" is defined as a manufacturer's defect in materials
or media.
"DISCONTINUED PRODUCT" is defined as Product that MS has stopped
manufacturing and discontinued from the CUSTOMER Price List.
"INVENTORY BALANCING" is defined as the return of eligible MS Product
for the purpose of reducing CUSTOMER's stock of such Product.
"MONTH" is defined as a MS fiscal month as outlined in the calendar
attached hereto as Schedule C.
"PROMOTIONAL PRODUCT" is defined as a special Product SKU which is
available to CUSTOMER for resale for a limited time. Free Product promotions
are not considered Promotional Product.
"RETURN AUTHORIZATION NUMBER" is defined as the unique number assigned
to CUSTOMER by MS for the purpose of Product returns for CUSTOMER to MS.
"UNRESALEABLE PRODUCT" is defined as any Product held in CUSTOMER's
inventory, including damaged Product and Product returned by CUSTOMER's
customers which is no longer fit for resale, and is ineligible for return to
MS for purposes of this Addendum, Unresaleable Product shall not include that
Product which has sustained solely shrink wrap damage.
Microsoft 1995/1996 Channel Agreement Software Spectrum Page A1
Direct Purchasing Reseller Addendum
<PAGE> 14
ADDENDUM TO THE MICROSOFT
1995/1996 CHANNEL AGREEMENT
(APPOINTMENT AS A LARGE ACCOUNT RESELLER)
This Addendum ("Addendum") entered into this 1st day of July, 1995, supplements
that certain 1995/1996 Channel Agreement ("Agreement") between MICROSOFT
CORPORATION ("MS") having its principal place of business at One Microsoft Way,
Redmond, WA 98052 and SOFTWARE SPECTRUM, INC. ("CUSTOMER") having its principal
place of business at 2140 Merritt Drive, Garland, TX 75041. The Agreement is
hereby supplemented as follows:
1. PURPOSE
The purpose of this Addendum is to set forth the framework by which MS appoints
CUSTOMER as a non-exclusive Large Account Reseller in the Territory and Canada
with the right to acquire Microsoft Select Software Products from MS and to
distribute such Select Software Products and their associated license rights to
Select Customers which have designated CUSTOMER in their Enrollment Form as
their Large Account Reseller.
2. DEFINITIONS
For purposes of this Addendum, capitalized terms are as defined in Schedule A
attached hereto.
3. CUSTOMER OBLIGATIONS
3.1 DISTRIBUTION OF SELECT SOFTWARE PRODUCTS
CUSTOMER may only distribute Select Software Products to Select Customers
located in the Territory and Canada, and at the direction of its Select
Customer's, outside of the Territory and Canada. Select Customers are entitled
to distribute the rights associated with their Select Software Products outside
of the Territory if they so elect, in accordance with the Master Agreement and
all applicable laws. However, in the event a Select Customer wants to initiate
an Enrollment Form in a country outside of the Territory, the Select Customer
is required by the terms of the Microsoft Select Program to locate a Large
Account Reseller in the desired country and acquire Select Software Products
from that Large Account Reseller.
3.2 DOCUMENTATION
CUSTOMER shall be authorized to purchase documentation SKUs from Microsoft Easy
Fulfillment (MEF) and to resell these documentation SKUs directly to CUSTOMER's
Select Customers.
3.3 DISTRIBUTION RESTRICTIONS
MS's authorization of the Large Account Reseller to acquire and distribute
Select Software Products as set forth herein shall not include the
authorization for the Large Account Reseller to use Select Software Products
internally or to distribute or otherwise transfer Select Software Products to
any entity which owns, controls, is owned or controlled by, or under common
ownership or control with the Large Account Reseller ("Large Account Reseller
Affiliates") without the prior written consent of MS. For the purposes of this
Addendum, an entity is "controlled" by another if that other company or legal
entity, either directly or through its control of another company or legal
entity: (i) holds the majority of voting rights in it; (ii) is a member of it
and has the right to appoint or remove a majority of its board of directors; or
(iii) is a member of it and controls alone or under an agreement with other
shareholders or members, the majority of the voting rights in it.
Microsoft Confidential - Disclosure Prohibited
<PAGE> 15
3.4 CUSTOMER ACCEPTANCE OF ENROLLMENT FORMS
Upon execution by MS of a Select Customer's Enrollment Form naming CUSTOMER as
the Large Account Reseller, MS shall deliver to CUSTOMER's designated Select
Program Administrator a copy of such Enrollment Form. CUSTOMER shall have
fifteen (15) days from the date of receipt of the Enrollment Form to decline to
acquire and distribute Select Software Products associated with such Enrollment
Form by notifying MS in writing of such election. All other Enrollment Forms
delivered to CUSTOMER by MS shall be deemed as accepted by CUSTOMER fifteen
(15) days after receipt by CUSTOMER, and shall constitute CUSTOMER's agreement
to pay MS as set forth in Section 3.6 below for all copies of Select Software
Products made by the Select Customer pursuant to the Enrollment Form and its
associated Master Agreement.
3.5 CUSTOMER SELECT PRICE SCHEDULE
CUSTOMER's prices are set forth on the CUSTOMER Select Price Schedule attached
hereto as Schedule B. MS may modify the CUSTOMER Select Price Schedule at any
time by providing thirty (30) days written notice to CUSTOMER
3.6 CUSTOMER'S REPORTING AND/OR ORDERING AND PAYMENT TO MS
(a) MICROSOFT SELECT I.X AND 2.X ENROLLMENT AGREEMENT
REPORTING
For each executed Microsoft Select version 1.x or version 2.x Enrollment
Agreement, the Select Customer is obligated by the terms of the Microsoft
Select Program to deliver to MS within fifteen (15) days of the end of each
calendar quarter, a written verified report for each Select Software Product
acquired from CUSTOMER pursuant to the terms of this Agreement. Following
receipt of a report from a given Select Customer, MS shall invoice CUSTOMER and
CUSTOMER shall be obligated to pay MS the fees set forth on Schedule B for each
unit reported by the Select Customer.
Should the Select Customer elect to submit reports to MS in addition to the
Select Customer's regular quarterly report, MS shall invoice CUSTOMER
immediately following receipt of such report, and CUSTOMER shall be obligated
to pay MS pursuant to the terms of this Section 3.6.
In the event CUSTOMER wants to receive copies of its Select Customers'
quarterly reports, CUSTOMER shall negotiate with its Select Customers for the
right to receive such copies.
(b) MICROSOFT SELECT 3.0 ENROLLMENT FORM ORDERING
For each of its executed Microsoft Select version 3.0 Enrollment Forms,
CUSTOMER shall deliver to MS via Electronic Data Interchange ("EDI") no later
than the fifteenth (15th) day of each calendar month, a purchase order for each
Select Software Product ordered and acquired from CUSTOMER by the Select
Customer or Enrollment site pursuant to the terms of this Agreement during the
previous month. Following receipt of such purchase order, MS shall invoice
CUSTOMER and CUSTOMER shall be obligated to pay MS the fees set forth on
Schedule B for each unit indicated on the purchase order, along with any
applicable quarterly Maintenance fees.
Microsoft 1995/1996 Channel Agreement Software Spectrum Page 2
Large Account Reseller Addendum
<PAGE> 16
(c) PAYMENT TERMS
All amounts are due and owing net thirty (30) days of date of invoice. All
payments not received by MS from CUSTOMER within the required time frame may be
assessed a finance charge of the then-current prime rate plus two percent (2%)
per month or the legal maximum, which ever is less. CUSTOMER shall be obligated
to pay MS regardless of whether CUSTOMER has received payment from the Select
Customer. All payments shall be in the form of bank wire transfer, sent to the
following:
First Interstate Bank of WA
Seattle Main Branch
ABA: #125-000-286
Beneficiary: Microsoft Corporation
Account No. 001-025865
3.7 TAXES
(a) SALES TAX
CUSTOMER shall either provide MS with a bona fide resale certificate for all
Select Software Products delivered to CUSTOMER by MS pursuant to the terms of
this Addendum, or shall pay to MS all applicable sales, use or other excise
taxes due on such Select Software Products.
(b) WITHHOLDING TAXES
In the event taxes are required to be withheld by any government on payments
required hereunder, CUSTOMER may deduct such taxes from the amount owed and pay
such taxes to the appropriate tax authority; provided, however, that CUSTOMER
shall promptly secure and deliver to MS an official receipt for any such taxes
withheld or other documents necessary to enable MS to claim a foreign tax
credit. CUSTOMER shall make certain that any taxes withheld are minimized to
the extent possible under the applicable law.
3.8 AGREEMENTS BETWEEN CUSTOMER AND ITS SELECT CUSTOMERS
With the exception of the terms contained in this Addendum and the terms
relating to the exercise of the intellectual property rights set forth in the
applicable Select Software Products, the applicable License Agreement for such
Select Software Products, Master Agreement and Enrollment Form, CUSTOMER shall
have complete discretion to establish with each Select Customer the pricing and
all other terms and conditions regarding CUSTOMER's provision of Select
Software Products and their associated license rights to CUSTOMER's Select
Customers. The negotiation of these terms between CUSTOMER and its Select
Customers shall not be subject to approval or review by MS in any way.
Microsoft 1995/1996 Channel Agreement Software Spectrum Page 3
Large Account Reseller Addendum
<PAGE> 17
3.9 ROLE OF THE SELECT PROGRAM ADMINISTRATOR
CUSTOMER agrees to appoint a representative to serve as CUSTOMER's Select
Program Administrator. CUSTOMER agrees to promptly make that individual, as
well as CUSTOMER's other sales employees, available for training on the
Microsoft Select Program and on the licensing policies related to such products
at such times and places as MS reasonably requests. The individual appointed by
CUSTOMER as its Select Program Administrator shall be an individual generally
knowledgeable on MS products and in regard to Microsoft's Select program. The
Select Program Administrator shall be responsible for administering all of
CUSTOMER's Select Customer billings, for general administration of CUSTOMER's
Select Customers and for working with the Microsoft Select Account Manager (or
local MS Contact) in regard to any problems relevant to a given Select
Customer. CUSTOMER's Select Program Administrator shall be:
Steve Lytle
2140 Merritt Drive
Garland, Texas 75041
214-840-6600
CUSTOMER shall provide MS with at least ten (10) days advance written notice of
any change in the individual serving as its Select Program Administrator.
3.10 ENROLLMENT OF NEW SELECT CUSTOMERS
CUSTOMER's solicitation of new customers shall be on such terms and conditions
as MS specifies from time to time. MS reserves the right to accept or reject in
its sole discretion any proposed customer.
3.11 CUSTOMER'S REPRESENTATIONS AND WARRANTIES
CUSTOMER hereby represents and warrants that:
(a) It will use its best efforts to service and support
its Select Customers and will promptly inform the appropriate Microsoft Select
contact of any difficulties it encounters in servicing its Select Customers;
(b) It will not alter in any way or form the Select
Software Products or theft packaging;
(c) It will only deliver the Select Software Products to
the Select Customer specified on the outside of the Select Software Product
packaging and will only deliver CD-ROMs and program materials and information
to the Select Customer named on each such CD-ROM or materials; and
(d) It will promptly inform MS of any known or suspected
violations by a Select Customer of the terms and conditions of the Master
Agreement, Enrollment Form, its Select Software Products and/or the applicable
License Agreement.
Microsoft 1995/1996 Channel Agreement Software Spectrum Page 4
Large Account Reseller Addendum
<PAGE> 18
3.12 CONFIDENTIALITY
CUSTOMER expressly undertakes to retain in confidence the terms and conditions
of this Addendum, and the terms and conditions of all executed Select Master
Agreements and Select Enrollment Forms which are made available to CUSTOMER.
Should CUSTOMER disclose the terms and conditions of any executed Select Master
Agreement or Select Enrollment Form, this Addendum shall immediately terminate.
CUSTOMER shall guarantee and ensure its employees' compliance with this
paragraph. CUSTOMER's obligations under this paragraph shall survive any
termination of this Agreement and shall extend to the earlier of such time as
the information is in the public domain or five (5) years following the
termination of this Agreement.
4. CUSTOMER AND MS OBLIGATIONS
4.1 DELIVERY OF SELECT SOFTWARE PRODUCTS AND SELECT CD-ROMS
Within fifteen (15) days of MS's approval of a given Enrollment Form, MS agrees
to deliver to CUSTOMER the Select Software Products identified on the
Enrollment Form. Each Select Software Product delivered to CUSTOMER will be a
custom package specific to the named Select Customer and will set forth the
Customer's Select Agreement Number and any special conditions relevant to the
named Select Customer. Select Software Products are provided in order that
CUSTOMER may provide the Select Software Products and their associated license
rights to the named Select Customer on such pricing and payment terms and
conditions as CUSTOMER and the Select Customer agree. CUSTOMER agrees to pay MS
for Select Software Products as set forth in Section 3.6 above. From time to
time during the term of this Addendum, MS will provide CUSTOMER with CD-ROMs
containing upgraded copies of the Select Software Products covered by a Select
Customer's Select Agreement. CUSTOMER agrees to immediately deliver all CD-ROMs
and any additional MS supplied program information and materials to the named
Select Customer.
4.2 RESERVATION OF RIGHTS
MS expressly reserves the right at any time during the term of this Addendum to
terminate any Select Customer's status as a Select Customer in the event the
Select Customer fails to comply with the terms of either the Master Agreement,
the Enrollment Form or the applicable License Agreement. MS agrees to promptly
notify CUSTOMER of the termination of any Select Customer to whom CUSTOMER has
distributed Select Software Products. Following such a notice, CUSTOMER shall
thereafter not deliver to the terminated Select Customer any additional Select
Software Products, licenses, CD-ROMs or any additional program information and
materials. Termination shall not, however, affect the Select Customer's
obligation to file the next due order/report and MS's right to invoice CUSTOMER
in regard to such order. If MS terminates a given Select Customer, CUSTOMER
shall not have any claim against MS or the Select Customer for damages or lost
profits resulting from such termination. CUSTOMER shall, however, be entitled
to invoice the Select Customer for copies of Select Software Products
reproduced by the Select Customer as set forth in the Customer's final order,
such invoice to be on the terms and conditions previously agreed to between
CUSTOMER and the Select Customer.
Microsoft 1995/1996 Channel Agreement Software Spectrum Page 5
Large Account Reseller Addendum
<PAGE> 19
4.3 OBLIGATIONS ON TERMINATION
Promptly following termination of this Addendum, MS shall inform each of
CUSTOMER's Select Customers that CUSTOMER is no longer a Large Account Reseller
and shall request that each Select Customer appoint a new Large Account
Reseller. In the event this Addendum is terminated without cause or expires of
its own accord, each Select Customer shall be obligated to file its next due
order/report and to pay CUSTOMER any and all amounts due for such order as
agreed to between CUSTOMER and the Select Customer. CUSTOMER shall in turn be
obligated to pay to MS in accordance with the terms of this Addendum any and
all amounts due MS as a result of the Select Customer's above-referenced order.
Thereafter, any and all future payments by CUSTOMER's Select Customers shall be
made to each Select Customer's newly designated Large Account Reseller (if any)
or to MS as the case may be and CUSTOMER shall not be entitled to any portion
of, or any compensation for its Select Customers' future orders and payments.
