EXHIBIT 10.1


 


 


CERTAIN
INFORMATION ON THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. 
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED
PORTIONS.  ASTERISKS WITHIN BRACKETS
DENOTE OMISSION.


 


 


 


 


 


 


 


 


 


 


REPLICATION
AGREEMENT


 


 


 


between


 


MICROSOFT
LICENSING, GP


 


a
Nevada, U. S. A. General Partnership,


 


and


 


ZOMAX
INCORPORATED


 


 


a
Corporation of U.S.A.


 


 


 


 


 


 


 


 


 


 


 


 


 


Microsoft
Licensing, GP Contract #                                                 





















 


This Replication Agreement (“Agreement”) is
made and entered into this 1st day of July, 2005 (“Effective Date”),
by and between MICROSOFT LICENSING, GP, a Nevada, U.S.A. general partnership (“MS”),
and Zomax Incorporated, a corporation of U.S.A. (“COMPANY”).


 


 


INTRODUCTION


 


The parties recognize that Customers license
Microsoft Corporation Software from MS, that such Software is updated from time
to time by MS, and that COMPANY has facilities to reproduce such Software. This
Agreement grants COMPANY such rights as needed to perform Replication Services
for Customers.


 


AGREEMENT


 


The
parties agree as follows:


 


1.       DEFINITIONS.           For purposes of this Agreement, the
following terms shall have the following meanings:


 


(a)     “All Transaction Journal” or “ATJ” shall
mean the reconciliation of the reports of Software shipments as submitted
according to the instructions identified on Exhibit A.


 


(b)     “APM” shall mean the associated software
material Components included in Software as provided by MS to COMPANY from time
to time which may include, but not be limited to, a Microsoft registration
card,  a Microsoft end user license
agreement and warranty card.


 


          (c)     “ARK(s)”
shall mean the Authorized Replication Kit supplied only by MS or its authorized
mastering Site(s) that contains Software Components, including, but not limited
to, Stampers, which are necessary for the replication of Software.


 


(d)     “BOM” shall mean the Bill of Materials
document provided to COMPANY by MS via MS’s RSM systems, which shall identify
all Components comprising each type of Software including, but not limited to,
the specific APM to be included with each type of Software.  The BOM may be modified from time to time by
MS at its sole discretion.


 


(e)     “Certificate(s) of Authenticity (“COA(s)”)”
shall mean all Microsoft anti-piracy devices including, but not limited to, the
personal computer Certificate(s) of Authenticity (“COA(s)”), corporate sticker,
and self-adhesive Certificate(s) of Authenticity (“Adhesive COA(s)”).  MS shall retain at all times management
responsibility for COA anti-piracy devices.


 


(f)      “COMPANY” shall include any subsidiary of
COMPANY, provided that COMPANY hereby guarantees its subsidiary’s performance
under this Agreement, the subsidiary agrees in writing with COMPANY to be bound
by the terms of this Agreement, and that COMPANY provides written notice to MS
of the name and address of each subsidiary before the subsidiary exercises any
rights under this Agreement.  A “subsidiary”
is a company in which, on a class by class basis, more than fifty percent (50%)
of the stock entitled to vote for the election of directors is owned or
controlled by COMPANY, but only so long as such ownership or control exists.


 


          (g)     “Components”
shall mean those parts listed on the BOM and included in the manufacture and/or
assembly of Software.  Components are
designated as such in RSM.


 


          (h)     “Customer”
shall mean (i) OEM(s) (ii) other Authorized Replicators (“AR(s)”) that have
current and valid license agreements with MS or have been approved in writing
by MS, and/or (iii) MS.


 


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(i)       “Customer Agreement(s)”
shall mean the MS/OEM Agreement for purposes of the OEMs.


 


          (j)      “DLK”
or “Disk Label Kit” shall mean the master kit that contains the artwork and
print specifications for the CD-ROM, DVD-ROM, and/or disk labels.


 


          (k)     “FDR(s)”
shall mean the Final Documentation Release that contains the artwork, print
specifications, and other master files for the production of printed
documentation.


 


          (l)      “Kit(s)”
shall mean the various kits provided to COMPANY by MS for purposes of
replicating the Software in accordance with the Specifications, including, but
not limited to, the disk label kit that contains the CD-ROM/DVD-ROM and/or disk
labels which COMPANY shall be required to place on the Software, the
registration card kit, the end user license agreement kit, and/or the warranty
kit.  Additional kits may be added and
the existing kit(s) may be modified from time to time by MS at its sole
discretion.


 


          (m)    “Microsoft”
shall mean Microsoft Corporation, a Washington corporation that is a supplier
of and holds certain rights in and to the Software identified in this
Agreement.


 


          (n)     “MS/OEM
Agreement” shall mean a valid license agreement between an OEM and MS.


 


          (o)     “MS
Authorized Replicator Policy and Procedures Manual”
shall mean the electronic or hard copy manual that provides Authorized
Replicators with instructions regarding how to manufacture Software and
implement policies, procedures and specifications associated with the
Authorized Replicator program.


 


(p)     [**]


 


          (q)     [**]


 


(r)      “OEM(s)” shall mean the original equipment
manufacturer that holds a current and valid license agreement with MS for any
or all Software pursuant to the MS/OEM Agreement and is located in the
Territory.


 


          (s)     [**]


 


          (t)     
[**]


 


          (u)     “Replication
Services” shall mean the services performed by COMPANY under the rights granted
to COMPANY by MS hereunder and such other value-added services as provided by
COMPANY.


 


          (v)     [**]


 


          (w)    [**]


 


          (x)      “Site(s)”
shall mean the COMPANY location(s) identified (i) on Exhibit B or (ii) on a
secure website authorized and maintained by MS.


 


          (y)     “Software”
shall mean the copyrighted and/or patented Microsoft software described in the
RSM BOM viewer, including, where applicable, the specified user documentation
Components of Software.  “Software” or “Software
Documentation” shall mean the software or documentation Components of
Software.  For purposes of the licensing
agreement, Software shall be considered a complete OEM package consisting of
Microsoft licensable software, COA and APM.


