[XXXXXX MICRO/R/ LOGO]
START-UP AGREEMENT
THIS XXXXXX MICRO START-UP AGREEMENT("Agreement"), dated this 16th day of
October, 1997, is made by and between XXXXXX MICRO INC. ("Ingram"), a Delaware
corporation, with its principal place of business at 0000 X. Xx. Xxxxxx Xxxxx,
Xxxxx Xxx, Xxxxxxxxxx 00000 and SONIC FOUNDRY, a Maryland corporation, with its
principal place of business at 000 Xxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000
("Vendor").
RECITALS:
WHEREAS, Ingram is engaged in the sale and distribution of microcomputer
products; and
WHEREAS, Vendor is engaged in the manufacture, production and supply of
microcomputer products, ("Products"); and
WHEREAS, Ingram desires to purchase Products from Vendor for sale and
distribution to Xxxxxx'x resellers on a North American basis pursuant to the
terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the terms and conditions set forth herein,
the parties agree as follows:
1. Order Fulfillment. Vendor will fulfill all Xxxxxx'x orders promptly and
completely. If a shortage of any Product in Vendor's inventory exists in
spite of Vendor's good faith efforts, Vendor agrees to allocate its
available inventory of such Product to Ingram in proportion to Xxxxxx'x
percentage of all of Vendor's customer orders for such Product during the
previous sixty (60) days. Ingram shall not be required to purchase any
minimum amount or quantity of the Product.
2. Delivery of Product. Vendor shall deliver all Products as designated in
Xxxxxx'x Purchase Orders ("P.O.") unless Vendor rejects the P.O. within ten
(10) days of P.O. date. Products will be shipped F.O.B. Xxxxxx'x warehouse
unless otherwise indicated on such P.O. Vendor shall bear all shipping
costs and risk of loss or damage to Products in transit. Risk of loss to
Products will pass to Ingram upon receipt thereof; Ingram will maintain
insurance coverage adequate to cover the normal cost of Products.
3. Title of Products. Vendor shall retain title to Products shipped hereunder
until Products are sold by Ingram.
4. Product Marking. Vendor shall clearly xxxx on the packaging of each unit
of Product the Product's name and computer compatibility. Such packaging
shall also bear a machine-readable bar code identifier scannable in
standard Uniform Product Code (UPC) format. The bar code must identify the
Product as specified by the Uniform Code Council (UCC). If the Vendor or
Ingram customers' require serial number tracking the serial number must be
clearly marked and bar coded on the outside of the individual selling unit.
The bar code shall fully comply with all conditions regarding standard
product labeling set forth in Exhibit A in the then-current Xxxxxx Micro's
Guide To Bar Code: The Product Label. Ingram shall charge a one dollar
($1.00) chargeback to Vendor for each unit of Product not in compliance
with this Product marking section.
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5. Returns of Product.
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x. Xxxxxx may return any Products, including Products returned by Ingram
customers, for credit against open invoices. Unsold Product shall be
inclusive of Products returned by Ingram customers. Such returns shall
be limited to once per month, and shall be made with advance notice to
Vendor as to estimated arrival date. Upon advance notice of returns, Vendor
shall provide a Return Material Authorization (RMA) within five (5) days of
notice. In the event that such RMA is not issued within five (5) days,
Ingram shall have the right to return any Product(s) to Vendor without an
RMA, and Vendor shall be obligated to accept such return for credit. Vendor
shall bear expense and risk of loss of return shipment. Vendor shall issue
payment to Ingram for such returned Products if no balance is then
outstanding.
b. Vendor shall issue an immediate credit for purchase price plus all
return freight charges for defective Product, and Products returned as
defective by Ingram customers. Upon Vendor recall of Products due to
defects, revisions, or upgrades and at Vendor's request with preapproval of
estimated expenses, Ingram shall provide reasonable assistance, at Vendor's
expense, in such recall.
x. Xxxxxx'x right to return Products shall survive the term and
termination of this Agreement. Should Ingram have a balance due upon
reconciliation of the account for Products returns, freight chargebacks,
advertising credits, or other upon end of term or termination, Vendor shall
issue payment therefor within thirty (30) days of such term or termination.
Ingram shall use best efforts to return all Products within one hundred
eighty (180) days of termination of the Agreement.
6. Sales and Selling Price. Xxxxxx'x selling prices to its resellers shall be
at Xxxxxx'x sole discretion and control. Vendor shall make no pricing
commitments to Reseller or other third parties which otherwise obligates
Ingram. Vendor shall have the right to change the list price of any Product
upon giving thirty (30) days' prior written notice to Ingram. In the event
that Vendor shall raise the list price of a Product, all orders for such
Product placed prior to the effective date of the price increase shall be
invoiced at the lower price.
