ADDENDUM NUMBER ONE TO THE PREMIUM INTERNATIONAL DISTRIBUTION AGREEMENT BY AND BETWEEN GUPTA TECHNOLOGIES, LLC

 

<PAGE>

                                                                   Exhibit 10.59

 

[GUPTA LOGO]

 

                               ADDENDUM NUMBER ONE

                                     TO THE

                  PREMIUM INTERNATIONAL DISTRIBUTION AGREEMENT

                                 BY AND BETWEEN

                             GUPTA TECHNOLOGIES, LLC

                                    ("GUPTA")

                                       AND

                                   SPHINX CST

                                  ("DISTRIBUTOR")

 

This Addendum Number One (the "Addendum") is made to the Premium International

Distribution Agreement effective October 1, 2003 and marked with the GUPTA

Agreement number indicated above (collectively referred to herein as the

"Agreement") by and between GUPTA TECHNOLOGIES, LLC, a Delaware limited

liability company with offices at 975 Island Drive, Redwood Shores, CA, 94065,

USA ("GUPTA"), and SPHINX CST, a company formed under the laws of the United

Kingdom with offices at Woodside House, Osier Drive, Sherwood Park, Nottingham,

NG15 0DS, England ("Distributor"). This Addendum supplements the General Terms

and Conditions ("GTCs") of the Agreement. All terms defined in the GTCs have the

meanings set forth therein. This Addendum is issued under and governed by the

terms and conditions of the Premium International Distribution Agreement

referenced above and shall be binding upon GUPTA and the Distributor named

above.

 

WHEREAS, GUPTA and Distributor have agreed to modify the terms and conditions of

the Agreement via this Addendum; and

 

NOW, THEREFORE, GUPTA and Distributor agree, as follows:

 

1.     Conflicts, Use of Terms: Where applicable, the defined terms in the

      Agreement and in this Addendum shall convey the same meanings. The terms

      and conditions contained in this Addendum are hereby incorporated into the

      Agreement by reference made herein. Notwithstanding the foregoing, in the

      event of conflict between the terms and conditions of the Agreement and

       this Addendum, the terms and conditions of this Addendum shall prevail.

 

2.     Term of this Addendum: October 1, 2004 ("Effective Date") to September 30,

      2005

 

3.     Revised Minimum Revenue Commitment for Year 2: As of the Effective Date of

       this Addendum, the "Minimum revenue delivered to GUPTA" for Year 2, as set

      forth in Exhibit A to the Agreement, is hereby deleted in its entirety and

      replaced with the following: (pound)1,125,000 (One million one hundred

      twenty-five thousand United Kingdom Pounds).

 

4.     Annual Enrollment Fee: Section 1.2 ("Enrollment Fee") of the Agreement is

      hereby deleted in its entirety and replaced with the following:

 

        1.2 Annual Enrollment Fee.

 

        Upon execution of this Agreement, and on each annual anniversary of the

        Effective Date of the Agreement, DISTRIBUTOR shall pay to GUPTA a

        nonrefundable annual fee (the "Annual Enrollment Fee") of (pound)3,300

        (Three thousand three hundred United Kingdom Pounds). The Annual

        Enrollment Fee covers the costs of training, unlimited internal use of

        the Products solely for purposes related to this Agreement, and external

        usage for demonstration purposes related to this Agreement.

 

      As of the Effective Date of this Addendum, the Annual Enrollment Fee of

      (pound)3,300 (Three thousand three hundred United Kingdom Pounds) is

      immediately due and payable to GUPTA and will be paid by Distributor no

      later than net thirty (30) days from GUPTA's purchase order date.

 

                                       1

 

 

<PAGE>

 

[GUPTA LOGO]

 

5.     Stock Rotation Provision: The following provision is added to the

      Agreement as Section 15.13 GTC:

 

            15.13 STOCK ROTATION.

 

                 15.13.1 At any time during the first 30 (thirty) days

                        following the end of GUPTA's fiscal quarter during the

                        Term of the Agreement, DISTRIBUTOR may return for credit

                        an amount of Products with an original purchase price

                        not in excess of ten percent (10%) of the aggregate

                        purchase price of all DISTRIBUTOR's purchases during the

                        preceding 90 (ninety) days, one calendar quarter. Any

                        Product(s) to be returned by Distributor must be new,

                        unused, and in original unopened packaging.