 


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          (z)      “Software
Release” shall mean a release of Software which is designated by MS in its sole
discretion as a change in the digit(s) to the left of the decimal point in
Software version number [(x).xx].


 


(aa)   “Specification(s)” shall mean the method by
which the Components comprising each type of Software identified in the BOM are
assembled in accordance with MS’s requirements, as is more specifically
described in the MS Authorized Replicator
Policy and Procedures Manual.


 


          (bb)   “Stamper(s)”
shall mean the metal replication master used in an injection molding machine
from which optical media are created. This definition shall include those
Stampers which produce edge-to-edge and inner mirror band hologram images.


 


          (cc)   “Sub-contractor”
shall mean (i) a third party performing support, manufacturing, assembly or any
other good or service used to produce component products or services, (ii) an
AR also performing subcontractor work for other ARs, and/or (iii) a subsidiary,
affiliate or related business entity to an existing AR that is performing
services or providing goods related to subcontracted work and is approved in
writing by MS.


 


          (dd)   “Territory”
shall mean those regions (as defined in the MS Authorized
Replicator Policy and Procedures Manual) listed on Exhibit E.


 


          (ee)   [**]


 


          (ff) 
“Update Release” shall mean a release of Software which is designated by
MS in its sole discretion as a change in the digit(s) to the right of the
tenths digit in Software version number [x.x(x)].


 


          (gg)   “Version
Release” shall mean a release of Software which is designated by MS in its sole
discretion as a change in the tenths digit in Software version number [x.(x)x].


 


 


2.       LICENSE GRANT.


 


          (a)     In
consideration of COMPANY’s performance of Replication Services under the terms
of this Agreement, MS grants COMPANY the following nonexclusive license rights:


 


(i)      to use ARKs, DLKs, FDRs,
and the applicable Kits internally for the purpose of reproducing Software in
document and object code form and in accordance with the RSM BOM(s) and
Specifications for delivery to Customers in the Territory;


 


(ii)     to assemble Software in
accordance with BOM(s) for delivery to Customers in the Territory; and


 


(iii)    to use the RSM software
in object code form for internal purposes only in the performance of
Replication Services and delivery of Software. 
COMPANY shall not subcontract the operation of, or sublicense, the RSM
software to any other entity except in accordance with Section 7(f) below.


 


(b)     [**]


 


          (c)     The
license grant of Section 2(a), above, shall also apply, where applicable, to
MS- or OEM-requested adaptations to Software authorized by MS or in accordance
with the MS/OEM Agreement, provided that MS has given COMPANY advance written
approval for such Software adaptation.


 


(d)     COMPANY shall not in whole or in part copy,
modify, reverse engineer, create derivative works of, or translate Software.


 


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          (e)     COMPANY’s
license shall extend to, and each type of Software shall be deemed to include,
only Software listed in the RSM BOM viewer with “released” status.


 


          (f)      COMPANY
shall replicate, assemble and deliver to OEMs only those types of Software in
the RSM BOM viewer.


 


          (g)     COMPANY
acknowledges that all rights not expressly granted, without limitation, are
reserved by MS, including, but not limited to, Software and/or Software
Documentation.


 


 


3.       INVESTMENT IN [**] AND GRANT OF [**]
SOFTWARE LICENSE.


 


          (a)     [**]


 


          (b)     MS
hereby grants COMPANY a limited, non-exclusive, non-transferable, personal
sub-license to install and use the [**] software, including any third party
procedural systems, during the term of this Agreement solely for the purpose of
operating the [**] only for MS in accordance with the terms and conditions of
this Agreement.  COMPANY shall not
subcontract the operation of, or sublicense, the [**]  software to any other entity.


 


          (c)     COMPANY shall use the [**] software and any
associated third party procedural systems in accordance with the instructions
provided by MS from time to time.  [**]
software use shall require stable and reliable Internet access to the [**] web
site.  COMPANY shall provide adequate
training to its [**] users on the [**] process and must ensure that such users
adhere to all security regulations regarding the secure handling of the COAs as
defined in the MS Authorized Replicator Policy and Procedures
Manual.


 


          (d)     COMPANY is responsible for maintenance of
[**].  Furthermore, COMPANY must enter
into a service agreement with an MS-approved service provider to cover such
requirements as defined in the MS Authorized Replicator
Policy and Procedures Manual within thirty (30) days of the [**].


 


          (e)     [**]


 


          (f)      EXCEPT AS EXPRESSLY AUTHORIZED ABOVE,
COMPANY SHALL NOT: (i) COPY, IN WHOLE OR IN PART, [**] SOFTWARE; (ii) MODIFY
THE [**] SOFTWARE; (iii) REVERSE ENGINEER ALL OR ANY PORTION OF THE [**]
SOFTWARE; OR (iv) CREATE DERIVATIVE WORKS OF THE [**] SOFTWARE.  COMPANY acknowledges that the [**] software
constitutes trade secrets, patents and/or copyrightable material of third
parties.  COMPANY agrees not to disclose,
provide, or otherwise make available such trade secrets or copyrighted material
in any form to any third party.  COMPANY
agrees to implement strict security measures in compliance with the MS Authorized Replicator Policy and Procedures Manual to
protect such trade secrets and copyrighted material.


 


          (g)     [**]


 


 


4.       REPORTS AND RECORDS.


 


(a)     COA and APM Reporting:


 


(i)      [**]


 


(ii)     COMPANY shall also
perform a COA and COA bearing Software transaction reconciliation on a daily
basis, and submit an ATJ report to MS on a daily basis in accordance with the
instructions identified in Exhibit A.


