Document:

EXHIBIT
10.14.1

 

McDATA CORPORATION

 

DISTRIBUTION AGREEMENT

Agreement No. 40-98-0096-07

 

(As Amended Through Amendment #17)

 

“McDATA”

McDATA Corporation

310 Interlocken Parkway

Broomfield, CO  80021-3464

 

“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

 

	
  Exhibit A

  	
   

  	
  Pricing

  
	
   

  	
   

  	
   

  
	
  Exhibit B

  	
   

  	
  Product
  Specifications

  
	
   

  	
   

  	
   

  
	
  Exhibit C

  	
   

  	
  Operational
  Provisions

  
	
   

  	
   

  	
   

  
	
  Exhibit D

  	
   

  	
  Conditions of
  Software Acceptance; Customer License Agreement

  
	
   

  	
   

  	
   

  
	
  Exhibit E

  	
   

  	
  Buyer Entities
  Authorized to Purchase

  
	
   

  	
   

  	
   

  
	
  Exhibit F

  	
   

  	
  Trademarks

  
	
   

  	
   

  	
   

  
	
  Exhibit G

  	
   

  	
  Terms for Use of
  McDATA Enterprise SAN Methodology

  

 

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.

 

	
  Executed and agreed to:

  	
   

  	
  Accepted and agreed to:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  McDATA Corporation (McDATA)

  	
   

  	
  Hitachi Data Systems Corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/  MICHAEL B. GUSTAFSON

  	
   

  	
  By:

  	
  /s/ DAVID COOMBS

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Michael B.
  Gustafson

  	
   

  	
  Name:

  	
  David Coombs

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  VP Sales &
  Services

  	
   

  	
  Title:

  	
  EVP, Operations

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  12/15/99

  	
   

  	
  Date:

  	
  12/13/99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Effective Date:

  	
  December 15,
  1999

  	
   

  	
   

  	
   

  	
   

  
											

 

 

McDATA CORPORATION

 

DISTRIBUTION AGREEMENT

 

Table of Contents

 

 

 

	
  Section Title

  	
   

  
	
   

  	
   

  
	
  1

  	
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  2

  	
  TERM

  	
   

  
	
   

  	
   

  	
   

  
	
  3

  	
  TERRITORY

  	
   

  
	
   

  	
   

  	
   

  
	
  4

  	
  MCDATA’S RESPONSIBILITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  5

  	
  BUYER’S RESPONSIBILITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  6

  	
  CREDIT AND PAYMENT TERMS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  6.1           Credit

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  6.2           Payment

  	
   

  
	
   

  	
   

  	
   

  
	
  7

  	
  TITLE AND RISK OF LOSS

  	
   

  
	
   

  	
   

  	
   

  
	
  8

  	
  FORECASTS, ORDERS, AND
  DELIVERY

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  8.1           Forecasts

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  8.2           Purchase Orders

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  8.3           Acceptance of Purchase Orders

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  8.4           Spares

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  8.5           Order Rescheduling

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  8.6           Shipment/Delivery and
  Export/Import

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  8.7           Acceptance of
  Products

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  8.8           Order Cancellation

  	
   

  
	
   

  	
   

  	
   

  
	
  9

  	
  PRODUCTS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  9.1           Product Specifications

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  9.2           Product Design
  Changes and Field Modification Orders

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  9.3           Improvements

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  9.4           Buyer Modification

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  9.5           Product Discontinuance

  	
   

  
	
   

  	
   

  	
   

  
	
  10

  	
  SOFTWARE LICENSE
  & RESTRICTIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  11

  	
  WARRANTY

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  11.1         Product Warranty

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  11.2         Software Warranty

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  11.3         Title Warranty

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  11.4         Year 2000

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  11.5         Disclaimer

  	
   

  
	
   

  	
   

  	
   

  
	
  12

  	
  TECHNICAL SUPPORT, REPAIRS, AND
  TRAINING

  	
   

  

 

i

 

	
   

  	
  12.1         By McDATA

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  12.2         By Buyer

  	
   

  
	
   

  	
   

  	
   

  
	
  13

  	
  SOFTWARE MAINTENANCE

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  13.1         Software Support

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  13.2         Program Errors

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  13.3         Software Update Service

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  13.4         Limitations

  	
   

  
	
   

  	
   

  	
   

  
	
  14

  	
  PROPRIETARY RIGHTS INDEMNIFICATION

  	
   

  
	
   

  	
   

  	
   

  
	
  15

  	
  DOCUMENTATION:  REPRODUCTION, MODIFICATION, AND
  DISTRIBUTION RIGHTS

  	
   

  
	
   

  	
   

  	
   

  
	
  16

  	
  IDENTIFICATION OF
  PRODUCTS AND TRADEMARK RIGHTS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  16.1         Identification of Products

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  16.2         Trademark Rights

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  16.3         Operational Provisions

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  16.4         Web Access

  	
   

  
	
   

  	
   

  	
   

  
	
  17

  	
  CONFIDENTIALITY OF
  INFORMATION

  	
   

  
	
   

  	
   

  	
   

  
	
  18

  	
  LIMITATION OF LIABILITY

  	
   

  
	
   

  	
   

  	
   

  
	
  19

  	
  TERMINATION

  	
   

  
	
   

  	
   

  	
   

  
	
  20

  	
  GENERAL PROVISIONS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  20.1         Governing Law

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  20.2         Waiver

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  20.3         Compliance with Laws

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  20.4         Notices

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  20.5         Assignment

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  20.6         Attorneys’ Fees

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  20.7         Official Language

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  20.8         Headings

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  20.9         Force Majeure

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  20.10       Severability

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  20.11       Contract Changes

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  20.12       Records

  	
   

  

 

ii

 

	
  EXHIBIT A

  	
  PRODUCT PRICING

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT B

  	
  PRODUCT
  SPECIFICATIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT C

  	
  OPERATIONAL
  PROVISIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT D

  	
  CONDITIONS
  OF SOFTWARE ACCEPTANCE CUSTOMER LICENSE AGREEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT E

  	
  BUYER
  ENTITIES AUTHORIZED TO PURCHASE

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT F

  	
  TRADEMARKS

  	
   

  

 

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.”

 

1

 

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:

 

McDATAÒ

 

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.

 

2

 

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              CREDIT AND PAYMENT TERMS.

 

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

 

3

 

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.

 

4

 

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

 

5

 

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 Cancellation.  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.

 

6

 

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.

 

7

 

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 where click-through or
shrinkwrap licenses are enforceable, McDATA’s click-through licenses or
shrinkwrap licenses shall satisfy such requirement.  In countries where click-through licenses or shrinkwrap licenses
are not enforceable, or if Buyer chooses not to use such a click-through or
shrinkwrap license, Buyer shall use a license which contains substantially the
same terms and conditions as those set forth on Exhibit D.

