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EXHIBIT 10.14.1
McDATA CORPORATION
DISTRIBUTION AGREEMENT
(As Amended Through Amendment #17)
“McDATA”
McDATA Corporation
“Buyer” Hitachi Data Systems Corporation 750 Central Expressway Santa Clara, CA 95050-2627
This Distribution Agreement (“ Agreement ”) is entered into by and between McDATA and Buyer, and commences on the date accepted and executed by McDATA (“ Effective Date ”).
Each of the documents identified below is incorporated herein by reference.
Distribution Agreement
This Agreement and the applicable Exhibits identified above, are the complete agreement between McDATA and Buyer with respect to the Products on Figure A-1 of Exhibit A of this Agreement, and replace all prior oral or written representations or agreements between the parties.
McDATA CORPORATION
DISTRIBUTION AGREEMENT
Table of Contents
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Distribution Agreement
McDATA and Buyer agree as follows:
1 DEFINITIONS .
1.1 “Buyer” means that entity listed on the first page of this Agreement and all subsidiaries or affiliates thereof designated to purchase hereunder as set forth on Exhibit E attached hereto, provided such subsidiaries or affiliates are bound by the terms and conditions of this Agreement.
1.2 “Customer” means any entity to which Buyer sells, rents, leases or otherwise distributes McDATA Products, including Resellers and End User Customers.
1.3 “ Reseller” means an entity authorized by Buyer to purchase Products directly, or indirectly through Buyer’s channels of distribution, for the purpose of resale.
1.4 “End User Customer” means any entity that purchases McDATA-manufactured Products from Buyer or a Reseller and/or licenses Software associated therewith for its use in accordance with McDATA’s then current published specifications, configurations, and compatibility guidelines for data communications networking.
1.5 “End User Customer Software” means, and is limited to, the Software in Object Code form, and includes (i) the machine-executable instructions and all associated descriptive material and documentation for each processor within each Product supplied by McDATA pursuant to this Agreement, (ii) subsequent updates and/or enhancements provided by McDATA pursuant to this Agreement and (iii) any Software Feature Option(s) that is sublicensed pursuant to the terms of this Agreement. Such Software may be provided to Buyer on magnetic media or in written or graphic form that performs, describes, or illustrates the performance of all on-line functions, off-line utilities, and diagnostics pertinent to the Product.
1.6 “Object Code” means computer programming code, substantially or entirely in binary form that is directly executable by a computer after suitable processing but without the intervening steps of compilation or assembly.
1.7 “Products” means certain McDATA data communication equipment, hardware, software, related features, conversions, options, and other accessories as further described in Figure A-1 of Exhibit A of this Agreement that Buyer is authorized to purchase and distribute, and that may utilize the Software licensed hereunder.
1.8 “Product Specifications” means the product specifications for the Products that are referred to in Exhibit B, as amended from time to time, as “Engineering Document Numbers.”
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1.9 “Service Provider” means Buyer [***] [***] [***] [***] [***] [***] authorized by Buyer which perform technical support for and repair Products.
1.10 “Services” means the technical support, repairs, and training provided by McDATA to Buyer under this Agreement.
1.11 “Software” means the collective reference to End User Customer Software, Software Feature Option(s) and software that may be listed on Figure A-1.
1.12 “Software Feature Option(s)” means an optional feature for End User Customer Software, as available from time to time, that enables special attributes and/or provides additional functionality, and that will be delivered to Buyer upon receipt of its purchase order and payment of an additional license fee, if applicable.
1.13 “Spares” means all parts or components of Products that are generally made available by McDATA for separate sale.
1.14 “Trademark” means the proprietary label(s) identified in Exhibit F under which the Products will be marketed in the Territory, such as:
McDATA Ò
NOTE: McDATA and the McDATA logo are registered trademarks of McDATA Corporation.
2 TERM . The initial term of this Agreement commences on the Effective Date and continues for a period of [***] ([***]) years, unless sooner terminated pursuant to the termination provisions in this Agreement. Thereafter, this Agreement shall be automatically renewed for successive [***] ([***]) year terms unless either party provides written notice to the other party of its intent to terminate this Agreement at least [***] ([***]) days prior to the end of the then-current term.
