CONFIDENTIAL
EXHIBIT 10.24
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO CERTAIN PORTIONS OF THIS
DOCUMENT. SUCH PORTIONS HAVE BEEN OMITTED
FROM THIS FILING AND HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
DISTRIBUTION AGREEMENT
This Agreement (the "Agreement") is made and entered into as of the 5th day of
June, 1991 by and between INGRAM MICRO INC., a California corporation
("Ingram"), and RADIUS INC., a California corporation ("Vendor").
RECITALS
Vendor manufactures, produces, and/or supplies microcomputer products and
desires to grant to Ingram the right to sell and distribute the products, as
hereinafter defined, upon the terms and conditions set forth below. Ingram is
engaged in the sale and distribution of microcomputer products and desires to
have the right to sell and distribute Vendor's products upon said terms and
conditions. In consideration of the mutual covenants and agreements set forth
below, the parties hereto agree as follows:
1. RECITALS. The recitals stated above are incorporated herein by reference.
2. GRANT OF DISTRIBUTION RIGHTS.
2.1 Vendor hereby grants to Ingram, and Ingram accepts, the nonexclusive
right to distribute in the United States those computer products designed for
IBM-PCs and IBM-PC compatibles listed on EXHIBIT A attached hereto and made a
part hereof, as that Exhibit A may be amended from time to time by Vendor in its
sole discretion and subject to Section 10.3 below. All IBM-PCs and IBM-PC
compatible products to be distributed shall be referred to in this Agreement as
the "Product" or "Products." Ingram acknowledges that it has no right to
distribute products designed by Vendor for use with computers manufactured by
Apple Computer, Inc.
2.2 Vendor grants Ingram only the right to distribute the Product to
Ingram's resellers and specifically excludes direct distribution to end-users
unless Ingram obtains Vendor's prior written consent. Ingram may distribute the
Products to Ingram's resellers that engage in telephone or mail order
distribution provided that such resellers comply with Vendor's then current
policies for such distribution as Vendor may establish them from time to time.
Vendor will notify Ingram of resellers that do not comply with Vendor's
telephone or mail order distribution guidelines and Ingram will discontinue
sales to such resellers as soon as possible but in no event more than thirty
(30) days after receipt of notice from Vendor.
2.3 Ingram shall neither export nor sell any Product to customers outside
of the United States without the prior written consent of Vendor.
2.4 Vendor agrees to make available and to sell to Ingram such Products as
Ingram shall order from Vendor at the prices and subject to the terms set forth
in this Agreement. Ingram shall not be required to purchase any minimum amount
or quantity of the Product.
2.5 Vendor may appoint other distributors to distribute its products.
Ingram shall have the right to obtain and/or retain the rights to distribute any
other products from other vendors, including products which may compete with the
Products.
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CONFIDENTIAL
3. TERM.
3.1 The initial term of this Agreement shall be for a period of one (1)
year, beginning on the date first above written. Thereafter, this Agreement
shall be renewed automatically for successive one (1) year terms without further
notice, unless terminated sooner as provided under the provisions of this
Agreement.
3.2 Either party may terminate this Agreement at will, with or without
cause, by giving ninety (90) days' written notice to the other party prior to
the effective date of the termination.
3.3 Upon termination or expiration of this Agreement: (a) all unshipped
orders automatically will be cancelled; (b) Vendor, at its option, may
repurchase any or all Products owned by Ingram at prices to be agreed upon but
in no event greater than the price invoiced to and paid by Ingram; (c) all
outstanding invoices to Ingram automatically will become due and payable on the
effective date of termination; (d) Ingram shall cease using any Vendor
trademark, logo, trade name or designation; and (e) if Ingram gives Vendor
written notice that it is terminating this Agreement for cause pursuant to
Section 15 below and Vendor fails to correct Vendor's default within the cure
period, then Vendor, at Ingram's option, will repurchase any or all Products
owned by Ingram at the price invoiced to Ingram, provided that the Products are
nondefective, undamaged, contained in factory-sealed cartons and listed on
Vendor's current price list at the time when this Agreement is terminated. If
Vendor repurchases Product pursuant to this Section 3.3, Vendor will either
credit Ingram's account in the amount of the price paid by Vendor in the event
Ingram has unpaid invoices, or will pay Ingram in cash.
3.4 NEITHER VENDOR NOR INGRAM SHALL BE LIABLE TO THE OTHER FOR DAMAGES OF
ANY KIND, INCLUDING INCIDENTAL, CONSEQUENTIAL OR SPECIAL DAMAGES, ON ACCOUNT OF
THE TERMINATION OR EXPIRATION OF THIS AGREEMENT. INGRAM WAIVES ANY RIGHT IT MAY
HAVE TO ANY OTHER OR ADDITIONAL REMEDY UPON TERMINATION OF THIS AGREEMENT.
4. OBLIGATIONS OF VENDOR.
4.1 Vendor shall use its diligent efforts to ship the Product within five
(5) days after receipt of Ingram's order for the Product, unless otherwise
directed by Ingram, or unless Ingram has failed to make any payment of invoices
as provided in this agreement.
4.2 At no charge to Ingram, Vendor shall support the Product and any
efforts to sell the Product by Ingram, and provide (i) sales literature and
advertising materials in reasonable quantities, and (ii) reasonable training and
support in the sale and use of the Product to Ingram's employees and customers,
if requested by Ingram.