 

10.5        Buyer shall not export, directly or indirectly, the
Software to countries that are not signatories of the Berne Convention.

 

10.6        Buyer shall reasonably notify McDATA promptly of any
unauthorized use, disclosure, reproduction or distribution of Software which
comes to Buyer’s attention.

 

11           WARRANTY.

 

11.1        Product and Spares Warranty.  McDATA warrants that the Products and
Spares purchased will, under normal use and service, conform to Product
Specifications at the time of shipment and be free from defects in material and
workmanship for [***] [***], as measured from the date of shipment.

 

[***]

 

McDATA will, at its option and without charge to Buyer, promptly repair
or replace, any Product (excluding expendables) that is determined to be
defective and that is returned to McDATA within this warranty period, provided
the Product or Spares has not been damaged, subjected to misuse, altered,
improperly repaired or maintained by Buyer or third parties in a manner that
McDATA reasonably determines to have adversely affected performance or
reliability.  McDATA’s liability hereunder
is limited to the repair or replacement of the defective Product or Spares and
does not include any labor related to the removal and/or subsequent
reinstallation thereof.  The above
warranty extends solely to Buyer (and shall not be transferred or assigned in
any manner) and all warranty claims must be generated by Buyer.  Repair or replacement of component parts by
McDATA shall not extend or decrease the Product or Spares warranty.

 

11.2        Software Warranty.  McDATA warrants that the licensed
Software will, under normal use and service, conform to Product Specifications
and be free from defects in material and workmanship for [***][***], as
measured from the date of shipment.

 

[***]

 

McDATA’s sole obligation under this warranty shall be to repair or
replace any defective Software media and/or to remedy any non-conformance of
the Software to enable it to conform to the functional specifications set forth
in its applicable documentation.

 

This warranty is only effective when the Software is used on or in
conjunction with the Product(s) to which it relates.  Further, the warranties are contingent upon proper use of the
Software by Buyer or Buyer’s Customers, and will not apply if the Software has
been modified without the prior written consent of McDATA.  McDATA makes no warranty that use of the
Software will be uninterrupted or error-free, or that its use will meet Buyer’s
or Buyer’s Customer’s suitability requirements.

 

11.3        Title
Warranty.  Except
for McDATA’s security interest in Products pending payment therefor pursuant to
Section 6, McDATA warrants that title to all Products delivered to Buyer
under this Agreement shall be free and clear of all liens, encumbrances or
other claims.

 

8

 

11.4        Year 2000.  Subject to the other provisions of this Section 11,
McDATA warrants that for a period of one (1) year following the advent of the
Year 2000 the Products sold to Buyer will under normal use and service, as set
forth in the Product Specifications, record, store, process, and present
calendar dates falling on or after January 1, 2000 (including
February 29, 2000), in the same manner, and with the same functionality,
except for limitations imposed by the underlying operating system and
utilities, as such Products record, store, process and present calendar dates
on or before December 31, 1999. Notwithstanding the foregoing, McDATA
shall not be responsible for any output, results, errors or abnormal
terminations to the extent that such are caused by (i) any products or services
not provided by McDATA or (ii) any data to be manipulated that is incorrect,
ambiguous or that does not specify a century.

 

11.5        Disclaimer.  THE WARRANTIES AND CONDITIONS SET FORTH
HEREIN AND THE OBLIGATIONS AND LIABILITIES OF McDATA HEREUNDER ARE IN LIEU OF,
AND McDATA HEREBY DISCLAIMS, ALL OTHER EXPRESS OR IMPLIED WARRANTIES AND
CONDITIONS, INCLUDING, WITHOUT LIMITATION, THOSE OF MERCHANTABILITY AND/OR
FITNESS FOR A PARTICULAR PURPOSE.  IN NO
EVENT SHALL McDATA’S LIABILITY TO BUYER UNDER THIS SECTION EXCEED THE
AMOUNT PAID BY BUYER TO McDATA FOR THE AFFECTED PRODUCT.

 

Buyer acknowledges and agrees that it will make no representations or
warranties to its Customers, on behalf of McDATA.

 

12           TECHNICAL
SUPPORT, REPAIRS AND TRAINING.

 

12.1        By McDATA:

 

12.1.1     Technical
Support.  McDATA will provide telephone support to
Buyer as is reasonably required and will, in good faith, cooperate with Buyer
to solve any technical difficulty specific to the designated products that
cannot be resolved by Buyer’s Technical Support Staff (TRC – US, Europe,
Australia and Asia) that are trained to service and maintain the Products.  Buyer’s Technical Support Staff members must
have completed training by McDATA on the designated products.  McDATA’s Technical Support Center will be
staffed and available to Buyer’s Technical Support Staff 8:00 am to 5:00pm
(Mountain Time, US) Monday through Friday, excluding holidays.  McDATA’s Technical Support Center will be
available to the Buyer’s Technical Support Centers through an answering service
at all other times for situations deemed critical by the Buyer’s Technical
Support Staff.  McDATA will acknowledge
the receipt of off-hours critical situation within [***] ([***]) hours of the
time Buyer logged the call with McDATA’s answering service.  Buyer acknowledges that all technical
support inquiries will originate from the Buyer’s Technical Support Staff
(Worldwide TRC).

 

McDATA will provide and maintain alternate forms of
communication for questions from the Buyer’s Technical Support Staff by means
of standard email and through the McDATA public web site.

 

[***]

 

12.1.2     Repairs.  McDATA shall maintain a repair facility
in the United States for a period of [***] ([***]) years from the last date of
shipment to Buyer of each Product

 

9

 

on a model by model basis. Such repair facility will
be available for spares, repairs, upgrades and on-going technical support
(including technical support pursuant to Section 12.1.1 and Software
Support pursuant to Section 13). 
[***] [***]

 

12.1.3     Technical Support Training.  Pricing for McDATA’s training is
specified in McDATA’s Training Guide, as discussed in Exhibit A of this
Agreement.  McDATA shall make available
to Buyer, at Buyer’s expense, training courses and materials designed to
instruct Service Providers in the operation and maintenance of the Products.

 

12.1.4     Information
and Documentation.  Information and documentation provided by McDATA
pursuant to Sections 9.2.2, 9.2.4, 12.1.1, 12.1.3, 15 and Exhibit A,
Section 5.1 may be used, displayed and copied by Buyer [***] [***]
solely for Service Providers’ use in supporting and repairing Products.  Buyer [***] [***] will include on any such
reproduction, copies or displays any of McDATA’s confidentiality, ownership,
use restriction statements and other similar notations that appear on the
original versions of such material.  The
only Web access Buyer [***] [***] may provide to such material which is
designated McDATA confidential or proprietary is to Service Providers with a
need to know via Buyer’s [***] [***] restricted-access intranet or  password-controlled
extranet; such confidential or proprietary material may not be posted on any
Buyer [***] [***] public Internet site.