 


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          (b)     Software
Components Record Management. 
COMPANY shall manage all Software Component records in accordance with
the MS Authorized Replicator Policy and Procedures Manual
and the following conditions:


 


(i)      COMPANY shall maintain
accurate and complete shipping/transfers-out records of Software Components
shipped by or for COMPANY;


 


(ii)     for Software Components
damaged during the ordinary course of COMPANY’s business, COMPANY shall
maintain a log that includes the number of the damaged Software Components, the
date such Software Components were damaged, the Software name(s) associated
with the damaged Software Components, and the cause of damage.  All Software must be maintained at the
COMPANY Site for inspection by MS.  
Microsoft or MS must approve and witness the disposition of all
Software; and


 


(iii)    for Software Components
received from a [**] in error (e.g., damaged, quantity does not match
transaction record, Software does not match [**] transaction documentation),
COMPANY shall:


 


(A)                                                                              alert
the [**] and appropriate MS OEM Supply Chain Operations Manager to the
discrepancy;


 


(B)     if a Return Material
Authorization (“RMA”) is issued by the [**], promptly return the Software
Components received in error; and


 


(C)     COMPANY shall maintain
records of RMA, quality assurance/receiving rejection, and transaction
documentation of all rejected and/or returned Software Components.


 


(c)     Reports Regarding Software Supply to
Customer(s).  COMPANY shall provide
MS, upon request, with a manually produced report summarizing and identifying
all information associated with the Customer requisition order and
corresponding COMPANY supply order relating to each transaction of Software to
or from Customer. COMPANY is required to accept requisition orders from OEMs in
written form.  This includes written
requisition orders, faxed requisition orders, or EDI requisition orders.  Requisition orders over the phone are not
allowed unless followed up with a written requisition order.  All requisition orders must contain at least
the Customer name, Customer license number, issue date, part numbers,
quantities, and a requisition order number. 
COMPANY is required to issue a delivery note with each transaction.  The delivery note must contain at least the
COMPANY name, the delivery date, the part numbers, quantities, and requisition
order number(s) from the OEM.  The
delivery note is required to be signed by the Customer or its bona fide agent
and one (1) copy returned to COMPANY (with one (1) copy remaining with the
Customer).  COMPANY must keep this
delivery note on file for a minimum of two (2) years.  Additionally, COMPANY shall provide MS, upon
request, with a manually produced report identifying the Customer requisition
order information associated with each return of Software from Customer.


 


(d)     Record Retention for Audit Purposes.


 


(i)      During the term of this
Agreement and for three (3) years thereafter, COMPANY shall maintain reports
and other detailed records referenced in this Section 4 (the “Reports and
Records”) in readily accessible locations. 
Reports and Records shall include, but may not be limited to, all
records (including complete financial statements and requisition order records)
relating to the reconciliation of Software Components, acquisition,
reproduction, delivery, supply to Customers, other disposition and inventory
level of each copy of each Software by or for COMPANY, COMPANY subsidiaries and
Sub-contractors.  COMPANY shall provide
MS with immediate access


 


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to current Reports and Records for a minimum period of two (2) years
from the date of such Reports and Records. 
COMPANY shall provide MS with a maximum of twenty-four (24) hour access
to archived Reports and Records.  All
archived Reports and Records shall be retained in an electronic format.


 


(ii)        COMPANY shall maintain a computerized
system of records to enable COMPANY to identify the Customer receiving any copy
of Software.  COMPANY shall make such
records information available to MS within twenty-four (24) hours of such
request.


 


 


5.       AUDIT AND INSPECTIONS.


 


(a)     [**]


 


(b)     [**]


 


(c)     In addition to the provisions of this
Section 5, MS may, without notice, inspect COMPANY’s procedures at COMPANY’s
premises in order to verify COMPANY’s compliance with any terms of this
Agreement, including, but not limited to, Sections 7(a) and 9(a).  Any such inspection shall be conducted during
regular business hours at COMPANY’s offices. 
Should material discrepancies be discovered in the course of the
inspection, or in the event an inspection leads to an audit due to material
discrepancies, COMPANY shall pay for all reasonable travel-related and other
applicable costs incurred by MS in performing such inspection.  Should inventory discrepancies (found in the
[**] and all inventory information made available to COMPANY through the RSM
system), negligence or other infractions by COMPANY warrant a non-scheduled
inspection by MS, COMPANY shall pay for all reasonable travel-related and other
applicable costs incurred by MS in performing such inspection.


 


          (d)     COMPANY
shall submit to audit(s) by MS from time to time in order to verify COMPANY’s
compliance with the terms and conditions of this Agreement.  If material discrepancies are discovered or
COMPANY does not pass such audit(s), COMPANY agrees to pay all costs for such
audit(s) together with any costs incurred to bring any COMPANY Site(s) into
strict compliance with this Agreement.


 


          (e)     During
the terms of this Agreement and for three (3) years thereafter, MS shall have
the right to audit the Reports and Records identified in Section 4 above.


 


 


6.       DELIVERY AND SUPPORT.


 


(a)     Neither MS nor its suppliers shall have any
liability for failure to deliver Software and or COAs by any particular date.


 


(b)     [**]


 


(c)     This Agreement does not include the
provision by MS of technical support in COMPANY’s performance of Replication
Services.  COMPANY will report to MS in
writing any deviations from specifications of Software FDR, DLK, ARK or
Kit.  MS agrees to use reasonable efforts
to correct such deviations in subsequent releases of Software; however, MS is
under no obligation to do so.


 


(d)     MS will use reasonable efforts to supply
COMPANY with Software Specifications referencing page and media counts which
are defined in the RSM BOM viewer at the time of Software release.


 


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7.       LICENSE RESTRICTIONS.


 


(a)     COMPANY shall deliver Software and COAs
only to Customers located in the Territory, as defined in Exhibit E.  COMPANY may add to its existing Territory
only at the discretion of MS.  Company
may add Sites in new Territories only upon approval from MS.  COMPANY shall deliver to a Customer in the
Territory only those types of Software that such Customer has licensed pursuant
to the Customer Agreements. COMPANY shall confirm that all Customers to which
COMPANY delivers Software have a valid Customer Agreement for Software ordered
by such Customer by referencing, on the date of Software transaction, the [**]
or other MS electronically produced daily report, as determined by MS. COMPANY
shall download, on a daily basis, the above-referenced MS [**] or other MS
electronically produced daily report, as determined by MS.  COMPANY shall not deliver Software or COAs to
any Customer that MS has put on transaction hold as identified in the [**], or
on the daily report identified in this Section 7(a).  MS may require that COMPANY refuse to fill a
Customer’s orders for Software due to such Customer’s failure to comply with
any terms of the Customer Agreements. COMPANY shall not otherwise deliver
Software or COAs.


