SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
January 12, 2000
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Date of Report (Date of earliest event reported)
Bell Microproducts Inc.
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(Exact name of Registrant as specified in its charter)
California
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(State or other jurisdiction of incorporation)
005-43709 94-3057566
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(Commission File No.) (IRS Employer Identification Number)
1941 Ringwood Avenue
San Jose, California 95131-1721
(408) 451-9400
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(Address of Principal Executive Offices)
Not Applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events
Effective January 12, 2000, Bell Microproducts Inc., a California
corporation (the "Company") announced that International Business Machines
Corporation, a New York corporation ("IBM"), had appointed the Company as a
"Technology Group Solutions Partner" and that it and IBM had entered into a
two-year non-exclusive Master Distribution Agreement. Under these arrangements,
the Company will be authorized to distribute certain IBM Technology Group
products, throughout the Americas. Although the Company and IBM anticipate sales
of $2 billion over a four year period, the Company can provide no assurance that
this target will be achieved.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Bell Microproducts Inc.
By: _________________________________
Remo E. Canessa
Title: Vice President, Finance and
Chief Financial Officer
Dated: January 13, 2000
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IBM [Logo]
January 11, 2000
Mr. Phil Koussey
Senior Vice President of Marketing
Bell Microproducts, Inc.
1941 Ringwood Avenue
San Jose, CA 95131-1721
Dear Phil,
This memo summarizes the agreement under which Bell Microproducts Inc. is
participating in a program called "Technology Group Solutions Partner" for the
distribution of certain defined IBM Technology Group products throughout the
Americas effective January 12, 2000.
Under this arrangement, you will be provided with certain privileges and
considerations consistent with IBM's Technology Group Master Distribution
Agreement and IBM's Technology Group Solutions Partner program.
It is our joint objective to achieve sales of $2 Billion over a four year
period, although there is no guarantee that these expectations will be met.
Sincerely,
/s/ Henri Richard
Henri Richard
Vice President,
WW Distribution Sales & Support
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MASTER DISTRIBUTION AGREEMENT
BETWEEN
INTERNATIONAL BUSINESS MACHINES CORPORATION
AND
BELL MICROPRODUCTS INCORPORATION
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MASTER DISTRIBUTION AGREEMENT
Customer: Bell Microproducts Agreement Number: OEM10399
International Business Machines Corporation, a New York corporation ("IBM") and
Bell Microproducts Inc. a California corporation with its principal offices at
1941 Ringwood Avenue, San Jose, California ("Distributor") enter into this
Master Distribution Agreement for the purchase and distribution of IBM Products
by Distributor on a non-exclusive basis in the Authorized Territory as defined
in the attached Product Attachment(s). This Master Distribution Agreement, any
Attachments, and order acceptances issued hereto shall collectively be referred
to as the "MDA".
In consideration of the mutual covenants contained herein and other good and
valuable consideration, the receipt and sufficiency of which both parties
acknowledge, IBM and Distributor, intending to be legally bound, agree to the
following terms and conditions of this MDA:
The term of this MDA commences on January 1, 2000 and shall remain in effect for
a period of two (2) years expiring on January 1, 2002, unless terminated in
accordance with Section 15 of the MDA.
IN WITNESS WHEREOF, the parties have caused their duly authorized agents to
execute this MDA on the date below indicated.
INTERNATIONAL BUSINESS MACHINES BELL MICROPRODUCTS, INC.
CORPORATION
BY: /s/ Robert C. Melendres BY: /s/ Phil Roussey
--------------------------------- ----------------------------
NAME: Robert C. Melendres NAME: Phil Roussey
TITLE: Director, WW Contracts & TITLE: SR V-P of Marketing
Business Practices TG
DATE: January 11, 2000 DATE: January 11, 2000
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TABLE OF CONTENTS
GENERAL TERMS
SECTION 1. DEFINITIONS
SECTION 2. SALES ACTIVITY OF THE DISTRIBUTOR
SECTION 3. PAYMENT TO IBM
SECTION 4. RIGHTS AND OBLIGATIONS OF IBM
SECTION 5. ORDERING
SECTION 6. PRICING
SECTION 7. TRANSFER OF TITLE AND RISK OF LOSS OR DAMAGE
SECTION 8. WARRANTY
SECTION 9. DISTRIBUTORS WARRANTY TO ITS CUSTOMERS
SECTION 10. SOFTWARE AND MANUALS
SECTION 11. PRODUCT WITHDRAWAL
SECTION 12. TAXES
SECTION 13. PATENT INDEMNITY
SECTION 14. LIMITATION OF LIABILITY
SECTION 15. TERMINATION
SECTION 16. TRADEMARKS AND TRADE NAMES
SECTION 17. EXPORT
SECTION 18. MISCELLANEOUS
List of Product Attachment(s):
ATTACHMENT A SSD PRODUCT ATTACHMENT
EXHIBIT 1 MICRODRIVE
ATTACHMENT B MD PRODUCT ATTACHMENT
ATTACHMENT C NHD PRODUCT ATTACHMENT [TBD]
ATTACHMENT D EXCLUDED COUNTRIES
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ATTACHMENT E IBM BUSINESS PARTNER EMBLEM AUTHORIZATION
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SECTION 1. DEFINITIONS
1.1 "Product(s)" are listed in the Product Attachments and shall mean
products purchased from IBM Technology Group that Distributor is
authorized to sell in the Authorized Territories. The Product
Attachment(s) may contain specific terms applying to the listed
Products.