 

12.1.5     Corrective Action.  In the event that (a) Buyer becomes aware of
a recurring problem arising from or related to a Product, or a Product quality
problem, or (b) an End User Customer specifically requests investigation of a
Product problem experienced by the End User Customer, Buyer will notify McDATA.  For a problem described under (a), the
parties will consult to mutually develop an action plan, including fault
identification, for a prompt remedy. 
For an End User Customer problem described in (b), the parties will mutually
investigate the matter and draft a response for the End User Customer.

 

12.2        By Buyer:  Buyer Technical Support.  Buyer’s technical support group
will attempt to remedy technical difficulties encountered by Buyer’s
Customers.  If Buyer is unable to
resolve such technical difficulties, Buyer’s designated, trained technical
support group will act as the interface between McDATA’s service support
organization (as set forth in Section 12.1.1) and Buyer’s field service
organization.

 

13           SOFTWARE MAINTENANCE.  Upon payment of the license fee and/or then-current annual
maintenance fee listed in Exhibit A, McDATA shall make available to Buyer the
following services:

 

13.1        Software Support.  [***].  Buyer agrees to give McDATA prompt written notice of any program
errors it discovers.  McDATA shall provide
Buyer with corrections to reported errors as soon as possible after receipt of
notification and supporting materials from Buyer regarding such error.  In the event Buyer reports a program error,
McDATA will resolve the error using the latest Software release.  The error will be deemed corrected when
McDATA makes the latest release available to Buyer unless Buyer communicates
with McDATA, within [***] ([***]) days after Buyer’s receipt of the Software
release, that the error has not been corrected.

 

13.2        Program Errors.  McDATA and Buyer recognize that
Software nonconformities are of varying severity and require different levels
of responsiveness.

 

10

 

Priority 1 - Critical Error

Priority 1 errors are those that corrupt data or that a user cannot
conveniently work around.  McDATA
recognizes that Priority 1 errors have a significant impact on End User
Customers and require immediate attention. 
McDATA agrees to acknowledge receipt of Buyer’s report of such Priority
1 errors within [***] ([***]) hours of such call, and further agrees to
commence corrective action as soon after receipt of such report as is
reasonably possible, and will diligently pursue such corrective action until
the errors are corrected.

 

Priority 2 - Serious Error

Priority 2 errors are errors for which work-arounds are available;
however, they have a noticeable effect and require prompt attention.  McDATA agrees to acknowledge receipt of
Buyer’s report of such Priority 2 errors within [***] hours of such call.  In the event a Priority 2 error is not
resolved within [***] ([***]) days after Buyer reports the error, McDATA will
provide Buyer with the schedule and action plan for prompt resolution.

 

Priority 3 - Minor Error

Priority 3 errors usually have minimal impact and need not be resolved
separately.  Resolution of these errors
may be incorporated in maintenance updates as periodically released by McDATA.

 

13.3        Software
Update Service.  Upon
payment of the License Fees and Annual Maintenance Fees as defined in Exhibit
A, Pricing, McDATA will provide Buyer with Software and documentation updates,
as they become available for Buyer to provide to End User Customers, directly
[***] [***] [***].  McDATA grants Buyer
[***] [***] the limited right to post Software drivers, firmware and Software
updates on their secure, password protected intranet and extranet sites only
for use by Service Providers in the support of McDATA Software.  Buyer acknowledges that Software drivers,
firmware and Software updates are proprietary and confidential information of
McDATA and will not disclose drivers, firmware and software updates to others
unless specifically authorized under the terms of this Agreement.  McDATA Software drivers, firmware and
software updates posted on Buyer’s [***] [***] web site[***] shall include the
following legend:  “The McDATA Product
software drivers, firmware and software updates contained herein are owned by
McDATA and are considered confidential. 
Such McDATA Product software drivers, firmware and software updates may
be used only by McDATA’s licensees. 
Unauthorized copying of these software drivers, firmware and software
updates is strictly prohibited.”  [***].

 

13.4        Limitations.

 

13.4.1     Should McDATA announce the availability of a new
Software release that enhances and supersedes a previous release, McDATA will
discontinue maintenance support for the previous release and shall provide
[***] ([***]) months’ written notice to Buyer prior to the effective date of
such maintenance discontinuation.

 

13.4.2     For a period of [***] ([***]) years from the date of
the last shipment to Buyer of a discontinued Product utilizing the Software,
McDATA shall make available to Buyer such Software maintenance services as may
reasonably be required for such Products [***] [***] [***] [***] [***]

 

14           INDEMNIFICATION.

 

14.1        By
McDATA. Subject to the provisions of Section 14.3, McDATA agrees, at
its expense, to defend, indemnify and hold harmless Buyer and its officers,
directors and employees

 

11

 

from and against all
third party claims, suits and proceedings (l) arising in connection with any
breach of this Agreement by McDATA, or (ll) based on any third party claim that
the Products and/or Software infringe or violate any United States patent or
trademark, or worldwide trade secret or copyright, and will pay all final
judgments awarded or settlements entered into on such claim, proceeding or
suit. Notwithstanding the foregoing,  McDATA shall not be liable for any claim
of infringement to the extent any Product or Software is altered or modified
without McDATA’s authorization.

 

In the event the Products or Software become, or in McDATA’s opinion
are likely to become, the subject of an infringement, McDATA shall have the
right, at its option and expense, to (i) obtain the rights to continued use of
such Product or Software, (ii) replace or modify the Product or Software so
that it is no longer infringing, or if, despite McDATA’s best efforts, neither
(i) nor (ii) is possible, (iii) [***].

 

The foregoing remedies are the sole remedies for infringement of any
intellectual property rights.

 

14.2        By
Buyer. Subject to the provisions of Section 14.3, Buyer agrees, at its
expense, to defend, indemnify and hold harmless McDATA and its officers,
directors and employees from and against all third party claims, suits and
proceedings arising in connection with (i) Buyer’s alteration or modification
of any Product as described in Section 9.4, (ii) any breach by Buyer of this
Agreement and (iii) Buyer’s modification of any Products and/or Software that
infringes any third party’s U.S. patents, copyright or trade secrets and that,
but for Buyer’s modifications, would not infringe such third party’s rights,
and will pay all final judgments awarded or settlements entered into on such
claim, proceeding or suit.