 


          (b)     [**]


 


          (c)     COMPANY
shall not reverse engineer, decompile or disassemble any Software.


 


          (d)     COMPANY
shall not in any way modify the content of BOM(s), disks, Software
Documentation and/or Software without the express written permission of MS.


 


          (e)     [**]


 


          (f)      COMPANY shall perform Replication
Services, (including, but not limited to the reproduction, duplication, copying
or otherwise permitting the assembly of Software), only at the Sites.  All replication and/or assembly Sites
approved by MS are shown on Exhibit B or on a secure website authorized and
maintained by MS. Additional COMPANY and/or COMPANY subsidiary Sites may be
added, but the addition of such Site(s) is subject to MS’s prior written
approval and, in the case of a COMPANY subsidiary, the full execution of the
COMPANY subsidiary agreement between MS and such COMPANY subsidiary as shown on
Exhibit C.  COMPANY may close a Site only
after providing MS with thirty (30) days notice of such intended closure.  COMPANY guarantees its subsidiary’s
fulfillment of the applicable obligations imposed on COMPANY by this Agreement.
COMPANY agrees to indemnify MS and its suppliers for all damages and/or costs
of any kind, without limitation, incurred by MS, its suppliers, or any third
party and caused by a breach of its subsidiary’s fulfillment of the applicable
obligations imposed on COMPANY by this Agreement, including, but not limited
to, COMPANY’s payment of any costs, fees and/or monetary judgments awarded in
favor of MS or its suppliers by a court of competent jurisdiction, resulting
from COMPANY subsidiary’s unauthorized replication and/or delivery of Software.


 


(g)     COMPANY may use a Sub-contractor for the
replication, assembly and delivery of Software to Customers only if all of the
following required conditions are met:


 


(i)      Prior to Sub-contractor
performing such services, COMPANY and its Sub-contractor enter into a written
agreement (“Sub-contractor Agreement”) that expressly provides that MS is a
third party beneficiary of the Sub-contractor Agreement with rights to enforce
such agreement; that MS, at its sole discretion, reserves the right to evaluate
the Sub-contractor, either in person or in written form; and further requires
Sub-contractor to:


 


(A)   comply with obligations identical to those
imposed on COMPANY by Sections 4, 5, 7, 8, 9, 10, 14(a), and 16,


 


(B)     halt reproduction of
Software as required under Section 7(a) of this Agreement or upon notice from
COMPANY or MS of the termination or expiration of this Agreement,


 


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(C)     pay MS’s or COMPANY’s
attorneys’ fees if COMPANY or MS employs attorneys to enforce any rights
arising out of the Sub-contractor Agreement; and


 


(ii)     COMPANY is not permitted
to provide COAs to Sub-contractor(s) for use in the manufacture or assembly of
Software on behalf of COMPANY; and


 


(iii)    COMPANY guarantees its
Sub-contractor’s fulfillment of the applicable obligations imposed on COMPANY
by this Agreement.  COMPANY agrees to
indemnify MS and its suppliers for all damages and/or costs of any kind,
without limitation, incurred by MS, its suppliers, or any third party and
caused by a breach of its Sub-contractors’ fulfillment of the applicable
obligations imposed on COMPANY by this Agreement; and


 


(iv)    Prior to Sub-contractor
performing such services, COMPANY provides MS with a written certification,
signed by a COMPANY officer, representing and warranting that COMPANY is in
compliance with the provisions of Sections 7(f) and 7(g) of this Agreement; and


 


(v)     MS, in its sole discretion, approves such
Sub-contractor prior to Sub-contractor performing such services.


 


In lieu of or in addition to
the Sub-contractor Agreement, MS may, in its sole discretion, require that the
Sub-contractor execute a separate agreement with MS that includes the same or
similar provisions required in the Sub-contractor Agreement.


 


          (h)     COMPANY
will not use any MS or Microsoft stationery, forms, or printed material of any
kind.


 


(i)      [**]


 


          (j)      COMPANY
may not fulfill aftermarket OEM end user requests for manuals and/or media
without the prior written authorization of MS.


 


          (k)     Pursuant
to this Agreement, COMPANY shall be authorized to order Software Stamper
masters only from MS or such Stamper mastering Site(s) as are authorized by MS
from time to time at its sole discretion.


 


          (l)      COMPANY
must return to its MS OEM Supply Chain Operations Manager all obsolete, broken
or no longer used Stampers in accordance with the MS-designated global scrap program
described in the MS Authorized Replicator
Policy and Procedures Manual.


 


          (m)    COMPANY
shall have no right to and may not assign or transfer in any manner any
liabilities that could be incurred by COMPANY to MS under this Agreement to any
Sub-contractor and/or supplier.


 


 


8.       SPECIFIC DUTIES OF COMPANY.


 


(a)     COMPANY will maintain a dedicated business
group to manage Replication Services for Customers and provide administrative
support to MS.


 


          (b)     [**]


 


          (c)     COMPANY
shall maintain at least the minimum MS Standards for security defined in the MS
Authorized Replicator Policy and Procedures Manual
at each replication and/or assembly Site to prevent the unauthorized delivery
of Software and/or COAs and disclosure or dissemination to third parties of any
materials (including technology) that would in whole or in part enable such
third parties to reproduce or in


 


8





















 


document
and submit to MS  COMPANY’s requirements
for COA handling, processing, manufacturing, inventory, and reporting.


 


          (d)     COMPANY
shall perform its obligations pursuant to this Agreement in accordance with the
MS Authorized Replicator Policy and Procedures Manual.  The MS Authorized Replicator
Policy and Procedures Manual may be modified by MS from time to time
in its sole discretion and shall be effective upon ten (10) calendar days’
prior notice to COMPANY.