4.3 Vendor shall use its diligent efforts to notify Ingram at least thirty
(30) days prior to the date any new Product is to be introduced and to make such
Product available for distribution by Ingram not later than the date it is first
introduced in the marketplace.
4.4 Vendor agrees to maintain sufficient Product inventory to permit it to
fill Ingram's orders on a reasonably timely basis. If a shortage of any Product
in Vendor's inventory exists in spite of Vendor's good faith efforts, Vendor
will allocate its available inventory of such
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CONFIDENTIAL
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO INFORMATION CONTAINED WITHIN
THE "[**]." SUCH MARKED PORTIONS HAVE BEEN
OMITTED FROM THIS FILING AND HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
Product on a basis Vendor deems equitable, taking into account Ingram's
percentage of all of Vendor's customer orders for such Product [**]. In any
event, Vendor shall not be liable for any damages or to any person if Vendor
fails to meet the delivery schedule.
4.5 For each Product shipment to Ingram, Vendor shall issue to Ingram an
invoice showing Ingram's order number and the Product part number, description,
price and any discount. At least monthly, Vendor shall provide Ingram with a
current statement of account, listing all invoices outstanding and any payments
made and credits given since the date of the previous statement, if any.
5. OBLIGATIONS OF INGRAM.
5.1 Ingram will list the Product in all appropriate catalogs and make the
Product available to its customers.
5.2 Ingram will advertise and/or promote the Products as provided in the
mutually agreed upon rollout plan attached hereto as EXHIBIT B and will transmit
Product information and promotional materials to its customers as reasonably
necessary.
5.3 As reasonably necessary, Ingram will make its facilities available
for, and will assist Vendor in providing, Product training and support required
under Section 4.2 hereof.
5.4 Ingram will provide Product technical assistance to its customers as
it is reasonably able to do so, and will refer all other technical matters
directly to Vendor.
5.5 By the fifth day of each month, Ingram will provide Vendor with a
point of sale report listing each Product sold during the prior month by product
model, units, serial number (Ingram's serial number system will be in place no
later than 10-1-91) and zip code of the point of sale.
6. PRICE AND TERMS.
6.1 The price and applicable discount, if any, for the Product shall be as
set forth in Exhibit A. The price at which Ingram resells Product to its
resellers will be determined by Ingram in its sole discretion. Prices are
stated exclusive of all local sales and use taxes, duties and other taxes of any
nature due on account of the purchases and sales hereunder. Ingram will pay all
such taxes when invoiced by Vendor or will supply appropriate tax exemption
certificates to Vendor.
6.2 Vendor shall have the right to change the list price of any Product.
Vendor shall use its diligent efforts to give thirty (30) days' prior written
notice to Ingram of any such price change. 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.
[**]. In the event that Vendor shall lower the list price of a Product,
purchase orders accepted prior to the effective date of the price decrease, but
not yet shipped, will receive the benefit of the price decrease. Price
decreases will also apply to, and Vendor will grant a credit
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CONFIDENTIAL
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO INFORMATION CONTAINED WITHIN
THE "[**]." SUCH MARKED PORTIONS HAVE BEEN
OMITTED FROM THIS FILING AND HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
for, all units of the Product (other than replacement parts) that [**]. The
dollar amount of this inventory price protection shall be determined by Vendor
in its sole discretion.
6.3 Terms of payment for any order shall be net thirty (30) days. In the
event that Ingram fails to pay any invoice when due, Vendor may (a) declare all
amounts owed by Ingram to be immediately due and payable, and (ii) refuse to
ship any further Products until Ingram has paid all invoiced amounts in full.
7. SHIPPING.
Vendor shall ship Product only pursuant to Ingram purchase orders received by
Vendor. Product shall be shipped FOB Vendor's point of shipment, with title
(except for software) and risk of loss or damage to pass to Ingram upon delivery
by Vendor to the carrier specified in Ingram's freight routing instructions
attached hereto as EXHIBIT C which may be amended by Ingram in its sole
dicretion from time to time.
8. COOPERATIVE ADVERTISING.
8.1 Ingram may advertise and promote the Product in a commercially
reasonable manner and may use Vendor's trademarks, service marks and trade names
in connection therewith; provided that, Ingram shall submit the advertisement or
promotion to Vendor for review and approval prior to initial release, which
approval shall not be unreasonably withheld or delayed.
9. EVALUATION UNITS.
At the request of Ingram and subject to Vendor's approval, Vendor shall loan
evaluation units of the Product to Ingram solely for Ingram's internal use in
aiding Ingram's sales staff in the promotion of the Product. At anytime such
units will be returned to Vendor upon Vendor's request in good condition,
reasonable wear and tear excepted.
10. STOCK BALANCING.
10.1 Vendor agrees to accept on a quarterly basis commencing with the end
of the first full calendar quarter following the date of this Agreement, a
shipment of nondefective and undamaged Products contained in factory-sealed
cartons that are listed on Vendor's current price list at the time the Products
are returned, and to credit Ingram's account in the amount of the net price paid
by Ingram therefor less any discounts or credits previously received, provided
that: (a) Ingram exercises its right hereunder within the first [**] of the
quarter immediately following the quarter during which such Products were
purchased and paid for; (b) Ingram obtains a return material authorization
number from Vendor prior to any such return; (c)[**]; (d) [**]; (e) Ingram
returns no more than [**] of all such Products purchased by Ingram within the
immediately preceding quarter. [**].