 

14.3        Indemnification Procedures. The
indemnifying party’s indemnification obligations are conditioned upon the
indemnified party:  (i) giving prompt
notice of the claim or action to the indemnifying party; (ii) granting sole
control of the defense or settlement of the claim or action to the indemnifying
party (except that the indemnified party’s prior written approval will be
required for any settlement that reasonably can be expected to require a
material affirmative obligation of, result in any ongoing material liability to
or materially prejudice or detrimentally impact the indemnified party in any
way); and (iii) providing reasonable cooperation and, at the indemnifying party’s
request and expense (except for the value of the time of the indemnified
party’s employees), assistance to the indemnifying party in the defense or
settlement of the claim or action.

 

15           DOCUMENTATION:  REPRODUCTION, MODIFICATION, AND
DISTRIBUTION RIGHTS.  Except
as otherwise provided in Section 17 and in Exhibit A, Section 5.1
hereof, and subject to the retention of all copyright notices and/or
confidentiality legends, Buyer [***] [***] shall have the right to (l) copy any
McDATA-supplied documentation for use internally by their employees and
authorized subcontractors in order to promote and maintain the Products, and
(ll) to translate, reproduce, and distribute to its Resellers and End User
Customers copies of McDATA’s Product manuals and related documentation in
conjunction with McDATA’s Products as purchased or leased by Resellers and End
User Customers.  Buyer shall indemnify
and hold McDATA, its successors and assigns, harmless from and against any
liabilities, damage, costs, and expenses, including reasonable attorneys’ fees
with respect to claims resulting from the Buyer’s [***] [***]  translation of McDATA’s Product manuals and
related documentation.

 

In the event the parties agree that Buyer may market
and distribute the Products under Buyer’s trademarks, and subject to the
retention of all copyright notices and/or confidentiality legends, Buyer shall
have the further right to prepare, assemble, and circulate Buyer’s own
maintenance manuals derived from such documentation for use by its employees and,
in the maintenance of the Products. 
Buyer shall have the further right and obligation, at Buyer’s expense,
to prepare a derivative work based upon McDATA’s end user documentation,
including translations thereof, and to reproduce and distribute Buyer’s end
user documentation to its Reseller and End User Customers.

 

12

 

16           IDENTIFICATION
OF PRODUCTS, TRADEMARK RIGHTS AND WEB
ACCESS

 

16.1        Identification
of Products.  McDATA
and Buyer hereby agree that Products sold hereunder will be labeled and
marketed by Buyer under Trademarks and trade names owned by McDATA. Buyer
agrees that for Products labeled and marketed under McDATA Trademarks or trade
names, Buyer shall not remove, alter or obscure any McDATA proprietary markings
on any Product at any time.  Buyer
agrees that, in its sales promotions, advertising literature and any other
public references, Buyer will identify such Products as McDATA’s Products.

 

In the event the parties
agree that the Products will be labeled and marketed by Buyer under Buyer’s
trademarks or trade names, McDATA shall have the right to affix and Buyer shall
not remove or cover over a nameplate indicating model number, serial number,
patent number and/or patent pending legends, and any other markings that may be
required by law or by regulatory agencies. 
In such event, Buyer agrees that, in its sales promotions, advertising
literature and any other public references, Buyer will identify such Products
as Buyer’s Products.

 

16.2        Trademark Rights.  During the term of this
Agreement, McDATA grants permission to Buyer and Resellers to use McDATA’s
trade name and Trademarks only as follows: (l) in connection with the sale,
lease, licensing, distribution, advertisement or promotion of the Products in
the Territory; (ll) to identify Buyer as an “Authorized Reseller” of
McDATA.  Trademarks may be used only in
the form as forth in Section 1 of Exhibit F, attached hereto and
incorporated herein, provided such Trademark is identified as being a registered
Trademark of McDATA Corporation as set forth in Section 2 of Exhibit
F.  Buyer agrees to report any
infringement, of which they are aware, relating to McDATA’s or its licensor’s
rights in said Trademarks and trade names. 
Buyer shall use McDATA’s Trademarks and trade names at Buyer’s place of
business, in sales literature and all other promotional materials, and in all
media advertisement, shall use McDATA’s trade name solely to reflect the source
of such Products, and shall identify Trademarks and trade names as being the
property of McDATA.

 

Both Buyer and McDATA recognize the importance of
maintaining the nature and quality of products offered and services rendered
under McDATA’s Trademarks.  Therefore,
Buyer agrees that all products and services provided under McDATA’s Trademarks
shall be of the same and consistent high quality as those that are presently
offered by McDATA.

 

Prior to initial publication or commercial use, samples of Buyer’s
intended use of McDATA’s Trademark and/or trade name in its printed material
shall be delivered to McDATA for review and approval.  In the event Buyer modifies such use, Buyer will submit such
modification to McDATA for review and approval.  McDATA reserves the right to discontinue use or to substitute any
McDATA Trademark or trade name at any time. 
Immediately upon written notice from McDATA of discontinued use, Buyer
shall immediately (or upon prompt liquidation of inventory) stop using the
Trademark and/or trade name, and if so instructed by McDATA, destroy or return
to McDATA any remaining goods, advertising and packaging materials bearing such
trademark and/or trade name.  In the
event of substitution, Buyer shall immediately use such new Trademark and/or
trade name, and stop using the previous Trademark and/or trade name, and if so
instructed by McDATA, destroy or return to McDATA any remaining goods,
advertising and packaging materials bearing such previous Trademark and/or
trade name.

 

McDATA will, in its sole discretion, in its name and
at its expense, apply for certificates of use or registration of its
Trademark(s), as applicable, or may require Buyer to apply therefor on McDATA’s
behalf and at its expense.  Buyer agrees
to cooperate with McDATA in making such applications as may be reasonably
requested.  Buyer

 

13

 

acknowledges that all right, title and interest in
said Trademarks and trade names shall at all times vest in McDATA or McDATA’s
licensors, and Buyer will not apply for or register Trademarks and/or trade
names which are the same as or confusingly similar thereto, except with
McDATA’s prior written consent.

 

It is the intention of
the parties to protect as fully as possible all of their rights to their
respective Trademarks.  Therefore, no
right is granted hereunder for either party to use the Trademarks of the other
party, except as provided herein or as specifically permitted in writing by
such other party.  Willful use of a
party’s Trademark contrary to the provisions of this Section shall constitute
a material breach of this Agreement.

 

16.3        Operational
Provisions.  In
the event the parties agree that the Products will be labeled and marketed by
Buyer under Buyer’s Trademark, special provisions for identifying Products
being purchased by Buyer are set forth in the attached Exhibit C.