 


          (e)     COMPANY
shall secure approval from MS prior to using COMPANY’s replication facilities
for any replication-related services that might be determined by MS to be
outside of the replication rights allowed under this Agreement.


 


          (f)      [**]


 


          (g)     COMPANY
will not enter into any agreement, contract, or arrangement with any government
or government representative or with any person, firm, corporation, partnership
or other enterprise imposing legal obligations or liability of any kind
whatsoever on MS.  Without limiting the
generality of the foregoing, COMPANY agrees that it will not sign MS’s name or
the name of any of its suppliers to any commercial paper, contract, or other
instrument, and will not contract any debt or enter into any agreement, either
express or implied, binding MS or any of its suppliers to the payment of money
and/or in any other regard.


 


          (h)     COMPANY
shall have no right to make any representations or warranties or otherwise
cause its Customers to believe that any warranty is applicable to any Software,
except as is provided in writing by MS. 
COMPANY hereby agrees to indemnify and hold MS and its suppliers
harmless from any expenses which MS or its suppliers may incur arising out of
or resulting from any warranty or representation by COMPANY other than a
warranty in conformity with MS’s then current express written warranty.  Unless COMPANY obtains the prior written
consent of MS, COMPANY shall not, in connection with the supply of Software,
use any advertising, promotional material or other literature other than those
contained in such materials and literature as MS may provide.


 


          (i)      COMPANY
shall not pledge the credit of MS or its suppliers, execute or vary
the terms of any agreement on behalf of MS or any of its suppliers, commit
any unlawful act in connection with this Agreement, or represent that COMPANY
has the authority to do any of the foregoing.


 


          (j)      [**]


 


          (k)     Prior
to adding DVD Mastering and/or Replication Sites, COMPANY, COMPANY subsidiary
and/or Sub-Contractor shall be specifically approved and certified by MS to
perform Replication Services for any Software using DVD format and technology.


 


(l)      [**]


 


          (m)    COMPANY
(i) represents and warrants that it shall pay and discharge all royalties,
license fees or other payments payable to or claimed by a third party in
respect of any patent or other intellectual property right of that third party
arising from the use of the subject matter of such patent or other intellectual
property by COMPANY or by any COMPANY subsidiary, approved Sub-contractors or
suppliers in performing the Replication Services or arising from the subsequent
requisite fulfillment or supply by MS (anywhere in the world) of any Software
or Component manufactured by COMPANY or by any COMPANY subsidiary, approved
Sub-contractors or suppliers and/or supplied by COMPANY to MS and whether or
not such obligation arises at the time the Replication Services are provided by
COMPANY or subsequently and (ii) COMPANY agrees to indemnify (including
associated costs of legal fees and expenses of defense), defend and hold MS and
its suppliers harmless from and against (a) any claim by a Customer
attributable to COMPANY’s performance of Replication Services for a Customer
pursuant to the


 


9





















 


rights
granted under this Agreement including, but not limited to, COMPANY’s
replication, assembly, and/or delivery processes or (b) any claim by any third
party that COMPANY’s performance of all or any portion of the Replication
Services, pursuant to the rights granted under this Agreement, infringes such
third party’s patent, copyright, trade secret and/or any other intellectual
property right with respect to COMPANY’s replication, assembly, and/or delivery
processes..


 


          (n)     COMPANY
may perform security reviews and Site audits of its Sub-contractors.  If COMPANY performs such reviews and audits,
COMPANY must provide to MS, upon MS’s written request, all documentation
related to such reviews and audits together with all reports regarding
necessary corrective action reports.


 


 


9.       QUALITY.


 


          (a)     COMPANY
shall maintain Software quality standards that meet or exceed those applicable
quality standards which MS defines for media replication, printed materials,
packaging, and assembly as set forth in the MS Authorized
Replicator Policy and Procedures Manual. At any time, MS may rescind
authorization for a particular COMPANY replication and/or assembly Site or
particular Software if MS determines, in its sole discretion, that Software
reproduced and/or assembled at such Site does not meet MS’s standards.


 


(b)     Concurrent with the manufacture of a new
Microsoft OEM Software type, COMPANY shall submit copies of Software in
compliance with the First Article Sample process included in the MS Authorized Replicator Policy and Procedures Manual  to their respective MS OEM Supply Chain
Operations Manager for each new and/or custom type of Software replicated and
assembled at, and/or delivered from each of the Sites identified on Exhibit B
or post a digital image of such Software on a secure website authorized and
maintained by MS pursuant to the license grant in Section 2(a) of this
Agreement.  COMPANY shall, upon request,
provide MS samples of all COMPANY literature that uses Software name(s).  MS may, at its discretion, halt the
production of any Software due to poor quality or workmanship, or failure to
comply with the most recent BOM as found in RSM.


 


          (c)     Additionally,
COMPANY shall submit sufficient copies of a CD or a DVD disc from each CD or
DVD replication mould line at each COMPANY, COMPANY subsidiary or Subcontractor
CD or DVD replication Site in compliance with the First Article Sample process
included in the MS Authorized Replicator
Policy and Procedures Manual.


 


 


10.     INTELLECTUAL PROPERTY RIGHTS/NOTICES.


 


          (a)     COMPANY
will not remove any copyright, trademark or patent notices that appear on
Software as delivered to COMPANY. 
COMPANY shall cause to appear on the title page of each volume of OEM’s
supplemental documentation, if any, and at any other location where any
copyright, patent or trademark notice appears, the Microsoft and, if
applicable, third party copyright, patent or trademark notices that appear in
the release of the corresponding Software Documentation provided by MS.