 

                15.13.2 When DISTRIBUTOR requests a stock rotation, it will

                         submit to GUPTA a list indicating the quantity and part

                        number of the Product(s), limited to current version or

                        immediately previous Product release only. Stock

                        rotation requests must be (i) submitted within 90

                        (ninety) days from the original Product invoice date,

                        and (ii) accompanied by an Order for Products with an

                        aggregate purchase price equal to or greater than the

                        credit DISTRIBUTOR is to receive for such return. Upon

                        receiving such list and related Order for Products,

                        GUPTA will issue to Distributor a Return Material

                         Authorization ("RMA") number for the return of the

                        Product(s) on the list and will process the related

                        Order for Products. All transportation costs (and

                        duties) for the returned Products shall be paid by

                        DISTRIBUTOR.

 

6.     Assignment: Distributor hereby acknowledges that, effective as of October

      1, 2004, Gupta Technologies GmbH has assigned all rights, duties and

      obligations under this agreement to its parent, Gupta Technologies, LLC.

      At all times the term "Gupta Technologies GmbH" and "GUPTA" as found in

      the Agreement modified by this Addendum shall be taken to refer to "Gupta

      Technologies, LLC". Distributor hereby acknowledges that Gupta

      Technologies, LLC is the successor in interest to Gupta Technologies,

      GmbH.

 

7.     No Other Modifications: Other than as provided in this Addendum above, the

      terms and conditions of the Agreement remain unchanged and in full force

      and effect.

 

IN WITNESS WHEREOF the parties have caused this Addendum to be duly executed and

effective as of the Effective Date set forth above.

 

SPHINX CST ("DISTRIBUTOR"):                    GUPTA TECHNOLOGIES, LLC ("GUPTA"):

 

Signature:_____________________________        Signature:________________________

Name:__________________________________        Name: Jeff Bailey

Title:_________________________________        Title: President and CEO

Date:__________________________________        Date:_____________________________

 

                                       2

<PAGE>

 

[GUPTA LOGO]

 

                                     PREMIUM

                       INTERNATIONAL DISTRIBUTION AGREEMENT

 

This Agreement ("Agreement") is made this 1st day of October, 2003 ("Effective

Date") between GUPTA TECHNOLOGIES GMBH, a company formed under the laws of

Germany with offices at Riesstrasse 15-17, D-80992 Munich, Germany ("GUPTA"),

and SPHINX CST, a company formed under the laws of the United Kingdom with

offices at Woodside House, Osier Drive, Sherwood Park, Nottingham, NG15 0DS,

England ("DISTRIBUTOR"), and is as follows:

 

                                 1. APPOINTMENT

 

1.1. APPOINTMENT AS DISTRIBUTOR.

 

1.1.1. APPOINTMENT.

 

GUPTA hereby appoints DISTRIBUTOR as an authorized distributor of GUPTA's

commercially available software (the "Products"), Gupta License Services ("GLS")

and other services (such GLS and other authorized services to be the "Services")

in the territory specified in Exhibit A ("Territory"), as further described

herein. DISTRIBUTOR hereby accepts such appointment. DISTRIBUTOR's appointment

means that GUPTA has granted DISTRIBUTOR the non-exclusive and non-transferable

right to (a) authorize third party resellers ("VARs") to market and distribute

one or more of the Products in object code form only, and sell the Services, in

accordance with this Agreement, to end users ("End Users") for their internal

business use in the Territory; (b) operate a GUPTA authorized technical support

("ASC") center in accordance with the Authorized Support Center Addendum, if

included, and (c) operate a GUPTA authorized training ("ATC") center in

accordance with the Authorized Training Center Addendum, if included.

DISTRIBUTOR shall prohibit VARs from soliciting End Users outside of the

Territory; provided, however, if the Territory is a member state of the European

Community ("EC") then VAR may fill any unsolicited order for Products and

Services received from an End User within any member state of the EC. Under no

circumstances shall VAR be permitted to fill any order for the Products and

Services from outside the EC. DISTRIBUTOR shall not distribute the Products and

Services to End Users unless authorized in writing by GUPTA.

 

1.1.2 ACTIVITIES BY GUPTA.

 

DISTRIBUTOR's appointment hereunder is non-exclusive as to all persons,

including GUPTA, its affiliates, and their respective licensors, distributors

and agents, and such parties may, directly or indirectly, sell, license, or

otherwise make the Products and Services available within the Territory. Unless

otherwise expressly agreed to in writing, no compensation shall be payable to

DISTRIBUTOR with respect to any such transactions.

 

1.2.   ENROLLMENT FEE.

 

Upon execution of this Agreement, DISTRIBUTOR shall pay to GUPTA a nonrefundable

fee (the "Enrollment Fee") in the amount specified on Exhibit A. The Enrollment

Fee covers the cost of training, unlimited internal use of the Products solely

for purposes related to this Agreement and external usage for demonstration

purposes related to this Agreement.

 

1.3.   QUALIFIED EMPLOYEES; TRAINING.

 

DISTRIBUTOR shall at all times employ at least one person who has successfully

completed GUPTA's reseller training program and at least one person to fulfill

the obligation to provide Services and training pursuant to Exhibits C and D.