 

16.4        Web Access.  The HITACHI DATA
SYSTEMS web site may utilize and maintain (a) hyperlinks to the main and any
additional relevant pages related to Products listed on Exhibit A of McDATA’s
internet site, www.mcdata.com, (b) unaltered electronic reproductions of
documentation (but not documents qualifying as Proprietary Information)
supplied by McDATA to HITACHI DATA SYSTEMS, and (c) display the McDATA logos on
connection with promoting the Products. 
All Buyer uses of McDATA logos will comply with McDATA Trademark Use
Policies and logo specifications that are provided by McDATA to Buyer.  In accordance with Section 16.2, Buyer
will provide to McDATA samples of Buyer’s use of McDATA’s logos.  Upon termination of this Agreement, HITACHI
DATA SYSTEMS shall cease to use any such marks, names, hyperlinks or logos, and
shall, within a reasonable time, remove any reference to McDATA from its
advertising and promotional material.

 

17           CONFIDENTIALITY OF INFORMATION.  Each party acknowledges that, in the course
of purchasing Product and/or licensing Software and meeting its respective
obligations under this Agreement, it might obtain information relating to the
Products, the Software and/or the other party that is of a confidential and
proprietary nature and, if furnished in written or other tangible form is
clearly marked as being confidential or proprietary, or, if orally or visually
furnished, is identified as being confidential or proprietary in a writing
submitted to the recipient within thirty (30) days after such oral or visual
disclosure (“Proprietary Information”). 
Such Proprietary Information may include, but is not limited to, trade
secrets, know-how, inventions, techniques, processes, programs, schematics,
data, customer lists, financial information, and sales and marketing
plans.  Each party agrees that, at all
times during the term of this Agreement and for three (3) years after its
termination, it shall (i) not use or disclose the Proprietary Information of
the other party, except as expressly authorized by this Agreement and (ii) use
at least that level of effort to prevent the disclosure of the other party’s
Proprietary Information as that level of effort used by itself to protect its
own proprietary information of similar importance, but in any event at least
commercially reasonable efforts. Each party further agrees that, when
disclosing Proprietary Information of the other party to its employees and
Resellers, it shall do so only (x) on a “need to know” basis to fulfill that
party’s obligations under this Agreement or to operate, maintain, or support
the Products, and (y) after such Resellers have executed written
confidentiality agreements with terms substantially equivalent to those herein.

 

Upon termination of this Agreement and upon request, the receiving
party shall promptly return all  of the
other party’s Proprietary Information under its control and all copies thereof
to the disclosing party, except that the receiving party shall be permitted to
retain such copies of the Proprietary Information as are necessary to operate,
maintain or support Products previously purchased pursuant to this Agreement.

 

Either party may publicly disclose the existence of this Agreement;
however, neither party shall disclose the specific terms and conditions to any
third parties except by written agreement

 

14

 

between McDATA and Buyer dated subsequent to the Effective Date or as
required by law or the order of a court of this Agreement with other buyers.

 

The non-use and non-disclosure provisions of this Section shall
not apply to information that (i) can be documented, by adequate written
records, that the receiving party already knew at the time of disclosure; (ii)
is or becomes publicly known or readily ascertainable by the public through no
wrongful act of the receiving party; (iii) can be documented, by adequate
written records, to have been independently developed by the receiving party
without reference to or use of any  Proprietary
Information; (iv) is rightfully received by the receiving party from a third
party without breach of any confidentiality obligations by such third party;
(v) is required to be disclosed by operation of law or pursuant to order of a
government agency that has jurisdiction over such information; or (vi) is
released by written mutual agreement of McDATA and Buyer.

 

The parties agrees that any violation of this or any other agreement
covering nondisclosure of  Proprietary
Information or publication or any unauthorized disclosure of Proprietary
Information shall constitute a violation of the terms of this Agreement.  Each party agrees that violation of the
terms hereof shall cause the other party irreparable damages for which monetary
damages may be inadequate, and each party agrees that the other party shall be
entitled to injunctive relief.

 

18           LIMITATION OF LIABILITY.  [***] [***] IN NO EVENT WILL EITHER
PARTY BE LIABLE TO THE OTHER FOR  ANY INDIRECT, SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES (INCLUDING LOSS OF ANTICIPATED REVENUE OR LOSS RESULTING
FROM BUSINESS DISRUPTION) ARISING IN CONNECTION WITH THIS AGREEMENT, WHETHER IN
AN ACTION FOR CONTRACT OR TORT AND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGE.

 

[***] IN NO EVENT SHALL THE LIABILITY OF EITHER PARTY TO THE OTHER, IN
ANY INSTANCE, EXCEED  [***].

 

19           TERMINATION.  In
addition to any other rights or remedies that may be available at law or in
equity, either party may terminate this Agreement upon the occurrence of any
one of the following:

 

(i)            In the event of a
material breach by either party in the performance of their obligations
hereunder, the party alleging the breach shall give written notice specifying
the nature and extent of the breach to the other party and such party shall
have thirty (30) days thereafter to cure the breach.  If the breach is not cured within the thirty (30) day period,
termination shall become effective on the thirtieth (30th) day following the written
notice.

 

(ii)           Immediately without notice
in the event that the other party (1) ceases to carry on its business as
currently conducted; (2) becomes insolvent; (3) makes a general assignment for
the benefit of creditors, (4) files a voluntary petition of bankruptcy, suffers
or permits the appointment of a receiver for its business or assets; (5)
becomes subject to any proceedings under any bankruptcy or insolvency law,
where such proceeding has not been dismissed within sixty (60) days or (6) has
wound up or liquidated, voluntarily, or otherwise.

 

Termination of this Agreement shall not relieve either party of the
obligations incurred under this Agreement pursuant to Sections 6, 10.2, 10.3,
11, 12.1.2, 14, 15, 16.2, 17, and 20.5, which Sections shall survive such
termination.  In addition, any other
obligations under this Agreement that by their nature extend beyond the
expiration date or other termination of this Agreement shall survive and remain
in effect until all such obligations are satisfied.

 

15

 

20           GENERAL PROVISIONS.

 

20.1        Governing Law.  This Agreement shall in all
respects be governed by and construed in accordance with the laws of the State
of Colorado of the United States of America, and shall not be construed in
accordance with or governed by the United Nations Convention for International
Sales of Goods (CISG).

 

20.2        Waiver.  No waiver of any right or remedy
on one occasion by either party shall be deemed a waiver of such right or
remedy on any other occasion.

 

20.3        Compliance
with Laws.  Buyer
and its Resellers shall comply with all applicable laws, including, without
limitation, the export control laws of the United States of America, any export
control regulations of the United States, and any applicable laws or
regulations of those countries involved in transactions concerning the
exporting, importing and re-exporting of Products purchased under application
of these terms and conditions. 
Buyer  and its Resellers shall
also comply with the United States Foreign Corrupt Practices Act and shall
indemnify McDATA from and against any liabilities, damage, costs and expenses,
including reasonable attorneys’ fees with respect to claims resulting from
violations of such act by Buyer and/or its Resellers.

