AMENDMENT TO MASTER PURCHASE AGREEMENT
DATED JANUARY ___, 1996
This Amendment (the "Amendment") will modify certain terms and conditions of the
above-described Master Purchase Agreement (the "Agreement") by and between
Zenith Electronics Corporation, a corporation organized under the laws of the
State of Delaware and having an office and place of business at 0000 Xxxxxxxxx
Xxxxxx, Xxxxxxxx, Xxxxxxxx, and FOCUS Enhancements, Inc., hereinafter called
"Focus", a corporation organized under the laws of the State of Delaware and
having an office and place of business at 000 X. Xxxxxxxx Xxxx, Xxxxxx,
Xxxxxxxxxxxxx (hereinafter called "Focus" or the "Company") and becoming
effective on October 1, 1996 (the "Amendment Effective Date"). Unless
specifically noted herein, all other terms of the Agreement shall remain in full
force and effect, including any terms that survive termination of the Agreement.
Section references below correspond to the Section numbers as they appear in the
Agreement.
WITNESSETH:
WHEREAS, Zenith and Company entered a Master Purchase Agreement on the
date hereinabove stated for the purchase of Focus Products from the Company for
bundling with Zenith television products; the Focus Products having been
developed according to Zenith specifications included in the Agreement as
Exhibit A;
WHEREAS, Zenith desires to purchase from Company additional Focus
Products not previously included in the Agreement; and
WHEREAS, Zenith, a party to the Agreement, desires to expand the scope
of the Agreement to include the additional Focus Products;
NOW, THEREFORE, in consideration of the foregoing promises and
covenants and agreements set forth in this Amendment, the sufficiency whereof is
hereby acknowledged, the parties agree to amend the Agreement as follows:
1.7 "FOCUS PRODUCTS" means all video graphics hardware products
designed or made by Focus including software that supports the hardware
products. The Focus Products shall include the following products:
PCZTV 41
PCZTV 2000 (must be retrofitable to current
commercial line and available by March 25,
1997).
PCZ 150
PCZ 200
FOCUS Scan 300 Chip
FOCUS Line Doubler
The Specification and Quality Requirements of the Focus
Products together with the anticipated delivery schedules shall be as
described and specified on Exhibit A.1 attached hereto.
1.18 "TELEVISION FIELD" means the market in which visual images are
transmitted as electromagnetic waves and the re-conversion of received
waves that meet the NTSC standard are converted back into visual
images.
2.1 APPOINTMENT AND LICENSE GRANT. The Company hereby appoints Zenith as an
exclusive authorized original equipment manufacturer of the Focus
Products, bundled with the Zenith Hardware, worldwide in the Television
Field. The Company hereby grants to Zenith the worldwide, royalty-free,
exclusive and non-transferable right to market, promote, display,
distribute, use and sell the Focus Products bundled with the Zenith
Hardware, directly or indirectly, and to do all acts necessary, in
Zenith's discretion, for the marketing, promotion and distribution of
the Focus Products bundled with Zenith Hardware in the Television
Field. For the purpose of clarification, Zenith may market, promote,
distribute, use or sell the Focus Products on a stand-alone basis in
situations where the Focus Products are bundled with the Zenith
Hardware and are sold within the Television Field, and the Company may
continue to distribute the Focus Products without the Zenith Hardware.
2.2 PROPRIETARY NOTICES. Zenith will retain all Copyright and trademark
notices and other promulgator right notices of Focus currently used by
Focus on the first screen display, label artwork film and film for
printed materials for the Focus Product. In addition, Zenith agrees to
include on all Focus products shipped by Zenith, the trademark shown on
Exhibit F attached hereto. The trademark shall be affixed on all
packing materials, manuals, literature and any other materials included
with the Focus Products.
4 SCOPE AND WORK. The Company will manufacture and deliver the Focus
Products to Zenith in accordance with the Specifications and the
Quality Requirements and will accept and fill Zenith's Purchase Orders.
Each Focus Product will contain one working unit, disk drivers, user
manual, all required cables and one power supply in the case of the PC
Presentation System. Focus will deliver the Focus Products to Zenith
completely assembled with functionality tested prior to shipment.