1.2 "IBM Technology Group" shall mean the group of IBM business units or
divisions currently known as: Storage Systems Division (SSD),
Microelectronics Division (MD), Networking Hardware Division (NHD),
Displays Business Unit (DBU), and Embedded Systems Business Unit
(ESBU). The group of IBM business units may change from time to time
without notice.
1.3 "Distributor" shall mean the entity executing this MDA, a Subsidiary,
and any other entity authorized to purchase Product(s) under this MDA.
1.4 "End User" shall mean a third party who: i) is not a Subsidiary and who
is otherwise unaffiliated with Distributor or Customer; ii) purchases
Products from a Customer for its own use; and iii) places such Product
in productive use. An End User does not remarket, sell, license, rent
or lease the Product(s) to other parties in the regular course of the
End User's business.
1.5 "Customer" shall mean a third party which is not a Subsidiary of or
which is otherwise unaffiliated with Distributor, and purchases
Product(s) from Distributor for the purpose of reselling to End Users
or to resellers such as VARs, retailers, integrators and OEMs.
1.6 "Base Agreement" shall mean the main body of the MDA, excluding Product
Attachment(s).
1.7 "Product Attachment(s)" shall mean a written instrument executed by the
parties for the purpose of specifically identifying Product(s) the
parties intend to be covered by this MDA and the terms and conditions
unique to the particular Product(s). A Product Attachment shall modify
and supplement this Base Agreement for the Products covered by that
Product Attachment. In the event of a conflict between the terms of the
Base Agreement and the Product Attachment(s), the Product Attachment(s)
shall control.
1.8 "Authorized Territory" shall mean the territory in which IBM authorizes
Distributor, on a nonexclusive basis, to sell and promote Product(s) to
Customer(s). The Authorized Territory for a particular Product is
specified in the applicable Product Attachment.
1.9 "Excluded Countries" shall mean countries where Distributor is not
authorized to sell Product(s) directly or indirectly. Excluded
Countries include those countries listed in Attachment D and any other
countries to which such sales are prohibited by U.S. law or by this
MDA.
1.10 "Subsidiary" shall mean a corporation, company, or other entity:
a. more than fifty percent (50%) of whose outstanding
shares or securities (representing the right to vote
for the election of directors or other managing
authority) are; or
b. which does not have outstanding shares or securities,
as may be the case in a partnership, joint venture,
or unincorporated association, but more than fifty
percent (50%) of whose ownership interest
representing the right to make decisions for such
corporation, company or other entity is;
now or hereafter, owned or controlled, directly or indirectly,
by a party hereto.
Such corporation, company or other entity, however, shall be deemed to
be a Subsidiary only so long as such ownership or control exists.
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SECTION 2. SALES ACTIVITY OF THE DISTRIBUTOR
Unless otherwise provided for in the Product Attachment(s), the sales activities
of the Distributor shall be governed by the terms and conditions as provided in
this Section 2.
2.1 General Scope of Product Sales Activity - IBM shall determine the scope
of Distributor's Product sales activity including but not limited to:
(i) the Product(s) that Distributor is authorized to sell; (ii) the
Authorized Territories; and, (iii) the Authorized Locations.
a. IBM Product Qualifications
IBM shall determine which Product(s) Distributor is authorized
to sell by evaluating IBM's business needs and Distributor's
ability to meet its needs by considering, among other things,
the following:
(1) Distributor's technical expertise and knowledge of
the particular Product(s);
(2) the resources available to Distributor to provide
services that support the particular Product(s);
(3) Distributor's ability to purchase minimum volumes of
the particular Product(s); and
(4) Distributor's performance and standing as a
distributor for other Product(s).
b. Authorized Territory
Distributor shall promote and sell Product(s) within its Authorized
Territory in accordance with the terms of this MDA. The following
applies to Distributor's Authorized Territories:
(1) Territory or Country Changes
In the event of political situations that result in a
change of geographical borders, a change of country
names or a similar change in the composition of any
such country, IBM shall have the right to modify the
territory in which Distributor is authorized to sell
or exercise any of its rights as set forth herein,
including termination.
(2) Excluded Countries
Distributor is not authorized to sell, promote, or
otherwise transfer Product(s) or services directly or
indirectly in Excluded Countries as defined herein.
(3) Out of Territory Sales
Distributor is not authorized to sell Product(s)
directly or indirectly outside of its Authorized
Territory, unless agreed upon by the parties in
writing, or if such prohibition is contrary to law.
c. Authorized Locations
Distributor shall receive Product(s), hold inventory,
distribute Product(s) and perform its other duties only at the
locations described in the Product Attachment(s) to this MDA
("Authorized Locations").
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d. Review
In addition to IBM's rights under Section 15 and
under law, if IBM, in its sole discretion, determines that:
(1) Distributor is not meeting the qualification criteria
established for any Product(s); (2) Distributor is not
adequately performing in the Authorized Territory for any
Product(s); or (3) Distributor is not adequately performing
its obligations under this MDA at an Authorized Location(s) ,
IBM may discontinue its authorization to sell: (i) such
Products; (ii) in such Authorized Territory; or (iii) from
such Authorized Location upon ninety (90) days prior written
notice to the Distributor and without any requirement to
account for or incurring any liability to the Distributor.