In the event this Addendum is terminated for cause, MS shall be entitled to
direct all of CUSTOMER's Select Customers to report/order and pay to MS or to
the Select Customer's newly designated Select Large Account Reseller any and
all payments due after termination. In such an event, CUSTOMER shall not under
any circumstances be entitled to any portion of, or any compensation for, the
Select Customers' next orders and payments or any future orders and payments.
4.4 ESSENTIAL ELEMENT
Both CUSTOMER and MS acknowledge that this Addendum is essential to any
agreement it enters into with a Select Customer. Except as is specifically
provided in Section 4.3 related to CUSTOMER's right to collect any outstanding
payment following termination of this Addendum, CUSTOMER's rights to acquire
and/or distribute Select Software Products, Select CD-ROMs and/or any
additional program information and materials, and to collect payment from its
Select Customers are conditional upon this Addendum being in fill force and
effect. CUSTOMER acknowledges further that, if and when it is the subject of a
bankruptcy filing (under any Chapter of 11 United States Code Section 101 et
seq. including any future amendments), then assumption of any contract with a
Select Customer is conditional upon the assumption of this Addendum.
5. SURVIVAL
Sections 3.6, 3.7, 3.12, 4.3, and 4.4 shall survive any termination of this
Addendum.
IN WITNESS WHEREOF, the parties have signed this Addendum on the date indicated
below. This Addendum is hereby made part of the Agreement. All terms and
conditions of the Agreement not supplemented herein shall remain in fill force
and effect. This Addendum is not binding until executed by MS.
MICROSOFT CORPORATION ("MS") SOFTWARE SPECTRUM, INC.
("CUSTOMER")
By: /s/ JOHAN LIEDGREN By: /s/ KEITH R. COOGAN
- ----------------------------------- -----------------------------------
Johan Liedgren Keith R. Coogan
- ----------------------------------- -----------------------------------
Name (please print) Name (please print)
Director, Channel Policies Vice President of Operations
- ----------------------------------- -----------------------------------
Title Title
6/27/95 June 19, 1995
- ----------------------------------- -----------------------------------
Date Date
Microsoft 1995/1996 Channel Agreement Software Spectrum Page 6
Large Account Reseller Addendum
<PAGE> 20
SCHEDULE A
DEFINITIONS
"ENROLLMENT AGREEMENT" is defined as the Microsoft Select Enrollment
Agreement in the form provided by MS to be signed by each Select Customer and
CUSTOMER, and approved by MS.
"ENROLLMENT FORM" is defined as the Microsoft Select Enrollment Form
in the form provided by MS to be signed by each Select Customer and approved by
MS.
"LARGE ACCOUNT RESELLER" is defined as any reseller which MS has
authorized to distribute licenses to Select Customers.
"LEAD CUSTOMER" is defined as the company or entity signing a Master
Agreement.
"LEAD CUSTOMER AFFILIATE" is defined as a company or legal entity
which owns and controls, is owned or controlled by, or is under common
ownership and control with, the Lead Customer.
"LICENSE AGREEMENT(S)" is defined as the license agreement attached to
the Enrollment Form.
"MASTER AGREEMENT" is defined as the Microsoft Select Master Agreement
in the form provided by MS to be signed by a given Select Customer or an entity
acting on behalf of the Select Customer.
"MASTER AGREEMENT NUMBER" is defined as the number assigned by MS to a
given Master Agreement.
"SELECT CUSTOMER" is defined as the Lead Customer, any Lead Customer
Affiliate and/or identifiable division, business unit or office location of
the foregoing identified as the Select Customer on an Enrollment Form.
"SELECT PROGRAM ADMINISTRATOR" is defined as the individual appointed
by CUSTOMER to act as CUSTOMER's primary contact with respect to the Microsoft
Select Program.
"SELECT SOFTWARE PRODUCT" is defined as the MS software as designated
from time to time by Microsoft which may be reproduced pursuant to an
Enrollment Form.
Microsoft 1995/1996 Channel Agreement Software Spectrum Page A1
Large Account Reseller Addendum
<PAGE> 1
EXHIBIT 10.3b
LARGE ACCOUNT RESELLER
REBATE ADDENDUM TO THE
MICROSOFT 1995/1996 CHANNEL AGREEMENT
(JULY - DECEMBER, 1995)
This Addendum ("Addendum") entered into as of the 1st day of July, 1995,
supplements that certain Microsoft 1995/1996 Channel Agreement ("Agreement")
between MICROSOFT CORPORATION ("MS") having its principal place of business at
One Microsoft Way, Redmond, WA 98052 and SOFTWARE SPECTRUM, INC. ("CUSTOMER")
having its principal place of business at 2140 Merritt Drive, Garland, TX
75041. The Agreement is hereby supplemented as follows:
1. PURPOSE
The purpose of this Addendum is to set forth the framework by which CUSTOMER
may earn Rebates on Microsoft Select sales.
2. TERM AND TERMINATION
This Addendum shall be effective as of the date indicated above, and shall
expire December 31, 1995. Either party may terminate this Addendum, with or
without cause, upon thirty (30) days prior written notice. This Addendum is not
valid unless both MS and CUSTOMER have executed a Microsoft 1995/1996 Channel
Agreement and the Addendum to the Microsoft 1995/1996 Channel Agreement
(Appointment As A Large Account Reseller).
3. DEFINITIONS
For purposes of this Addendum, capitalized terms not otherwise defined herein,
shall have the same definitions as set forth in the Agreement. Additional
capitalized terms included in this Addendum are as defined in Schedule A
attached hereto.
4. REBATES
CUSTOMER is eligible to receive up to a * Rebate on its Qualified Select Sales
made during the Rebate Period. The Rebate shall be paid provided CUSTOMER
complies with the Select Rebate Program Guidelines outlined in Schedule B.
Notwithstanding such Rebate Program Guidelines, MS may, at its sole discretion,
pay all or any portion of the Rebate prior to the end of the Rebate Period. The
Rebate so paid may be adjusted subsequently based upon compliance with the
Rebate Program Guidelines.
IN WITNESS WHEREOF, the parties have signed this Addendum on the date indicated
below. This Addendum is hereby made part of the Agreement. All terms and
conditions of the Agreement not supplemented herein shall remain in full force
and effect. This Addendum is not binding until executed by MS.
AGREED AND ACCEPTED TO BY AGREED AND ACCEPTED TO BY
MICRO CORPORATION ("MS") SOFTWARE SPECTRUM, INC.
("CUSTOMER")
By: /s/ ILLEGIBLE By: /s/ Keith R. Coogan
--------------------------------- ---------------------------------
/s/ ILLEGIBLE Keith R. Coogan
- ------------------------------------ ------------------------------------
Name (please print) Name (please print)
/s/ ILLEGIBLE Vice President of Operations
- ------------------------------------ ------------------------------------
Title Title
06/27/95 June 19, 1995
- ------------------------------------ ------------------------------------
Date Date
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
<PAGE> 2
SCHEDULE A
DEFINITIONS
"ELECTRONIC DATA INTERCHANGE" or "EDI" is defined as the ANSI-ASCII
X.12 standard, adopted by Company, by which CUSTOMER shall order and report
to MS.
"QUALIFIED SELECT SALES" is defined as net Select sales excluding the
Select Maintenance revenue of all Enrollment Agreements signed prior to July 1,
1995, and all revenue from Enrollment Agreements signed prior to July 1, 1994,
made during the Rebate Period, to CUSTOMER's End User customers as reported to
MS in CUSTOMER's normal sales reporting.
"REBATE" is defined as the dollar amount paid to CUSTOMER by MS in the
form of a purchase credit for achieving specific rebate goals as set forth
herein.
"REBATE PERIOD" is defined as the six (6) calendar months, July 1,
1995 - December 31, 1995, during which CUSTOMER shall be eligible to earn
Rebates.
"STREET DATE" is defined as the date prior to which new Product or new
versions of existing Product shall not be available for End User purchase.
<PAGE> 3
SCHEDULE B
REBATE PROGRAM GUIDELINES
- -------------------------------------------------------------------------------
SELECT REBATE PROGRAM OVERVIEW
- -------------------------------------------------------------------------------
PROGRAMS: Microsoft offers four Select rebate programs for the July - December,
1995 Rebate period. Rebate percentages available are listed in the table below.
Details on each program are also included in this document.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
REBATE INCENTIVE MAXIMUM PERCENTAGE OUTLINED ON PAGE(S)
AVAILABLE
- -------------------------------------------------------------------------------
<S> <C> <C>
Compliance Program B1-B2
Business Systems Program B2-B4
Maintenance Program * B4-B5
Enterprise (MELP) Program B5-B6
Total
</TABLE>
REBATE CALCULATIONS AND PAYMENTS: Rebates will be paid in the form of a
Microsoft purchase credit forty-five (45) days after the end of each quarterly
rebate period (i.e. November 15th for the July - September, 1995 quarter).
Rebates are calculated by multiplying the achieved rebate percentage by the
total Qualified Select Sales for the rebate period. All Microsoft Select
revenue will be included in calculating CUSTOMER's performance against the
Select Rebate goals. Revenue generated from Microsoft Select Enrollment Forms
executed by MS prior to July 1, 1994, shall be included in calculating
CUSTOMER's achievement toward the Select Rebate goals, but shall not be
included in CUSTOMER's final total Qualified Select Sales for purposes of the
Rebate payment. Only revenue generated from Microsoft Select Enrollment Forms
executed by MS on or after July 1, 1994 (excluding any Microsoft Select
Maintenance) will be included in CUSTOMER's final total Qualified Select Sales
for purposes of the Rebate payment.
ANY ISSUES SURROUNDING REBATES SHOULD BE SENT IN WRITING TO KRISTIN WEEBER,
REBATE SPECIALIST, NO LATER THAN THIRTY (30) DAYS FOLLOWING RECEIPT OF REBATE
PAYMENT. If such written notice is not provided within thirty (30) days,
CUSTOMER shall have no further right to dispute rebate payment.
- -------------------------------------------------------------------------------
COMPLIANCE REBATE PROGRAM
- -------------------------------------------------------------------------------
PROGRAM OBJECTIVES: The objective of the Compliance Rebate Program is to
provide incentive for CUSTOMER to comply with Microsoft contractual
requirements for payments, Street Dates, and EDI ordering for Select 3.0.
NON-COMPLIANCE: During any given month, failure to comply with any or all of
the current compliance criteria will result in the forfeiture of the entire
compliance rebate for that month.
1. MICROSOFT PAYMENT REQUIREMENTS:
Microsoft requires it's customers to pay it's invoices within terms. In order
to maintain compliance, 85% of the gross invoice value for Select must be
current as of Microsoft's fiscal month-end. Unapplied credits will be excluded
from the calculation.
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
Microsoft 1995/1996 Channel Agreement
Large Account Reseller Rebate Addendum
July-December, 1995 Page A2
<PAGE> 4
2. MICROSOFT STREET DATE REQUIREMENTS:
From time to time, Microsoft may announce a new product or new versions of an
existing product for which Microsoft shall set a Street Date. In order to
comply with the Street Date requirements, CUSTOMER shall not:
o Ship or deliver the product to any end-user customer prior to
the Street Date.
o Accept any end user payment for the product prior to the
Street Date. Checks and/or credit card numbers may be accepted
by CUSTOMER, but can only be processed when product is
delivered to the end user on or after the Street Date.
o Advertise, merchandise, or promote the product to end user
customers until it is officially announced by Microsoft.
Usually, the product announcement is on the Street Date. If
the product announcement is earlier than the Street Date,
Microsoft will clearly communicate the announce date to the
channel. If product is announced by Microsoft before the
Street Date, the product can be advertised, merchandised
and/or promoted immediately after such announcement, provided
that all such promotions clearly state that the product is not
yet available for purchase.
o Allow it's distribution centers and/or warehouses to
distribute, for a period of up to twelve months, a Street Date
product to any individual sales office, retail store, or
outlet which Microsoft in its sole discretion has determined
to be in violation of the Street Date Requirements.
In the event CUSTOMER violates the Street Date for any special products
specified in a Microsoft Street Date letter (including, but not limited to
Microsoft(R) Windows(R) 95), CUSTOMER shall forfeit up to the entire Compliance
Rebate for the six month Rebate period in which the violation occurred.
Should CUSTOMER fail to comply with the Street Date Requirements, Microsoft may
also, for a period of up to twelve (12) months, withhold shipments to CUSTOMER
of future product until the Street Date of such product.
Should CUSTOMER wish to report a Street Date violation, CUSTOMER may fax a copy
of a dated sales receipt to STREET DATE VIOLATIONS AT MICROSOFT AT (206)
936-7329. Once a violation has been reported, Microsoft shall investigate the
violation, and take remedial action as appropriate. Please note, in order to
confirm a suspected violation, Microsoft must receive a dated sales receipt.
3. MICROSOFT REPORTING REQUIREMENTS
CUSTOMER must comply with the reporting requirements as outlined in the
1995/1996 Channel Agreement and/or the Senior Partner Marketing Fund and
Reporting Agreement, as applicable.
4. MICROSOFT TRANSACTION REQUIREMENTS
Electronic Data Interchange format ("EDI") transactions include, but are not
limited to 850/855 EDI transactions and all other EDI reporting requirements
which may be required by MS and in the EDI Implementation Guide attached hereto
as Schedule C. CUSTOMER must place EDI transaction orders at a minimum of once
per month per Enrollment Site if product is purchased during said month.
COMPLIANCE REBATE CALCULATION: The Microsoft Compliance Rebate will be
calculated on a monthly basis. If CUSTOMER has met all of the Compliance Rebate
criteria in a given month, CUSTOMER will be entitled to a Rebate payment equal
to (* ) of that month's total Qualified Select Sales. The rebate payment
will be made forty-five (45) days after the end of each quarterly rebate period.
- -------------------------------------------------------------------------------
BUSINESS SYSTEMS REBATE PROGRAM
- -------------------------------------------------------------------------------
PROGRAM OBJECTIVE: The objective of the Microsoft Business Systems Rebate
Program is to increase the Microsoft Business Systems revenue as well as to
increase the ratio of Microsoft Windows NT Client licenses to Server license
sales. The Microsoft Business Systems products consist of any license type of
the following products: MICROSOFT(R) BACKOFFICE, MICROSOFT(R) MAIL,
MICROSOFT(R) EXCHANGE, MICROSOFT(R) SNA SERVER, MICROSOFT(R) SQL SERVER(TM),
MICROSOFT(R) SYSTEMS MANAGEMENT SERVER, MICROSOFT(R) WINDOWS NT(TM) SERVER, and
MICROSOFT(R) WINDOWS NT(TM) WORKSTATION.
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
Microsoft 1995/1996 Channel Agreement
Large Account Reseller Rebate Addendum
July-December, 1996 Page A3
<PAGE> 5
REBATE PERCENTAGES: The total possible rebate percentage achievable for the
Business Systems Rebate Program is * of Qualified Select Sales for the
July - December, 1995 semester.
GOAL DEFINITIONS: The program goals are based upon the following:
o Existing Microsoft Business Systems revenue.
o Microsoft's Business Systems revenue goals.
o Microsoft's Windows NT Client to Server Ratio goals.