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CONFIDENTIAL
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO INFORMATION CONTAINED WITHIN
THE "[**]." SUCH MARKED PORTIONS HAVE BEEN
OMITTED FROM THIS FILING AND HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
10.2 Vendor reserves the right to correct, improve, modify and enhance the
Product, in whole or in part, as Vendor deems necessary or desirable. Vendor
will use reasonable efforts to give Ingram at least sixty (60) days prior
written notice of any material change in form, fit or function.
10.3 Vendor reserves the unilateral right, without liability, to
discontinue any or all Products. Vendor shall use its diligent efforts to
provide Ingram [**] notice that it is discontinuing production of the Product or
any version thereof. Upon such notice Ingram may sell through any such
inventory of affected Product, or may return any such affected Product in its
inventory to Vendor for credit provided that (a) Ingram exercises its rights
hereunder no later than [**] following the close of the quarter in which the
discontinuance occurred, (b) Ingram obtains a return material authorization
number from Vendor prior to any such return, (c) all such returned Product is
undamaged and contained in factory-sealed cartons, (d) [**], and (e) such
inventory was shipped to Ingram no more than [**] of the Product discontinuance.
Any credit or refund due Ingram for returned Product shall be equal to the
purchase price of the Product, less any discounts or credits previously
received. [**].
11. PRODUCT WARRANTIES AND LIMITATION OF LIABILITY.
11.1 VENDOR MAKES NO WARRANTIES OR REPRESENTATIONS AS TO PERFORMANCE OF THE
PRODUCTS OR AS TO SERVICE TO INGRAM OR TO ANY OTHER PERSON, EXCEPT AS SET FORTH
IN VENDOR'S LIMITED WARRANTY ACCOMPANYING DELIVERY OF THE PRODUCT. VENDOR
RESERVES THE RIGHT TO CHANGE THE WARRANTY AND SERVICE POLICY SET FORTH IN SUCH
LIMITED WARRANTY OR ELSEWHERE, AT ANY TIME, WITHOUT FURTHER NOTICE AND WITHOUT
LIABILITY TO INGRAM OR TO ANY OTHER PERSON. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ALL IMPLIED WARRANTIES, INCLUDING BUT NOT LIMITED TO IMPLIED
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NONINFRINGEMENT, ARE HEREBY EXCLUDED. NEITHER PARTY'S LIABILITY UNDER THIS
AGREEMENT SHALL EXCEED THE ACTUAL AMOUNT PAID BY INGRAM UNDER THIS AGREEMENT IN
THE TWELVE MONTHS (12) PRECEDING THE FILING OF THE CAUSE OF ACTION RELATING TO
THE EVENTS GIVING RISE TO SUCH LIABILITY AND SHALL IN NO EVENT INCLUDE
INCIDENTAL, CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES OF ANY KIND, EVEN IF THE
PARTY IS AWARE OF THE POSSIBILITY OF SUCH DAMAGES.
11.2 Ingram may return Product found to be defective within the later to
occur of sixty (60) days of Ingram's receipt of that Product, or within thirty
(30) days of receipt of that Product by any reseller from Ingram, provided that
Ingram obtains a return material authorization number. Ingram agrees to batch
all defective Product returned by Ingram or its resellers and to ship such
defective products to Vendor once every thirty (30) days. Vendor may, at its
option, either (a) provide Ingram within thirty (30) days' of Vendor's receipt
of such Product with a new replacement Product or (b) credit Ingram for the
amount of the Product's purchase price less any discounts or credits previously
received.
11.3 In the event Vendor recalls any or all of the Products due to defects
or for revisions, Ingram shall provide reasonable assistance in such recall.
Vendor agrees to pay all
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CONFIDENTIAL
freight costs related to such recalls but has no obligation to pay handling
charges or otherwise reimburse Ingram for its assistance.
12. INDEMNITY.
12.1 Vendor shall defend, indemnify, and hold harmless Ingram from and
against all losses, damages, liabilities, costs or expenses (including but not
limited to attorneys' fees) incurred by Ingram as a result of any third party
claim based on an allegation that any Product supplied hereunder infringes a
patent, copyright, trade secret or other proprietary right under the laws of the
United States, provided, that Ingram promptly notifies Vendor in writing of any
such claim, gives Vendor sole control of the defense and all related settlement
negotiations, and cooperates with Vendor in defending or settling any such
claim. With the exception of Section 12.2 below, Vendor grants no indemnity
with respect to any other claim against Ingram, including but not limited to any
claim based on the combination, operation, or use of Products with equipment,
data or programming not supplied by Vendor, or based on any alteration or
modification of any Product. If an infringement claim is asserted, or if Vendor
believes one likely, Vendor may: (a) procure a license from the person claiming
or likely to claim infringement; (b) modify the Product, as appropriate, to
avoid the claim of infringement, as long as the modification for this purpose
does not materially impair the operation thereof; or (c) accept the return of
the Products in Ingram's inventory subject to or likely to be subject to the
claim and refund to Ingram the price paid for them, reflecting any quantity or
other discounts granted to Ingram. THE FOREGOING STATES VENDOR'S EXCLUSIVE
OBLIGATION WITH RESPECT TO CLAIMS OF INFRINGEMENT OF PROPRIETARY RIGHTS OF ANY
KIND.