Training will be held at GUPTA's offices in Redwood Shores, California or as

specified otherwise. GUPTA will supply classroom materials. DISTRIBUTOR shall

bear all costs of attending the training sessions, including transportation,

food, and lodging.

 

1.4.   CROSS-LINKS ON WEBSITE.

 

Upon successful completion of the training program referenced in Section 1.3,

GUPTA shall identify DISTRIBUTOR as a distributor on GUPTA's website and shall

provide a link to DISTRIBUTOR's website that is as prominent as the links to

other distributors and or resellers on GUPTA's website. DISTRIBUTOR shall at the

same time identify GUPTA as a vendor on DISTRIBUTOR's website and shall provide

a link to GUPTA's website that is as prominent as the links to other vendors on

DISTRIBUTOR's website. The home page of the website of each party shall visibly

display the required link or a single link to another page that contains the

required link.

 

1.5.   OTHER SOURCES OF REVENUE.

 

DISTRIBUTOR represents and warrants to GUPTA that DISTRIBUTOR does not expect

more than forty percent (40%) of DISTRIBUTOR's future gross sales to derive from

the resale of GUPTA Products and Services.

 

1.6.   RELATIONSHIP OF DISTRIBUTOR TO GUPTA.

 

DISTRIBUTOR is an independent contractor with respect to GUPTA. DISTRIBUTOR is

not a joint venture, agent, employer, or employee of GUPTA. All obligations

associated with DISTRIBUTOR's business are the sole responsibility of

DISTRIBUTOR. DISTRIBUTOR shall have no authority to act for or bind GUPTA in any

manner not specified in this Agreement.

 

                          2. OBLIGATIONS OF DISTRIBUTOR

 

2.1    QUOTAS; MINIMUM REVENUE COMMITMENTS.

 

During each calendar year of this Agreement, DISTRIBUTOR shall, through the

activities of its VARs, achieve each of the applicable Minimum Revenue

Commitments specified in Exhibit A. If at any time during the term of this

Agreement, any Minimum Revenue Commitment specified in Exhibit A is not achieved

or agreed upon, GUPTA may take such action as may be permitted under this

Agreement including, but not limited to, Termination as provided in Section 14.

 

DISTRIBUTOR_________                                                GUPTA________

 

               GUPTA PREMIUM International Distribution Agreement

 

                                     - 1 -

 

<PAGE>

 

[GUPTA LOGO]

 

2.2    VAR AND END-USER AGREEMENTS.

 

DISTRIBUTOR shall ship each Product with the accompanying click-wrap or

shrink-wrap license agreement ("End-User Agreement") intact. DISTRIBUTOR may not

modify the terms of the End-User Agreement without GUPTA's prior written consent

and shall consult with GUPTA at any time DISTRIBUTOR believes that changes to

the End-User Agreements may be required to conform to local law or custom.

DISTRIBUTOR shall verify that each VAR has signed a VAR or reseller agreement

with GUPTA and prior to shipping Products to a VAR, and shall not ship Products

to a VAR if at any time it is notified by GUPTA or has reason to know that any

such VAR is no longer under a valid contract with GUPTA.

 

2.3    DUPLICATION.

 

DISTRIBUTOR may not and shall not permit VARs to reproduce the Products or GLS

releases in any form. DISTRIBUTOR shall, at its expense, deliver to VARs for the

re-distribution to End Users only those copies of the Products and GLS releases

that DISTRIBUTOR receives from GUPTA pursuant to the terms of this Agreement.

 

2.4    USE OF MARKS.

 

DISTRIBUTOR shall not and shall not permit that its VARs use (i) the name

"GUPTA", "Platinum", or anything deceptively similar thereto, or (ii) the name

of any of GUPTA's licensors or anything deceptively similar thereto, as one of

its business or corporate names; provided, however, that DISTRIBUTOR may

represent itself as "An authorized distributor of GUPTA." Notwithstanding the

foregoing, DISTRIBUTOR may, with GUPTA's prior review and approval and in a

manner consistent with GUPTA policy in effect from time to time, use the

trademarks, trade names and logos that GUPTA uses for the Products in connection

with DISTRIBUTOR's activities hereunder. DISTRIBUTOR shall not affix any

trademark, trade name or logo belonging or licensed to GUPTA to any non-GUPTA

product.

 

                           3. APPOINTMENT OF RESELLERS

 

3.1    APPOINTMENT BY GUPTA.

 

DISTRIBUTOR and GUPTA shall work together to identify potential resellers of the

Products in the Territory. GUPTA may, in its sole and absolute discretion,

appoint or choose not to appoint any reseller as a VAR in the Territory under

GUPTA's terms and conditions. DISTRIBUTOR shall have no right to appoint VARs

for the Products and shall notify GUPTA at any time it has reason to believe

that a potential or appointed VAR is performing in a manner that does not

reflect favorably on GUPTA.