REBATE GOALS: CUSTOMER must meet a minimum Windows NT Client to Server Ratio of
* in order to receive any portion of the Business Systems rebate. Performance
against the Client to Server goal will be measured against all license types of
Microsoft Windows NT including full packaged product, MLPs, MOLP, and Select
license types. Provided that CUSTOMER meets the * Client to Server Ratio,
CUSTOMER's achievement against the Business Systems goal will be based on
CUSTOMER's performance against the Business Systems revenue goal. CUSTOMER's
performance against the revenue goal will also be based on all license types.
CUSTOMER has a first quarter rebate goal and a total semester rebate goal.
CUSTOMER's performance for the first three months of the July - December, 1995
semester will be measured against the first quarter rebate goal. At the end of
the first quarter, CUSTOMER will receive the percentage of the eligible rebate
earned based on performance against the first quarter goal. At the end of the
semester, CUSTOMER will be measured on their six-month performance against the
total semester goal. Even if CUSTOMER does not meet * of the first quarter
goal, CUSTOMER can still achieve * of the semester goal provided that the
semester goal is met at the end of the six-month period.
CUSTOMER's Business Systems Rebate Program goals are as follows:
o Minimum Windows NT Client to Server Ratio of *
o Quarter 1 Goal (July - September, 1995): *
o Semester Goal (July - December, 1995): *
PAYMENT: As stated earlier, CUSTOMER must attain a * Client to Server ratio of
Microsoft Windows NT in order to receive any portion of the Business Systems
Rebate. Provided CUSTOMER meets the Client to Server Ratio requirement,
CUSTOMER will be paid a Business Systems rebate based on performance against
the semester goal at the end of the semester. If CUSTOMER achieves greater than
* ) of the semester Business Systems revenue goal, and attains a minimum of *
Windows NT Client to Server ratio CUSTOMER will receive the exact achieved
percentage of the eligible Business Systems rebate up to * . If CUSTOMER
achieves less * ) of the Business Systems revenue goal, CUSTOMER will not
receive any portion of the Business Systems rebate. The purpose of this scale
is to offer an incentive for accounts to meet a portion of their goal in the
event they cannot achieve the full Microsoft Business Systems goal.
Although Microsoft pays the rebate ultimately based on performance against the
semester goal, Microsoft also pays a rebate at the end of the first quarter
based on performance against the first quarter goal. Microsoft pays a portion
of the rebate after the first quarter as an incentive for CUSTOMER to focus on
the Business Systems rebate program throughout the entire semester. The scale
for the first quarter payment is the same as the scale for the semester
payment. The first quarter payment amount will be subtracted from the final
semester payment for the rebate. Should CUSTOMER fail to meet the minimum
attainment for the final semester goal, MS will not seek reimbursement for
Rebate paid. Please note: Although performance against the Business Systems
Rebate is based on all Select, and non-Select Business Systems revenue, payment
will be based on Select revenue only.
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
<PAGE> 6
Example:
Goals:
o Quarterly Business Systems revenue goal of *
o Semester Business Systems revenue goal of *
o Minimum Windows NT Client to Server Ratio of *
Performance:
o Windows NT Client to Server Ratio of *
o Actual Quarter Business Systems revenue is *
o Actual Semester Business Systems revenue is *
Because CUSTOMER attained the minimum Windows Mr Client to Server Ratio of *
CUSTOMER's Business Systems Rebate payment would be as follow:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
PERIOD GOAL SELL THROUGH PAYMENT
ACHIEVED
=======================================================================================================
<S> <C> <C> <C>
First Quarter * * * eligible rebate = * July - September
Select Sales.
- -------------------------------------------------------------------------------------------------------
Semester * * * eligible rebate = * of July - December
Select Sales less first quarter payment. The maximum
allowable Business Systems rebate is *
</TABLE>
MAINTENANCE REBATE PROGRAM
PROGRAM OBJECTIVE: The objective of the Microsoft Maintenance Rebate Program is
to increase the Microsoft Maintenance revenue percentage of total Select
revenue.
REBATE PERCENTAGES: The total possible rebate percentage achievable for the
Maintenance Rebate Program is * of Qualified Select Sales for the July -
December, 1995 semester.
GOAL DEFINITIONS: The program goals are based upon the following:
o Existing Maintenance revenue percentage of total Select revenue.
o Microsoft's Maintenance revenue goals.
REBATE GOALS: CUSTOMER's achievement against the Maintenance goal will be based
on CUSTOMER's Select Maintenance revenue percentage of CUSTOMER's total Select
revenue.
CUSTOMER has a first quarter rebate goal and a total semester rebate goal.
CUSTOMER's performance for the first three months of the July - December, 1995
semester will be measured against the first quarter rebate goal. At the end of
the first quarter, CUSTOMER will receive the percentage of the eligible rebate
earned based on performance against the first quarter goal. At the end of the
semester, CUSTOMER will be measured on their six-month performance against the
total semester goal. Even if CUSTOMER does not meet * of the first quarter
goal, CUSTOMER can still achieve * of the semester goal provided that the
semester goal is met at the end of the six-month period.
CUSTOMER's Maintenance Rebate Program goals are as follows:
o Quarter 1 Goal (July - September, 1995): *
o Semester Goal (July - December, 1995): *
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
<PAGE> 7
PAYMENT: CUSTOMER will be paid a Maintenance rebate based on performance
against the semester goal at the end of the semester. If CUSTOMER achieves
greater than * of the semester Maintenance rebate goal, CUSTOMER will receive
the exact achieved percentage of the eligible Maintenance rebate up to *
If CUSTOMER achieves less than * of the Maintenance rebate goal, CUSTOMER will
not receive any portion of the Maintenance rebate. The purpose of this scale is
to offer an incentive for accounts to meet a portion of their goal in the event
they cannot achieve the full Microsoft Maintenance goal.
Although Microsoft pays the rebate ultimately based on performance against the
semester goal, Microsoft also pays a rebate at the end of the first quarter
based on performance against the first quarter goal. Microsoft pays a portion
of the rebate after the first quarter as an incentive for CUSTOMER to focus on
the Maintenance rebate program throughout the entire semester. The scale for
the first quarter payment is the same as the scale for the semester payment.
The first quarter payment amount will be subtracted from the final semester
rebate payment. However, if CUSTOMER does not meet the minimum attainment for
the semester goal, Microsoft will not seek reimbursement of the first quarter
rebate payment.
Example:
Goals:
o Quarterly Maintenance goal of * total Select revenue
o Semester Maintenance goal of * total Select revenue
Performance:
o Actual Maintenance revenue is * of total Select
revenue at the end of the quarter
o Actual Maintenance revenue is * of Select revenue
at the end of the semester
CUSTOMER's Maintenance Rebate payment would be as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
PERIOD GOAL PERCENTAGE PAYMENT
ACHIEVED
=========================================================================================================================
<S> <C> <C> <C> <C>
First Quarter * * * eligible rebate = * of July - September Select
Sales.
- -------------------------------------------------------------------------------------------------------------------------
Semester * * * Eligible rebate = * of July - December Select
Sales less first quarter payment. The maximum allowable
Maintenance rebate is *
</TABLE>
ENTERPRISE REBATE PROGRAM
PROGRAM OBJECTIVE: The objective of the Microsoft Enterprise Rebate Program is
to increase the Microsoft Enterprise revenue percentage of total Select
revenue.
REBATE PERCENTAGES: The total possible rebate percentage achievable for the
Enterprise Rebate Program is of Qualified Select Sales for the July - December,
1995 semester.
GOAL DEFINITIONS: The program goals are based upon the following:
o Existing Enterprise revenue percentage of total Select
revenue.
o Microsoft's Enterprise revenue goals.
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
<PAGE> 8
REBATE GOALS: CUSTOMER's achievement against the Enterprise goal will be based
on CUSTOMER's Enterprise revenue percentage of CUSTOMER's total Select revenue.
CUSTOMER has a first quarter rebate goal and a total semester rebate goal.
CUSTOMER's performance for the first three months of the July - December, 1995
semester will be measured against the first quarter rebate goal. At the end of
the first quarter, CUSTOMER will receive the percentage of the eligible rebate
earned based on performance against the first quarter goal. At the end of the
semester, CUSTOMER will be measured on their six-month performance against the
total semester goal. Even if CUSTOMER does not meet * of the first quarter
goal, CUSTOMER can still achieve * of the semester goal provided that the
semester goal is met at the end of the six-month period.
CUSTOMER's Enterprise Rebate Program goals are as follows:
o Quarter 1 Goal (July - September, 1995): *
o Semester Goal (July - December, 1995): *
PAYMENT: CUSTOMER will be paid a Enterprise rebate based on performance against
the semester goal at the end of the semester. If CUSTOMER achieves greater than
* ) of the semester Enterprise rebate goal, CUSTOMER will receive the
exact achieved percentage of the eligible Enterprise rebate up to * if
CUSTOMER achieves less than * ) of the Enterprise rebate goal,
CUSTOMER will not receive any portion of the Enterprise rebate. The purpose of
this scale is to offer an incentive for accounts to meet a portion of their
goal in the event they cannot achieve the full Microsoft Enterprise goal.
Although Microsoft pays the rebate ultimately based on performance against the
semester goal, Microsoft also pays a rebate at the end of the first quarter
based on performance against the first quarter goal. Microsoft pays a portion
of the rebate after the first quarter as an incentive for CUSTOMER to focus on
the Enterprise rebate program throughout the entire semester. The scale for the
first quarter payment is the same as the scale for the semester payment. The
first quarter payment amount will be subtracted from the final semester rebate
payment. However, if CUSTOMER does not meet the minimum attainment for the
semester goal, Microsoft will not seek reimbursement of the first quarter
rebate payment.
Example:
Goals:
o Quarterly Enterprise goal of * of total Select revenue
o Semester Enterprise goal of * of total Select revenue Performance:
o Actual Enterprise revenue is * of total Select revenue at the end of
the quarter
o Actual Enterprise revenue is * of Select revenue at the end of the
semester
CUSTOMER's Enterprise Rebate payment would be as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
PERIOD GOAL PERCENTAGE PAYMENT
ACHIEVED
=======================================================================================================================
<S> <C> <C> <C>
First Quarter * * * eligible rebate = * of July -
September Select Sales.
- -----------------------------------------------------------------------------------------------------------------------
Semester * * * of * eligible rebate does not qualify
for any portion of the Business Systems rebate.
However the first quarter payment will not be
affected and Microsoft will not ask for
reimbursement.
</TABLE>
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
<PAGE> 9
AMENDMENT NO. 1 TO THE
LARGE ACCOUNT RESELLER ADDENDUM TO THE
MICROSOFT 1995/1996 CHANNEL AGREEMENT
This Amendment No. 1 ("Amendment"), dated this first day of January, 1996,
amends that certain Large Account Reseller Addendum to The Microsoft 1995/1996
Channel Agreement ("Addendum") dated July 1, 1995, between MICROSOFT
CORPORATION ("MS") having its principal place of business at One Microsoft Way,
Redmond, WA 98052 and SOFTWARE SPECTRUM, INC. ("CUSTOMER") having its
principal place of business at 2140 Merritt Drive, Garland, TX 75041. The
Addendum is hereby amended as follows:
2. TERM AND TERMINATION
The first sentence of the section is replaced with the following:
"This Addendum shall be effective as of the date indicated above, and shall
expire June 30, 1996."
SCHEDULE B
Schedule B is replaced in its entirety with the attached Schedule C.
IN WITNESS WHEREOF, the parties have signed this Amendment on the date
indicated below. This Amendment is hereby made part of the Addendum. All terms
and conditions of the Addendum not amended herein shall remain in full force
and effect. This Amendment is not binding until executed by MS.
AGREED AND ACCEPTED TO BY AGREED AND ACCEPTED TO BY
MICROSOFT CORPORATION ("MS") SOFTWARE SPECTRUM, INC.
("CUSTOMER")
By: /s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
--------------------------- ---------------------------------
/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
- ------------------------------ ------------------------------------
Name (please print) Name (please print)
/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
- ------------------------------ ------------------------------------
Title Title
1/3/96 December 20, 1995
- ------------------------------ ------------------------------------
Date Date
<PAGE> 10
SCHEDULE C
JANUARY-JUNE, 1996
REBATE GUIDELINES
- -------------------------------------------------------------------------------
SELECT REBATE PROGRAM OVERVIEW
- -------------------------------------------------------------------------------
PROGRAMS: Microsoft offers four Select rebate programs for
the January - June, 1996 Rebate period:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
REBATE INCENTIVE MAXIMUM PERCENTAGE AVAILABLE
==============================================================================
<S> <C>
Compliance Program
Maintenance Sales-out Program *
Enterprise Sales-out Program
Business Systems Sales-out Program
Total
</TABLE>
REBATE CALCULATIONS AND PAYMENTS: Rebates will be paid in the form of a
Microsoft purchase credit forty-five (45) days after the end of each quarterly
rebate period (i.e. May 15th for the January - March, 1996 quarter). Rebates
are calculated by multiplying the achieved rebate percentage by the total
Qualified Select Sales for the rebate period. All Microsoft Select revenue will
be included in calculating CUSTOMER's performance against the Select Rebate
goals. Revenue generated from Microsoft Select Enrollment Forms executed by MS
prior to July 1, 1994, shall be included in calculating CUSTOMER's achievement
toward the Select Rebate goals, but shall not be included in CUSTOMER's final
total Qualified Select Sales for purposes of the Rebate payment. Only revenue
generated from Microsoft Select Enrollment Forms executed by MS on or after
July 1, 1994 (excluding any Microsoft Select Maintenance) will be included in
CUSTOMER's final total Qualified Select Sales for purposes of the Rebate
payment.
ANY ISSUES SURROUNDING REBATES SHOULD BE SENT IN WRITING TO KRISTIN WEEBER,
MARKETING MANAGER, NO LATER THAN THIRTY (30) DAYS FOLLOWING RECEIPT OF REBATE
PAYMENT. If such written notice is not provided within thirty (30) days,
CUSTOMER shall have no further right to dispute rebate payment
COMPLIANCE REBATE PROGRAM
PROGRAM OBJECTIVES: The objective of the Compliance Rebate Program is to
provide incentive for CUSTOMER to comply with Microsoft contractual
requirements for payments, Street Dates, and EDI ordering for Select 3.0.
NON-COMPLIANCE: During any given month, failure to comply with any or all of
the current compliance criteria will result in the forfeiture of the entire
compliance rebate for that month.
1. MICROSOFT PAYMENT REQUIREMENTS
Microsoft requires its customers to pay its invoices within terms. In order to
maintain compliance, 85% of the gross invoice value for Select must be current
as of Microsoft's fiscal month-end. Unapplied credits will be excluded from the
calculation.
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
Amendment No. 1 to The Large Account Page C2
Reseller Rebate Addendum to The Microsoft
1995/1996 Channel Agreement
<PAGE> 11
2. Microsoft Street Date Requirements
From time to time, Microsoft may announce a new product or new versions of an
existing product for which Microsoft shall set a Street Date. In order to
comply with the Street Date requirements, CUSTOMER shall not:
o Ship or deliver the product to any end-user customer prior to the
Street Date.
o Accept any end user payment for the product prior to the Street
Date. Checks and/or credit card numbers may be accepted by
CUSTOMER, but can only be processed when product is delivered to
the end user on or after the Street Date.
o Advertise, merchandise, or promote the product to end user
customers until it is officially announced by Microsoft. Usually,
the product announcement is on the Street Date. If the product
announcement is earlier than the Street Date, Microsoft will
clearly communicate the announce date to the channel. If product is
announced by Microsoft before the Street Date, the product can be
advertised, merchandised and/or promoted immediately after such
announcement, provided that all such promotions clearly state that
the product is not yet available for purchase.
o Allow it's distribution centers and/or warehouses to distribute,
for a period of up to twelve months, a Street Date product to any
individual sales office, retail store, or outlet which Microsoft in
its sole discretion has determined to be in violation of
the Street Date Requirements.