Such modification of IBM's authorization, shall not constitute
a breach of IBM's obligations under this MDA or trigger a "For
Cause" termination of this MDA.
2.2 The primary intent of this MDA is to service the reseller market and
Distributor has represented that the reseller opportunity is the main
source of sales and revenue. Distributor represents that it is not now
and will not itself be owned or controlled by any entity that sells the
same or similar Products to End Users.
2.3 Minimum Sales Targets - IBM shall, from time to time, develop minimum
sales targets for the Products which Distributor must meet or exceed.
Such minimum sales targets shall be agreed upon by IBM and Distributor.
In the event that Distributor fails to meet or exceed any such sales
targets, IBM shall notify Distributor in writing about the sales
shortfall. If Distributor fails to cure the sales shortfall within the
period, if any, as set forth in the Product Attachment(s) IBM may, at
its sole option terminate this MDA or Product Attachment(s) by written
notice to Distributor.
2.4 Distributor's Support of its Customers - Distributor shall actively and
diligently promote, with the highest quality and with the highest
degree of professionalism, the sale of Products and after-sale
satisfaction of the Customers. In connection with performing these
duties, the Distributor shall engage in all of the following
activities:
a. Customer Satisfaction Programs - Participate in IBM Customer
satisfaction programs as IBM requires, and be responsible for
establishing and maintaining Customer satisfaction with
respect to all of the Distributor's responsibilities under
this MDA.
b. Problem Resolution - Be responsible for all, or at IBM's
request, assist IBM with, problem determination and resolution
regarding any Customer. Distributor will also assist IBM in
tracing and locating Products.
c. Sales Training - Participate in any sales training required by
IBM for the Distributor's sales personnel at such times as are
mutually agreed. Provide continuing supplemental training for
Distributor's personnel as necessary for the performance of
this MDA. Ensure that personnel responsible for selling
Products are appropriately-trained, highly-motivated sales
personnel who are approved and qualified, pursuant to any
formal IBM qualification procedures or otherwise, if required
by IBM, to sell the Products.
d. IBM Sales Literature - Use only those catalogs, samples,
advertising literature, and sales aids which IBM provides or
approves in advance. IBM-provided catalogs, samples,
advertising literature, and sales aids shall be provided by
IBM at IBM's expense and remain the property of IBM. Upon
termination or expiration of this MDA, any remaining such
items shall be returned promptly to IBM.
e. Forecasts - Provide to IBM the following forecasts: (i) a
monthly rolling forecast that provides weekly estimates for
the following month; and (ii) a rolling forecast that provides
monthly estimates for the following six subsequent months.
Forecasts shall be non binding but shall be
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provided as an accurate forecast and in good faith. IBM will
use these forecasts to establish sales targets, as referenced
in Section 2.3.
f. Duty to be Informed - Become and remain informed concerning
all information, bulletins and Price List or Price Catalog
changes in connection with Products and perform faithfully
policies announced or communicated by IBM in writing.
g. Sufficient Financial Resources - Maintain adequate financial
resources to fully support and perform all of its activities
and obligations under this MDA.
h. Changes in Business or Financial Condition - Provide IBM at
least ninety (90) days advance written notice of any
substantive change or anticipated change to its business
structure, financial condition or operating environment. For
example, notice shall be required for a material change in
equity ownership or management, or any material change to
information supplied when the Distributor applied to be a
Distributor or otherwise furnished to IBM under this MDA.
i. Ethical Compliance - Comply with the highest ethical standards
in performing under this MDA. The Distributor shall not offer
or make payments or gifts (monetary or otherwise) to anyone
for the purpose of influencing decisions.
j. Comments About Remarketers - Not discuss with IBM any other
remarketer's pricing or other marketing practices. IBM does
not wish to receive, and will disregard, any such comments
whether written or oral. Any comments by our representatives
contrary to this are expressly unauthorized and disclaimed by
IBM.
k. Maintain Records and Permit IBM Review - Maintain adequate
records of its Customers, inventories and sales to permit
appropriate IBM staff or an independent third party hired by
IBM to review Distributor's records to determine Distributor's
compliance with this MDA. IBM may, upon giving Distributor 24
hour notice: (i) periodically inspect and review Distributor's
performance under this MDA which shall include the right to
visit the principal business location, marketing offices,
Authorized Location(s), or the distribution center(s) of
Distributor; (ii) review Distributor's files relating to its
sales, marketing and inventory levels of Products; and (iii)
request and receive from Distributor information relating to
Distributor's inventory of Products upon reasonable request by
IBM. IBM shall conduct any such inspection or review no more
frequently than semiannually. In the event that Distributor is
experiencing unforeseen and exceptional circumstances beyond
Distributor's reasonable control which prevents IBM from
performing its inspection, IBM will reschedule such inspection
date and notify Distributor of the revised date.
l. Customer Documents - Furnish packaging slips and invoices to
the Customers before or upon delivery of Products specifying
the Customer's name and address, the Product part number and
quantity, date of sale and price.
m. Inventory Reports - Provide inventory reports, either on a
daily or weekly basis, as specified in the applicable Product
Attachment(s). Inventory reports shall include consigned and
bonded inventory, if any.
n. Physical Inventory Inspection - Distributor shall make
available for physical inspection any and all Product(s) in
Distributor's inventory at any time IBM deems necessary.