7. Price Protection. In the event that Vendor reduces the price of any Product
or offers the Product at a lower price, including raising the discount
offered, to any other like distributor, Vendor shall promptly credit Ingram
for the difference between the invoice price charged to Ingram and the
reduced price for each unit of Product held in inventory by Ingram on the
date the reduced price is first offered. Vendor will also credit Ingram for
the difference between the invoice price charged by Ingram to the customer
and the reduced price charged by Ingram to the customer for each unit of
Product held in inventory by Xxxxxx'x customers on the date the reduced
price is first offered by Vendor if Xxxxxx'x customers request a credit
resulting from Vendor's price reduction. Should any of Xxxxxx'x customers
request a price adjustment as outlined in this Section, Ingram shall
provide for an independent third party audit of that customer's inventory
upon Vendor's reasonable request and at Vendor's expense. Ingram will use
commercially reasonable efforts to provide inventory reporting of its
customer's inventory.
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8. Records. Vendor shall furnish documentation with each shipment to and
return of Products from Ingram. Ingram shall keep accurate records of all
Products sales and returns, and monthly inventory reports. Ingram shall
reconcile its account with Vendor upon end of term or termination of the
Agreement. Vendor shall respond to any Ingram request for reconciliation
within thirty (30) days.
9. Term. The initial term of this Agreement shall be one (1) year. Thereafter,
the Agreement shall automatically renew for additional one (1) year
periods.
10. Termination. Either party may terminate the Agreement, with or without
cause, with ninety (90) days advance written notice. For one hundred eighty
(180) days after the expiration or earlier termination of this Agreement,
Ingram may return to Vendor any Product for credit against outstanding
invoices, or if there are no outstanding invoices for a cash refund. Any
credit or refund due Ingram for returned Product shall be equal to the
Product's then current replacement cost plus all freight charges incurred
by Ingram in returning the Product.
11. SKU Setup and Catalog Listing. Vendor agrees to pay ten thousand dollars
($10,000) to cover the setup and catalog listing of all Ingram approved
SKU's for the first six (6) month period. This also includes the following
activities: (i) one (1) CMD Vendor night or four (4) general Fast Facts,
(ii) one (1) month of a catalog banner ad in the electronic catalog section
of Xxxxxx'x website, and (iii) comprehensive catalog listing. The ten
thousand dollars ($10,000) is to be paid via check in advance of setup.
Beginning in the third quarter of the Agreement, Vendor agrees to pay a
three thousand dollar ($3,000) quarterly charge, paid by check in advance
of the start of the quarter for the continuation of Agreement. Quarters
shall be calendar quarters and the quarterly fee will be prorated if the
third quarter begins on a date other than a calendar month.
The setup and catalog listing charges listed above are in addition to any
marketing funds and the rebate specified in section 12.
12. Rebate. Vendor will pay Ingram a five percent (5%) quarterly rebate based
on gross sales. The rebate will be paid by check within thirty (30) days
after the quarter end. If no check is received within that period Ingram
shall deduct that amount from the Vendor's next payment.
13. Payment. Vendor will issue invoices concurrently with Product shipments to
Ingram. Ingram will pay Vendor one time per month for any invoices not held
in reserve for: (i) product on hand at Ingram, (ii) product on hand at
resellers who have purchased Vendor's product from Ingram, (iii) Product in
transit to Ingram from resellers, (iv) marketing programs which will occur
in the upcoming thirty (30) days and which have not already been prepaid,
and (v) for any outstanding debt or invoice to Vendor.
14. Bulletin Board System (BBS). Ingram will provide the Detailed Vendor Buying
Report weekly by its electronic BBS. The standard reports will include
sales by zip code, state, product/quantity sold and the detailed Vendor
Buying Report.
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15. Marketing/Advertising. Vendor and Ingram agree to conduct joint marketing
and advertising for the Products as mutually agreed by the parties in
writing. Both parties agree to cooperate in the planning and funding of
such advertising. Xxxxxx'x marketing and advertising costs incurred in
accordance with such agreement shall be pre-approved by Xxxxxx'x buyer and
prepaid by Vendor via check to Ingram. Vendor shall make no marketing,
advertising, pass through or promotional commitments to Reseller or other
third parties which otherwise obligates Ingram.
16. Warranties/Certification.
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(a) General Warranty. Vendor represents and warrants that (i) it has good
transferable title to the Products, (ii) the Product will perform in
conformity with specifications and documentation supplied by Vendor, (iii)
the Product or its use does not infringe any patents, copyrights,
trademarks, trade secrets, or any other intellectual property rights, (iv)
that there are no suits or proceedings pending or threatened which allege
any infringement of such proprietary rights, and (v) the Product sales to
Ingram do not in any way constitute violations of any law, ordinance, rule
or regulation in the distribution territory.
(b) Warranty. Vendor hereby represents and warrants that any Product
offered for distribution does not contain any obscene, defamatory or
libelous matter or violate any right of publicity or privacy.
(c) End-User Warranty. Vendor shall provide a warranty statement with
Product for end user benefit. This warranty shall commence upon Product
delivery to end-user. NO OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
BUT NOT LIMITED TO THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE ARE MADE BY VENDOR WITH RESPECT TO THE PRODUCT. INGRAM
SHALL NOT EXTEND ANY ADDITIONAL WARRANTIES TO ANY RESELLERS OR END-USERS OF
THE PRODUCT. IN NO EVENT WILL XXXXXX BE LIABLE FOR ANY LOST PROFITS OR ANY
OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGES, EVEN IF INGRAM HAS BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES.