In the event CUSTOMER violates the Street Date for any special products
specified in a Microsoft Street Date letter, CUSTOMER shall forfeit up to the
entire Compliance Rebate for the six month Rebate period in which the violation
occurred.
Should CUSTOMER fail to comply with the Street Date Requirements, Microsoft may
also, for a period of up to twelve (12) months, withhold shipments to CUSTOMER
of future product until the Street Date of such product.
Should CUSTOMER wish to report a Street Date violation, CUSTOMER may fax a copy
of a dated sales receipt to Street Date Violations at Microsoft at (206)
936-7329. Once a violation has been reported, Microsoft shall investigate the
violation, and take remedial action as appropriate. Please note, in order to
confirm a suspected violation, Microsoft must receive a dated sales receipt.
3. Microsoft Reporting Requirements
CUSTOMER must comply with the reporting requirements as outlined in CUSTOMER's
then current 1995/1996 Channel Agreement and/or Senior Partner Marketing Fund
and Reporting Agreement, as applicable.
4. Microsoft Transaction Requirements
Electronic Data Interchange format ("EDI") transactions include, but are not
limited to 850/855 EDI transactions and all other EDI reporting requirements
which may be required by MS and in the EDI Implementation Guide provided by MS
from time to time. CUSTOMER must place EDI transaction orders at a minimum of
once per month per Enrollment Site if product is purchased during said month.
5. Select Certification Program
CUSTOMER shall participate in and obtain certification in the Microsoft Select
Certification Program for no less than two (2) CUSTOMER Select administration
contacts by June 30, 1996.
Compliance Rebate Calculation: The Microsoft Compliance Rebate will be
calculated on a monthly basis. If CUSTOMER has met all of the Compliance Rebate
criteria in a given month, CUSTOMER will be entitled to a Rebate payment equal
to * of that month's total Qualified Select Sales. The
rebate payment will be made forty-five (45) days after the end of each
quarterly rebate period.
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
Amendment No. 1 to The Large Account Page C3
Reseller Rebate Addendum to The Microsoft
1995/1996 Channel Agreement
<PAGE> 12
- -------------------------------------------------------------------------------
SALES-OUT REBATE PROGRAMS
- -------------------------------------------------------------------------------
REBATE GOALS: CUSTOMER has first quarter sales-out goals and total semester
sales-out goals. CUSTOMER's performance for the first three months of the
January - June, 1996, semester will be measured against the first quarter
sales-out goals. At the end of the first quarter, CUSTOMER will receive the
percentage of the eligible rebates earned based on performance against the first
quarter goals. At the end of the semester, CUSTOMER will be measured on their
six-month performance against the total semester goals. Even if CUSTOMER does
not meet * of the first quarter goals, CUSTOMER can still achieve * of the
semester goals provided that the semester goals are met at the end of the
six-month period.
SALES-OUT DEFINITIONS/MEASUREMENT: MS Product Sales-out is defined as those MS
net product units sold through CUSTOMER's outlet locations. For the Business
Systems sales-out goal, CUSTOMER's full packaged product, Microsoft Open
License, and upgrade sales-out units will be measured from the sales-out
reported by CUSTOMER to MS. For the Maintenance and Enterprises sales-out goals,
only the appropriate Select license will be measured. Licensing sales (Select,
Microsoft Maintenance) are captured and generated by MS' financial systems and
included in total sales-out used to measure product sales-out rebate
performance.
Any Microsoft Select 2.x and 1.x and Microsoft Maintenance revenue credit is
granted as MS recognizes the revenue. This occurs when MS has received the
customer's license reporting. Following receipt of reporting, MS bills the
customer/reseller and simultaneously recognizes the revenue.
PAYMENT: At the end of the semester, CUSTOMER will be paid sales-out rebates
based on performance against the semester goals. If CUSTOMER achieves greater
than sixty percent (60%) of each semester sales-out goal, CUSTOMER will receive
the exact achieved percentage of the eligible sales-out rebate up to one
hundred percent (100%) CUSTOMER achieves less than sixty percent (60%) of any
sales-out rebate goal, CUSTOMER will not receive any portion of that sales-out
rebate.
Although MS pays the sales-out rebate ultimately based on performance against
the semester sales-out goal, MS also pays a sales-out rebate at the end of the
first quarter based on performance against the first quarter goal. MS pays a
portion of the rebate after the first quarter to provide incentive for CUSTOMER
to focus on sales-out throughout the entire semester. The scale for the first
quarter payment is the same as the scale for the semester payment. The first
quarter payment amount will be subtracted from the final semester payment for
the sales-out rebate.
Example: If CUSTOMER has a quarterly Business Systems sales out goal of
$1,000,000 and a total semester Business Systems goal $2,500,000 and
CUSTOMER sells $800,000 over the first quarter period and $2,600,000 over the
entire semester period, CUSTOMER will receive the following rebate payments:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
PERIOD GOAL SELL-THROUGH PAYMENT
ACHIEVED
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
First Quarter * eligible rebate = * of January -
* * June sales.
- ----------------------------------------------------------------------------------------------------------------------------------
Semester * eligible rebate = * of January -
* * June sales less first quarter payment. The
maximum allowable rebate is *
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
Amendment No. 1 to The Large Account Page C4
Reseller Rebate Addendum to The Microsoft
1995/1996 Channel Agreement
<PAGE> 13
- -------------------------------------------------------------------------------
SELECT MAINTENANCE SALES-OUT REBATE PROGRAM
- -------------------------------------------------------------------------------
REBATE PERCENTAGES: The total possible rebate percentage achievable for the
Maintenance Sales-out Rebate Program is * of Qualified Sales for the
January - June, 1996 semester.
CUSTOMER's Total Sales-out Rebate Program goals are as follows:
o Quarter 1 Goal (January - March, 1996): *
o Semester Goal (January - June, 1996): *
- -------------------------------------------------------------------------------
ENTERPRISE SALES-OUT REBATE PROGRAM
- -------------------------------------------------------------------------------
REBATE PERCENTAGES: The total possible rebate percentage achievable for the
Enterprise Sales-out Rebate Program is * of Qualified Sales for the
January - June, 1996 semester.
CUSTOMER's Total Sales-out Rebate Program goals are as follows:
o Quarter 1 Goal (January - March, 1996): *
o Semester Goal (January - June, 1996): *
- -------------------------------------------------------------------------------
BUSINESS SYSTEMS SALES-OUT REBATE PROGRAM
- -------------------------------------------------------------------------------
REBATE PERCENTAGES: The total possible rebate percentage achievable for the
Business Systems Sales-out Rebate Program is * of Qualified Sales for the
January - June, 1996 semester.
REBATE GOALS: CUSTOMER must meet a minimum Microsoft(R) BackOffice client
license unit sales goal in order to receive any portion of the Business Systems
rebate. Provided that CUSTOMER meets the client license unit sales goal,
CUSTOMER's achievement against the Business Systems goal will be based on
CUSTOMER's performance against the Business Systems revenue goal.
CUSTOMER's Microsoft(R) BackOffice unit sales goals are as follows:
o Quarter 1 Goal (January - March, 1996): *
o Semester Goal (January - June, 1996): *
CUSTOMER's Business Systems Sales-out Rebate Program goals are as follows:
o Quarter 1 Goal (January - March, 1996): *
o Semester Goal (January - June, 1996): *
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
Amendment No. 1 to The Large Account Page C5
Reseller Rebate Addendum to The Microsoft
1995/1996 Channel Agreement
<PAGE> 1
EXHIBIT 10.3(d)
REBATE AND MARKETING FUND
ADDENDUM TO THE 1995/1996 MICROSOFT
CHANNEL AGREEMENT
(JULY-DECEMBER, 1995)
This Addendum ("Addendum") entered into as of the 1st day of July, 1995,
supplements that certain Microsoft 1995/1996 Channel Agreement ("Agreement")
between MICROSOFT CORPORATION ("MS") having its principal place of business at
One Microsoft Way Redmond, WA 98052 and SOFTWARE SPECTRUM, INC. ("CUSTOMER")
having its principal place of business at 2140 Merritt Drive, Garland, TX
75041. The Agreement is hereby supplemented as follows:
1. PURPOSE
The purpose of this Addendum is to set forth the framework by which CUSTOMER
may earn Rebates and Marketing Funds.
2. TERM AND TERMINATION
This Addendum shall be effective as of the date indicated above, and shall
expire on December 31, 1995. Either party may terminate this Addendum, with or
without cause, upon thirty (30) days prior written notice. This Addendum is not
valid unless both MS and CUSTOMER have executed a Microsoft 1995/1996 Channel
Agreement, and the Addendum to The Microsoft 1995/1996 Channel Agreement
(Appointment As a Direct Reseller).
3. DEFINITIONS
For purposes of this Addendum, capitalized terms not otherwise defined herein,
shall have the same definitions as set forth in the Agreement. Additional
capitalized terms included in this Addendum are as defined in Schedule A
attached hereto.
4. REBATES
CUSTOMER is eligible to receive up to a * Rebate on its Qualified
Sales made during the Rebate and Marketing Fund Period. The Rebate shall be
paid provided CUSTOMER complies with the Rebate Program Guidelines outlined in
Schedule B. Notwithstanding such Rebate Program Guidelines, MS may, at its sole
discretion, pay all or any portion of the Rebate prior to the end of the Rebate
and Marketing Fund Period. The Rebate so paid may be adjusted subsequently
based upon compliance with the Rebate Program Guidelines.
5. MARKETING FUNDS
5.1 BASE LEVEL FUNDS
MS hereby grants to CUSTOMER the use of Marketing Funds calculated monthly by
the total number of each Product CUSTOMER purchased from MS multiplied by each
Product's respective Marketing Fund Accrual rate as outlined in Schedule C
attached hereto. MS reserves the right to modify Schedule C at anytime without
notice. Marketing Funds accrue monthly and shall expire on February 29, 1996.
Marketing Funds shall not begin accruing until both CUSTOMER and MS have
executed this Addendum. Should CUSTOMER fail to execute, or should MS be unable
to execute this Addendum by July l, 1995, for each full month after July 1,
1995, in which this Addendum is not executed, CUSTOMER shall not receive such
month's Marketing Fund accrual.
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
Microsoft Confidential - Disclosure Prohibited
<PAGE> 2
5.2 OPPORTUNITY FUNDS
Periodically, MS may allow CUSTOMER to participate in other MS programs in
which CUSTOMER shall receive additional Marketing Funds.
5.3 GUIDELINES FOR MARKETING FUND USE
MS shall provide CUSTOMER with a guideline of activities which MS sees as a
priority for spending the funds. The Microsoft Reseller Marketing Fund
Guidelines is attached hereto as Schedule D.
5.4 MARKETING FUND AUDIT
During the term of this Agreement and for a period of two (2) years following
its termination, MS may audit the applicable records and operations of CUSTOMER
as is reasonable to verity CUSTOMER'S use of Base Level Marketing Funds and
Opportunity Funds. Any audit will be conducted during CUSTOMER's normal
business hours in such a manner as not to unreasonably interfere with
CUSTOMER'S normal business activities. Should such audit disclose material
discrepancies, audit expenses shall be paid by CUSTOMER. For purposes of this
Addendum, "material discrepancies" shall mean ten thousand U.S. dollars (US
$10,000) or more.
If the results of such audit show that CUSTOMER used Marketing Funds in any
manner other than is authorized under this Addendum, MS shall be entitled to
recover from CUSTOMER any and all Marketing Funds so used, in additional to any
other remedies available to MS under law or equity plus injunctive relief
and/or any other damages as may be permitted by law.
5.5 MARKETING FUND REIMBURSEMENT POLICY FOR MICROSOFT(R) WINDOWS(R) 95
CUSTOMER agrees to abide by the Marketing Fund Reimbursement Guidelines,
attached hereto as Schedule G, and as revised from time to time by MS.
6. REPORTING REQUIREMENTS
CUSTOMER shall submit reports to MS as outlined in CUSTOMER'S Rebate Program
Guidelines, and in Schedule F attached hereto in accordance with the EDI
Implementation Guide attached hereto as Schedule E. Failure by CUSTOMER to
comply with the terms of the Guidelines shall result in CUSTOMER's loss of its
monthly Compliance Rebate total for each month reporting is non-compliant.
IN WITNESS WHEREOF, the parties have signed this Addendum on the date indicated
below. This Addendum is hereby made part of the Agreement. All terms and
conditions of the Agreement not supplemented herein shall remain in full force
and effect. This Addendum is not binding until executed by MS.
AGREED AND ACCEPTED TO BY AGREED AND ACCEPTED TO BY
MICROSOFT CORPORATION ("MS"): SOFTWARE SPECTRUM, INC.
("CUSTOMER"):
By /s/ JOHAN LIEDGREN By /s/ KEITH R. COOGAN
--------------------------- ------------------------------
Johan Liedgren Keith R. Coogan
- ------------------------------ --------------------------------
Name (please print) Name (please print)
Director, Channel Policies Vice President of Operations
- ------------------------------ --------------------------------
Title Title
6/27/95 June 19, 1995
- ------------------------------ --------------------------------
Date Date
Microsoft 1995/1996 Channel Agreement Software Spectrum, Inc. Page 2
July - December, 1995, Rebate and
Marketing Fund Addendum
<PAGE> 3
SCHEDULE A
DEFINITIONS
"AMS REPORTING" (ACCOUNT MANAGEMENT SYSTEMS REPORTING) is defined as a
monthly report of CUSTOMER's monthly Sell To sales of all MS Product, reported
in the format Attached hereto as Schedule F.
"ELECTRONIC DATA INTERCHANGE" OR "EDI" is defined as the ANSI-ASCII
X.12 standard, adopted by CompTIA, by which CUSTOMER shall submit sales
reporting to MS.
"INVENTORY REPORTING" is defined as the reporting of Product specific
month end inventory. If CUSTOMER has multiple locations, inventory reporting
shall be by location, and shall include the name, street address, city, state
and zip code for each location.
"MARKETING FUNDS" is defined as the purchase credit amount accrued by
CUSTOMER as a percentage of Qualified Purchases, and used to find CUSTOMER's
pre-approved MS marketing activities.
"MARKETING FUND ACCRUAL" is defined as the dollar amount MS grants
CUSTOMER for each Product purchased from MS.
"MICROSOFT MARKETING FUNDS GUIDELINES" is defined as MS' then current
terms and conditions attached hereto as Attachment D, available from the
Microsoft Reseller Account Representative, for the use of Marketing Funds.
"QUALIFIED SALES" is defined as net sales, made during the Rebate and
Marketing Fund Period, to CUSTOMER's End User customers as reported to MS in
CUSTOMER's normal sales reporting.