12.2 Vendor shall defend, indemnify, and hold harmless Ingram from and
against all losses, damages, liabilities, costs or expenses (including but not
limited to attorneys' fees) for any injury or damage (including but not limited
to any personal or bodily injury or property damage) arising out of resulting
from any defect in unaltered and unmodified Products, provided that Ingram
promptly notifies Vendor in writing of such claim, gives Vendor sole control of
the defense and all related settlement negotiations, and cooperates with Vendor
in defending or settling any such claim.
12.3 Ingram agrees to defend, indemnify and hold Vendor harmless from any
and all losses, damages, liabilities, costs and expenses (including but not
limited to attorneys' fees) incurred by Vendor as a result of any third party
claim arising from Ingram's activities (other than the mere marketing of
Products) under this agreement, provided that Vendor promptly notifies Ingram in
writing of such claim, gives Ingram sole control of the defense and all related
settlement negotiations, and cooperates with Ingram in defending or settling any
such claim.
13. PRODUCT MARKINGS.
Vendor shall clearly mark on the packaging of each unit of Product the Product's
name and computer compatibility. Ingram will include on each Product that it
distributes all trademarks, copyrights and other notices of proprietary rights
included by Vendor on such Products.
14. REPRESENTATIONS AND WARRANTIES.
Vendor warrants and represents that:
14.1 The Products or their use do not infringe upon any patents,
copyrights, or trademarks under the laws of the United States, and that there
are not any suits or proceedings pending or threatened which allege that any
Product or the use thereof infringes upon such patents, copyrights, or
trademarks;
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CONFIDENTIAL
14.2 Sales to Ingram of the Products at the listed price and/or discounts
do not in any way constitute violations of federal, state, or local laws,
ordinances, rules or regulations, including any antitrust laws or trade
regulations;
14.3 It has product liability insurance in an amount and scope comparable
to that of companies of similar size in its industry.
15. DEFAULTS.
15.1 For purposes of this Agreement, a party shall be in default if (a) it
materially breaches a term of this Agreement and such breach continues for a
period of twenty (20) days after it has been notified of the breach in writing,
or (b) it shall cease conducting business in the normal course, become
insolvent, make a general assignment for the benefit of creditors, suffer or
permit the appointment of a receiver for its business or assets, or shall avail
itself of or become subject to any proceeding under the Federal Bankruptcy Act
or any other federal or state statute relating to insolvency or the protection
of rights of creditors.
15.2 Upon the occurrence of an event of default as described in Section
15.1, the party not in default may immediately terminate this Agreement by
giving written notice to the party in default.
15.3 The rights and remedies provided to the parties in this Section 15
shall not be exclusive and are in addition to any other rights and remedies
provided by this Agreement or by law or in equity.
16. INSURANCE.
During the term of this Agreement, both parties will maintain insurance in an
amount and scope comparable to that of companies of similar size in their
respective industries.
17. OTHER PROVISIONS.
17.1 Construction. This Agreement shall be construed and enforced in
accordance with the laws of the State of California applicable to agreements
entered into between California residents and performed entirely within
California.
17.2 Notices. All notices, requests, demands and other communications
called for or contemplated hereunder shall be in writing and shall be deemed to
have been duly given upon the earlier to occur of two (2) days after mailing by
U.S. certified or registered first-class mail or upon delivery by any return
receipt express courier, prepaid, and addressed to the parties at the addresses
set forth at the end of this Agreement or at such other addresses as the parties
may designate by written notice.
17.3 Proprietary Software. Ingram acknowledges that Products often contain
not only hardware but software. Such software may be included in ROMs, PALs or
semiconductor chips embedded in the hardware or it may be contained separately
on disks or other media. Ingram understands that while Vendor sells its
hardware subject to the terms of this Agreement, Vendor does not sell its
software. Rather, Ingram is permitted to transfer such software as part of its
resale of the associated Product. Such software is proprietary to Vendor and is
copyrighted or patented. Ingram also agrees not to reverse engineer any Product
or any component thereof.
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CONFIDENTIAL
17.4 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument; however, this Agreement
shall be of no force or effect until executed by both parties.
17.5 Confidential Information. The parties acknowledge that they will have
access to certain trade secrets and information and materials concerning the
other party's present or future business development and business activities
that are confidential and proprietary, the value of which would be substantially
impaired if such information was disclosed to third parties (the "CONFIDENTIAL
INFORMATION"). Such Confidential Information includes but is not limited to the
terms of this Agreement, business plans, customer lists, sales data, technical
data, product information, and financial information. Each party agrees that it
will not use the other party's Confidential Information, except in the
performance of this Agreement, or disclose such Confidential Information to
third parties during the term of this Agreement or following its termination or
expiration. Each party will also take the same measures and precautions to
protect the other party's Confidential Information as it takes to protect its
own Confidential Information. Upon termination or expiration of this Agreement,
each party shall deliver to the other all tangible items representing the other
party's Confidential Information. For purposes of the foregoing obligations,
Confidential Information does not include information which (i) was already
rightfully known to the receiving party prior to the time that it was disclosed
hereunder, (ii) is in or has entered into the public domain through no breach of
this Agreement or wrongful act of the receiving party, (iii) has been rightfully
received from a third party not under an obligation of confidentiality to the
disclosing party and without breach of this Agreement, (iv) has been approved
for release by written authorization of the disclosing party, or (v) is required
to be disclosed pursuant to a final binding order of a governmental agency or
court of competent jurisdiction. The parties' obligation not to use or disclose
Confidential Information will expire five (5) years after the date that such
party originally received the Confidential Information from the other party.