 

3.2    RESERVED.

 

3.3    TERMINATION OF VARS.

 

GUPTA may terminate, or may require that DISTRIBUTOR terminate, any VAR

(including DISTRIBUTOR in its capacity as VAR) under the same terms and

conditions as GUPTA has in its agreements with other resellers.

 

                             4. OBLIGATIONS OF GUPTA

 

4.1    DEMONSTRATOR/EVALUATION PRODUCTS.

 

During the term of this Agreement, GUPTA shall provide DISTRIBUTOR with at least

one copy for each VAR of such demonstration or evaluation versions of GUPTA

Products as GUPTA may release from time to time. GUPTA will not charge any

additional amounts for such copies. Except as provided in Section 4.2,

DISTRIBUTOR's license to use such copies shall be nonexclusive, nonassignable,

nonsublicensable, and limited to the term of DISTRIBUTOR's appointment.

DISTRIBUTOR's license to use demonstration or evaluation versions shall be

further limited by any terms and conditions included with the copy of the

software, all of which are incorporated by reference into this Agreement.

 

4.2    RIGHT TO DISTRIBUTE EVALUATION COPIES.

 

GUPTA hereby grants DISTRIBUTOR a non-exclusive, non-transferable, royalty-free,

right and license to distribute to VARs the object code versions only of those

GUPTA Products that GUPTA may designate as evaluation versions from time to time

(the "Evaluation Software") for the purpose of permitting VARs to provide such

Evaluation Software to End Users or potential End Users. The license granted by

this Section 4.2 shall terminate upon the expiration or termination of the term

of DISTRIBUTOR's appointment.

 

                  5. PROGRAM MAINTENANCE, UPGRADES, AND TECHNICAL

                        SUPPORT WITH RESPECT TO PRODUCTS

 

5.1    DEFINITIONS.

 

For purposes of this Section 5, the terms below shall have the meanings given to

them in this Section 5:

 

SERVICES:

 

"Gupta License Services" ("GLS") means GUPTA's program to furnish commercially

available new major releases, minor releases, maintenance releases, updates,

upgrades, and bug fixes of the Products to End Users.

 

TECHNICAL SUPPORT:

 

"First Line Support" means (a) receiving and acknowledging problems from End

Users, (b) checking lists of known problems and workarounds, and (c) if the

reported problem is known, giving the published answer to the End User and

helping the End User implement the solution.

 

"Second Line Support" means (a) isolating, identifying, and reproducing an

unknown problem reported by an End User, (b) researching a workaround and/or

solution to the problem, (c) working with GUPTA to help develop a workaround

and/or fix, and (d) dialing into an End User system to implement a complex

workaround or to apply a patch.

 

5.2    DISTRIBUTOR'S TECHNICAL SUPPORT OBLIGATION.

 

DISTRIBUTOR_________                                                GUPTA________

 

               GUPTA PREMIUM International Distribution Agreement

 

                                      - 2 -

 

<PAGE>

 

[GUPTA LOGO]

 

For the term of this Agreement, DISTRIBUTOR shall require that its VARs take

responsibility for providing First Line Support for the Products to End Users,

and DISTRIBUTOR shall provide Second Line Support for the Products to its VARs.

GUPTA has no obligation to accept support requests directly from DISTRIBUTOR's

VAR or its End Users.

 

5.3    GUPTA'S TECHNICAL SUPPORT OBLIGATION.

 

For the term of this Agreement, GUPTA shall use all commercially reasonable

efforts to respond to and fix problems in the Products that a DISTRIBUTOR or VAR

is unable to resolve as reported by DISTRIBUTOR in accordance with Exhibit C.

GUPTA may discontinue support of any version of the Products at any time after

12 months after GUPTA has released a new version of the Product. The DISTRIBUTOR

shall and shall require that its VARs shall use all commercially reasonable

efforts to provide to GUPTA information necessary (including, where appropriate,

reproducible test cases and other diagnostic information) to diagnose and repair

such problems as the DISTRIBUTOR may report to GUPTA. GUPTA shall make such

repair at GUPTA's option either by (a) modifying the Product or (b) providing an

updated commercial version of the Product.

 

5.4    DISTRIBUTION OF GLS.

 

For the term of this Agreement, DISTRIBUTOR may authorize its VARs to sell GLS

to End Users. GUPTA shall provide VARs for the benefit of End Users with all

product updates and new versions that GUPTA makes generally available, provided

such VARs furnish GUPTA with a signed purchase order for GLS that identifies the

End User and number of licenses required for each such End User. In no event

shall product updates and new versions be distributed for any purpose other than

to replace an existing End User license under GLS.