Physical inventory inspection may take place no more
frequently than semiannually. In the event that Distributor is
experiencing unforeseen and exceptional circumstances beyond
Distributor's reasonable control which prevents IBM from
performing its physical inspection, IBM will reschedule such
inspection date and notify Distributor of the revised date.
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2.5 Distributor's Customer Agreements - In its Customer agreements,
Distributor shall include a limitation of liability that protects IBM
as a supplier that is substantially similar to the limitation of
liability contained in Section 14 of this MDA.
a. Distributor's limitation of liability provision in its
Customer agreement shall state, in comparable words:
"The collective liabilities of the seller and its third party
suppliers are subject to the limitation of liability described
in this agreement. The third party suppliers are intended
beneficiaries of this limitation."
b. The Distributor's Customer agreement(s) shall further state
that third party suppliers disclaim all implied warranties
(including without limitation the warranties of
merchantability and fitness for a particular purpose) as
follows:
"THE FOREGOING WARRANTIES ARE DISTRIBUTOR'S EXCLUSIVE
WARRANTIES AND REPLACE ALL OTHER WARRANTIES OR TERMS, EXPRESS
OR IMPLIED, INCLUDING THE WARRANTY OF NON-INFRINGEMENT AND THE
IMPLIED WARRANTIES OR TERMS OF MERCHANTABILITY, FITNESS OR USE
FOR A PARTICULAR PURPOSE, OR SATISFACTORY QUALITY."
2.6 Prohibited Sales - IBM does not intend for Product(s) or services to be
used in conjunction with medical devices, or military or nuclear
applications. Distributor agrees and warrants that Distributor will not
use, promote, sell or otherwise transfer any Product(s) or services to
any Customer or End User for use in conjunction with medical devices,
or military or nuclear applications. Distributor shall include
substantially similar limitations on the use of Product(s) or services
in its Customer agreements. IBM shall have no liability when Product(s)
or services are used in conjunction with medical devices, or military
or nuclear applications.
SECTION 3. PAYMENT TO IBM
3.1 Distributor shall pay promptly to IBM any amounts which may become due
as a result of this MDA. Unless otherwise set forth in either the
Product Attachment(s) or program offering letters, Distributor shall
pay for all Products net within thirty (30) days after the date
specified on the IBM invoice.
3.2 If Distributor's account becomes delinquent or Distributor's account
balance exceeds its credit limit established by IBM, Distributor
agrees that IBM may, in addition to any other right provided for under
this MDA, do one or more of the following:
a. impose a finance charge equal to the lesser of 1.5% of the
balance due per month or the statutorily allowed maximum rate
of interest in accordance with applicable law;
b. repossess any Products. If IBM does so, the Distributor agrees
to pay all expenses associated with repossession and
collection, including reasonable attorney's fees. The
Distributor agrees to make the Products available to IBM at a
site requested by IBM;
c. require payment before shipment or payment via letter of
credit;
d. stop shipments to Distributor; or
e. terminate this MDA as a material breach.
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3.3 IBM reserves the right to pursue any other remedy
available at law or in equity. In addition, if Distributor's
account with any Subsidiary or affiliate of IBM becomes
delinquent due to any other reason other than a good faith
dispute, IBM may terminate this MDA as a material breach.
SECTION 4. RIGHTS AND OBLIGATIONS OF IBM
4.1 IBM shall:
a. supply Products to Distributor at the shipment location
specified in the order acceptance or order confirmation, as
applicable;
b. provide warranty service as described in the Product
Attachment(s);
c. provide, without charge, reasonable quantities of Product
information, marketing literature and promotional material for
use by Distributor when promoting and marketing the Product(s)
(Additional quantities thereof may be available for a
charge.); and;
d. provide specified levels of training to the Distributor if
provided for in the applicable Product Attachment(s).
SECTION 5. ORDERING
5.1 Distributor and any Subsidiary authorized by IBM may order Products and
related services by sending IBM a written purchase order. IBM will
confirm receipt of orders. All accepted orders will incorporate and be
fulfilled under the terms of this MDA. Minimum and multiple order
quantities may apply.
5.2 For non-U.S. sales (sales for which IBM ships to Distributor and
Distributor takes title outside of the U.S.), the contract of sale for
Products purchased under this MDA will be between Distributor and the
IBM legal entity that will supply the Products to Distributor ("the
Plant"). It is agreed that all such orders will incorporate the terms
of this MDA whether expressly referenced or not, and will only be
accepted on this basis. Orders will be accepted by the Plant when it
issues an acceptance document thereby creating the contract of sale for
the Products. IBM reserves the right to enforce the provisions of this
MDA on behalf of the Plant.
5.3 For U.S. sales (sales for which IBM ships to Distributor and
Distributor takes title within the U.S.), the contract of sale for
Products purchased under this MDA will be between IBM and Distributor.
5.4 Distributor's Right to Change or Cancel - Prior to the ship date,
Distributor may cancel or reschedule an order for Products and IBM may
charge a cancellation feeas set forth in the Product Attachment(s).