17.6 Implied Waivers. The failure of either party at any time to require
performance by the other party of any provision hereof shall not affect in any
way the full rights to require such performance at any time thereafter. The
waiver by either party of a breach of any provision hereof shall not be taken,
construed, or held to be a waiver of the provision itself or a waiver of any
breach thereafter or any other provision hereof.
17.7 Captions and Section Headings. Captions and section headings used
herein are for convenience only, are not a part of this Agreement, and shall not
be used in construing it.
17.8 Covenant of Further Cooperation. Each of the parties agrees to
execute and deliver such further documents and to cooperate in such manner as
may be necessary to implement and give effect to the agreements contained
herein.
17.9 Binding on Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of each party, its successors and assigns.
17.10 Severability. A judicial determination that any provision of
this Agreement is invalid in whole or in part shall not affect the
enforceability of those provisions found not to be invalid.
17.11 Relationship of Parties. Ingram's relationship with Vendor
during the term of this Agreement will be that of an independent contractor.
17.12 Force Majeure. Vendor shall not be responsible for any failure
to perform due to unforeseen circumstances or to causes beyond Vendor's control,
including but not limited to
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CONFIDENTIAL
acts of God, war, riot, embargoes, acts of civil or military authorities, fire,
floods, earthquakes, accidents, strikes, or shortages of transportation,
facilities, fuel, energy, labor or materials. In the event of any such delay,
Vendor may defer the delivery of orders for Products for a period equal to the
time of such delay.
17.13 Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto pertaining to the subject matter hereof,
superseding any and all previous proposals, representations or statements, oral
or written. Any previous agreements between the parties pertaining to the
subject matter of this Agreement are hereby expressly cancelled and terminated.
The terms of this Agreement shall supersede the terms of any invoice or purchase
order issued by either party. Any modifications of this Agreement must be in
writing and signed by authorized representatives of both parties hereto.
17.14 Parties Executing. The parties executing this Agreement warrant
that they have the requisite authority to do so.
IN WITNESS WHEREOF, the parties hereunto have executed this Agreement.
"INGRAM" "VENDOR"
Ingram Micro Inc. Radius Inc.
2801 S. Yale Street 1710 Fortune Drive
Santa Ana, CA 92704 San Jose, CA 95131
By: /s/ Sanat Dutta By: /s/ Barry James Folsom
--------------- ----------------------
Sanat K. Dutta Barry James Folsom
Senior Vice President President and Chief Executive
Operations Officer
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ADDENDUM ONE
TO THE DISTRIBUTION AGREEMENT BETWEEN RADIUS INC.
AND INGRAM MICRO INC.
This Addendum to the Distribution Agreement dated June 5, 1991 by and between
Radius Inc. ("VENDOR") and Ingram Micro Inc. ("INGRAM") is made as of April 1,
1992. Unless otherwise indicated, all capitalized terms are defined in the
Distribution Agreement.
1. DISTRIBUTION RIGHTS.
Section 2.1 of the Distribution Agreement is deleted and replaced with the
following:
2.1 Vendor hereby grants to Ingram, and Ingram accepts, the nonexclusive
right to distribute in the United States those Vendor products (the "PRODUCTS")
set forth in EXHIBIT A attached hereto as it may be amended by Vendor from time
to time in its sole discretion subject only to Section 10.3 below.
Section 2.3 of the Distribution Agreement is deleted and replaced with the
following:
2.3 Ingram's appointment is expressly limited to distribution of Products
within the United States, and Ingram will not knowingly resell Products to any
reseller or other customer that intends to sell or otherwise distribute Products
to customers located outside of the United States.
2. REPORTING REQUIREMENTS.
Section 5.5 of the Distribution Agreement is deleted and replaced with the
following:
5.5 By the eighth (8th) day of each month, Distributor will provide Vendor
with: (i) a point of sale report listing each Vendor Product sold during the
prior month (excluding sales made to major accounts designated by Vendor ("MAJOR
ACCOUNTS")) indicating product model, units, Ingram's costs of goods sold and
zip code of the point of sale; and (ii) a separate point of sale report listing
each Product sold during the prior month to Major Accounts indicating the units
and costs of goods sold to each such Major Account. All point of sale reports
will be transmitted to Vendor electronically unless the parties otherwise agree
to an alternative manner of delivery and need not contain serial numbers.
Ingram will also provide Vendor with standard inventory reports on a weekly
basis.
3. DEFECTIVE PRODUCTS.
Section 4.2 of the Distribution Agreement is amended as follows:
4.2 At no charge to Ingram, Vendor shall provide (i) sales literature and
advertising materials in reasonable quantities, and (ii) reasonable training and
support in the sale and use of the Product to Ingram's employees and customers,
if requested by Ingram.