"QUALIFIED PURCHASES" is defined as net purchases made during the
Rebate and Marketing Fund Period; provided, however, that Qualified Purchases
shall include only those purchases which are shipped to CUSTOMER during the
Rebate and Marketing Fund Period, less returns, and credits for which payment
in full has been received by MS from CUSTOMER within thirty (30) days after the
end of the Rebate and Marketing Fund Period, and shall not include Microsoft
Select.
"REBATE" is defined as the dollar amount paid to CUSTOMER by MS in the
form of a purchase credit for achieving of specific rebate program goals and
reporting requirements as set forth herein.
"REBATE AND MARKETING FUND PERIOD" is defined as the six (6) calendar
months, from July 1, 1995 through December 31, 1995, during which CUSTOMER
shall earn Rebates and Marketing Funds.
"SALESOUT" OR "SELL THROUGH REPORTING" is defined as the reporting of
the number of Product units that CUSTOMER location distributes to its
customers.
"SELL TO" is defined as Product specific (per MS SKU) sales to all End
Users.
Microsoft 1995/1996 Channel Agreement Software Spectrum, Inc. Page A1
July - December, 1955, Rebate and
Marketing Fund Addendum
<PAGE> 4
SCHEDULE B
REBATE PROGRAM GUIDELINES
- --------------------------------------------------------------------------------
REBATE PROGRAM OVERVIEW
- --------------------------------------------------------------------------------
PROGRAMS: Microsoft offers four rebate programs for the July - December,
1995 Rebate period. Rebate percentages available are listed in the table below.
Details on each program are also included in this document.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
MAXIMUM PERCENTAGE OUTLINED ON
REBATE INCENTIVE AVAILABLE PAGE(S)
===============================================================================================
<S> <C> <C>
Compliance Program B2-B4
- -----------------------------------------------------------------------------------------------
Total Sales-out Program B4-B5
- -----------------------------------------------------------------------------------------------
Business Systems Program * B5-B6
- -----------------------------------------------------------------------------------------------
Win Office and Mac Office Sales-out Program B7-B8
- -----------------------------------------------------------------------------------------------
TOTAL
- -----------------------------------------------------------------------------------------------
</TABLE>
REBATE CALCULATIONS AND PAYMENTS: Rebates will be paid in the form of a
Microsoft purchase credit forty-five (45) days after the end of each quarterly
rebate period (i.e. November 15th for July - September, 1995 quarter). Rebates
are calculated by multiplying the achieved rebate percentage by the total
Qualified Sales for the rebate period. Revenue generated from Microsoft Select
Enrollment Forms executed by MS on or after July 1, 1994, shall be included in
calculating CUSTOMER's achievement toward the Sales-out goal, but shall not be
included in CUSTOMER's final total Qualified Sales for purposes of Rebate
payment. Revenue generated from Microsoft Select Enrollment Forms executed by
MS prior to July 1, 1994 will be included in calculating CUSTOMER's achievement
towards the sales-out goal and will also be eligible for a Grandfathered rebate.
Rebate payment for such Select Enrollment Forms shall be in the form of a
purchase credit forty-five (45) days after the end of each quarterly rebate
period.
PURCHASES THROUGH DISTRIBUTION: CUSTOMER's purchases through distribution will
be subtracted from CUSTOMER's Qualified Sales for purposes of Rebate payment.
PRODUCT AVAILABILITY: If Microsoft is unable to ship a CURRENT VERSION of a
product for any ten (10) consecutive business days, CUSTOMER's purchases
through distribution of those SKUs will count toward CUSTOMER's Qualified Sales
for purchases of Rebate payment.
All copies of eligible purchase orders placed through distribution along with a
copy of the Microsoft Stock Out Report must be sent to Microsoft no later than
fifteen (15) days following the semester end. Please send purchase order copies
and the Microsoft Stock Out Report to the following address:
MICROSOFT CORPORATION
ONE MICROSOFT WAY
BLDG. 22/4051
REDMOND, WA 98052
ATTN: KRISTIN WEEBER, REBATE SPECIALIST
COMPLIANCE REBATE PAYMENT: The Microsoft Compliance Rebate will be calculated
on a monthly basis. If CUSTOMER has met all of the Compliance Rebate criteria
in a given month, CUSTOMER will be entitled to * of that month's
total Qualified Sales. The rebate payment will be made forty-five (45) days
after the end of each quarterly rebate period.
ANY ISSUES REGARDING REBATES SHOULD BE SENT IN WRITING TO KRISTIN WEEBER,
REBATE SPECIALIST, NO LATER THAN THIRTY (30) DAYS FOLLOWING RECEIPT OF REBATE
PAYMENT. If such written notice is not provided within thirty (30) days,
CUSTOMER shall have no further right to dispute rebate payment.
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
Microsoft 1995/1996 Channel Agreement Software Spectrum, Inc. Page B1
July - December, 1955, Rebate and
Marketing Fund Addendum
<PAGE> 5
- --------------------------------------------------------------------------------
COMPLIANCE REBATE PROGRAM
- --------------------------------------------------------------------------------
PROGRAM OBJECTIVES: The objective of the Compliance Rebate Program is to
provide incentive for CUSTOMER to comply with Microsoft contractual
requirements for payments, Street Dates, reporting, and EDI ordering for Select
3.0.
NON-COMPLIANCE: During any given month, failure to comply with any or all of
the current compliance criteria will result in the forfeiture of the entire
compliance rebate for that month.
1. MICROSOFT PAYMENT REQUIREMENTS:
Microsoft requires its customers to pay its invoices within terms. In order
to maintain compliance, 100% of the gross invoice value for non-Select and
85% of the gross invoice value for Select must be current as of Microsoft's
fiscal month-end. Unapplied credits will be excluded from the calculation.
Failure to comply with this section will result in the loss of CUSTOMER's
Select Compliance Rebate.
2. MICROSOFT STREET DATE REQUIREMENTS:
From time to time, Microsoft may announce a new product or new versions of an
existing product for which Microsoft shall set a Street Date. In order to
comply with the Street Date requirements, CUSTOMER shall not:
o Ship or deliver the product to any end-user customer
prior to the Street Date.
o Accept any end user payment for the product prior to
the Street Date. Checks and/or credit card numbers
may be accepted by CUSTOMER, but can only be
processed when product is delivered to the end user
on or after the Street Date.
o Advertise, merchandise, or promote the product to end
user customers until it is officially announced by
Microsoft. Usually, the product announcement is on
the Street Date. If the product announcement is
earlier than the Street Date, Microsoft will clearly
communicate the announce date to the channel. If
product is announced by Microsoft before the Street
Date, the product can be advertised, merchandised
and/or promoted immediately after such announcement,
provided that all such promotions clearly state that
the product is not yet available for purchase.
o Allow its distribution centers and/or warehouses to
distribute, for a period of up to twelve months, a
Street Date product to any individual sales office,
retail store, or outlet which Microsoft in its sole
discretion has determined to be in violation of the
Street Date Requirements.
In the event CUSTOMER violates the Street Date for any special products
specified in a Microsoft Street Date letter (including, but not limited to
Microsoft(R) Windows(R) 95), CUSTOMER shall forfeit up to the entire Compliance
Rebate for the six month Rebate period in which the violation occurred.
Should CUSTOMER fail to comply with the Street Date Requirements, Microsoft may
also, for a period of up to twelve (12) months, withhold shipments to CUSTOMER
of future product until the Street Date of such product.
Should CUSTOMER wish to report a Street Date violation, CUSTOMER may fax a copy
of a dated sales receipt to STREET DATE VIOLATIONS AT MICROSOFT AT (206)
936-7329. Once a violation has been reported, Microsoft shall investigate the
violation, and take remedial action as appropriate. Please note, in order to
confirm a suspected violation, Microsoft must receive a dated sales receipt.
3. MICROSOFT TRANSACTION REQUIREMENTS
Electronic Data Interchange format ("EDI") transactions are defined as 850/855
EDI transactions. CUSTOMER must place EDI transaction orders at a minimum of
once per month per Enrollment Site if product is purchased during said month.
4. MICROSOFT REPORTING REQUIREMENTS
ALL REPORTS OUTLINED BELOW MUST BE TIMELY, ACCURATE, AND COMPLETE. FOR PURPOSES
OF THE MICROSOFT CHANNEL AGREEMENT, "TIMELY" IS DEFINED AS MS RECEIPT OF
REPORTING BY THE DUE DATE AND TIME INDICATED, "ACCURATE" IS DEFINED AS THE
CORRECT POPULATION OF ALL REPORTING FIELDS, AND "COMPLETE" IS DEFINED AS THE
POPULATION OF ALL REQUIRED REPORTING FIELDS.
Microsoft 1995/1996 Channel Agreement Software Spectrum, Inc. Page B2
July - December, 1955, Rebate and
Marketing Fund Addendum
<PAGE> 6
FAST TRACK REPORTING
Fast Track Reporting is defined as a weekly report sent to Microsoft via
Electronic Data Interchange format ("EDI") of weekly Sales, Inventory, and
Internal Market Share. CUSTOMER must make the EDI reports available to MS' EDI
mailbox each Monday by 12:00 noon (Pacific time). These reports shall cover the
seven-day period ending the prior Friday night. Please refer to the EDI
Reporting Guidelines for details on reporting requirements.
Microsoft reserves the right to conduct audits on CUSTOMER's market share data
at any time. If the results of the audit show that CUSTOMER is reporting one or
more market share categories incorrectly, CUSTOMER must correct the specified
categories and provide the corrected back data through the beginning of July,
1994 before CUSTOMER is eligible to receive a compliance rebate.
REPORTING REQUIREMENTS
o Each unit of single license Full Package Product should be reported as
one unit. This applies for both Microsoft products and for competitive
products.
o Any single Microsoft product that includes multiple licenses should be
reported as one unit. Microsoft will then convert the quantity of
multiple license units sold to the number of licenses they represent.
Examples of these products include MMLP 20 Pack, MMLP 100 Pack, and AE
l0 Pack.
o All volume licensing agreements (such as MOLP, Variable Licenses, and
Enterprise Licenses) should be reported as one unit for each license
sold.
MARKET SHARE REPORTING
The following table outlines the Market Share product categories for EDI
reporting. The table also specifies the top competitive products that must be
included in the aggregated market share reporting for the Fast Track Rebate
Program. All competitive products within a given category must be reported.
The products listed below are just examples, not a comprehensive list.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Category Microsoft product Competitive products
=====================================================================================================
<S> <C> <C>
Windows word processors Microsoft(R) Word for WordPerfect(R) for Windows(R)
Windows(R) Ami Pro(R) for Windows(R)
- -----------------------------------------------------------------------------------------------------
Windows spreadsheets Microsoft(R) Excel for 1-2-3(R) for Windows(R)
Windows(R) Quattro Pro(R) for Windows(R)
- -----------------------------------------------------------------------------------------------------
Windows bundles Microsoft(R) Office for Lotus(R) Smartsuite
Windows(R) WordPerfect(R)/Borland(R) Office
Novell(R) Perfect Office
- -----------------------------------------------------------------------------------------------------
Windows Databases Microsoft Access(R) for Paradox(TM) for Windows(R)
Windows(R) dBase(R) for Windows(R)
FoxPro(R) for Windows(R) Approach
Superbase(R)
- -----------------------------------------------------------------------------------------------------
Mail Servers Microsoft(R) Mail Lotus(R) cc:Mail(TM)
Lotus Notes(R)
WordPerfect(R) Office
- -----------------------------------------------------------------------------------------------------
Network Operating Microsoft(R) Windows Novell(R) Netware(R) 4.x, 3.x, 2.x
Systems NT(TM) Server Novell(R) UnixWare
OS/Lan Server
Banyan(R)
SCO(R) Unix
- -----------------------------------------------------------------------------------------------------
</TABLE>
Accounts are required to report sell-through units and inventory units for each
Microsoft SKU, but are required only to report the total license count for
competitive product sell-through for each category. All SKUs for these titles
should be counted, including full packaged product, upgrades, Microsoft license
packs, education, and government SKUs. Please refer to the EDI Reporting
Guidelines for details on reporting requirements.
Microsoft 1995/1996 Channel Agreement Software Spectrum, Inc. Page B3
July - December, 1955, Rebate and
Marketing Fund Addendum
<PAGE> 7
EXAMPLE: If CUSTOMER sold-through fifty (5O) units of Lotus(R) 1-2-3(R) for
Windows(R) and a 20 user MMLP of Quattro Pro(R) for Windows(R) in one week, then
CUSTOMER would report a total of seventy (70) licenses for sell-through of
competitor's products in the Windows Spreadsheet category.
MBS REPORTING
CUSTOMER must submit MBS reporting by the 10th of each month for the prior
month in the format outlined in Schedule D. Reporting shall be transmitted in
electronic format and sent via modem to 1-800-831-6316, or on tape or diskette
to MS at the following address:
MICROSOFT CORPORATION
RESELLER REPORTING GROUP
BLDG. 8N/2
ONE MICROSOFT WAY
REDMOND, WA 98052
Should CUSTOMER provide both monthly MBS reporting and weekly Fast Track
reporting on a compliant basis for three (3) consecutive months, MS may at its
sole discretion grant a written waiver of CUSTOMER monthly MBS reporting
requirements.
- --------------------------------------------------------------------------------
TOTAL SALES-OUT REBATE PROGRAM
- --------------------------------------------------------------------------------
PROGRAM OBJECTIVE: The objective of the Total Sales-out Rebate Program is to
increase the sales of Microsoft products. All license types (Select, Microsoft
Open License, Full Package Product, (MLPs) are included in measuring
performance against this goal.
REBATE PERCENTAGES: The total possible rebate percentage achievable for the
Total Sales-out Rebate Program is * of Qualified Sales for the July -
December, 1995 semester.
GOAL DEFINITIONS: The program goals are based upon the following:
o CUSTOMER's historical sales-out of Microsoft products by
Microsoft product division.
o Microsoft's United States total sales-out goals.
o CUSTOMER's contribution to Microsoft's historical sales.
REBATE GOALS: CUSTOMER has a first quarter sales-out goal and a total semester
sales-out goal. CUSTOMER's performance for the first three months of the July -
December, 1995 semester will be measured against the first quarter sales-out
goal At the end of the first quarter, CUSTOMER will receive the percentage of
the eligible rebate earned based on performance against the first quarter goal.
At the end of the semester, CUSTOMER will be measured on their six-month
performance against the total semester goal. Even if CUSTOMER does not meet
100% of the first quarter goal, CUSTOMER can still achieve 100% of the semester
goal provided that the semester goal is met at the end of the six-month period.
CUSTOMER'S Total Sales-out Rebate Program goals are as follows:
o Quarter 1 Goal (July - September, 1995): *
o Semester Goal (July - December, 1995): *
SALES-OUT DEFINITIONS/MEASUREMENT: Microsoft Product Sales-out is defined as
those Microsoft net product units sold through CUSTOMER's outlet locations.
CUSTOMER's full packaged product, Microsoft Open License, and upgrade sales-out
units will be measured from the sales-out reported by CUSTOMER to Microsoft.
Licensing sales (Select, Microsoft Maintenance) are captured and generated by
Microsoft's financial systems and included in total sales-out used to measure
product sales-out rebate performance.