3 TERRITORY . Buyer is authorized to market the Products and sublicense the Software worldwide.
4 MCDATA’S RESPONSIBILITIES : Subject to the terms and conditions of this Agreement, McDATA shall:
(i) upon receipt and acceptance of a purchase order for Products and/or Software from Buyer, sell/license the specified Products and/or Software to Buyer at the prices specified in Exhibit A;
(ii) grant Buyer the rights and licenses in the Software as set forth in Section 10 of this Agreement;
(iii) ship Products and/or Software to Buyer as set forth in Section 8 of this Agreement;
(iv) warrant the Products and Software as set forth in Section 11 of this Agreement;
(v) indemnify Buyer as set forth in Section 14 of this Agreement;
(vi) offer technical support, repairs, and training to Buyer as set forth in Section 12 and Exhibit A of this Agreement, at the prices specified in Exhibit A;
(vii) provide Software support to qualified Buyer personnel as set forth in Section 13 of this Agreement; and
(viii) make available to Buyer all new releases of Software, with all available documentation, as set forth in Section 13.
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5 BUYER’S RESPONSIBILITIES : Subject to the terms and conditions of this Agreement, Buyer shall:
(i) market, sell, lease, rent, and deliver Products to its Customers in the Territory as set forth in Section 3 of this Agreement;
(ii) forecast, order, take delivery of, accept, and pay for Products as set forth in Sections 6 and 8 of this Agreement;
(iii) provide all required technical support for the Products to its Customers as set forth in Section 12 of this Agreement;
(iv) provide all required installation services for the Products and Software to its Customers;
(v) provide all required training for its Customers;
(vi) provide all required support for the Software to its Customers as set forth in Section 13;
(vii) protect McDATA’s proprietary rights as set forth in Section 10, 14, and 16 of this Agreement; and
(viii) stock Spares at levels sufficient to satisfy its Customers in accordance with Section 8.4 of this Agreement.
6.1 Credit. McDATA reserves the right to reassess credit terms and increase or decrease credit limits at any time in its sole discretion, based on Buyer’s payment history, financial position, and/or perceived risk.
McDATA’s obligation to deliver Products ordered, to perform Services, and to license Software under this Agreement shall be subject to Buyer’s adherence to all payment and credit terms stipulated herein. Following Buyer’s failure to comply with these terms, McDATA may, at any time, without liability, suspend credit and/or delay or reschedule delivery of additional Products, and/or suspend performance of Services, and/or suspend performance of Software/maintenance support, and shall give Buyer [***] days written notice of such action.
6.2 Payment. In the event McDATA agrees to extend open credit to Buyer, terms of payment are net [***] ([***]) days. Each Product shipment shall be invoiced by McDATA upon shipment, and paid for by Buyer when due, without regard to other scheduled deliveries. All payments hereunder shall be made in United States Dollars by electronic wire transfer or bank check.
7 TITLE AND RISK OF LOSS . Title and risk of loss or damage to Products purchased by Buyer shall pass to Buyer upon shipment.
8 FORECASTS, ORDERS, AND DELIVERY .
8.1 Forecasts. Within thirty (30) days after execution of this Agreement, Buyer will give McDATA a forecast in writing of its projected purchases of Products for the following [***] ([***])[***]; quantities are to be identified by model by month. On or before the fifteenth (15th) day of each month thereafter, Buyer will provide McDATA with an updated forecast covering the projected purchases for [***] [***] [***] [***] ([***]) [***] [***]. Such forecasts are Buyer’s projections of intended total purchases inclusive of all applicable rescheduled
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quantities of Products, are for planning purposes only, and are not commitments to buy. Such commitments are only valid upon Buyer’s issuance of purchase orders as defined in Section 8.2 below.