 

                                  6. PAYMENTS

 

6.1.   REGISTRATION OF OPPORTUNITIES

 

To be eligible to purchase Products and Services for a discount under this

Agreement with respect to any particular transaction, DISTRIBUTOR must provide

to GUPTA a valid purchase order before the sale using a purchase order form that

GUPTA will provide to DISTRIBUTOR. DISTRIBUTOR must fill out the form

completely. GUPTA may update the form from time to time.

 

6.2.   PROCEDURE; ACCRUALS.

 

GUPTA shall establish reasonable procedures for processing orders for and

delivering Products and Services. DISTRIBUTOR or any VAR, as the case may be,

shall comply with these procedures as they are in effect from time to time.

GUPTA's right to be paid for Products and Services shall accrue on the invoiced

date of shipment or where the DISTRIBUTOR otherwise takes delivery of the

Products.

 

6.3.   CREDIT RISK.

 

DISTRIBUTOR bears all credit risk with respect to all sales of Products and

Services by DISTRIBUTOR or VAR. Failure of the VAR or End-User to pay

DISTRIBUTOR for Products or Services does not relieve DISTRIBUTOR of

DISTRIBUTOR'S obligation to pay GUPTA for such Products and Services.

 

6.4.   DISCOUNTS.

 

GUPTA shall resell Products and Services to DISTRIBUTOR at a discount from

GUPTA's published list prices as the same are revised from time to time. The

discount from list price will be in the amount specified on Exhibit A.

 

6.5.   MONTHLY REPORTS.

 

Within fifteen (15) days after the end of each calendar month, DISTRIBUTOR shall

deliver report(s) to GUPTA showing (i) all purchase orders received during the

calendar month by all VARs engaged with DISTRIBUTOR, (ii) the names of the End

Users, (iii) the total amount of fees owed to GUPTA with respect to each

purchase order, and (iv) the amount remaining due. In addition, within fifteen

(15) days of the end of each calendar quarter, DISTRIBUTOR shall submit to GUPTA

the Quarterly License Report for SQLBase TE Encryption Product Export Compliance

(attached hereto as Exhibit B). GUPTA may change the report content and

requirements at its sole discretion.

 

6.6.   PAYMENT.

 

      6.6.1. BY DISTRIBUTOR.

 

GUPTA shall invoice DISTRIBUTOR for all Products, GLS, and Services sold to

DISTRIBUTOR. DISTRIBUTOR shall pay all invoices by the end of the following

month of receipt of invoice. Payment shall be by wire transfer in U.S. Dollars,

with the sender responsible for any fees charged by the sending bank and the

recipient responsible for any fees charged by the receiving bank. DISTRIBUTOR

shall make all such payments without offset.

 

                          7. PRODUCTS AND TERMS OF SALE

 

7.1    RIGHT TO DISCONTINUE PRODUCTS AND SERVICES.

 

GUPTA may discontinue the sale of any of the Products and Services from time to

time on thirty (30) days prior written notice to DISTRIBUTOR. GUPTA is not

obligated to offer, or to continue to offer, any Product or Services. GUPTA may

discontinue offering GLS with respect to any Product upon termination of the

initial term of the service agreement with respect to the Product.

 

7.2    TERMS AND CONDITIONS.

 

DISTRIBUTOR shall purchase all Products and Services from GUPTA in accordance

with the terms of this Agreement. Any licenses for Products shall be in

accordance with this Agreement and the form of license included with the Product

documentation. To permit DISTRIBUTOR to continue to use DISTRIBUTOR's standard

form of purchase order, the parties agree that terms or conditions contained in

any purchase order submitted by DISTRIBUTOR shall be of no force or effect

unless accepted in writing and signed by an authorized officer of GUPTA. GUPTA

may require DISTRIBUTOR to submit orders through GUPTA's website using a form

specified by GUPTA. DISTRIBUTOR expressly waives any requirement that GUPTA

notify DISTRIBUTOR that GUPTA does not accept any terms of DISTRIBUTOR's

purchase order that are in addition to, or inconsistent with, this Agreement.