However, if not stated in the Product Attachemnt(s), such orders are
cancelled within (10) days prior to shipment and a fee may be assessed.
5.5 Supply Constraint - IBM shall not be liable or in default under this
MDA if IBM's supply of Products or Services ordered under this MDA
becomes constrained for any reason, including but not limited to,
inventory shortages, work slowdowns or stoppages and IBM may, in its
sole discretion, reduce quantities or delay shipments of Products to
Distributor.
5.6 Changes - IBM retains the right to change the specification of any
Product and shall use reasonable efforts to notify the Distributor.
5.7 Subsidiaries - Upon IBM's written approval, a Distributor's Subsidiary
may be authorized to order Products under the terms and conditions of
this MDA. Furthermore, Distributor agrees that it shall guarantee its
Subsidiary's compliance with the terms and conditions of this MDA and
the Subsidiary's performance hereunder.
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5.8 Special Programs - IBM may offer Products to Distributor under various
special programs such as qualification units or sales rebates. IBM will
notify Distributor of these offerings and such programs shall
incorporate the terms and conditions of this MDA. In the event of a
conflict between such special program offerings and the MDA, such
special program offerings will take precedence.
SECTION 6. PRICING
6.1 The prices to be paid by the Distributor for the Products ordered
hereunder shall be those set forth in the Price List or Price Catalog,
as amended from time to time by IBM, depending on the Product.
6.2 Price Changes - IBM may change Product prices at any time and will
provide written notice to Distributor. IBM will provide at least thirty
(30) days notice of a price increase. If IBM increases prices
Distributor may reduce the number of units ordered or cancel orders
without charge for affected Products not yet shipped by IBM. If IBM has
accepted an order for Products and subsequently sends notice of a price
increase for such Products prior to shipment, the price on the document
confirming the order shall apply to the sale. Otherwise, the price
increase will apply to all such Products shipped on or after the
effective date of the increase. If IBM decreases prices, the decreased
price will apply to all Products not yet shipped by IBM and the other
terms and conditions, if any, will be set forth in a special program
offering letter.
SECTION 7. TRANSFER OF TITLE AND RISK OF LOSS OR DAMAGE
Transfer of title and risk of loss or damage for the Products will pass to
Distributor upon tender by IBM to the carrier located at the "ship-from"
location which shall be specified in the order confirmation. IBM will ship the
Product(s) via any carrier agreed to by the parties and that carrier shall be
identified in the order confirmation. If Distributor does not request a carrier,
IBM shall choose the carrier and identify the carrier in the order confirmation
which shall then be deemed to be agreed to by both parties. Distributor will be
responsible for shipment costs from the "ship-from location" to Distributor's
location. Products shall be deemed accepted by the Distributor upon delivery
unless Distributor notifies IBM otherwise in writing within ten (10) days of
delivery that the Products are defective the terms of this MDA or IBM's
confirmation of Distributor's order.
SECTION 8. WARRANTY
Except as may otherwise be provided in a Product Attachment(s), the following
warranty shall apply:
8.1 IBM warrants each Product to be free from defects in material and
workmanship for the applicable warranty period and subject to any
additional terms and conditions set forth in the Product Attachment(s).
8.2 IBM's sole liability and Distributor's sole remedy for breach of
warranty shall be limited as stated in this Section 8.
8.3 If Distributor claims that the Products are nonconforming, Distributor
shall (1) promptly notify IBM in writing of the basis of such
nonconformity; (2) follow IBM's instructions for return of the Products
as set forth below; and (3) at IBM's request, return the Product
freight prepaid by Distributor to the IBM designated location. IBM has
the sole discretion to apply minimum return quantities. The return
Product procedure for warranty claims is identified in Sections 8.3 a -
e.
a. In the event that a potential defect becomes apparent to
Distributor, Distributor shall request a Return Materials
Authorization (RMA) from IBM. As a condition of receiving its
remedies under IBM's warranty, Distributor must provide
details regarding the alleged defect such as:
(i) the date the claimed defect became apparent;
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(ii) the identity of the Unit(s) involved specifying all
affected serial numbers or lot numbers including any
associated IBM part numbers; and
(iii) the quantity of Product(s) involved including the
conditions under which the defect became apparent.
b. Return Materials Authorization - Distributor shall not receive
a replacement unit or a credit from IBM unless and until it
first receives a RMA from IBM.
c. Return of Units - Distributor must return the Products to IBM
at a location which shall be designated by IBM. Distributor
must ship the Products via transportation prepaid by
Distributor. Minimum return quantities and multiples may
apply.
d. Replacement Unit - In the event that IBM elects to provide
replacement unit(s) under the warranty terms, IBM shall issue
a RMA and ship the replacement unit(s) to the appropriate
Authorized Location.
e. Credits - In the event that IBM issues a RMA and elects to
provide a credit to Distributor such credits will be at the
price in effect as of the date the RMA is issued. Distributor
shall not have any set-off rights or the right to decrease the
payments owed to IBM pursuant to this MDA.
8.4 If IBM determines such Product does not conform to its warranty, IBM
will, at IBM's option, repair or replace the Product or issue a credit
at the price in effect as of the date of the credit. If IBM replaces
the Product, the returned Product becomes IBM's property. This warranty
does not cover a Product that fails to conform to its warranty because
of: (a) accident, abuse, misuse, negligence, modification, or improper
maintenance; (b) a failure caused by any item which IBM did not provide
or for which IBM is not responsible; or (c) use or storage in other
than IBM's specified operating environment. The warranty is void if
labels have been removed or altered by Distributor or a third party.