8.2 Purchase Orders.
8.2.1 Buyer shall, from time to time, issue purchase orders to McDATA for Products. Such purchase orders are Buyer’s commitments to buy. Normal lead-time for purchase orders based on the forecast is [***] ([***]) [***] days after receipt of order (ARO). Such purchase orders shall be in writing and identify quantity, model, features and prices. Each purchase order will be issued by Buyer at least [***] ([***]) [***] days before its first scheduled delivery date to Buyer’s specified location. McDATA will use best effort to comply with the delivery dates requested on such purchase orders.
8.2.2 McDATA agrees to provide to HDS, without liability or charge, the ability to
modify quantities on each issued purchase order as follows:
[***]
If Buyer requests an increase beyond the percentages specified above, McDATA will use best efforts to comply with such request.
8.2.3 Buyer may transmit purchase orders by facsimile or e-mail provided such e-mail purchase orders are issued by an authorized HDS representative. Buyer shall provide a written list of such authorized persons for each Hitachi Data Systems Entities listed on Exhibit E. Orders are considered binding upon receipt by McDATA of said facsimile or e-mail, subject to acceptance as set forth below.
8.3 Acceptance of Purchase Orders. McDATA will notify Buyer of its acceptance or rejection of a purchase order within [***] ([***]) [***] days after receipt of such purchase order, by email, facsimile or traditional post. Failure of McDATA to notify Buyer within [***] ([***]) [***] days will be deemed acceptance of a purchase order. In the event that McDATA rejects a purchase order, McDATA will inform Buyer of the reason for such rejection. All purchase orders shall be governed by the terms and conditions of this Agreement, and none of the terms or conditions of Buyer’s purchase order shall be applicable if they are in conflict with the terms or conditions of this Agreement unless otherwise agreed to in writing by McDATA.
8.4 Spares.
8.4.1 Spare Parts Orders. Buyer has full responsibility for stocking Spares at levels sufficient to satisfy its Reseller and End User Customer requirements. As outlined in McDATA’s then-current Spares, Repair and Upgrade Catalog, Spares to support Products currently in production may be ordered from 8:00 to 5:00 MT in three ways: “Normal Spares”, “Expedite Spares”, and “Emergency Spares”. Orders for Normal Spares shall be placed by Buyer not less than [***] ([***]) days in advance of the earliest delivery date specified in such orders. Orders for Expedite Spares shall be placed by Buyer not less than[***] ([***]) days in advance of the earliest delivery date specified in such orders. McDATA shall use its reasonable best efforts to ship orders for Emergency Spares within [***] ([***]) hours after receipt of order. Spares to support discontinued Products shall be handled in accordance with the provisions of the applicable Product discontinuance notice.
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Notwithstanding the foregoing, for the [***]month period commencing on the effective date of the Agreement, orders for Normal Spares may be placed by Buyer not less than [***] days in advance of the earliest delivery date specified in such orders. All pricing on such orders will be at a [***] ([***]) discount off McDATA’s End User “Spares, Repair and Upgrade Catalog”. Spare parts orders placed less than [***] days in advance of the earliest delivery date, will be priced at the “Expedite” or “Emergency” levels according to lead-times specified in the “Spares, Repair and Upgrade Catalog”. Upon expiration of such [***] month period, pricing and lead times revert to those stated in preceding paragraph.
8.4.2 Other Vendors. Nothing contained herein shall prohibit Buyer from purchasing Spares or replacement parts from any other vendor, provided, however, that McDATA shall have no warranty responsibility with respect to such Spares purchased from any other vendor or for Products in which such Spares are installed. The purchase and use, by Buyer, of expendables (fuses and diskettes) acquired from sources other than McDATA shall not affect McDATA’s warranty responsibility for the affected Products.
8.5 Order Rescheduling. Buyer may reschedule a purchase order within the calendar quarter of the originally scheduled ship date without penalty. Within any calendar quarter (“Quarter”) Buyer may reschedule the ship date for any purchase order(s) accepted by McDATA, on an unlimited basis without charge, if the new scheduled ship date for such purchase order(s) is within such Quarter. [***]. Except as set forth herein, no other rescheduling is allowed.