The Company will make available to Zenith at Zenith's facility
three professional managers to provide Zenith with appropriate
customer and product support in connection with the sale of
Focus Products. The three individuals shall consist of (a) a
project manager who will devote 50% of his time to commercial
systems and 50% of this time to the Zenith consumer group; (b)
a consumer sales manager to work full-time with Zenith's
professional consumer sales team and (c) a commercial sales
manager to work full-time with Zenith's professional
commercial sales team. The three individuals shall be Focus
employees, with salaries, benefits and expenses paid by Focus.
5.3 MINIMUM PURCHASES. Zenith agrees to purchase a minimum number of
Focus Products at the prices set forth in paragraph 5.1 herein such
that the aggregate purchases (the "Total Purchases") of Focus Products
during the Term, as stated in paragraph 21.1 herein, of this Agreement
shall be a minimum of two million ($2M) dollars per quarter (the
"Period") and twelve million ($12M) dollars during the Term
(hereinafter the $2 million and $12 million minimums shall be referred
to as the "Minimums") exclusive of taxes or other costs not
contemplated in paragraph 5.1. The foregoing notwithstanding, there
shall be no Minimum in the quarter ended December 31, 1996 and the
Minimum for the quarter ended March 31, 1997 shall be $1.25M. If, upon
the end of the Period or Term, as the case may be, the Total
Purchases are less than the Minimums, Zenith agrees to pay to the
Company an amount equal to thirty percent (30%) of the difference
between the Total Purchases and the Minimums. Such payment shall be
made within thirty (30) days of the end of the Period or Term as the
case may be. If Zenith establishes that its failure to satisfy the
Minimums set forth in this paragraph is the result of a lack of
customer and product support by FOCUS, Zenith shall not be responsible
for paying the Minimums hereunder, provided, however, that the
foregoing shall not relieve Zenith from paying the pro rata portion of
the Minimums with respect to any Period or portion of the Term with
respect to which it cannot demonstrate lack of customer and product
support. In the event that Zenith fails to meet the Minimums for any
Period, but meets or exceeds the Minimums for the Term, FOCUS agrees to
reimburse Zenith for any payments made by Zenith to FOCUS pursuant to
this paragraph within thirty (30) days after the end of the Term.
21.1 TERM. This Agreement will come into force on the Effective Date of
the Agreement and will remain in effect until December 31, 1997, unless
earlier terminated by either party pursuant to this Section 21. Zenith
may, at its option, extend the term of the Agreement to December 31,
1998, provided that Zenith agrees that the minimum purchases for the
period from January 1, 1998 to December 31, 1998 shall equal or exceed
$30 million and provided further that notice of the exercise of the
option is given by Zenith to FOCUS on or before September 30, 1997.
21.4 (d) Notwithstanding anything to the contrary in this
Section 21.4, Zenith, in its sole discretion, may
terminate this Agreement upon thirty (30) days prior
written notice to Focus: if the Focus Products cease
to be technologically competitive; if Focus fails to
deliver the Focus Products according to the Delivery
Schedule set forth on Exhibit A.1 hereto; or if the
Focus Products fail to repeatedly meet the quality
specifications set forth herein. If the Agreement is
terminated by Zenith pursuant to this paragraph,
Zenith's obligation to satisfy the Minimums and make
the payments set forth in paragraph 5.3 shall cease,
provided, however, that Zenith shall be obligated to
take delivery of and pay for any FOCUS Products that
were ordered by or shipped to Zenith prior to the
date of termination.
21.5(f) Except for a termination pursuant to Section 21.4
hereof, if the Total Purchases of Focus Products at
the time of termination is less than the portion of
the Minimum due as determined by a straight line
accounting method for the portion of the Term which
ended upon termination of this Agreement, Zenith
agrees to pay to Company the difference between the
Total Purchases and the portion of the Minimum.
IN WITNESS WHEREOF, the parties have executed duplicate originals of this
Agreement, by their duly authorized representatives.
ZENITH ELECTRONICS CORPORATION
By /s/ Xxxxx Xxxxx
-----------------------------------
(Authorized signature)
Name Xxxxx Xxxxx
---------------------------------
(Typed or printed)
Title General Manager
Date October 11, 1996
FOCUS ENHANCEMENTS, INC.
By /s/ T X. Xxxxxx
-----------------------------------
(Authorized signature)
Name Xxxxxx Xxxxxx
--------------------------------
(Typed or printed)
Title President & CEO
Date October 9, 1996