 


          (b)     MS
expressly reserves its exclusive right under applicable copyright, patent, and
trademark laws to distribute copies of Software by any means.  COMPANY acknowledges that MS shall retain all
copyright, patent, moral, trademark, title and other proprietary and
intellectual property in the Software. 
COMPANY shall use the appropriate trademark, Software descriptor and
trademark symbol (either “TM” or “®” in a superscript),
and clearly indicate Microsoft’s or applicable third party’s ownership of its
trademark(s) whenever Software name is first mentioned in any advertisement,
brochure or in any other manner in connection with the Replication
Services.  COMPANY shall not, at any time,
use any name or trademark confusingly similar to a Microsoft or licensed third
party trademark, trade name and/or product


 


10





















 


name
or in connection with Software and agrees that its use of such trademark(s),
trade name(s) and/or product name(s) shall not directly or indirectly create in
or for COMPANY any right, title or interest therein.  COMPANY shall undertake no action that will
interfere with or diminish Microsoft’s right, title and/or interest in Microsoft’s
or licensed third party’s trademark(s), trade name(s) or Software name(s).  COMPANY shall, upon request, provide MS with
samples of all COMPANY literature that uses Microsoft’s, MS’s or Software
name(s).  COMPANY shall comply with the
published standard guidelines established by Microsoft and located at the
following URL: 
http://www.microsoft.com/trademarks/. A list of Microsoft Software names
may be found on the Microsoft trademark website which is currently located at
http://www.microsoft.com/mscorp/ip/trademarks/.


 


 


11.     PROHIBITION AGAINST ASSIGNMENT AND
SUBLICENSE BY COMPANY/ASSIGNMENT BY MS.


 


          (a)     COMPANY
shall not assign or sublicense this Agreement and/or any rights or obligations
hereunder (by actual assignment or by operation of law, including without
limitation through a merger, consolidation, exchange of shares, or sale or
other disposition of assets, including disposition on dissolution), except as
is otherwise provided pursuant to Sections 7(f) and 7(g) of this Agreement.


 


          (b)     MS
may assign this Agreement to any Microsoft Corporation subsidiary at any time
in its sole discretion.


 


 


12.     TERM OF AGREEMENT.  The term of this Agreement shall begin on the
Effective Date and end on the earlier to occur of the termination of this
Agreement or June 30, 2006 (the “Term”). 
At MS’s sole discretion, this Agreement shall be amended from time to
time during the Term for any reason including, but not limited to, the purpose
of updating business processes described herein.


 


 


 


13.     DEFAULT AND TERMINATION.


 


          (a)     The
non-defaulting party may terminate this Agreement if any of the following
events of default occur:  (i) if either
party materially fails to perform or comply with this Agreement or any
provision hereof, or (ii) if either party fails to strictly comply with the
provisions of Section 16 or 17 or makes an assignment in violation of Section
11.  MS may, at its sole discretion,
immediately terminate this Agreement without opportunity of cure if MS
determines that any (i) loss or (ii) unauthorized replication and/or delivery
of Software, COA(s), Stamper(s), and/or any third party software has occurred.
MS may, at its sole discretion, immediately terminate COMPANY’s right to
subcontract the replication and/or assembly of Software, in accordance with Sections
7(f) and 7(g) of this Agreement, to COMPANY subsidiary and/or Sub-contractor if
MS determines that any (i) loss or (ii) unauthorized replication and/or
delivery of Software, COA(s), Stamper(s), or any third party software has
occurred.  Additionally, MS may in its
sole discretion with sixty (60) days notification terminate this Agreement for
any or no reason and without any liability to make or pay any compensation to
COMPANY for loss of profits, goodwill or otherwise arising as a result of the termination
of this Agreement.


 


          (b)     Termination
due to a breach of Sections 2, 4, 5, 7(e), 7(f), 7(g), 8(c), 8(d), 11 and 16
shall be effective upon notice.  In all
other cases, termination shall be effective thirty (30) calendar days after
notice of termination to the defaulting party if the default(s) has not been
cured within such thirty (30) calendar-day period.  The rights and remedies of the parties
provided herein shall not be exclusive and are in addition to any other rights
and remedies provided by law or this Agreement.


 


          (c)     In
addition to and without waiving any or all other termination rights, MS may
immediately and temporarily suspend the rights granted to COMPANY in the event
COMPANY fails to perform Replication


 


11





















 


Services
in accordance with the BOM, the Specifications, and/or the MS Authorized Replicator Policy and Procedures Manual.  In such case, MS shall, within ten (10)
business days from the date of MS’s temporary suspension notice to COMPANY,
send an MS manager to COMPANY’s manufacturing Site(s) to inspect and review
Replication Services processes in accordance with Section 5 of this
Agreement.  Within ten (10) business days
from the conclusion of such review/inspection MS shall provide COMPANY with a
corrective action plan or terminate a manufacturing Site or the Agreement
without opportunity of cure.  Upon the
successful completion, as determined solely by MS, of a corrective action plan
in accordance with the schedule identified by MS therein, the rights granted to
COMPANY under this Agreement may be reinstated.


 


          (d)     In
the event of COMPANY’s default or for any MS reason, MS may immediately
terminate any individual Software, and/or any COMPANY replication, assembly,
and/or Software delivery Site(s). 
Termination of any particular Software or any COMPANY replication,
assembly, and/or distribution Site(s) will not affect the terms and conditions
of this Agreement as they apply to other Software, or as to any other COMPANY
replication, assembly, and/or Software delivery Site(s).


 


 


14.     OBLIGATIONS UPON TERMINATION.


 


          (a)     Within
ten (10) calendar days after termination or expiration of this Agreement,
COMPANY shall, at MS’s option, either return to MS all Microsoft and MS
material (including, without limitation, ARKs, DLKs, FDRs, Kits, [**] software,
and any MS intellectual property residing on the hard disk of [**]) in COMPANY’s
possession or under its control supplied by MS to COMPANY under this Agreement,
or destroy Microsoft and MS material with a representative of Microsoft or MS
present to witness and approve such destruction.  COMPANY will provide a Certificate of
Microsoft and MS Material Destruction attached hereto as Exhibit D, signed by
an officer of the COMPANY as verification of actual MS Material destroyed
and/or a representative of Microsoft or MS witnessing such destruction.


 


          (b)     COMPANY
may retain ownership of the [**] at the termination date of this Agreement;
however, MS shall have the first option to purchase back from COMPANY the [**]
installed at COMPANY Site(s).  The
Equipment shall be made available to MS at a market value current with the date
of termination.