(d) Millennium Compliance Warranty. Vendor warrants and represents that
the Products will properly (a) record, store, process, calculate or present
calendar dates falling on and after (and if applicable, spans of time
including) January 1, 2000 as a result of the occurrence, or use of data
consisting of, such dates, and (b) calculate any information dependent on
or relating to dates on or after January 1, 2000 in the same manner, and
with the same functionality, data integrity and performance, as such
Product records, stores, processes, calculates and presents calendar dates
on or before December 21, 1999, or information dependent on or relating to
such dates.
(e) Class B Warranty. Vendor hereby represents and warrants that the
Product has been or will be at the time of shipment certified as a Class B
computing device as required by the rules of the U.S.A. Federal
Communications Commission ("FCC Rules").
(f) EU Warranty. Vendor further warrants and represents for Products
distributed to the European Union ("EU") that the Products will be accepted
under all EU directives, regulations and the EU country's legislation.
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(g) Made in America Certification. Vendor by the execution of this
Agreement that it will not label any of its products as being "Made in
America," "Made in U.S.A.," or with similar wording, unless all
components or elements of such Product is in fact made in the United
States of America. Vendor further agrees to defend, indemnify and hold
harmless from and against any and all claims, demands, liabilities,
penalties, damages, judgments or expenses (including attorney's fees
and court costs) arising out of or resulting in any way from Product
that does not conform to the Certification.
17. Indemnity. Vendor shall defend, indemnity, and hold harmless Ingram from
and against any claims, demands, liabilities, or expenses (including
attorney's fees and costs) for any injury or damage, including, but not
limited to, any personal or bodily injury or property damage, arising out
of or resulting in any way from any defect in Vendor's Products. This duty
to indemnify shall be in addition to Vendor's warranty obligations.
Vendor shall defend, indemnify and hold Ingram harmless from and against
all damages and costs incurred by Ingram due to claims of infringement of
any patents, copyrights, trademarks, trade secrets, or other proprietary
rights in the manufacture or marketing of Product; provided that, Ingram
promptly notifies Vendor of the infringement claim. Upon claim of
infringement, Vendor may, at its expense and option, either procure the
right to continue using any part of Product, replace same with infringing
Products, or modify Products to make it non-infringing; should Vendor be
unable or unwilling to replace, modify, or procure right to continued use
of Products within ninety (90) days of claim notification, Ingram may
return Products for a full credit or a cash refund, at Xxxxxx'x option.
18. Millennium Compliance Indemnity. Vendor agrees to indemnify and hold Ingram
and its shareholders, officers, directors, employees, agents, successors,
and assigns harmless from and against any and all claims, suits, actions,
liabilities, losses, costs, reasonable attorney's fees, expenses, judgments
or damages, whether ordinary, special or consequential, resulting from any
third party claim made or suit brought against Ingram or such persons, to
the extent such results from Vendor's breach of the warranty specified in
Section 16(d).
19. Competitive Price. Vendor agrees that the prices and terms it offers to
Ingram are now and will continue to be at least as low as those it offers
to any of its like customers. If Vendor offers a lower price, including,
but not limited to, sales price, volume discount, extended terms,
advertising, freight cost, or back haul allowance to any other customer,
then Vendor will immediately offer that lower price to Ingram, and shall
apply such lower price to all Ingram orders not yet shipped. Ingram shall
also be entitled to participate in and receive notice of the same no later
than Vendor's other customers. In addition, Vendor will issue a credit to
reflect the difference in price for all affected inventory in Xxxxxx'x or
its resellers inventory on the date of the price decrease.
20. Notices. All notices or other communications made hereunder shall be in
writing and sent by U.S. certified or registered first-class mail prepaid,
and receipt thereof shall be deemed to be two (2) days from date
postmarked.
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21. Entire Agreement/Law. This Agreement contains all understandings and
agreements between the parties and may not be modified or supplemented
except in a writing signed by both parties. The parties agree that the
Agreement shall be governed by the law of the State of California,
excepting that body of law concerning conflicts of law.
22. Authorized Representatives. Either party's authorized representative for
execution of this Agreement or any amendment hereto shall be president, a
partner, or a duly authorized vice-president of their respective party. The
parties executing this Agreement warrant that they have the requisite
authority to do so.
The signer represents that he/she has read this Agreement, agrees, and is an
authorized representative of their respective party.
XXXXXX MICRO INC. SONIC FOUNDRY
By: /s/ Xxxxxxxx X. Xxxxxx By: /s/ Xxx Xxxxxx
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Name: Xxxxxxxx X. Xxxxxx Name: Xxx Xxxxxx
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Title: Sr. Vice President Purchasing Title: VP Sales & Marketing
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Date: 2/25/98 Date: 2/22/98
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EXHIBIT:
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A - Guide To Bar Code: The Product Label
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