8.5 This warranty is not transferable. IBM does not warrant: (a)
uninterrupted or error free operation of the Products, or (b) that IBM
will correct all defects. No course of dealing, course of performance,
usage of trade, or description of Products or services shall be deemed
to establish a warranty, express or implied.
8.6 UNLESS OTHERWISE PROVIDED BY WRITTEN AGREEMENT, ALL SERVICES,
PROTOTYPES AND QUALIFICATION UNITS ARE PROVIDED "AS IS" WITHOUT
WARRANTY OR INDEMNIFICATION OF ANY KIND BY IBM.
8.7 THE FOREGOING WARRANTIES ARE IBM'S EXCLUSIVE WARRANTIES REGARDING
PRODUCTS AND REPLACE ALL OTHER WARRANTIES OR TERMS, EXPRESS OR IMPLIED,
INCLUDING THE WARRANTY OF NON-INFRINGEMENT AND THE IMPLIED WARRANTIES
OR TERMS OF MERCHANTABILITY, FITNESS OR USE FOR A PARTICULAR PURPOSE,
AND SATISFACTORY QUALITY.
SECTION 9. DISTRIBUTOR'S WARRANTIES TO CUSTOMERS
Nothing contained in this MDA shall prohibit Distributor from offering its own
warranty directly to any of its Customers PROVIDED HOWEVER, that Distributor
shall not and is not authorized to: (a) make any representations or warranties
about IBM or IBM's warranty to Distributor for the Products; (b) make any
representations or warranties on behalf of IBM; or (c) enter into any commitment
on behalf of IBM.
SECTION 10. SOFTWARE AND MANUALS
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If IBM provides Distributor with software or other code ("Software") under this
MDA, the Software will be subject to all U.S. patent and copyright laws, this
MDA, and the license agreement provided with the Software. If Distributor
objects to the license agreement, Distributor shall notify IBM in writing and
return all copies of the Software within ten (10) days of receipt.
Distributor may reproduce or modify manuals IBM provides under this MDA
("Manuals") as needed to support Distributor's use of Products. Distributed
Manuals must not include anything that suggests IBM is the source of the Manuals
or Products. Distributor may reproduce and distribute Manuals only for use with
Products and only under terms acceptable to IBM. Distributor must include a
copyright notice and an U.S. Government user restricted rights notice in
reproduced Manuals. The copyright notice must comply with copyright laws and
identify the owner as Distributor "and others." IBM shall retain title to all
Manuals and any modifications.
SECTION 11. PRODUCT WITHDRAWAL
IBM reserves the right to cancel or withdraw any Product or program at any time
and without liability as set forth in the Product Attachment(s) and if not so
specified, upon ninety (90) days written notice to the Distributor.
SECTION 12. TAXES
The Distributor shall pay all taxes arising out of transactions under this MDA,
including all sales, use and property taxes, but excluding taxes levied upon the
net income of IBM. Distributor shall reimburse IBM for any such taxes for which
the Distributor is liable hereunder which are imposed on IBM including, but not
limited to sales, use, and personal property taxes. The Distributor may supply
IBM with a tax exemption certificate or resale number in a form acceptable to
IBM, shall notify IBM promptly of any revocation of or modification to such
documentation, and shall hold IBM harmless from any and all taxes and expenses
incurred because or arising out of the use of such certificate or resale number.
SECTION 13. PATENT INDEMNITY
13.1 IBM agrees to indemnify and defend Distributor against money damages
and court costs assessed against Distributor resulting from a final
judgment of a court of competent jurisdiction that any Product sold or
service provided by IBM to Distributor hereunder infringes a patent or
copyright of a third party in any country in which Distributor is
authorized to sell and which IBM sells or provides similar products or
services. IBM has no obligation hereunder unless Distributor (1)
promptly notifies IBM, in writing, of the charge of infringement; (2)
allows IBM to control and cooperates with IBM in the defense and any
related settlement activities; and (3) upon the written request of IBM
either: (a) allows IBM to modify or replace the Product, or (b) returns
the Product to IBM for a credit equal to the purchase price paid by
Distributor to IBM for the Product. If such a claim is made or appears
likely to be made about a Product in Distributor's inventory,
Distributor agrees that IBM may, in IBM's sole discretion: (1) permit
Distributor to continue to market the Product; (2) modify the Product;
(3) replace the Product; or (4) require return of the Product for a
credit equal to the purchase price paid by Distributor to IBM for the
Product. IBM has no obligation regarding any claim of infringement to
the extent such claim is based on any of the following: (1)
Distributor's modification of a Product or service; (2) the
combination, operation or use of a Product with any product, data or
apparatus; (3) anything Distributor provides which is incorporated into
a Product; (4) IBM's manufacture or modification of a Product in
compliance with Distributor's requirements; (5) the use of a Product in
other than its specified operating environment; (6) the use or
distribution of a Product in a country in violation of U.S. export laws
or this MDA; or (7) infringement by a non-IBM product alone, as opposed
to its combination with Products IBM provides to Distributor as a
system. For such claims for which IBM has no obligation to indemnify
Distributor hereunder, Distributor agrees to indemnify and defend IBM
against all money damages and costs resulting from any claim that any
Product or service infringes a patent or copyright of a third party.