 

7.3    TAXES.

 

Distributor shall be solely responsible for the collection and payment of all

value-added, sales, use, property, withholding, and other taxes, duties, and

assessments ("Taxes") which may be imposed upon or arise in connection with this

Agreement, excluding, however, any taxes based upon GUPTA's net

 

DISTRIBUTOR_________                                                GUPTA________

 

               GUPTA PREMIUM International Distribution Agreement

 

                                      - 3 -

 

<PAGE>

 

[GUPTA LOGO]

 

income. When GUPTA has a legal obligation to collect such taxes or duties, GUPTA

will add the applicable amount to the monthly statement. DISTRIBUTOR shall pay

this amount unless DISTRIBUTOR provides GUPTA with a valid exemption certificate

authorized by the applicable taxation authority. If Distributor is required by

law to deduct or withhold any Taxes from any sum payable hereunder, then the sum

payable by DISTRIBUTOR upon which the deduction or withholding is based shall be

increased to the extent necessary to ensure that, after deduction of all Taxes,

GUPTA receives a net amount equal to the amount GUPTA would have received in the

absence of such Taxes.

 

7.4    PRICE INCREASES.

 

GUPTA may increase the list price of any Product or Services or GLS by giving at

least thirty (30) days prior notice to DISTRIBUTOR. Increases shall apply to all

orders received after the effective date of the increase.

 

7.5    PAYMENT.

 

Product and Service prices do not include any taxes, fees, duties,

transportation costs, returnable containers, cartage, or storage unless

otherwise stated. Payments to GUPTA are due at 975 Island Drive, Redwood Shores,

California, 94065, USA, in United States dollars free of collection or exchange

charges. Late payments are subject to interest at a rate of one percent (1%) per

month, compounded, from the date past due.

 

7.6    SHIPPING EXPENSES.

 

All prices for Product and GLS placed with GUPTA are FOB GUPTA's point of

origin, and DISTRIBUTOR shall: (i) reimburse GUPTA for any shipping expenses

incurred by GUPTA, and (ii) bear the risk of loss damage or theft upon shipment

by GUPTA to DISTRIBUTOR.

 

7.7    LOCAL CURRENCY PRICING

 

The Local Currency Price for Products and GLS is set at DISTRIBUTOR's

discretion. Local Currency Pricing will not be more or less than GUPTA's list

prices (as converted from dollars to Local Currency) without the prior approval

of GUPTA. DISTRIBUTOR will notify GUPTA thirty (30) days prior to any changes in

their Local Currency Price.

 

                    8. ADDITIONAL OBLIGATIONS OF DISTRIBUTOR

 

8.1.   APPOINTMENT CONDITIONED ON SATISFACTORY PERFORMANCE.

 

As a material condition to the obligations of GUPTA under this Agreement and to

the continued effectiveness of DISTRIBUTOR's appointment, DISTRIBUTOR shall at

all times meet the performance standards set forth in this Agreement.

 

8.2.   KNOWLEDGE OF GUPTA PRODUCTS AND SERVICES.

 

DISTRIBUTOR's personnel shall be sufficiently knowledgeable of the Products and

Services to be able to configure and install the hardware, software, and

connections for the Products. In addition, DISTRIBUTOR's personnel shall be

sufficiently knowledgeable of the Products and Services to be able to

demonstrate to VARs and End Users (a) all of the commonly used features of the

Products and Services without resort to Product and Services documentation and

(b) all of the advanced features of the Products discussed in the Product

documentation after reference to such documentation.

 

8.3.   PRODUCT AND SERVICE PROMOTION.

 

DISTRIBUTOR shall enthusiastically promote the goodwill, name, and reputation of

GUPTA, the Products, and the Services, in connection with all of DISTRIBUTOR's

activities under this Agreement. DISTRIBUTOR shall stay in contact with existing

and potential customers on a regular basis, consistent with good business

practice. DISTRIBUTOR shall solicit customer feedback on the Products and

Services, including desired new products and ways to make the Products and

Services more valuable to customers, and regularly convey such information to

GUPTA .

 

8.4.   DEMONSTRATION CAPABILITY.

 

DISTRIBUTOR shall maintain the capability to demonstrate the Products to

potential VARs and End Users.

 

8.5.   ETHICAL BUSINESS PRACTICES.

 

DISTRIBUTOR shall adhere to high standards of honesty, integrity, fair dealings,

and ethical conduct in all of its dealings with customers, potential customers,

and the general public, and shall refrain from any business or advertising

practice, which may be injurious to the business or reputation of GUPTA.

DISTRIBUTOR shall not make any false or misleading representations to customers

or others regarding GUPTA or the Products and Services. DISTRIBUTOR shall not

make any representations, warranties, or guarantees concerning the Products and

Services that are inconsistent with the documentation accompanying the Products

or GUPTA's literature describing the Products and Services.

 

8.6.   INDEMNIFICATION.

 

DISTRIBUTOR shall defend, indemnify, and hold harmless GUPTA from any activities

of DISTRIBUTOR that (a) relate to the discretion DISTRIBUTOR exercises in

performing DISTRIBUTOR's obligations under this Agreement, (b) DISTRIBUTOR

performs in a negligent manner, or (c) constitute a breach of this Agreement.