8.6 Shipment/Delivery and Export/Import. When requested, McDATA will use reasonable efforts to assist Buyer in obtaining any documents (e.g., import certificate, pro forma invoice) that are required to enable Buyer to import the Products into the country of delivery (and, where necessary, for in-transit passage of goods through another country) and enable McDATA to obtain an export license for the exportation of the Products.
After appropriate export and import licenses are secured, McDATA will ship each item of Product sold hereunder F.O.B., McDATA’s point of shipment. Buyer shall, at least [***] ([***]) days prior to the requested delivery date of such Products, specify in writing the location to which the Products are to be shipped, and may also specify the type of conveyance and/or carrier for shipment.
As used in this Agreement, shipment and delivery are synonymous. For purposes of this Agreement, shipment and delivery occur upon delivery of Products by McDATA at McDATA’s factory to the common carrier specified by Buyer.
8.7 Acceptance of Products. All Products sold under this Agreement shall conform to McDATA’s then current Product Specifications at time of delivery. Buyer’s acceptance of each Product shall occur upon delivery unless Buyer notifies McDATA in writing within [***] ([***]) days after delivery that such Product does not conform to specifications. Payment for any Product by Buyer shall not reduce the [***] ([***]) day period available for inspection and reporting of any nonconformance. McDATA’s obligation for defective Products shall be limited to its repair or replacement (at McDATA’s option and expense) pursuant to the warranty provisions of Section 11 of this Agreement.
In the event that any Product delivered to Buyer does not function in accordance with the specifications during the [***] ([***]) day acceptance period, and such malfunction is not due to freight damage or other exclusions in Section 11.1, Buyer shall make a reasonable attempt to isolate and correct the problem and, if required, shall contact McDATA for
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assistance by telephone. If these steps prove unsuccessful, McDATA agrees, upon written request by Buyer, to either promptly repair or replace (at McDATA’s option and expense) the malfunctioning Product as a warranty adjustment to Buyer’s Products pursuant to Section 11.1.
8.8 Order Cancel lation. If, upon installation at an End User Customer’s site, Buyer finds that a Product has functional defects that render it unfit for sale, Buyer shall notify McDATA by fax or in writing. Within [***] ([***]) [***] days of receipt of such notice, McDATA shall ship a replacement Product to Buyer at no charge to Buyer. Buyer shall ship the defective Product to McDATA within [***] ([***]) [***] days of its notice to McDATA. In the event that Buyer does not ship the defective Product to McDATA within [***] ([***]) [***] days of its notice to McDATA, Buyer shall pay McDATA [***] [***] [***] [***] [***]
9 PRODUCTS . McDATA agrees to sell to Buyer the Products listed in Figure A-1 of Exhibit A of this Agreement, at the prices specified in Figure A-1 of Exhibit A, and under the terms specified in this Agreement. McDATA reserves the right to add or withdraw Products from this list. Additionally, McDATA reserves the right at any time to make changes to any Products, including changes that are required to facilitate performance in accordance with Product Specifications.
9.1 Product Specifications. Reference numbers (“Engineering Document Numbers”) for McDATA product specifications for the Products are outlined in Exhibit B of this Agreement. All repairs and maintenance for Products shipped prior to such change in Product Specifications shall be provided according to the Product Specifications in effect at the time of the shipment of such Products.
9.2 Product Design Changes and Field Modification Orders.
9.2.1 Design Changes. In the event McDATA proposes a change to the Products or Software which affects the form, fit or function of the Products and such change will be implemented for all of McDATA’s customers purchasing similar products with similar specifications from McDATA, or if such change would directly affect any Buyer-unique feature, McDATA agrees to provide Buyer prior notification of such change, and give Buyer an opportunity to comment on such change. On such notice, McDATA will state a date by which Buyer’s comments are required; such date shall be a minimum of [***] ([***]) [***] days from the date of such notice. If Buyer has not responded on or before that date, McDATA will assume Buyer has no comments, and will proceed with the change process.
McDATA shall have the right to make any other design changes to the Products which do not affect the form, fit or function and do not affect a Buyer-unique feature at any time prior to shipment.