Section 11.2 of the Distribution Agreement is deleted and replaced with the
following:
11.2 Distributor will have the exclusive responsibility to support its
resellers. This support will include answering questions from resellers,
providing Product updates to such resellers if Distributor so desires, and
replacing defective Products that fail within Vendor's limited warranty with new
or refurbished Products. If Distributor's resellers are contacting Vendor
directly with respect to
-1-
Products, Vendor will refer such resellers to Distributor. Distributor's
obligations with respect to defective Products are set forth below.
(i) COMMUNICATIONS WITH RESELLERS. Distributor shall instruct its
resellers to return to Distributor all defective Products that fail within
Vendor's limited warranty along with a copy of the end user invoice for the
defective Product, IF AVAILABLE. Distributor, and/or its resellers, will be
responsible for all shipping and insurance charges incurred when transporting
such defective Products from a reseller location to Distributor and when
transporting new or refurbished replacement Products from Distributor to a
reseller location. With regard to Products that fail outside of the Vendor
warranty period, Distributor will notify its resellers that they are to refer
customers with such Products to the nearest Vendor authorized service center.
Vendor will supply Distributor, and Distributor will in turn make available to
each of its resellers that purchase Products, a complete listing of Vendor's
authorized service centers as it may be updated by Vendor from time-to-time.
(ii) DOA PRODUCTS REPLACED BY EXISTING INVENTORY. When a reseller
returns to Distributor a dead on arrival Product (a "DOA PRODUCT") (defined
below) and the Distributor or the reseller have an identical new unit in
inventory, Distributor will either (1) promptly replace the DOA Product with an
identical NEW Product from Distributor's inventory of such Products, or (2)
extend the reseller a credit for the returned DOA Product if the reseller
provides the end user with a new Product from the reseller's inventory of such
Products. Provided that Distributor first returns these DOA Products to Vendor
in accordance with Section 11.2(iv) below, Vendor will grant Distributor a
credit equal to the purchase price (as adjusted for any subsequent price
protection or other credits) for such returned units. If Vendor determines that
the returned unit does not qualify as a DOA, Vendor will invoice Distributor for
shipping, insurance and an appropriate handling charge. A DOA Product, as that
term is used in this Section 11.2, means any Product that fails to operate as
specified by Vendor within thirty (30) days of its delivery to an end user.
(iii) DEFECTIVE PRODUCTS REPLACED WITH AN ADVANCE EXCHANGE. If a
Product is returned to Distributor that fails within Vendor's warranty period
but outside of the thirty (30) day DOA period (a "WARRANTY PRODUCT"), or a DOA
Product is returned to Distributor and neither Distributor nor the reseller have
an identical new replacement unit in stock so that the failed unit cannot be
replaced out of inventory, Distributor will immediately notify Vendor of the
particular reseller that requires a replacement unit. Vendor will then issue
Distributor an RMA number for the defective Product and will promptly ship a
replacement unit (an identical new product in the case of a DOA failure or a
refurbished replacement unit in the case of a warranty failure) to the reseller
at no charge in advance of Vendor's receipt of the defective Product. (If
Radius receives a request for an RMA number for a defective Product before
before 1:00 p.m. PST on a week day, Vendor will use its best efforts to ship the
replacement unit that same day and in any event will ship the replacement unit
within two (2) business days following Distributor's request for an RMA number
(subject to product availability)). If Vendor determines that the returned unit
does not qualify as a DOA or Warranty Product, Vendor will invoice Distributor
for shipping, insurance and an appropriate handling charge.
(iv) MONTHLY BATCHING OF DEFECTIVE PRODUCTS. Distributor will inform
Vendor by the fifth (5th) day of each month of the number of defective Products
returned to Distributor in the prior month and Vendor will then promptly issue a
return material authorization ("RMA") number or numbers for these defective
Products. By the eighth (8th) day of each month, Distributor will batch these
defective Products and ship them to Vendor along with (1) a copy the
Distributor's invoice to the reseller for each such Product, and (2) IF
AVAILABLE, a copy of the end user invoice for the defective Product, so that
Vendor can confirm that the Product failed within the DOA period or the warranty
period. Vendor shall pay all inbound shipping and insurance charges on all
properly returned defective Products (i.e. both DOA Products and Warranty
Products).
(v) RETURN OF DEFECTIVE PRODUCTS. To facilitate and expedite advance
exchanges under Section 11.2 (iii) above, Radius will ship replacement units to
Distributor's resellers before Radius
-2-
receives a failed defective unit. On a quarterly basis, the parties agree to
review the advance exchange process and determine whether the defective units
have been accounted for. In the event defective units are not returned to
Radius on a regular basis, the parties will work together in good faith to make
appropriate adjustments in the advance exchange process.
(vi) MARKING BOXES. Distributor will indicate on each box shipped to
Vendor containing defective Products the appropriate RMA number, product number
and serial number for each defective Product included in that box. Such numbers
may be marked on the box directly, included on a packing label that is securely
fastened to the box, or indicated on the box by attaching stickers/labels
supplied to Distributor by Vendor for that purpose.