 

8.7    AUDIT RIGHTS.

 

DISTRIBUTOR shall keep full, accurate and complete books of account and all

other related records of all matters relating to this Agreement for a period of

three (3) years from the end of each calendar year. GUPTA, its licensors, or

their respective authorized representatives shall have the right to examine and

copy such books of account and other related records at all reasonable times

during such period, to verify the correctness of amounts paid to GUPTA,

DISTRIBUTOR compliance with, and for any other matters arising out of, this

Agreement. If any such examination discloses a deficiency in any payments made

by DISTRIBUTOR to GUPTA of more than three percent (3%) of such payment,

DISTRIBUTOR shall reimburse GUPTA for all of the expenses connected with such

examination and the next subsequent examination, in addition to the payment of

the amount of any such deficiency.

 

              9. DISCLAIMER OF WARRANTY AND LIMITATION OF LIABILITY

 

9.1    LIMITED SERVICE WARRANTY; NO THIRD PARTY WARRANTIES.

 

GUPTA does not warrant that the operation of the Products will be uninterrupted

or error free, and otherwise licenses the Products "AS IS." ALL OTHER

WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED

 

DISTRIBUTOR_________                                                GUPTA________

 

               GUPTA PREMIUM International Distribution Agreement

 

                                      - 4 -

 

<PAGE>

 

[GUPTA LOGO]

 

TO IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,

ARE DISCLAIMED. As between DISTRIBUTOR and GUPTA, DISTRIBUTOR ASSUMES AND SHALL

ENSURE THAT VAR ASSUMES, FULL RESPONSIBILITY for selecting Products and for

ensuring that the Products selected are compatible and appropriate for use with

the computers and other software with which they will be used.

 

9.2    NO WARRANTY FOR INTERACTION WITH USER COMPUTER.

 

GUPTA DOES NOT WARRANT that any Product or GLS release is FREE FROM ERROR or

that it will INTERFACE WITHOUT ANY PROBLEMS with the other components of an

End-User's computer system. DISTRIBUTOR or applicable VAR shall advise each

End-User that it is the responsibility of the End-User to BACK UP its computer

or otherwise SAVE important data BEFORE INSTALLING any Product and to continue

to back-up its important data regularly.

 

9.3    LIMITATION ON DAMAGES.

 

GUPTA SHALL NOT BE LIABLE TO DISTRIBUTOR, ANY VAR, OR ANY END-USER, OR ANY THIRD

PARTY FOR THE COSTS OF PROCURING SUBSTITUTE GOODS OR SERVICES, OR FOR ANY

SPECIAL, CONSEQUENTIAL, INDIRECT, INCIDENTAL, OR PUNITIVE DAMAGES, OR OTHERWISE,

NOTWITHSTANDING THE FAILURE OF ANY PRODUCT OR SERVICE. GUPTA is not an insurer.

The purchase price of the Products do not include any undertaking by GUPTA to

deliver a Product or provide a service at any particular time, even if GUPTA is

aware of the consequences of late delivery or unavailability.

 

9.4    WARRANTY MANAGEMENT.

 

DISTRIBUTOR shall resolve all warranty claims with the VAR with respect to an

End User. Warranty returns shall only be credited against DISTRIBUTOR's account

if the Products are determined to be defective and the End Users have followed

the procedures set forth in GUPTA's End User License Agreement.

 

                             10. INTELLECTUAL PROPERTY

 

10.1   OWNERSHIP OF INTELLECTUAL PROPERTY.

 

DISTRIBUTOR acknowledges that, as between GUPTA and DISTRIBUTOR, GUPTA owns or

has the exclusive right to use any patents, trademarks, copyrights, trade

secrets, and other intellectual property rights ("Intellectual Property")

associated with the Products and Services. DISTRIBUTOR shall do nothing

inconsistent with GUPTA's ownership of such Intellectual Property. All use of

GUPTA's Intellectual Property by DISTRIBUTOR shall inure solely to the benefit

of and shall be on solely behalf of GUPTA. DISTRIBUTOR shall not challenge

GUPTA's ownership of GUPTA's trademarks, service marks, and trade names (the

"Marks") or the validity of the terms of DISTRIBUTOR's use of the Marks.

 

10.2   NO IMPLIED RIGHTS.

 

Sale of the Products to DISTRIBUTOR does not convey any license, expressly or by

implication, to manufacture, duplicate, or otherwise copy or reproduce any of

the Products.

 

10.3   NO REVERSE ENGINEERING.

 

DISTRIBUTOR shall not, and shall not help others, reverse engineer any Product

or any portion of any Product. DISTRIBUTOR shall promptly notify GUPTA if

DISTRIBUTOR becomes aware of any attempt to reverse engineer any Product or any

portion of any Product.