 

Further, Buyer acknowledges that the laws and regulations of the United
States restrict the export and reexport of commodities and technical data of
United States origin, including some or all of the Software.

 

20.4        Notices.  Notices required hereunder shall
be in writing, and shall be deemed given when transmitted by facsimile
(provided such facsimile is subsequently confirmed in writing within five (5)
days of the facsimile date) or deposited with an express delivery service with
guaranteed third day delivery, prepaid, addressed as follows:

 

	
  To McDATA:

  	
   

  	
  With an
  additional copy to:

  
	
  McDATA
  Corporation

  	
   

  	
  McDATA
  Corporation

  
	
  310 Interlocken
  Parkway

  	
   

  	
  310 Interlocken
  Parkway

  
	
  Broomfield,
  Colorado  80021-3464

  	
   

  	
  Broomfield,
  Colorado 80021-3464

  
	
  Attn.:

  	
  Vice President
  of

  	
   

  	
  Attn.:  Contract Operations

  
	
   

  	
  Marketing and
  Sales

  	
   

  	
   

  
	
  Facsimile #
  303/465-4996

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  To Buyer:  Hitachi Data Systems

  	
   

  	
  With an
  additional copy to:

  
	
  750 Central
  Expressway

  	
   

  	
  Hitachi Data
  Systems

  
	
  Santa Clara,
  CA  95051

  	
   

  	
  750 Central
  Expressway

  
	
  Attn.:  Vice President Alliances

  	
   

  	
  Santa Clara,
  CA  95051

  
	
  Facsimile #
  408/748-8451

  	
   

  	
  Attn.:  General Counsel, M/S 32-02

  
	
   

  	
   

  	
  Facsimile #
  408/970-5949

  

 

20.5        Assignment.  Neither  Buyer nor McDATA shall
assign this Agreement or any rights hereunder without the prior written consent
of the other party, which consent shall not be unreasonably withheld.

 

20.6        Attorneys’ Fees.  If any dispute arises between the parties
with respect to the matters covered by this Agreement that leads to a
proceeding to resolve such dispute, the prevailing party shall be entitled to
receive its reasonable attorneys’ fees and out-of-pocket costs incurred in
connection with such proceeding, in addition to any other relief it may be
awarded.

 

20.7        Official Language.  The official language of this Agreement,
and all transactions conducted under this Agreement, is English.  Documents or notices not originally written
in English shall have no effect under this Agreement until they have been
translated into

 

16

 

English by the party providing the notice or document and the English
translation shall then be the controlling form of the document or notice.

 

20.8        Headings.  The headings provided in this Agreement
are for convenience only and shall not be used in interpreting or construing
this Agreement.

 

20.9        Force Majeure.  Neither party shall be responsible for
any failure to perform or delay in performing any of its obligations due to
causes beyond the reasonable control of the party, including but not limited to
acts of God, war, riot, embargoes, acts of civil or military authorities, fire,
floods, accidents, strikes, or shortages of transportation, facilities, fuel,
energy, labor, or materials.  In the
event of such delay, either party may defer the performance for a period equal
to the time of such delay.

 

20.10      Severability.  If any provision of this Agreement shall
be held illegal, unenforceable, or in conflict with any law having jurisdiction
over this Agreement, the validity of the remaining portions or provisions
hereof shall not be affected thereby.

 

20.11      Contract Changes.  Except as provided herein, this Agreement may not be modified or
amended except by an instrument in writing signed by duly authorized
representatives of both parties.  The
parties acknowledge that from time to time McDATA and Buyer may wish to
implement changes to this Agreement.  On
an ongoing basis, these changes will be executed in accordance with a
formalized written process, and the overall Agreement may be amended annually
with mutual agreement of both parties.

 

20.12      Records.    During the term of this Agreement [***]
[***] Buyer shall maintain a full and complete record of all Buyer’s shipments
of Software to Resellers and End User Customers including any information or
reports Buyer receives from Resellers with regard to Product.  During such time, McDATA retains limited
rights to audit such records.  Such
audit shall be conducted by an independent third party at McDATA’s expense and
is subject to reasonable notice by McDATA and shall take place during Buyer’s
normal business hours.

 

EXHIBIT
A

 

[***]

 

 

Figure A –
1

 

[***]

 

 

EXHIBIT
B

 

[***]

 

17

 

EXHIBIT
C

 

OPERATIONAL PROVISIONS

 

In the event the parties agree that the Products will be
labeled and marketed by Buyer under Buyer’s Trademark, the following
operational provisions apply.

 

All prices assume
Buyer’s purchase of McDATA’s standard Product design, standard parts and
identification thereof, packing and packaging and identification thereon, and
documentation relating to installation, operation and maintenance, with the
following exceptions:

 

1.             Logos.  McDATA Products are normally shipped
without a logo.  McDATA agrees to apply
specialized logos, as outlined below, to Products purchased by Buyer, provided
Buyer has supplied sufficient information in compliance with McDATA’s
Manufacturing Specifications within ninety (90) days of the initial requested
ship date, and has supplied logos/nameplates and/or labels within thirty (30)
days of the requested ship date.

 

Custom
Logos.  McDATA will,
at Buyer’s expense, produce and apply a specialized logo for Buyer if Buyer
provides the necessary artwork, dimensioned drawings, color, and material
specifications.  McDATA will have the
logos designed and manufactured.  McDATA
prefers to use a Lexan-type material.

 

Buyer-Provided
Logos.  McDATA will
apply Buyer’s adhesive-backed logo to the Products if Buyer supplies the logos,
and if Buyer provides clear instructions as to placement.  If Buyer supplies its logo to McDATA, McDATA
requires Buyer’s logo part number so that McDATA may order the logos directly
from Buyer or Buyer’s recommended supplier. 
If Buyer supplies its own logo and McDATA has not received the logos in
time for scheduled Product shipment, McDATA will ship the Product without
Buyer’s logo on the unit.

 

2.             Identification
of Parts.  Buyer agrees that it will
utilize McDATA’s system of component identification.  All field replaceable components of the Products shall bear
McDATA Corporation part numbers.  Other
components, as used on or in the field replaceable components of the Products
may bear either McDATA Corporation part numbers or supplier part numbers.

 

3.             Packing
and Shipping Containers.  McDATA
agrees to package all Products, Spares and replacement components in accordance
with standard industry practices.