Buyer may request changes or modifications in the Products (Buyer Initiated Change) upon written request to McDATA specifying the same in detail. As soon as practicable after receipt thereof, McDATA shall review the request and, if acceptable to McDATA, shall furnish Buyer price estimates, non-recurring development costs, and delivery schedules for such changes or modifications. If same are acceptable to Buyer, McDATA will, upon receipt of a purchase order therefor, proceed to implement same at the expense of Buyer.
All rights in and to any Product design changes initiated by McDATA or requested by Buyer shall be the exclusive property of McDATA.
9.2.2 Field Changes. In the event that a Product field change is mandatory, McDATA will promptly provide Buyer a full description of the problem and resolution, and any hardware or software required. Buyer will provide such information, hardware and software to Service Providers and End Users.
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9.2.3 Obsolete Spares. In the event that McDATA shall have rendered any Spares obsolete through Mandatory Changes, Buyer shall have the right to return and receive [***] [***] [***] any excess inventory of such Spares. McDATA agrees to accept [***] [***] [***] [***] any such Spares provided the Spares rendered obsolete have not been damaged or subjected to misuse and are returned to McDATA, in substantially the same condition as received by Buyer, in a single lot shipment at Buyer’s expense, within [***] ([***]) [***] days after date of notice from McDATA pursuant to Section 9.2.4 hereof.
9.2.4 Notification . McDATA will notify Buyer promptly of all engineering change notices (“ECNs”) which affect form, fit or function of the Product, field changes (including whether they are optional or mandatory), technical and support documentation changes, microcode updates, driver and firmware updates, and Product problems. Such notification will include a message to Buyer via electronic mail or fax concurrent with McDATA’s release of information to its support Web sites. Buyer will provide such information, as appropriate, to Service Providers and End Users.
9.3 Improvements. McDATA agrees to give Buyer the right to purchase any new or improved product that has capabilities and functions comparable to the Products that McDATA makes generally available to its other customers with similar distribution strategies. Such new models, options, features and improvements will be made available to Buyer [***] [***] [***] [***]
9.4 Buyer Modification. Buyer represents that in no event shall Buyer alter any Product in any way to modify the performance characteristics of that Product without the prior written permission of McDATA. The appropriate identification labels, regulatory agency marks and verification of FCC Class A Compliance or the licensed agency number are indicated on the Products at the time of shipment. Buyer shall not modify any marks or labels affixed to the Products by McDATA with those showing Buyer’s name, or otherwise modify or replace such marks or labels. McDATA hereby disclaims any liability for the possession, use, resale, or operation of any Products that, as a result of an alteration by Buyer or any third party, affects its compliance with the applicable regulations and/or requirements.
9.5 Product Discontinuance. McDATA reserves the right to discontinue Products by notifying Buyer in writing at least [***] ([***]) days prior to the discontinuance date. McDATA agrees to honor all purchases orders received and accepted by McDATA prior to the date specified on the discontinuance notice.
10 SOFTWARE LICENSE & RESTRICTIONS .
10.1 Buyer understands that the Software is proprietary to, trade secret of, and copyrights by McDATA or its suppliers. Buyer further understands that Buyer and its Resellers and End User Customers are acquiring only the right to use the Software, and that all ownership, copyright, and other intellectual property rights vested in this Software shall remain with McDATA or its suppliers.
10.2 McDATA grants to Buyer the non-exclusive, non-transferable right and license to use the Software, in Object Code form only, for support, marketing and demonstration purposes and for the training of its Resellers and End User Customers.
10.3 Buyer agrees that it shall not attempt to modify, reverse engineer, decompile, disassemble, decode or translate the Software. Buyer further agrees that it shall not copy the Software except for archival or back-up purposes, as may be necessary for use on or with the Products.
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10.4 Buyer shall ensure that each End User Customer is provided a copy of the Software license that is between such End User and McDATA or its suppliers. Such Software license may be in the form of a click-through or shrinkwrap license. In countries whe | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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