Microsoft Select 2.x and 1.x and Microsoft Maintenance revenue credit is
granted as Microsoft recognizes the revenue. This occurs when Microsoft has
received the customer's license reporting. Following receipt of reporting,
Microsoft bills the customer/reseller and simultaneously recognizes the
revenue.
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
Microsoft 1995/1996 Channel Agreement Software Spectrum, Inc. Page B4
July - December, 1955, Rebate and
Marketing Fund Addendum
<PAGE> 8
PAYMENT: At the end of the semester, CUSTOMER will be paid a sales-out rebate
based on performance against the semester goal. If CUSTOMER achieves greater
than sixty percent (60%) of the semester sales-out goal, CUSTOMER will receive
the exact achieved percentage of the eligible sales-out rebate up to one
hundred percent (100%). If CUSTOMER achieves less than sixty percent (60%) of
the sales-out rebate goal, CUSTOMER will not have any portion of the sales-out
rebate. The purpose of this scale is to offer an incentive for accounts to meet
portion of their goal in the event they cannot achieve the full Microsoft
sales-out goal.
Although Microsoft pays the sales-out rebate ultimately based on performance
against the semester sales-out goal, Microsoft also pays a sales-out rebate at
the end of the first quarter based on performance against the first quarter
goal. Microsoft pays a portion of the rebate after the first quarter to provide
incentive for CUSTOMER to focus on sales-out throughout the entire semester.
The scale for the first quarter payment is the same as the scale for the
semester payment. The first quarter payment amount will be subtracted from the
final semester payment for the sales-out rebate.
Example: If CUSTOMER has a quarterly sales-out goal of $1,000,000 and a total
semester goal $2,500,000 and CUSTOMER sells $800,000 over the first quarter
period and $2,600,000 over the entire semester period, CUSTOMER will receive
the following rebate payments:
<TABLE>
<CAPTION>
===========================================================================================================================
PERIOD GOAL SELL-THROUGH PAYMENT
ACHIEVED
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
First Quarter * eligible rebate = * of July - September Qualified Sales.
*
- ---------------------------------------------------------------------------------------------------------------------------
Semester * eligible rebate = * of July-December Qualified Sales
less first quarter payment. The maximum allowable rebate is *
===========================================================================================================================
</TABLE>
- --------------------------------------------------------------------------------
BUSINESS SYSTEMS REBATE PROGRAM
- --------------------------------------------------------------------------------
PROGRAM OBJECTIVE: The objective of the Microsoft Business Systems Rebate
Program is to increase the Microsoft Business Systems revenue as well as to
increase the ratio of Microsoft Windows NT Client to Server sales. The
Microsoft Business Systems products consist of any license type of the
following products: MICROSOFT(R) BACKOFFICE, MICROSOFT(R) EXCHANGE,
MICROSOFT(R) MAIL, MICROSOFT(R) SNA SERVER, MICROSOFT(R) SQL SERVER(R),
MICROSOFT(R) SYSTEMS MANAGEMENT SERVER, MICROSOFT(R) WINDOWS NT(TM) SERVER, AND
MICROSOFT(R) WINDOWS NT(TM) WORKSTATION.
REBATE PERCENTAGES: The total possible rebate percentage achievable for the
Business Systems Rebate Program is * of Qualified Sales for the July -
December, 1995 semester.
GOAL DEFINITIONS: The program goals are based upon the following:
o Existing Microsoft Business Systems revenue.
o Microsoft's Business Systems revenue goals.
o Microsoft's Windows NT Client to Server Ratio goals.
REBATE GOALS: CUSTOMER must meet a minimum Windows NT Client to Server Ratio of
* in order to receive any portion of the Business Systems rebate.
Performance against the Client to Server goal will be measured against all
license types of Microsoft Windows NT including full packaged product, MLPs,
MOLP, and Select license types. Provided that CUSTOMER meets the * Client
to Server Ratio, CUSTOMER's achievement against the Business Systems goal will
be based on CUSTOMER's performance against the Business Systems revenue goal.
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
Microsoft 1995/1996 Channel Agreement Software Spectrum, Inc. Page B5
July - December, 1955, Rebate and
Marketing Fund Addendum
<PAGE> 9
CUSTOMER has a first quarter rebate goal and a total semester rebate goal.
CUSTOMER's performance for the first three months of the July - December, 1995
semester will be measured against the first quarter rebate goal. At the end of
the first quarter, CUSTOMER will receive the percentage of the eligible rebate
earned based on performance against the first quarter goal. At the end of the
semester, CUSTOMER will be measured on their six-month performance against the
total semester goal. Even if CUSTOMER does not meet 100% of the first quarter
goal, CUSTOMER can still achieve 100% of the semester goal provided that the
semester goal is met at the end of the six-month period.
CUSTOMER's Business Systems Rebate Program goals are as follows:
o Minimum Windows NT Client to Server Ratio of *
o Quarter l Goal (July - September, 1995): *
o Semester Goal (July - December, 1995: *
PAYMENT: As stated earlier, CUSTOMER must attain a * Client to Server
ratio of Microsoft Windows NT in order to receive any portion of the Business
Systems Rebate. Provided CUSTOMER meets the Client to Server Ratio requirement,
CUSTOMER will be paid a Business Systems rebate based on performance against the
semester goal at the end of the semester. If CUSTOMER achieves greater than
sixty percent (60%) of the semester Business Systems revenue goal and attains a
minimum of 10:1 Windows NT Client to Server ratio, CUSTOMER will receive the
exact achieved percentage of the eligible Business Systems rebate up to one
hundred percent (100%). If CUSTOMER achieves less than sixty percent (60%) of
the Business Systems revenue goal, CUSTOMER will not receive any portion of the
Business Systems rebate. The purpose of this scale is to offer an incentive for
accounts to meet a portion of their goal in the event they cannot achieve the
full Microsoft Business Systems goal.
Although Microsoft pays the rebate ultimately based on performance against the
semester goal, Microsoft also pays a rebate at the end of the first quarter
based on performance against the first quarter goal. Microsoft pays a portion
of the rebate after the first quarter to provide incentive for CUSTOMER to
focus on the Business Systems rebate program throughout the entire semester.
The scale for the first quarter payment is the same as the scale for the
semester payment. The first quarter payment amount will be subtracted from the
final semester payment for the rebate.
Example:
Goals:
o Quarterly Business Systems revenue goal of $1,000,000
o Semester Business Systems revenue goal of $2,500,000
o Minimum Windows NT Client to Server Ratio of *
Performance:
o Windows NT Client to Server Ratio of *
o Actual Quarter Business Systems revenue is $ 800,000
o Actual Semester Business Systems revenue is $2,600,000
Because CUSTOMER attained the minimum Windows NT Client to Sever Ratio of * .
CUSTOMER's Business Systems Rebate payment would be as follows:
<TABLE>
<CAPTION>
===============================================================================================================================
PERIOD GOAL SELL THROUGH PAYMENT
ACHIEVED
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
First Quarter * eligible rebate = * of July - September Qualified Sales.
- -------------------------------------------------------------------------------------------------------------------------------
*
Semester * eligible rebate = * of July - December Qualified Sales
less first quarter payment. The maximum allowable Business
Systems rebate is *
===============================================================================================================================
</TABLE>
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
Microsoft 1995/1996 Channel Agreement Software Spectrum, Inc. Page B6
July - December, 1955, Rebate and
Marketing Fund Addendum
<PAGE> 10
- --------------------------------------------------------------------------------
OFFICE SALES-OUT REBATE PROGRAM
- --------------------------------------------------------------------------------
PROGRAM OBJECTIVE: The objective of the Microsoft Office Sales-out Rebate
Program is to increase sales and support the efforts of Microsoft Office for
Windows Standard and Professional products and Microsoft Office for the
Macintosh products. All Microsoft Office license types (Select, Microsoft Open
License, Full Package Product, (MLPs) are included in measuring performance
against this goal.
REBATE PERCENTAGES: The total possible rebate percentage achievable for Office
Sales-out Rebate Program is * of net qualified purchases for July -
December, 1995.
GOAL DEFINITIONS: The program goals are based upon the following:
o CUSTOMER's historical Sales-out of Office.
o Microsoft's North America Office Sales-out goals.
o CUSTOMER's contribution to Microsoft's historical
Office sales.
REBATE GOALS: CUSTOMER has a first quarter sales-out goal and a total semester
sales-out goal. CUSTOMER's performance for the first three months of the July -
December, 1995 semester will be measured against the first quarter sales-out
goal. At the end of the first quarter, CUSTOMER will receive the percentage of
the eligible rebate earned based on performance against the first quarter goal.
At the end of the semester, CUSTOMER will be measured on their six-month
performance against the total semester goal. Even if CUSTOMER does not meet
100% of the first quarter goal, CUSTOMER can still achieve 100% of the semester
goal provided that the semester goal is met at the end of the six-month period.
CUSTOMER's Office Sales-out Rebate Program goals are as follows:
o Quarter 1 Goal (July - September, 1995): *
o Semester Goal (July - December, 1995): *
SALES-OUT DEFINITIONS/MEASUREMENT: Microsoft Office Product Sales-out is defined
as those Office net product units sold through reseller outlet locations.
CUSTOMER's full packaged product and upgrade sales-out units will measured from
the sales-out reported by CUSTOMER to Microsoft, which includes MOLP sales.
Licensing sales (Select, and Microsoft Maintenance) are captured and generated
by Microsoft's financial systems and included in total Sales-out used to
measure Office product sales-out rebate performance.
Microsoft Select 2.x and I.x and Microsoft Maintenance revenue credit is
granted as Microsoft recognizes the revenue. This occurs when Microsoft has
received the customer's license reporting. Following receipt of reporting,
Microsoft bills the customer/reseller and simultaneously recognizes the
revenue.
PAYMENT: At the end of the semester, CUSTOMER will be paid a sales-out rebate
based on performance against the semester goal. If CUSTOMER achieves greater
than sixty percent (60%) of the semester sales-out goal, CUSTOMER will receive
the exact achieved percentage of the eligible sales-out rebate up to one
hundred percent (100%) CUSTOMER achieves less than sixty percent (60%) of the
sales-out rebate goal, CUSTOMER will not receive any portion of the sales-out
rebate. The purpose of this scale is to offer an incentive for accounts to meet
a portion of their goal in the event they cannot achieve the full Microsoft
sales-out goal.
Although Microsoft pays the sales-out rebate ultimately based on performance
against the semester sales-out goal, Microsoft also pays a sales-out rebate at
the end of the first quarter based on performance against the first quarter
goal. The scale for the first quarter payment is the same as the scale for the
semester payment. The first quarter payment amount will be subtracted from the
final semester payment for the sales-out rebate.
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
Microsoft 1995/1996 Channel Agreement Software Spectrum, Inc. Page B7
July - December, 1955, Rebate and
Marketing Fund Addendum
<PAGE> 11
Example: If CUSTOMER has a quarterly sales-out goal of $1,000,000 and a total
semester goal $2,500,000 and CUSTOMER sells $800,000 over the first period and
$2,600,000 over the entire semester period, CUSTOMER will receive the following
rebate payments:
--------------------------------------------------------------------------
PERIOD GOAL SELL-THROUGH PAYMENT
ACHIEVED
First * eligible rebate = * of July -
Quarter September Qualified Purchases.
--------- * --------------------------------------
Semester * eligible rebate = * of July -
December Qualified Purchases less first
quarter payment. The maximum allowable
rebate is *.
--------------------------------------------------------------------------
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
Microsoft 1995/1996 Channel Agreement Software Spectrum, Inc. Page B8
July-December, 1995, Rebate and
Marketing Fund Addendum
<PAGE> 12
SCHDULE F
SALES REPORTING FORMATS
SALESOUT, SELL-THROUGH AND INVENTORY REPORT FORMAT
==========================================================================
FIELD FIELD DESCRIPTION MAX SIZE
- --------------------------------------------------------------------------
1 Distributor's Customer or Outlet Number X(20)
- --------------------------------------------------------------------------
2 Customer or Outlet Name X(40)
- --------------------------------------------------------------------------
3 Customer or Outlet Address 1 X(40)
- --------------------------------------------------------------------------
4 Customer or Outlet Address 2 X(40)
- --------------------------------------------------------------------------
5 Customer or Outlet City X(40)
- --------------------------------------------------------------------------
6 Customer or Outlet State X(02)
- --------------------------------------------------------------------------
7 Customer or Outlet Zip X(10)
- --------------------------------------------------------------------------
8 Customer or Outlet Phone X(14)
- --------------------------------------------------------------------------
9 Distributor Part Number X(20)
- --------------------------------------------------------------------------
10 Part Description X(50)
- --------------------------------------------------------------------------
11 Sell-Through Quantity 9(11)
- --------------------------------------------------------------------------
12 Sell-To Quantity 9(11)
- --------------------------------------------------------------------------
13 Ending Inventory Quantity 9(11)
- --------------------------------------------------------------------------
14 Unit Price 9(11).99
- --------------------------------------------------------------------------
15 Calendar Year Shipped X(02)
- --------------------------------------------------------------------------
16 Calendar Month Shipped X(02)
- --------------------------------------------------------------------------
Microsoft 1995/1996 Channel Agreement Software Specrum, Inc. Page F1
July-December, 1995, Rebate and
Marketing Fund Addendum
<PAGE> 13
SCHDULE E
SALES REPORTING FORMATS
AMS REPORT FORMAT
<TABLE>
<CAPTION>
=================================================================================================
FIELD FIELD NAME COMMENTS OPTIONAL?
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 Reseller Outlet ID
- -------------------------------------------------------------------------------------------------
2 Outlet Name
- -------------------------------------------------------------------------------------------------
3 Outlet Address 1
- -------------------------------------------------------------------------------------------------
4 Outlet Address 2
- -------------------------------------------------------------------------------------------------
5 Outlet Phone Yes
- -------------------------------------------------------------------------------------------------
6 Outlet Fax Yes
- -------------------------------------------------------------------------------------------------
7 Outlet City
- -------------------------------------------------------------------------------------------------
8 Outlet State
- -------------------------------------------------------------------------------------------------
9 Outlet Zip Yes, if end user
- -------------------------------------------------------------------------------------------------
10 Bill-to Customer ID Yes, if end user
- -------------------------------------------------------------------------------------------------
11 Bill-to Name Yes, if end user
- -------------------------------------------------------------------------------------------------
12 Bill-to State Yes, if end user
- -------------------------------------------------------------------------------------------------
13 Bill-to Zip Yes, if end user
- -------------------------------------------------------------------------------------------------
14 Ship-to Customer ID Yes, if end user
- -------------------------------------------------------------------------------------------------
15 Ship-to Name Yes, if end user
- -------------------------------------------------------------------------------------------------
16 Ship-to State Yes, if end user
- -------------------------------------------------------------------------------------------------
17 Ship-to Zip If Null and end user, Outlet Zip will be used Yes, if end user
- -------------------------------------------------------------------------------------------------
18 Invoice Number Yes, if end user
- -------------------------------------------------------------------------------------------------
19 Invoice Date Yes, if end user
- -------------------------------------------------------------------------------------------------
20 Vendor Part Number One of Microsoft, Merisel, Ingram, Tech Data,
Handleman, NACSCORP, Microage, or Intelligent
Electronics
- -------------------------------------------------------------------------------------------------
21 Reseller Part Number
- -------------------------------------------------------------------------------------------------
22 Part Description
- -------------------------------------------------------------------------------------------------
23 Quantity Sold
- -------------------------------------------------------------------------------------------------
24 Agreement Number Number assigned to Agreement sales have been
made under
- -------------------------------------------------------------------------------------------------
25 Agreement Type "1" = MSM; "2" = Select; "3' = Express "4"
= Special Agreement; "5" = MOLP; "6" =
GSA; "7" = GSA Select; "8" = Desktop4
- -------------------------------------------------------------------------------------------------
26 Sales Type "E" for End User, "A" for Academic, "G" for
Government, "C" for Corporate Account.