(vii) REFURBISHED INVENTORY. If Distributor desires to build an
inventory of refurbished replacement units for those Products that have an above
average failure rate, Distributor may purchase one or more refurbished
replacement units at Vendor's then current charge for the refurbished
replacement units and shall pay all related shipping and insurance charges.
3. EFFECT ON THE DISTRIBUTION AGREEMENT; MISCELLANEOUS. Except as expressly
modified by this Addendum, the terms and conditions of the Distribution
Agreement shall remain in full force and effect, and Ingram and Vendor agree to
remain bound by the provisions thereof. This Addendum shall become effective on
the date first indicated above only after it has been signed by Vendor and
Ingram. This Addendum may be executed in counterparts, both of which together
will constitute one agreement.
IN WITNESS WHEREOF, the parties have executed this Addendum on the date(s)
specified below:
RADIUS INC. INGRAM MICRO INC.
Signature: /s/ Michael D. Boich Signature: /s/ Sanat Dutta
-------------------- ----------------------------------
Name: Michael D. Boich Name: Sanat Dutta
----------------------- -------------------------------------
Title: President & CEO Title: Senior Vice President, Operations
----------------------- -------------------------------------
Date: December 24, 1992 Date: December 15, 1992
----------------------- -------------------------------------
-3-
CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO INFORMATION
CONTAINED WITHIN THE "[**]." SUCH
MARKED PORTIONS HAVE BEEN OMITTED FROM
THIS FILING AND HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
VIA FACSIMILE
May 30, 1995
Mr. Sanat Dutta
Executive Vice President
Ingram Micro Inc.
1600 E. St. Andrews Place
Santa Ana, CA 92799
Dear Sanat:
This letter describes the basis for an exclusive distribution agreement between
Radius and Ingram for the distribution of Radius' Macintosh compatible systems
in the United States and Canada. The first part of this letter builds on our
discussions during the meeting on Friday, May 19, 1995 by outlining the key
terms of this exclusive relationship. With these terms in place, Ingram and
Radius can commence exclusive distribution of Radius systems. The second part
of the letter outlines additional issues that we will work together to address
over the next 30 days.
A. EXCLUSIVE DISTRIBUTION TERMS
1. The content of the Systems Business Marketing Plan dated May 19, 1995 that
was prepared by Ingram ("Ingram's Proposal"), a copy which is enclosed, was the
basis of our May 19, 1995 meeting. It outlines the initial activities and
resources required to implement our exclusive relationship. Based on Ingram's
proposal, Radius appoints Ingram as its exclusive distributor for Radius branded
Macintosh compatible systems in the United States and Canada.
2. This appointment will remain in effect for two years but may be terminated
by either Radius or Ingram upon 120 days prior written notice.
3. Ingram's Proposal commits to an extensive plan for launching systems within
Ingram and to Ingram resellers at a cost to Radius of [**]. It also details an
additional [**] peripheral products marketing fund to be established by Radius.
Ingram and Radius also agree to [**] ongoing sales and marketing activities.
These activities will include [**] for reseller customers and may include [**]
for resellers. The [**] shall not be greater than [**] annually.
4. Radius and Ingram will develop a one year Sales and Marketing Plan by July
1, 1995 detailing our sales and marketing activities and associated budget
requirements. The funding described above will be allocated in accordance with
the Sales and Marketing Plan. All of these funds will be allocated and managed
in a manner that is consistent with Radius' current MDF process; however, the
funds will be based on a [**] described in the Sales and Marketing Plan.
CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO INFORMATION
CONTAINED WITHIN THE "[**]." SUCH
MARKED PORTIONS HAVE BEEN OMITTED FROM
THIS FILING AND HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
Mr. Sanat Dutta
May 30, 1995
Page 2 of 6
5. We have agreed to a dedicated sales and marketing organization, described
in Ingram's Proposal, and we will begin to implement that organizational plan
immediately.
6. Ingram agreed that it will not distribute any other Mac O/S licensee's
Macintosh compatible systems without written approval from Radius, which will
not be unreasonably withheld, so long as Ingram is the exclusive distributor for
Radius branded Macintosh compatible systems. This limitation will not, however,
preclude Ingram from distributing Macintosh compatible systems based on the
Common Reference Hardware Platform that may be developed in the future by those
vendors that currently distribute systems products through Ingram.
7. Ingram will sell Radius Macintosh compatible systems to other master
resellers and commercial distributors under Ingram's normal terms and conditions
should those organizations desire to purchase and resell such products.
8. Radius' pricing to Ingram will be based on the assumption that Ingram's
pricing and terms to its customers will be consistent with its pricing and terms
for other manufacturer's systems products. Radius anticipates setting a price
for its systems that is approximately [**]. However, Radius reserves the right
to determine pricing as it deems appropriate in light of overall business
conditions.
9. Radius may utilize Ingram Labs for certification testing for our systems
products and other peripheral and software products. The first [**] in testing
costs per year will be at Ingram's expense; any additional testing costs will be
paid by Radius. Ingram will develop a Radius [**] for Ingram's and Radius'
customers and field organizations. The [**]will be budgeted within the Sales
and Marketing Plan.
10. In addition to providing the reporting capabilities described in Ingram's
Proposal, Ingram will provide serial number reporting by [**] as part of its EDI
record electronic reporting.