 

10.4   QUALITY STANDARDS.

 

The nature and quality of all services rendered by DISTRIBUTOR in connection

with the Marks, all goods sold by DISTRIBUTOR under the Marks, and all related

advertising, promotional, and other related uses of the Marks by DISTRIBUTOR

shall conform to the standards set by GUPTA. GUPTA shall have the sole

discretion to change such standards. DISTRIBUTOR shall not use any trademark or

service mark in combination with any of the Marks without prior written approval

of GUPTA.

 

10.5   INFRINGEMENT PROCEEDINGS.

 

DISTRIBUTOR shall notify GUPTA of any unauthorized use of the Intellectual

Property by others promptly as it comes to DISTRIBUTOR's attention. GUPTA shall

have the sole right and discretion to bring infringement or unfair competition

proceedings involving the Intellectual Property.

 

                           11. INFRINGEMENT INDEMNITY

 

11.1. INDEMNIFICATION.

 

GUPTA shall have the right to defend or settle, and shall defend or settle, any

claim, proceeding, or suit ("Claim") against DISTRIBUTOR or any VAR for

infringement of any United States patent, copyright, trademark, mask work, trade

secret, or other intellectual property right arising from the sale or use of any

Product, subject to the limitations set forth below. GUPTA shall have sole

control of any action or settlement and shall pay any final judgment entered

against DISTRIBUTOR on such issue in any Claim that GUPTA defends.

 

11.2. NOTICE AND COOPERATION.

 

DISTRIBUTOR shall (a) notify GUPTA promptly in writing of any Claim, (b) give

GUPTA all information in DISTRIBUTOR's actual knowledge with respect to the

Claim, (c) cooperate with GUPTA in all reasonable respects at DISTRIBUTOR's

expense, and (d) at GUPTA's request give GUPTA any additional authority GUPTA

needs to defend or settle such Claim. GUPTA shall be relieved of its obligations

under this Section 11 to the extent GUPTA is prejudiced by any failure of

DISTRIBUTOR to give timely notice or cooperate.

 

11.3. RIGHT TO SUSPEND SALES.

 

If GUPTA determines that DISTRIBUTOR or VAR cannot sell a Product without a

material risk of incurring a Claim that would give rise to a right of

indemnification under this Agreement, GUPTA may at GUPTA's sole option suspend

any further sales of Products pursuant to this Agreement.

 

11.4. REMEDIES WITH RESPECT TO SERVICES.

 

If GUPTA determines that GUPTA cannot offer a Service without a material risk of

incurring a Claim that would give rise to a right of indemnification under this

Agreement, GUPTA may at GUPTA's sole option and expense (a) procure for End

Users the right under such patent, copyright, trademark, mask work, trade

secret, or other intellectual property to use the Service; or (b) terminate the

Service without further liability. GUPTA shall not be liable for any cost or

expense incurred without GUPTA's prior written authorization.

 

DISTRIBUTOR_________                                                GUPTA________

 

               GUPTA PREMIUM International Distribution Agreement

 

                                      - 5 -

 

<PAGE>

 

[GUPTA LOGO]

 

11.5. EXCLUSIONS.

 

Notwithstanding anything to the contrary in this Agreement, GUPTA shall have no

liability for (a) infringement caused by use of the Products, or any portion of

a Product, in combination with any other good, method, or process if the

infringement is caused by the combination; (b) any claim for infringement with

respect to the sale by DISTRIBUTOR or VAR of a Product after DISTRIBUTOR or VAR

has notice that the Product is alleged to so infringe; (c) infringement

involving any mark not applied to a Product by GUPTA; or (d) infringement

resulting from modification or servicing of a Product by a person whom GUPTA has

not authorized to service Products.

 

11.6. NO OTHER LIABILITIES OR REMEDIES.

 

This Section 11 states the entire liability of GUPTA and the exclusive remedy of

DISTRIBUTOR for any claim that a Product infringes any Intellectual Property

right or otherwise. GUPTA is not obligated to indemnify DISTRIBUTOR for any

claim that a Product infringes any Intellectual Property right outside of the

Territory.

 

                                   12. EXPORT

 

DISTRIBUTOR hereby acknowledges that the Products, in particular without

limitation the encryption technology contained in certain Products, and all

technical data pertaining to those Products, are subject to export controls

under the laws and regulations of the United States, including the Export

Administration Regulations, 15 C.F.R. Parts 730-774. In the distribution of all

Products, DISTRIBUTOR shall comply and shall ensure that VAR complies strictly

with all such United States export controls, and, without limiting the

generality of this Section 12, DISTRIBUTOR shall not and shall ensure that VAR

not export, reexport, transfer or divert any of the Products, and technical data

pertaining to such Products, or