 

Pre-Printed
Shipping Carton Labels.  Products
are shipped in generic shipping cartons with generic pre-printed labels (e.g.,
international handling labels).  These
labels must be applied to all cartons and cannot be customized.

 

Buyer-Supplied
Carton Labels.  McDATA
will apply Buyer-supplied shipping labels showing Buyer’s name, logo, etc.,
provided Buyer supplies McDATA with pre-printed labels, and the part number for
those labels that allows McDATA to order the labels from Buyer or from Buyer’s
recommended supplier.  If McDATA has not
received the labels in time for scheduled Product shipment, McDATA will ship
without Buyer’s label on the carton.

 

Custom
Carton Labels.  At
Buyer’s expense, McDATA will develop and supply special shipping labels for
Buyer, provided Buyer supplies to McDATA the artwork necessary to create the
labels and the material requirements for the labels in sufficient time to
complete the development and ordering of the special labels prior to the
scheduled Product shipment date.

 

4.             [***]

 

5.             Obsolete
Parts Return.  [***]

 

18

 

EXHIBIT
D

 

An extra
section break has been inserted above this paragraph. Do not delete this
section break.

 

 

EXHIBIT
E

 

[***]

 

EXHIBIT
F

 

TRADEMARKS

 

Pursuant to
Section 16.2, Buyer may use the following Trademarks:

 

Section 1               Logo:

 

 

Upon request,
McDATA will provide a copy of the Corporate Standards for using McDATA’s Logo.

 

Section 2               The following
statement must appear whenever the McDATA Trademark is used:

 

“McDATAÒ and the McDATA
logo are registered trademarks of McDATA Corporation.”

 

EXHIBIT
G

 

[***]

 

19Exhibit 4.4

 

[Execution Version]

 

As of December 19, 2003

 

Trans World Entertainment

Corporation

Record Town,
Inc.

Record Town
Michigan, Inc.

Record Town
Minnesota, LLC

38 Corporate
Circle

Albany, New
York 12203

 

Re:          Amendment No. 7 to Loan and
Security Agreement

 

Ladies and
Gentlemen:

 

Reference is
made to the Loan and Security Agreement, dated as of July 9, 1997, by and among
Congress Financial Corporation (“Lender”), Trans World Entertainment
Corporation (“TWE”), Record Town, Inc. (“RTI”), Record Town Minnesota, LLC (“RT
Minnesota”), and Record Town Michigan, Inc. (“RT Michigan”; and together with
TWE, RTI and RT Minnesota, individually and collectively, jointly and
severally, “Borrowers”), as amended by Amendment No. 1 to Loan and Security
Agreement, dated as of February 17, 1998, Amendment No. 2 to Loan and Security
Agreement, dated May 29, 1998, Amendment No. 3 to Loan and Security Agreement,
dated as of December 31, 1998, Amendment No. 4 to Loan and Security Agreement,
dated as of May 31, 1999, Amendment No. 5 to Loan and Security Agreement, dated
as of June 30, 2000, Amendment No. 6 to Loan and Security Agreement, dated as
of May 30, 2003 (“Amendment No. 6 to Loan Agreement”), and as further amended
by this Amendment No. 7 to Loan and Security Agreement (this “Amendment”),
dated as of the date hereof (as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced,
collectively, the “Loan Agreement”), together with all other agreements,
documents, supplements and instruments now or at any time hereafter executed or
delivered by Borrowers and Media Logic USA, LLC (“Media Logic”), Movies Plus,
Inc. (“Movies Plus”), Records N’ Such, Inc. (“R&S”), Saturday Matinee, Inc.
(“SMI”), Trans World Management Company, Inc. (“TW Management”), Trans World
New York, LLC (“TW New York LLC”), Camelot Music Holdings, Inc. (“CMHI”) and
Spec’s Music, Inc. (“Specs”; together with Media Logic, Movies Plus, R&S,
SMI, TW Management TW New York LLC, and CMHI, each, individually, a “Guarantor”
and, collectively, “Guarantors”), or any other person, with, to or in favor of
Lender in connection therewith (all of the foregoing, together with the Loan
Agreement

 

 

and the
agreements and instruments delivered hereunder, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced, collectively, the “Financing Agreements”).

 

Borrowers and
Guarantors have requested that Lender waive the requirement that Lender have a
first priority security interest in connection with certain investments in Cash
Equivalents by Borrower arranged by ABN AMRO Financial Services, Inc. (“ABN
AMRO”) on behalf of Borrowers with respect to which the investment account or
other similar account is maintained by Borrowers with a securities intermediary
or commodity intermediary other than ABN AMRO. 
Lender is willing to waive such requirement, subject to the terms and
conditions contained herein. Unless otherwise defined herein, all terms used
herein, including, but not limited to, those terms used above, shall have the
respective meanings given to them in the Loan Agreement.

 

In
consideration of the premises and covenants set forth herein and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

 

1.  Loans, Investments and Guarantees.  Section 9.10(b) of the Loan Agreement is
hereby deleted and replaced with the following:

 

“(b) investments in Cash Equivalents and investments in stock or
obligations issued in settlement of claims against any non-affiliated person by
reason of any bankruptcy case or composition or readjustment of debt or
reorganization of any such non-affiliated person that is a debtor of any
Borrower; provided, that, unless waived in writing by Lender,
Borrowers shall take such actions as are deemed necessary by Lender to perfect
its security interest in such Cash Equivalents, other than investments in Cash
Equivalents arranged by ABN AMRO so long as each of the following conditions is
satisfied as determined by Lender at all times during which such Cash
Equivalents are invested with or by ABN AMRO behalf of any Borrower:

 

(i) the aggregate amount of such investments shall not exceed
$100,000,000 in the aggregate,

 

(ii) no Loans or Letter of Credit Accommodations shall be outstanding
or if any Letter of Credit Accommodations are outstanding, then the amount of
any credit balance of Borrowers with Lender shall equal or exceed the amount of
any such outstanding Letter or Credit Accommodations;

 

(iii) Borrowers shall at all times maintain Excess Availability of not
less than $50,000,000;

 

2

 

(iv) if any such investments are offered by ABN AMRO pursuant to which
such investments are maintained through an investment account, securities
account, commodities account or any other similar account with a securities
intermediary or commodity intermediary other than ABN AMRO, then Borrowers
shall use their best efforts to comply with the terms and conditions of Section
5.2(e)(ii)(C) of Amendment No. 6 to Loan Agreement; provided, that,
if any such investments are offered by ABN AMRO pursuant to which such
investments are maintained through an investment account, securities account,
commodity account or any other similar account with ABN AMRO, then Borrowers
shall comply with the terms and conditions of Section 5.2(e)(ii) of Amendment
No. 6 to Loan Agreement; and

 

(v) no Event of Default or event which with notice or passage of time
or both, would constitute an Event of Default shall exist or have occurred and
be continuing.”