- -------------------------------------------------------------------------------------------------
</TABLE>
Microsoft 1995/1996 Channel Agreement Software Specrum, Inc. Page F2
July-December, 1995, Rebate and
Marketing Fund Addendum
<PAGE> 14
SCHEDULE G
MARKETING FUND REIMBURSEMENT POLICY
FOR MICROSOFT(R) WINDOWS(R) 95 UPGRADE
OVERVIEW
For the period beginning July 1, 1995 and ended December 31, 1995, CUSTOMER
must comply with MS' Marketing Fund Reimbursement Policy for Microsoft(R)
Windows(R) 95 Upgrade in order to receive Marketing Funds from MS.
RULES
1. Program Scope. This Program affects only CUSTOMER's eligibility for MS
Marketing Funds, and CUSTOMER is always free to advertise and price all MS
products however CUSTOMER chooses.
2. Marketing Funds and Price Advertising. In order for CUSTOMER to be eligible
for Base Level Funds and Opportunity Funds, all advertisements of the
Windows 95 Upgrade made by CUSTOMER or on CUSTOMER's behalf must state
prices at or above the following net before tax price:
Alternatively, CUSTOMER's advertisements may state no price whatsoever.
The following specific requirement apply to advertisements in which
CUSTOMER is offering other services or products together with the Windows
95 Upgrade:
o CUSTOMER may advertise "free" end-user training or support in
connection with the Windows 95 upgrade.
o CUSTOMER may advertise a package of products offered for a single
price including the Windows 95 Upgrade, but only if the net package
price is at or above . Alternatively, CUSTOMER's
advertisements may state no price whatsoever.
o MS reserves the right to change the price upon notice to
CUSTOMER.
3. Loss of Marketing Funds. If CUSTOMER fails to comply with the rules of
this Program, then notwithstanding any other provisions of the Addendum to
which this Schedule is attached, CUSTOMER will be ineligible to receive
both Base Level Funds and Opportunity Funds for a period of six(6) months.
Marketing Funds ineligibility shall begin with the entire month in which
the failure to comply first occurred and shall continue for six(6) months
which may include CUSTOMER's ineligibility for Base Level Funds and
Opportunity Funds in a subsequent Rebate and Marketing Fund Period. MS'
sole judgment is final in determining CUSTOMER compliance with this
Program.
4. Products Covered. The "Windows 95 Upgrade" as covered by this Program
means:
Windows(R) 95 Upgrade (SKU: 050-042-950)
Windows (R) 95 Upgrade on CE-ROM (SKU; 050-052-950)
5. Advertisements. The term "advertisement" means any printed broadcast,
direct mail or transmitted advertisements for the Window 95 Upgrade,
including without limitation, all newspaper, television, radio and internet
or on-line advertisements.
Microsoft 1995/1996 Channel Agreement Software Spectrum Page G1
July-December, 1995, Rebate and
Marketing Fund Addendum
<PAGE> 15
6. December 31, 1995.
7. Questions and Inquiries. If CUSTOMER has questions about whether
CUSTOMER's advertisements comply with this Program or if CUSTOMER has other
inquiries, CUSTOMER must direct these questions and inquiries to the
following MS contact:
Arlene Yanow
One Microsoft Way
Redmond, WA 98052
(206)882-8080
The above contact is CUSTOMER's ONLY authorized source of information at
MS about this Program, and CUSTOMER may not rely on any other source of
information, including other MS employees. No MS employee, including the
above contact, is authorized to communicate with CUSTOMER about any alleged
infractions of any other reseller.
8. Program Modifications/Termination: MS reserves the right to modify or
terminate this program at any time, in its sole discretion.
Microsoft 1995/1996 Channel Agreement Software Spectrum, Inc. Page G2
July-December, 1995, Rebate and
Marketing Fund Addendum
<PAGE> 16
AMENDMENT NO.1 TO THE
REBATE AND MARKETING FUND ADDENDUM TO THE
MICROSOFT 1995/1996 CHANNEL AGREEMENT
This Amendment No. 1 ("Amendment"), dated the first day of January, 1996, amends
that certain Rebate and Marketing Fund Addendum to The Microsoft 1995/1996
Channel Agreement ("Addendum"), dated July 1, 1995, between MICROSOFT
CORPORATION ("MS") having its principal place of business at One Microsoft Way,
Redmond, WA 98052 and SOFTWARE SPECTRUM, INC. ("CUSTOMER") having its
principal place of business at 2140 Merritt Drive, Garland, TX 75041. The
Addendum is hereby amended as follows:
2. TERM AND TERMINATION
The first sentence of the section is replaced with the following:
"This Addendum shall be effective as of the date indicated above, and shall
expire on June 30, 1996."
4. REBATES
The section is replaced in its entirety with:
"4.1 PACKAGED PRODUCT REBATE
CUSTOMER is eligible to receive up to a * ) Rebate on its Qualified
Sales, excluding Open License sales, made during the Rebate and Marketing Fund
Period. The Rebate shall be paid provided CUSTOMER complies with the Rebate
Program Guidelines outlined in Schedule B.
4.2 OPEN LICENSE REBATE
CUSTOMER is eligible to receive up to a * Rebate on its Open License
sales made during the Rebate and Marketing Fund Period. The Rebate shall be
paid provided CUSTOMER complies with the those portions of the Packaged Product
Rebate Guidelines outlined in Schedule J.
4.3 PROVISION FOR EARLY PAYMENT OF REBATES
Notwithstanding such Rebate Program Guidelines, MS may, at its sole discretion,
pay all or any portion of the Rebate prior to the end of the Rebate and
Marketing Fund Period. The Rebate so paid may be adjusted subsequently based
upon compliance with the Rebate Program Guidelines."
5. MARKETING FUNDS
The section is replaced in its entirety with:
"5.1 OPPORTUNITY FUNDS
Periodically, MS at its discretion may allow CUSTOMER to participate in MS
programs which provide the opportunity to earn Opportunity Marketing Funds.
Customer's participation in such programs shall be governed by this Addendum.
Grant of Opportunity Marketing Funds is subject to prior approval by MS.
5.2 USE OF MARKETING FUNDS
Acquisition, use of, and proof of expenditures of Opportunity Marketing Funds
shall be in accordance with this Addendum, and the terms of each Opportunity
Fund Proposal approved by CUSTOMER'S MS Account Manager. Without limiting the
foregoing, CUSTOMER shall abide by the Spending Period dates as outlined in the
then-current Microsoft Marketing Fund Guidelines. Marketing Fund Claims
exceeding the then-current balance in CUSTOMER'S Marketing Fund account at MS'
Marketing Fund vendor, currently Pinpoint Marketing, Inc. ("PMI") or submitted
in excess of the pre-approved dollar amount shall not be granted to CUSTOMER.
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
Microsoft Confidential - Disclosure Prohibited
<PAGE> 17
CUSTOMER must obtain MS approval from a MS representative prior to claiming
Marketing Funds. CUSTOMER agrees to report to PMI any suspected error or
discrepancy in the amount of Marketing Funds received by CUSTOMER within thirty
(30) days of receipt thereof. Failure to provide such notice within the
specified period shall mean that CUSTOMER forfeits the opportunity to request a
re-audit. MS reserves the right at any time to adjust CUSTOMER's Marketing Fund
balance should MS discover that an error or discrepancy has occurred.
5.3 MARKETING FUND AND REBATE AUDIT
During the term of this Addendum and for a period of two (2) years following
its termination, MS may audit the applicable records and operations of CUSTOMER
as is reasonable to verity CUSTOMER's compliance with the terms of this
Addendum. Additionally, MS may audit specific Opportunity Marketing Fund claims
submitted by CUSTOMER as outlined in CUSTOMER's then current Marketing Fund
Guidelines. Any audit shall be conducted during CUSTOMER'S normal business
hours in such a manner as not to unreasonably interfere with CUSTOMER's normal
business activities. Audit expenses shall be paid by MS unless material
discrepancies are disclosed by such audit, in which case audit expenses shall
be paid by CUSTOMER. For purposes of this Section, "material discrepancies"
shall mean ten thousand U.S. dollars (US $10,000) or more.
If the results of any audit show that CUSTOMER used Marketing Funds in any
manner other than as authorized under this Addendum, MS shall be entitled to
recover from CUSTOMER any and all Marketing Funds so used, in addition to any
other remedies available to MS under law or equity plus injunctive relief
and/or any other damages as may be permitted by law. Further, if any such
audits shows that CUSTOMER has submitted incorrect sales reporting, and such
reporting was the basis of any rebate payment, MS shall have the right to
recover any and all rebate paid."
5.4 MARKETING FUND REIMBURSEMENT POLICY
CUSTOMER agrees to abide by the Marketing Fund Reimbursement Guidelines,
attached hereto as Schedule G, and as revised from time to time by MS."
6. REPORTING REQUIREMENTS
The first sentence of the section is replaced with the following:
CUSTOMER shall submit reports to MS as outlined in CUSTOMER's Rebate Program
Guidelines in accordance with the then current EDI Implementation Guide
provided by MS.
SCHEDULE B
The Schedule is replaced in its entirety with the attached Schedule H.
SCHEDULE G
The Schedule is replaced in its entirety with the attached Schedule I.
IN WITNESS WHEREOF, the parties have signed this Amendment on the date
indicated below. This Amendment is hereby made part of the Addendum. All terms
and conditions of the Addendum not amended herein shall remain in full force
and effect. This Amendment is not binding until executed by MS.
AGREED AND ACCEPTED TO BY AGREED AND ACCEPTED TO BY
MICROSOFT CORPORATION ("MS"): SOFTWARE SPECTRUM, INC.
("CUSTOMER"):
By /s/ JOHAN LIEDGREN By /s/ KEITH R. COOGAN
---------------------------- ---------------------------------
Johan Liedgren Keith R. Coogan
- ------------------------------ -----------------------------------
Name (please print) Name (please print)
Director, Channel Policies Vice President of Operations
- ------------------------------ -----------------------------------
Title Title
1/3/96 December 20, 1995
- ------------------------------ -----------------------------------
Date Date
Amendment No. 1 to The Rebate and Page 2
Marketing Fund Addendum to The
Microsoft 1995/1996 Channel Agreement
<PAGE> 18
SCHEDULE H
JANUARY-JUNE, 1996
REBATE GUIDELINES
PROGRAMS: Microsoft offers four rebate programs for the January - June, 1996
Rebate period. The total available Rebate is divided as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
MAXIMUM PERCENTAGE
REBATE INCENTIVE AVAILABLE
===================================================================================================
<S> <C>
Compliance Program
- ---------------------------------------------------------------------------------------------------
Total Sales-out Program
- ---------------------------------------------------------------------------------------------------
Business Systems Program *
- ---------------------------------------------------------------------------------------------------
Office Sales-out Program
- ---------------------------------------------------------------------------------------------------
TOTAL
- ---------------------------------------------------------------------------------------------------
</TABLE>
REBATE CALCULATIONS AND PAYMENTS: Rebates will be paid in the form of a
Microsoft purchase credit forty-five (45) days after the end of each quarterly
rebate period (i.e. May 15th for January - March, 1996 quarter). Rebates are
calculated by multiplying the achieved rebate percentage by the total Qualified
Sales for the rebate period. Revenue generated from Microsoft Select Enrollment
Forms executed by MS on or after July 1, 1994, shall be included in calculating
CUSTOMER's achievement toward the Sales-out goal, but shall not be included in
CUSTOMER's final total Qualified Sales for purposes of Rebate payment. Revenue
generated from Microsoft Select Enrollment Forms executed by MS prior to July
1, 1994 will be included in calculating CUSTOMER's achievement towards the
sales-out goal and will also be eligible for a Grandfathered rebate. Rebate
payment for such Select Enrollment Forms shall be in the form of a purchase
credit forty-five (45) days after the end of each quarterly rebate period.
PURCHASES THROUGH DISTRIBUTION: CUSTOMER's full packaged product and MLP
purchases through distribution will be subtracted from CUSTOMER's Qualified
Sales for purposes of Rebate payment.
PRODUCT AVAILABILITY: If Microsoft is unable to ship a CURRENT VERSION of a
product for any ten (10) consecutive business days, CUSTOMER's purchases
through distribution of those SKUs will count toward CUSTOMER's Qualified Sales
for purchases of Rebate payment.
All copies of eligible purchase orders placed through distribution along with a
copy of the Microsoft Stock Out Report must be sent to Microsoft no later than
fifteen (15) days following the quarter end. Please send purchase order copies
and the Microsoft Stock Out Report to the following address:
MICROSOFT CORPORATION
ONE MICROSOFT WAY
BLDG. 22/4054
REDMOND, WA 98052
ATTN: KRISTIN WEEBER, MARKETING MANAGER
COMPLIANCE REBATE PAYMENT: The Microsoft Compliance Rebate will be calculated
on a monthly basis. If CUSTOMER has met all of the Compliance Rebate criteria
in a given month, CUSTOMER will be entitled to * of that month's total
Qualified Sales. The rebate payment will be made forty-five (45) days after the
end of each quarterly rebate period.
ANY ISSUES REGARDING REBATES SHOULD BE SENT IN WRITING TO KRISTIN WEEBER,
MARKETING MANAGER, NO LATER THAN THIRTY (30) DAYS FOLLOWING RECEIPT OF REBATE
PAYMENT. If such written notice is not provided within thirty (30) days,
CUSTOMER shall have no further right to dispute rebate payment.
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
Amendment No. 1 to The Rebate and Page H1
Marketing Fund Addendum to The
Microsoft 1995/1996 Channel Agreement
<PAGE> 19
- --------------------------------------------------------------------------------
COMPLIANCE REBATE PROGRAM
- --------------------------------------------------------------------------------
PROGRAM OBJECTIVES: The objective of the Compliance Rebate Program is to
provide incentive for CUSTOMER to comply with Microsoft contractual
requirements for payments, Street Dates, reporting, and EDI ordering for Select
3.0.
NON-COMPLIANCE: During any given month, failure to comply with any or all of
the current compliance criteria will result in the forfeiture of the entire
compliance rebate for that month.
1. MICROSOFT PAYMENT REQUIREMENTS
Microsoft requires its customers to pay its invoices within terms. In order to
maintain compliance, 100% of the gross invoice value for non-Select and 85% of
the gross invoice value for Select must be current as of Microsoft's fiscal
month- end. Unapplied credits will be excluded from the calculation. Failure to
comply with this section will also result in the loss of CUSTOMER's Select
Compliance Rebate.