The foregoing states IBM's entire obligation and
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Distributor's exclusive remedy of IBM and Distributor regarding any
claim of patent or copyright infringement relating to any Product sold
or service provided.
13.2 Except for the copyright license provided in paragraph 2 of Section 10
of the MDA, no license, immunity or other right is granted herein by
either party to the other party, whether directly or by implication,
estoppel, or otherwise, with respect to any patent, trademark,
copyright, mask work, trade secret, or other intellectual property
rights.
13.3 Nothing in this MDA grants either party any rights to use the other
party's trademarks or trade names, directly or indirectly, in
connection with any product, service, promotion, publication or
publicity without prior written approval of the other party or
trademark or trade name owner.
SECTION 14. LIMITATION OF LIABILITY
14.1 For matters not covered by Section 8 of the MDA , IBM's sole and total
liability and Distributor's sole remedy for any and all causes of
action shall be limited to actual direct damages not exceeding the
greater of ten thousand U.S. Dollars ($10,000.00) or the applicable
price paid to IBM by the Distributor for the specific units of Products
or services that caused the damages and that are the subject matter of,
and directly related to, the cause of action. This limitation will not
apply to claims by Distributor for bodily injury (including death) or
damage to real or tangible personal property caused by the Products or
services and for which IBM is legally liable.
14.2 IBM shall not be liable for any special, indirect, incidental or
consequential damages, including lost profits or savings, even if IBM
has been informed of their possibility, including those arising from
infringement or alleged infringement of any patent, trademark,
copyright, mask work, or other intellectual property rights, or for
punitive, specific or exemplary damages. In addition, IBM will not be
liable for any loss or damage to any records or data, or for any claim
based on any third party claim, except those described in the last
sentence in Section 14.1 above.
SECTION 15. TERMINATION
15.1 Without Cause
Either party may terminate a Product Attachment(s) or the Base
Agreement for convenience upon ninety (90) days written notice. If
Distributor terminates the Base Agreement or a Product Attachment(s),
IBM may, at IBM's option, treat any or all applicable orders as if
cancelled by Distributor.
15.2 For Cause
Notwithstanding the foregoing, either party shall have the right to
terminate this MDA immediately if the other party:
a. becomes insolvent;
b. becomes the subject of any proceeding seeking relief,
reorganization, receivership or rearrangement under any laws
relating to insolvency;
c. makes an assignment for the benefit of creditors;
d. begins the liquidation, dissolution or winding up of its
business; or
e. undergoes a change of control with another entity, either
through an event such as acquisition, merger, consolidation,
or purchase of all or substantially all of the acquired
party's assets; or
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f. commits a material breach of its obligations under this MDA
including misappropriation of intellectual property of IBM.
15.3 Termination of a Product Attachment(s) or failure by IBM to renew
Distributor's authorization to sell Products under any particular
Product Attachment(s) shall not be considered to be termination of
other Product Attachment(s) or this MDA.
15.4 In the event of termination of a Product Attachment(s) or the Base
Agreement as set forth in Sections 15.1 and 15.2 above, IBM may, at its
option, repurchase any or all of Distributor's stock of affected
Products as set forth in the Product Attachment(s) or if not so
specified, which are in the original unopened packaging at IBM's then
current Price Catalog/Price List price less fifteen (15) percent to
cover administrative costs.
SECTION 16. TRADEMARKS AND TRADE NAMES
16.1 Unless the Distributor receives IBM's prior written permission, the
Distributor shall not use in advertising, publicity or other
activities, any name, trade name, trademark, acronym or other
designation of IBM or a company of IBM, including any contraction,
abbreviation, or simulation of any of the foregoing.
16.2 Distributor shall not have the right to use the IBM Business Partner
Emblem unless specifically provided for in the Product Attachment(s).
SECTION 17. EXPORT
17.1 Regardless of any disclosure made by Distributor to IBM of an ultimate
destination of Products, Distributor will not export either directly or
indirectly any Product, or any system incorporating said Product,
without first obtaining all required licenses and permits from all
relevant government agencies and departments. Distributor must disclose
to IBM in writing any intention to export any Products and ultimate
destination or as soon thereafter as is reasonably practical, but in
all cases prior to shipment.
17.2 FAILURE TO COMPLY WITH SECTION 17.1 ABOVE SHALL VOID ALL WARRANTIES ON
AFFECTED PRODUCT(S)) PROVIDED BY IBM HEREIN.
SECTION 18. MISCELLANEOUS PROVISIONS
18.1 Independent Parties - The parties recognize that the purpose of this
MDA is to establish a master distribution arrangement and to define the
respective rights and obligations of the parties within that
arrangement. The parties further recognize that they are independent
contractors and that this MDA (whether construed by itself or in
combination with separate but related agreements) does not establish or
create and shall not be interpreted as establishing or creating a joint
venture, partnership, franchise or other formal or informal business
organization of any kind. This MDA has been negotiated by the parties
and their respective counsel and will be interpreted fairly in
accordance with its terms and without any strict construction in favor
of or against either party. Each party is free to enter into similar
agreements with others, to market competitive products, and generally
to conduct its business in whatever way it chooses, provided there is
no conflict with this MDA. Likewise, IBM may increase or decrease the
number of its distributors, the types of distribution channels it
employs, and the number of participants in such channels.