 

2.  Representations, Warranties and Covenants.  Borrowers and Guarantors represent, warrant
and covenant with and to Lender as follows, which representations, warranties
and covenants are continuing and shall survive the execution and delivery
hereof, the truth and accuracy of, or compliance with each, together with the
representations, warranties and covenants in the other Financing Agreements,
being a condition of the effectiveness of this Amendment and a continuing
condition of the making or providing of any Loans or Letter of Credit
Accommodations by Lender to Borrowers:

 

(a)  This Amendment and each other agreement or
instrument to be executed and delivered by Borrowers and Guarantors hereunder
have been duly authorized, executed and delivered by all necessary action on
the part of each of Borrowers and Guarantors which is a party hereto and
thereto and, if necessary, their respective stockholders (with respect to any
corporation) or members (with respect to any limited liability company), and is
in full force and effect as of the date hereof, as the case may be, and the
agreements and obligations of each of Borrowers and Guarantors, as the case may
be, contained herein and therein constitute legal, valid and binding
obligations of each of Borrowers and Guarantors, as the case may be,
enforceable against them in accordance with their terms.

 

(b)  Without limiting any other reporting
requirements under the Loan Agreement or any of the other Financing Agreements,
upon the request of Lender, Borrowers shall furnish to Lender copies of any
investment account statements or other information of ABN AMRO or such other
securities intermediary or commodity intermediary with respect to the
investments in Cash Equivalents.

 

(c)  All of the representations and warranties
set forth in the Loan Agreement as amended hereby, and the other Financing
Agreements, are true and correct in all material respects after giving effect
to the provisions of this Amendment, except to the extent any such
representation or warranty is

 

3

 

made as of a
specified date, in which case such representation or warranty shall have been
true and correct as of such date.

 

3.  Conditions Precedent.  The effectiveness of this Amendment and the
agreement of Lender to the consents, modifications and amendments set forth in
this Amendment are subject to the fulfillment of the following conditions
precedent:

 

(a)  Borrowers and Guarantors shall have
delivered, or shall have caused to be delivered, to Lender, a photocopy of an
executed original or executed original counterparts of this Amendment by
facsimile (with the originals to be delivered within five (5) Business Days
after the date hereof), as the case may be, duly authorized, executed and
delivered by Borrowers and Guarantors;

 

(b)  all requisite corporate action and
proceedings in connection with this Amendment and the documents and instruments
to be delivered hereunder shall be in form and substance satisfactory to
Lender, and Lender shall have received, to the extent applicable, all
information and copies of all documents, including, without limitation, records
of requisite corporate action and proceedings which Lender may have reasonably
requested in connection therewith, such documents where requested by Lender or
its counsel to be certified by appropriate corporate officers or governmental
authorities; and

 

(c)  no Event of Default shall exist or have
occurred and no event or condition shall have occurred or exist which with
notice or passage of time or both would constitute an Event of Default.

 

4.  Effect of this Amendment.  This Amendment and the instruments and
agreements delivered pursuant hereto constitute the entire agreement of the
parties with respect to the subject matter hereof and thereof, and supersede
all prior oral or written communications, memoranda, proposals, negotiations,
discussions, term sheets and commitments with respect to the subject matter
hereof and thereof.  Except as expressly
amended pursuant hereto, and except for the consents expressly set forth in the
Consent No. 1 under Loan Agreement, Consent No. 2 under Loan Agreement, Consent
No. 3 under Loan Agreement, Consent No. 4 under Loan Agreement, Consent No. 5
under Loan Agreement and Consent No. 6 under the Loan Agreement, no other
changes or modifications to the Financing Agreements or consents under any
provisions thereof are intended or implied, and in all other respects the Financing
Agreements are hereby specifically ratified, restated and confirmed by all
parties hereto as of the effective date hereof.  To the extent of conflict between the terms of this Amendment and
the other Financing Agreements, the terms of this Amendment shall control.

 

5.  Further Assurances.  Borrowers shall execute and deliver such
additional documents and take such additional action as may be reasonably
requested by Lender to effectuate the provisions and purposes of this
Amendment.

 

4

 

6.  Governing Law.  The rights and obligations hereunder of each
of the parties hereto shall be governed by and interpreted and determined in
accordance with the internal laws of the State of New York (without giving
effect to principles of conflict of laws).

 

7.  Binding Effect.  This Amendment shall be binding upon and
inure to the benefit of each of the parties hereto and their respective
successors and assigns.

 

8.  Counterparts.  This Amendment may be executed in any number
of counterparts, but all of such counterparts shall together constitute but one
and the same agreement.  In making proof
of this Amendment, it shall not be necessary to produce or account for more
than one counterpart thereof signed by each of the parties hereto.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

5

 

Please sign in
the space provided below and return a counterpart of this Amendment, whereupon
this Amendment, as so agreed to and accepted, shall become a binding agreement
among Borrowers and Lender.

 

	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
   

  	
  CONGRESS
  FINANCIAL CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  AGREED TO
  AND ACCEPTED:

  	
   

  
	
   

  	
   

  
	
  TRANS WORLD
  ENTERTAINMENT CORPORATION

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  RECORD TOWN,
  INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
  Title:

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  
	
   

  	
   

  
	
  RECORD TOWN
  MICHIGAN, INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
  Title:

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  
	
   

  	
   

  
	
  RECORD TOWN
  MINNESOTA, LLC

  	
   

  
	
   

  	
   

  
	
  By: RECORD
  TOWN, INC.,

  	
   

  
	
   

  	
  its sole
  member

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  
														

 

 

[SIGNATURES CONTINUE ON NEXT PAGE]

 

 

[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

 

	
  CONSENTED
  AND AGREED TO:

  	
   

  
	
   

  	
   

  	
   

  
	
  MEDIA LOGIC
  USA, LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By: RECORD
  TOWN, INC.,

  	
   

  	
   

  
	
   

  	
  its sole
  member

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  MOVIES PLUS,
  INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SATURDAY MATINEE,
  INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  RECORDS N’
  SUCH, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
										

 

[SIGNATURES CONTINUE ON NEXT PAGE]

 

 

[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

 

	
  TRANS WORLD
  NEW YORK, LLC

  
	
   

  
	
  By: RECORD
  TOWN MICHIGAN, INC.,

  
	
   

  	
  its sole
  member

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  
	
   

  
	
  TRANS WORLD
  MANAGEMENT COMPANY, INC.

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  
	
   

  
	
  CAMELOT
  MUSIC HOLDINGS, INC.

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  
	
  SPEC’S
  MUSIC, INC.

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

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