2. MICROSOFT STREET DATE REQUIREMENTS
From time to time, Microsoft may announce a new product or new versions of an
existing product for which Microsoft shall set a Street Date. In order to
comply with the Street Date requirements, CUSTOMER shall not:
o Ship or deliver the product to any end-user customer prior to
the Street Date.
o Accept any end user payment for the product prior to the
Street Date. Checks and/or credit card numbers may be accepted
by CUSTOMER, but can only be processed when product is
delivered to the end user on or after the Street Date.
o Advertise, merchandise, or promote the product to end user
customers until it is officially announced by Microsoft.
Usually, the product announcement is on the Street Date. If
the product announcement is earlier than the Street Date,
Microsoft will clearly communicate the announce date to the
channel. If product is announced by Microsoft before the
Street Date, the product can be advertised, merchandised
and/or promoted immediately after such announcement, provided
that all such promotions clearly state that the product is not
yet available for purchase.
o Allow it's distribution centers and/or warehouses to
distribute, for a period of up to twelve months, a Street Date
product to any individual sales office, retail store, or
outlet which Microsoft in its sole discretion has determined
to be in violation of the Street Date Requirements.
In the event CUSTOMER violates the Street Date for any special products
specified in a Microsoft Street Date letter, CUSTOMER shall forfeit up to the
entire Compliance Rebate for the six month Rebate period in which the violation
occurred.
Should CUSTOMER fail to comply with the Street Date Requirements, Microsoft may
also, for a period of up to twelve (12) months, withhold shipments to CUSTOMER
of future product until the Street Date of such product.
Should CUSTOMER wish to report a Street Date violation, CUSTOMER may fax a copy
of a dated sales receipt to STREET DATE VIOLATIONS AT MICROSOFT AT (206)
936-7329. Once a violation has been reported, Microsoft shall investigate the
violation, and take remedial action as appropriate. Please note, in order to
confirm a suspected violation, Microsoft must receive a dated sales receipt.
3. MICROSOFT TRANSACTION REQUIREMENTS
Electronic Data Interchange format ("EDI") transactions are defined as 850/855
EDI transactions. CUSTOMER must place EDI transaction orders at a minimum of
once per month per Enrollment Site if product is purchased during said month.
4. MICROSOFT REPORTING REQUIREMENTS
ALL REPORTS OUTLINED BELOW MUST BE TIMELY, ACCURATE, AND COMPETE. FOR PURPOSES
OF THIS AGREEMENT, "TIMELY" IS DEFINED AS MS RECEIPT OF REPORTING BY THE DUE
DATE AND TIME INDICATED, "ACCURATE" IS DEFINED AS THE CORRECT POPULATION OF ALL
REPORTING FIELDS, AND "COMPLETE" IS DEFINED AS THE POPULATION OF ALL REQUIRED
REPORTING FIELDS.
Amendment No. 1 to The Rebate and Page H2
Marketing Fund Addendum to The
Microsoft 1995/1996 Channel Agreement
<PAGE> 20
Reporting is defined as a weekly report sent to Microsoft via Electronic Data
Interchange format ("EDP") of weekly Sales, Inventory, and Internal Market
Share. CUSTOMER must make the EDI reports available to MS' EDI mailbox each
Monday by 12:00 noon (Pacific time). These reports shall cover the seven-day
period ending the prior Sunday night. Please refer to the EDI Reporting
Guidelines for details on reporting requirements.
REPORTING REQUIREMENTS
o Each unit of single license Full Package Product should be reported as
one unit. This applies for both MS products and for competitive
products.
o Any single Microsoft product that includes multiple licenses should be
reported as one unit. MS will then convert the quantity of multiple
license units sold to the number of licenses they represent. Examples
of these products include MMLP 20 Pack, MMLP 100 Pack, and AE 10 Pack.
o All volume licensing agreements (such as MOLP, Variable Licenses, and
Enterprise Licenses) should be reported as one unit for each license
sold.
o Each competitive multiple license product should be reported as the
number of licenses represented.
Accounts are required to report sell-through units and inventory units for each
MS SKU, but are required only to report the total license count for competitive
product sell-through for each category. All SKUs for these titles should be
counted, including full packaged product, upgrades, license packs, education,
and government SKUs. Please refer to the EDI Reporting Guidelines for details
on reporting requirements.
MARKET SHARE REPORTING
The following table outlines the Market Share product categories for EDI
reporting. The table also specifies the top competitive products that must be
included in the aggregated market share reporting. All competitive products
within a given category must be reported. The products listed below are just
examples, not a comprehensive list.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
CATEGORY MICROSOFT PRODUCT COMPETITIVE PRODUCTS
================================================================================================================
<S> <C> <C>
Windows word processors Microsoft(R) Word for WordPerfect(R) for Windows(R)
Windows(R) Lotus(R) WordPro(R) for Windows(R)
- ----------------------------------------------------------------------------------------------------------------
Windows spreadsheets Microsoft(R) Excel for 1-2-3(R) for Windows(R)
Windows(R) Quattro Pro(R) for Windows(R)
- ----------------------------------------------------------------------------------------------------------------
Windows bundles Microsoft(R) Office for Lotus(R) Smartsuite
Windows(R) WordPerfect(R)/Borland(R) Office
Novell(R) Perfect Office
- ----------------------------------------------------------------------------------------------------------------
Windows Databases Microsoft Access(R) for Paradox(TM) for Windows(R)
Windows(R) dBase(R) for Windows(R)
FoxPro(R) for Window(R) Approach
Superbase(R)
- ----------------------------------------------------------------------------------------------------------------
Mail Servers Microsoft(R) Mail Lotus(R) cc:Mail(TM)
Lotus Notes(R)
WordPerfect(R) Office
- ----------------------------------------------------------------------------------------------------------------
Network Operating Microsoft(R) Windows Novell(R) Netware(R) 4.x, 3.x, 2.x
Systems NT(TM) Server Novell(R) UnixWare
OS/Lan Server
Banyan(R)
SCO(R) Unix
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Example: If CUSTOMER sold-through fifty (50) units of Lotus(R) 1-2-3(R) for
Windows(R) and a 20 user MMLP of Quattro Pro(R) for Windows(R) in one week, then
CUSTOMER would report a total of seventy (70) licenses for sell-through of
competitor's products in the Windows Spreadsheet category.
Amendment No. 1 to The Rebate and Page H3
Marketing Fund Addendum to The
Microsoft 1995/1996 Channel Agreement
<PAGE> 21
- --------------------------------------------------------------------------------
SALES-OUT REBATE PROGRAMS
- --------------------------------------------------------------------------------
PROGRAM OBJECTIVE: The objective of all Sales-out Rebate Programs is to
increase the sales of Microsoft products. All license types (Select, Microsoft
Open License, Full Package Product, MLPs) are included in measuring performance
against this goal, however, the Rebate is paid on full packaged product and
MOLP sales only.
REBATE GOALS: CUSTOMER has first quarter sales-out goals and total semester
sales-out goals. CUSTOMER's performance for the first three months of the
January - June, 1996, semester will be measured against the first quarter
sales-out goals. At the end of the first quarter, CUSTOMER will receive the
percentage of the eligible rebates earned based on performance against the
first quarter goals. At the end of the semester, CUSTOMER will be measured on
their six-month performance against the total semester goals. Even if CUSTOMER
does not meet 100% the first quarter goals, CUSTOMER can still achieve 100%
of the semester goals provided that the semester goals are met at the end of
the six-month period.
SALES-OUT DEFINITIONS/MEASUREMENT: MS Product Sales-out is defined as those MS
net product units sold through CUSTOMER's outlet locations. CUSTOMER's full
packaged product, Microsoft Open License, and upgrade sales-out units will be
measured from the sales-out reported by CUSTOMER to MS. Licensing sales
(Select, Microsoft Maintenance) are captured and generated by MS' financial
systems and included in total sales-out used to measure product sales-out
rebate performance.
Any Microsoft Select 2.x and 1.x and Microsoft Maintenance revenue credit is
granted as MS recognizes the revenue. This occurs when MS has received the
customer's license reporting. Following receipt of reporting, MS bills the
customer/reseller and simultaneously recognizes the revenue.
PAYMENT: At the end of the semester, CUSTOMER will be paid sales-out rebates
based on performance against the semester goals. If CUSTOMER achieves greater
than sixty percent (60%) of each semester sales-out goal, CUSTOMER will receive
the exact achieved percentage of the eligible sales-out rebate up to one
hundred percent (100%). If CUSTOMER achieves less than sixty percent (60%) of
any sales-out rebate goal, CUSTOMER will not receive any portion of that
sales-out rebate.
Although MS pays the sales-out rebate ultimately based on performance against
the semester sales-out goal, Microsoft also pays a sales-out rebate at the end
of the first quarter based on performance against the first quarter goal.
Microsoft pays a portion of the rebate after the first quarter to provide
incentive for CUSTOMER to focus on sales-out throughout the entire semester.
The scale for the first quarter payment is the same as the scale for the
semester payment. The first quarter payment amount will be subtracted from the
final semester payment for the sales-out rebate.
Example: If CUSTOMER has a quarterly total sales out goal of $1,000,000 and a
semester total sales out goal $2,500,000 and CUSTOMER sells $800,000 over the
first quarter period and $2,600,000 over the entire semester period, CUSTOMER
will receive the following rebate payments:
<TABLE>
<CAPTION>
================================================================================================================
PERIOD GOAL SELL-THROUGH PAYMENT
ACHIEVED
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
First Quarter * eligible rebate = * of January - March sales.
- ------------------- -----------------------------------------------------------------
*
Semester * eligible rebate = * of January - June sales less
first quarter payment. The maximum allowable total sales out
rebate is * .
================================================================================================================
</TABLE>
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
Amendment No. 1 to The Rebate and Page H4
Marketing Fund Addendum to The
Microsoft 1995/1996 Channel Agreement
<PAGE> 22
- --------------------------------------------------------------------------------
TOTAL SALES-OUT REBATE PROGRAM
- --------------------------------------------------------------------------------
REBATE PERCENTAGES: The total possible rebate percentage achievable for the
Total Sales-out Rebate Program is * of Qualified Sales for the January -
June, 1996 semester.
CUSTOMER's Total Sales-out Rebate Program goals are as follows:
o Quarter 1 Goal (January - March, 1996): *
o Semester Goal (January - June, 1996): *
- --------------------------------------------------------------------------------
OFFICE SALES-OUT REBATE PROGRAM
- --------------------------------------------------------------------------------
REBATE PERCENTAGES: The total possible rebate percentage achievable for the
Office Sales-out Rebate Program is * of Qualified Sales for the January -
June, 1996 semester.
CUSTOMER's Office Sales-out Rebate Program goals are as follows:
o Quarter 1 Goal (January - March, 1996): *
o Semester Goal (January - June, 1996): *
- --------------------------------------------------------------------------------
BUSINESS SYSTEMS SALES-OUT REBATE PROGRAM
- --------------------------------------------------------------------------------
REBATE PERCENTAGES: The total possible rebate percentage achievable for the
Business Systems Sales-out Rebate Program is * of Qualified Sales for the
January - June, 1996 semester.
REBATE GOALS: CUSTOMER must sell a minimum number Microsoft(R) BackOffice client
licenses in order to receive any portion of the Business Systems rebate.
Provided that CUSTOMER sells the minimum number of BackOffice client licenses,
CUSTOMER's achievement against the Business Systems goal will be based on
CUSTOMER's performance against the Business Systems revenue goal. -
CUSTOMER's BackOffice client license unit goals are as follows:
o Quarter 1 Goal (January - March, 1996) *
o Semester Goal (January - June, 1996) *
CUSTOMER's Business Systems Sales-out Rebate Program goals are as follows:
o Quarter 1 Goal (January - March, 1996): *
o Semester Goal (January - June, 1996): *
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
Amendment No. 1 to The Rebate and Page H5
Marketing Fund Addendum to The
Microsoft 1995/1996 Channel Agreement
<PAGE> 23
SCHEDULE I
MARKETING FUND REIMBURSEMENT POLICY
OVERVIEW
As designated from time to time by MS, CUSTOMER must comply with MS' Marketing
Fund Reimbursement Policy in order to receive Marketing Funds from MS.
RULES
1. Program Scope. This Program affects only CUSTOMER's eligibility for MS
Marketing Funds, and CUSTOMER is always free to advertise and price
all MS products however CUSTOMER chooses.
Marketing Funds and Price Advertising. In order for CUSTOMER to be
eligible for Marketing Funds, all advertisements of such product made
by CUSTOMER or on CUSTOMER's behalf must state no less than the price
designated by MS exclusive of sales tax.
Alternatively, CUSTOMER's advertisements may state no price
whatsoever. The following specific requirements apply to
advertisements in which CUSTOMER is offering other services or
products together with the product:
o CUSTOMER may advertise "free" end-user training or
support in connection with the product.
o CUSTOMER may advertise a package of products offered
for a single price including the product, but only if
the net package price is at or above the price
designated by MS. Alternatively, CUSTOMER's
advertisements may state no price whatsoever.
o MS reserves the right to change the designated price
upon notice to CUSTOMER.
3. Loss of Marketing Funds. If CUSTOMER fails to comply with the rules of
this Program, then notwithstanding any other provisions of the
Addendum to which this Schedule is attached, CUSTOMER will be
ineligible to receive Opportunity Funds for a period of six (6)
months. Marketing Funds ineligibility shall begin with the entire
month in which the failure to comply first occurred and shall continue
for six (6) months which may include CUSTOMER's ineligibility for
Opportunity Funds in a subsequent Rebate and Marketing Fund Period.
MS' sole judgment is final in determining CUSTOMER compliance with
this Program.
4. Advertisements. The term "advertisement" means any printed, broadcast,
direct mail or transmitted advertisements for the product, including
without limitation, all newspaper, television, radio, and Internet or
on-line advertisements.
5. Questions and Inquiries. If CUSTOMER has questions about whether
CUSTOMER's advertisements comply with this Program or if CUSTOMER has
other inquiries, CUSTOMER must direct these questions and inquires to
the following MS contact:
Arlene Yanow
One Microsoft Way
Redmond, WA 98052
(206) 882-8080
The above contact is CUSTOMER's only authorized source of information
at MS about this Program, and CUSTOMER may not rely on any other
source of information, including other MS employees. No MS employee,
including the above contact, is authorized to communicate with
CUSTOMER about any alleged infractions of any other reseller.
8. Program Modifications/Termination: MS reserves the right to modify or
terminate this program at any time, in its sole discretion.
Amendment No. 1 to The Rebate and Page I1
Marketing Fund Addendum to The
Microsoft 1995/1996 Channel Agreement
<PAGE> 24
SCHEDULE J
JANUARY - JUNE, 1996
OPEN LICENSE
REBATE PROGRAMS
PROGRAMS: Microsoft offers three Open License rebate programs for the January -
June, 1996 Rebate period. The total available Rebate is divided as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
MAXIMUM PERCENTAGE
REBATE INCENTIVE AVAILABLE
==========================================================================
<S> <C>
Compliance Program
- --------------------------------------------------------------------------
Total Sales-out Program
- --------------------------------------------------------------------------
Business Systems Program *
- --------------------------------------------------------------------------
Total
- --------------------------------------------------------------------------
</TABLE>
All guidelines, including actual Rebate goals, shall be as outlined for the
Packaged Product Rebate.
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
Amendment No. 1 to The Rebate and Page J1
Marketing Fund Addendum to The
Microsoft 1995/1996 Channel Agreement