18.2 Assignment - Distributor may not assign its rights or delegate its
obligations under this MDA without the prior written consent of IBM.
18.3 Choice of Law - The validity, construction and performance of this MDA,
and any claim related to the transactions arising out of this MDA,will
be governed by the substantive laws of the State of New York, United
States as though this MDA were executed in and fully performed within
the State of New York and without regard to any conflict of laws
provisions. The United Nations Convention on Contracts for the
International Sale of Goods shall not apply to this MDA. Neither party
will bring a legal action against the
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other more than one (1) year after the cause of action arose, except
for actions for nonpayment or to enforce intellectual property rights.
Both parties waive the right to a jury trial in any dispute arising out
of this MDA. Both parties agree that any action or claim related to
this MDA or the transactions arising out of this MDA shall be brought
in a court of competent jurisdiction in the State of New York and
hereby submit to the exclusive personal jurisdiction of any such court.
Distributor shall appoint and maintain a registered agent for the
purpose of service of process in the State of New York.
18.4 Confidentiality - Confidentiality of information exchanged between the
parties shall be governed by the terms of a separate and valid
confidential disclosure agreement duly executed by the parties. Neither
party shall disclose the terms of this MDA unless required by law or
both parties agree to do so. This includes, but is not limited to, the
issuance of press releases.
18.5 Entire Agreement - This Base Agreement, any Product Attachment(s) and
any other written documents signed by both parties that make specific
reference to amending this MDA, constitute the entire agreement between
the parties with respect to the subject matter of this MDA, and
supersede all prior discussions and agreements between the parties
relating to the subject matter hereof. Except for Product part numbers,
part number descriptions, prices and quantities, purchase orders will
be used to convey information only and any additional or different
terms in any purchase order or written communication from Distributor
are void. IBM may change the terms of this MDA by giving Distributor
ninety (90) days written notice. Such changes shall be effective on the
date specified by IBM in the notice and for orders received on or after
such date. If IBM elects to change the terms of this MDA and
Distributor objects to the proposed changes, Distributor must send a
written objection within the (10) days after receiving the notice from
IBM. The parties will engage in good faith discussions up to a period
of 30 days in order to come to a resolution. In the event that a
resolution can not be agreed upon, IBM may terminate this MDA upon
providing Distributor ninety (90) days notice.
18.6 Force Majeure - Except for Distributor's obligation to pay, neither
party will be responsible for failing to perform under this MDA for
acts of God, natural disasters, or other similar causes beyond its
reasonable control.
18.7 Indemnification - The Distributor shall save and hold IBM harmless and
indemnify IBM from and against all claims, losses, liabilities and
expenses, direct or indirect, by Distributor or any third party,
including legal expenses, arising out of, related to, or in any way
connected with the performance of this MDA or its breach, Distributor's
relationship with a third party, or any act or omission by the
Distributor or anyone employed by or associated with the Distributor.
18.8 Engineering Changes - Distributor agrees to install mandatory
engineering changes (such as those required for safety) on a Product.
Any parts removed become IBM's property. Distributor represents that it
will obtain permission from the owner and any lien holders prior to
transferring ownership and possession of removed parts to IBM. IBM will
use reasonable efforts to provide direction to Distributor in
performing such changes.
18.9 English Language - This MDA is in the English language only, which
shall be controlling in all respects, and all versions hereof in any
other language shall be for accommodation only and shall not be binding
upon the parties hereto. All communications and notices to be made or
given pursuant to this MDA shall be in the English language.
18.10 Compliance with Laws - Each party shall comply, at its own expense,
with all applicable United States (local, state and federal), European
Economic Commission, and other country or country group laws and
regulations, and shall procure all licenses and pay all fees and other
charges required thereby.
18.11 No Waiver - No delay or failure by either party to act in the event of
a breach or default hereunder shall be construed as a waiver of that or
any subsequent breach or default of any provision of this MDA.
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18.12 Severability - If any part, term or provision of this MDA is declared
unlawful or unenforceable by a court of competent jurisdiction, the
remainder of this MDA shall remain in full force and effect.
18.13 Reproductions - Once signed by both parties, any reproduction of the
MDA made by reliable means (e.g., photocopy or facsimile) is considered
an original.
18.14 Notices - All notices shall be in writing, sent in a manner that
generates a reliable written receipt, and is addressed to the attention
of the individual signatories of this Master Distribution Agreement on
behalf of the parties, unless either party specifies otherwise in a
Product Attachment(s) that notices for a specific Product(s) should be
sent to the attention of a different addressee.
18.15 Headings - The headings contained in this MDA are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this MDA.
18.16 Survival - Any terms of this MDA which by their nature extend beyond
expiration or termination shall remain in effect until fulfilled and
shall bind the parties and their legal representatives, successors,
heirs and assigns.
18.17 Third Party Beneficiaries - This MDA is not intended to and does not
benefit any party except IBM and Distributor. It is the parties'
express intent that this MDA is not a third party beneficiary contract.
18.18 Mediation - In the event of a dispute, the parties may mutually agree
to mediation.
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