 


          (c)     COMPANY
shall follow all termination or Site shut-down procedures as described in the
MS Authorized Replicator Policy and Procedures Manual
including the submission of an electronic copy/archive of the COA database.


 


          (d)     Sections
4, 5, 15, 16, 17, and 21(a), and the indemnification and liability provisions
of Sections 7(f), 8(h), and 8(m) shall survive termination or expiration of
this Agreement.


 


 


15.     LIMITATION OF LIABILITY AND REMEDY.


 


          (a)     [**]


 


          (b)     Neither
MS, its licensors or suppliers shall be liable to COMPANY for costs or losses
which COMPANY incurs due to the failure by a Customer to pay for Software, nor
due to Software inventory held by COMPANY for any Customer to which COMPANY is
unable to deliver such Software inventory due to termination of the respective
Customer Agreement, expiration of the respective Customer Agreement, removal of
Software from the [**], or as a result of Customer’s placement on transaction
hold.


 


          (c)     In
no event shall MS, its licensors or suppliers be liable for any indirect,
incidental, special or consequential damages, or damages for loss of profits,
revenue, data or use, incurred by COMPANY or any


 


12





















 


third
party in connection with use of [**] or [**] software, whether in action in
contract or tort, even if the other party has been advised of the possibility
of such damages.


 


ANY
AND ALL MS OR MICROSOFT WARRANTIES OF ANY KIND WHATSOEVER, INCLUDING THOSE FOR
MERCHANTABILITY AND/OR FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT OF
INTELLECTUAL PROPERTY, ARE EXPRESSLY EXCLUDED. 
COMPANY AGREES NEITHER MS, MICROSOFT, NOR THEIR LICENSORS OR SUPPLIERS
SHALL BE LIABLE FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, ECONOMIC OR
PUNITIVE DAMAGES, EVEN IF MS, MICROSOFT, OR THEIR LICENSORS OR SUPPLIERS HAVE
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.


 


 


16.     NONDISCLOSURE AGREEMENT.  COMPANY shall keep confidential any
information provided by MS or its suppliers to COMPANY (including, but not
limited to the Specifications, BOMs, DLKs, ARKs, FDRs, Kits, [**] software, and
all information made available to COMPANY through the MS RSM system), the terms
and conditions of this Agreement, any disclosures made by MS or its suppliers
to COMPANY which by the nature of the disclosure ought to be treated as
confidential, and other nonpublic information and know-how disclosed to COMPANY
by MS, Microsoft or any of its subsidiaries. 
However, COMPANY may disclose the terms and conditions of this Agreement
in confidence to its immediate legal and financial consultants as required in
the ordinary course of COMPANY’s business. 
Nothing in this Section shall prohibit either party from disclosing
confidential information as specifically required by national, international or
applicable government authorities, provided the disclosing party immediately
notifies the other party in writing upon its receipt of an order or request for
disclosures and will assist the other party and its affiliates as reasonably
required in seeking any protective order or its equivalent or in limiting the
scope of any disclosure.


 


 


17.     PRIVACY AND DATA PROTECTION.


 


(a)     “Personal Information” means any
information provided by MS or collected by COMPANY in connection with this
Agreement (i) that identifies or can be used to identify, contact, or
locate the person to whom such information pertains, or (ii) from which
identification or contact information of an individual person can be derived.
Personal Information includes, but is not limited to: name, address, phone
number, fax number, email address, social security number or other
government-issued identifier, and credit card information. Additionally, to the
extent any other information (such as, but not necessarily limited to, a
personal profile, unique identifier, biometric information, and/or IP address)
is associated or combined with Personal Information, then such information also
will be considered Personal Information.


 


(b)     Any Personal Information collected or
accessed by COMPANY in the performance of the Replication Services in
accordance with this Agreement shall be limited to that which is strictly
necessary to perform such Replication Services or to fulfill any legal
requirements.  If the Replication
Services involve the collection of Personal Information directly from
individuals, such as through a webpage, COMPANY will provide a clear and
conspicuous notice regarding the uses of the Personal Information.  Such notice will comply with all relevant
guidelines contained at http://members.microsoft.com/vendorguide or as
otherwise provided by MS.


 


(c)     COMPANY shall use Personal Information only
as necessary to perform Replication Services in accordance with this Agreement
and not for any other purpose whatsoever. 
COMPANY shall maintain such Personal Information in strict confidence in
accordance with the provisions of Section 16 above.  COMPANY shall not share any Personal Information
that is collected or possessed by COMPANY with any third parties for any reason
except as necessary to carry out the Replication Services, and only under terms
and conditions substantially similar to those contained in this Section. If
COMPANY is serviced with a court order compelling disclosure of any Personal
Information or with notice of proceedings for such an


 


13





















 


opportunity to intervene
before COMPANY files any response to the order or notice.



          (d)     COMPANY will take reasonable steps to protect Personal
Information in COMPANY’s possession from unauthorized use, access, disclosure,
alteration or destruction. Security measures shall include access controls,
encryption or other means, where appropriate. COMPANY must immediately notify
MS of any known security breach that may result in the unauthorized
use, access, disclosure, alteration or destruction of Personal
Information.  COMPANY agrees to conduct an audit on at least an annual basis
to evaluate the security of Personal Information in COMPANY’s possession and to
verify that the terms of this Agreement with respect to Personal Information
are being followed.  The results of such audit shall be made available to
MS on request.


 


          (e)     Upon
request from MS, COMPANY shall provide MS with any or all Personal Information
in COMPANY’s possession. Upon termination or expiration of this Agreement,
COMPANY shall within ten (10) days thereafter, at MS’s sole discretion either
(i) provide MS with all documents and materials (including any and all copies)
containing Personal Information, together with all other materials and property
of MS, which are in its possession or under its control or (ii) destroy all
such specified documents and materials (including any and all copies in any and
all formats) and provide MS with a certificate of destruction signed by an
officer of COMPANY.


 


 


18.     NOTICES AND REQUESTS.  All notices, authorizations, and requests in
connection with this Agreement shall be deemed given on the day they are (i)
deposited in the U.S. mails, postage prepaid, certified or registered, return
receipt requested; or (ii) sent by air express courier, charges prepaid; and
addressed as follows:


 


[**]


 


or to such other address as the party to
receive the notice or request so designates by written notice to the other.


 


 


19.     CONTROLLING LAW; NO FRANCHISE.


 


(a)     This Agreement and all matters relating to
this Agreement shall be construed and controlled by the laws of the State of
Nevada, and COMPANY consents to jurisdiction and venue in the state and federal
courts sitting in the State of Nevada. 
Process may be served on either party in the manner set forth in Section
18 for the delivery of notices or by such other method as is authorized by
applicable law or court rule.


 


(b)     Neither this Agreement, nor any terms and
conditions contained herein, shall be construed as creating a partnership,
joint venture or agency relationship or as granting a franchise as defined
under the laws of the State of Nevada.


 


 


20.     ATTORNEYS’ FEES. 
If either MS, its licensors or suppliers, or COMPANY employs attorneys
to enforce any rights arising out of or relating to this Agreement, the
prevailing party shall be entitled to recover its reasonable attorneys’ fees,
costs and other expenses.


 


 


21.     GENERAL.


 


(a)     U.S.
GOVERNMENT LICENSE RIGHTS. 
All Software provided to the U.S. Government pursuant to solicitations
issued on or after December 1, 1995 is provided with the commercial license
rights


 


14





















 


solicitations issued prior
to December 1, 1995 is provided with “Restricted Rights” as provided for in
FAR, 48 CFR 52.227-14 (JUNE 1987) or DFAR, 48 CFR 252.227-7013 (OCT 1988), as
applicable.  The reseller is responsible
for ensuring Software is marked with the “Restricted Rights Notice” or “Restricted
Rights Legend,” as required.  All rights
not expressly granted are reserved.


 


(b)     EXPORT
RESTRICTIONS.  COMPANY
acknowledges that Software is subject to U.S. export jurisdiction.  COMPANY agrees to comply with all applicable
international and national laws that apply to the Software, including the U.S.
Export Administration Regulations, as well as end-user, end-use and destination
restrictions issued by U.S. and other governments. For additional information,
see http://www.microsoft.com/exporting/.


 


(c)     This Agreement does not constitute an offer
by MS and shall not be effective until signed by both parties.  Upon execution by both parties, all prior
Replication Agreement(s), including amendments thereto, between MS and COMPANY
shall terminate and this Agreement shall constitute the entire agreement
between the parties with respect to the subject matter hereof and merges all
prior and contemporaneous communications. 
It shall not be modified except by a written agreement signed on behalf
of COMPANY and MS by their respective duly authorized representatives.  Unless agreed to in a separate writing signed
by both parties, any statement appearing as a restrictive endorsement on a
check or other document that purports to modify a right, obligation or
liability of either party shall be of no force and effect.


 


(d)     If any provision of this Agreement or
license of any particular type of Software shall be held by a court of
competent jurisdiction to be illegal, invalid or unenforceable, the remaining
provisions and license for remaining Software, as applicable, shall remain in
full force and effect.


 


(e)     No waiver of any breach of any provision of
this Agreement shall constitute a waiver of any prior, concurrent or subsequent
breach of the same or any other provisions hereof, and no waiver shall be
effective unless made in writing and signed by an authorized representative of
the waiving party.


 


(f)      The section headings used in this
Agreement and the attached Exhibits are intended for convenience only and shall
not be deemed to supersede or modify any provisions.


 


 


22.     COMPANY’S GOVERNMENTAL APPROVAL OBLIGATIONS.


 


(a)     COMPANY shall, at its own expense, obtain
and arrange for the maintenance in full force and effect of all governmental
approvals, consents, licenses, authorizations, declarations, filings, and
registrations as may be necessary or advisable for the performance of all terms
and conditions of this Agreement, including, but not limited to, foreign
exchange approvals, import and offer agent licenses, fair trade approvals and
all approvals which may be required to realize the purposes of the
Agreement.  COMPANY warrants and
represents that Software is importable into the country where the shipping
address for COMPANY (Section 18) is located and to the country to which
Software may be delivered.


 


(b)     If any necessary approvals are not or
cannot be obtained within a reasonable time in form and substance satisfactory
to MS, or MS determines that the Bureau of Export Administration or any other
U.S. government agency with jurisdiction over export controls has suspended,
revoked, or denied COMPANY’s export privileges, MS may immediately terminate
this Agreement, and upon receipt of such notice by COMPANY, this Agreement shall
be null, void and of no effect.


 


15





















 


23.     EXHIBITS.


 


The following exhibits, as amended from time
to time, are incorporated into this Agreement by this reference (“Exhibits”):


 


Exhibit A                All
Transaction Journal


Exhibit B                Replication,
Assembly and/or Software Delivery Sites


Exhibit C                COMPANY
Subsidiary Agreement


Exhibit D                Certificate
of Microsoft and MS Material Destruction


Exhibit E Territory


 


 


IN WITNESS WHEREOF, the parties have executed
this Agreement as of the date set forth above. 
All signed copies of this Agreement shall be deemed originals.


 


MICROSOFT
LICENSING, GP                                                 ZOMAX
INCORPORATED


 


 


	
   

  	
   

  	
   

  
	
  By (Sign)

  	
   

  	
  By (Sign)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Ryan Matthews

  	
   

  	
  Name (Print)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Supply Chain Manager, OEM
  Supply Chain Operations

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
  Date

  



 


16





















EXHIBIT
A — ALL TRANSACTION JOURNAL


 


 


[**]


 


17





















 


EXHIBIT
B


REPLICATION,
ASSEMBLY, SOFTWARE DELIVERY AND/OR DESTRUCTION SITES


 


[**]


 


18





















 


EXHIBIT C


COMPANY SUBSIDIARY AGREEMENT


 


 


[**]


 


19





















 


EXHIBIT
D


CERTIFICATE
OF MICROSOFT AND MS MATERIAL DESTRUCTION


 


[**]


 


20





















 


EXHIBIT
E — TERRITORY


 


[**]


 


21