11. For a period of [**] months beginning with the first shipment of Radius
system products to Ingram, Ingram will pay Radius within [**] of receipt of such
systems products. During this [**]month period, the price charged to Ingram for
Radius systems may be increased to reflect this [**]payment plan. Following
this [**]month period, all payments will be [**] and any change in the price
charged to Ingram for Radius systems reflecting the return to [**]payment terms
will not result in [**].
12. Radius will ship to Ingram distribution sites with all shipping costs [**].
[**]will determine the carrier for all [**]freight.
CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO INFORMATION
CONTAINED WITHIN THE "[**]." SUCH
MARKED PORTIONS HAVE BEEN OMITTED FROM
THIS FILING AND HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
Mr. Sanat Dutta
May 30, 1995
Page 3 of 6
13. Ingram will distribute Radius systems products only to resellers that have
been authorized by Radius under its Radius systems reseller authorization
process. Radius will not unreasonably withhold approval of additional resellers
that Ingram may suggest from time to time.
14. Radius' current build plan, product offerings, and pricing are described
below but may be changed by Radius in its discretion based on component
availability, development schedules, market conditions, and other factors.
In [**], Radius will ship to Ingram approximately [**] systems. These
systems will cost Ingram approximately [**] each.
In [**], Radius will ship Ingram [**] units. These units are [**] units
configured two ways: [**]configured priced at an estimated [**] and a
[**]configured system priced at an estimated [**]. We discussed those
configurations at our prior meetings. We anticipate that [**] units
will be [**]configured.
From [**], Radius will ship Ingram [**] units configured as indicated
above. We estimate that [**]of these units will be [**]configured and
the remainder will be [**]configured. The pricing will be the same as
noted above.
From [**], Radius will ship to Ingram an estimated [**]units. We expect
to build and ship [**] units which are [**]systems. [**]of these units
will be [**]configured and[**] will be [**]configured units. The
pricing for these units is estimated to be [**] and [**] respectively.
During this period we also expect to introduce the [**] system (which is
a [**] system) and [**] unit. Both of these systems will be
[**]configured [**]and are anticipated to include [**] of memory, a [**]
hard drive, and a CD. As we discussed, we may [**]that configuration
further upon your request. The pricing for these systems is estimated
to be [**] and [**] respectively. We expect to build and ship to Ingram
[**] systems and [**] systems during this period.
Beyond [**] our product offerings have not been determined; although we
expect to bring a [**] system to market in [**]referred to as [**]."
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO INFORMATION CONTAINED WITHIN THE
"[**]." SUCH MARKED PORTIONS HAVE BEEN
OMITTED FROM THIS FILING AND HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
Mr. Sanat Dutta
May 30, 1995
Page 4 of 6
15. The systems products developed by Radius described above will meet [**] and
will be of comparable quality to systems offered by other Ingram vendors.
Radius will attempt to obtain the highest possible ratings for its system
products in MACWORLD and MACUSER. Radius will also create market awareness
programs, and review such programs with Ingram prior to implementation, that are
consistent with the goal of creating demand for the above described volumes of
Radius systems products.
16. Ingram agrees to place firm purchase orders for all of the units that
Radius will manufacture through December not to exceed the unit numbers
described above. Radius and Ingram will prepare purchase orders for the period
from [**] together upon the acceptance of this letter by Ingram. Radius will
need to receive Ingram's firm purchase orders by [**] for the period from [**].
For all quarters after [**], Ingram agrees to place firm purchase orders at
least [**] in advance of each quarter. We anticipate that Radius will build and
ship to Ingram an estimated [**] total systems per quarter during calendar 1996.
Ingram agrees that it will provide Radius' manufacturing and financing partners
with documentation evidencing Ingram's purchase orders if Radius determines that
such documentation is needed to assure the continued supply of Radius systems.
17. All Ingram purchase orders will be non-modifiable and non-cancelable with
the following two exceptions: (i) Ingram may increase or decrease a purchase
order by up to [**] of the units to be shipped under that purchase order
provided that Ingram provides Radius with written notice at least [**] prior to
the scheduled ship date; and (ii) Ingram may increase or decrease a purchase
order by up to [**] of the units to be shipped under that purchase order
provided that Ingram provides Radius with written notice at least [**] prior to
the scheduled ship date. Ingram agrees that it will make no more than one
modification per purchase order. In the event the quantity ordered is increased
as a result of a purchase order change, Radius will use commercially reasonable
efforts to provide the additional units but will not be liable to Ingram if it
cannot do so.
18. Because this is an exclusive agreement, we have entered an extremely unique
alliance that creates a new business for both Ingram and Radius. As such, we
need to make certain that the marketing programs we have discussed are
effectively implemented so that all Radius systems delivered to Ingram are sold
through to end-users. Accordingly, we have agreed that there [**] for Radius
systems products. Defective units are, of course, exempt from this practice and
will be governed by Radius' service and exchange policies. If for any reason
our systems are not selling, we will work together to develop a plan to sell
them. In such an event, Radius would assess, and implement where appropriate, a
variety of strategies for improving sales such as [**].
CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO INFORMATION
CONTAINED WITHIN THE "[**]." SUCH
MARKED PORTIONS HAVE BEEN OMITTED FROM
THIS FILING AND HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
Mr. Sanat Dutta
May 30, 1995
Page 5 of 6
19. [**] for Radius' Macintosh systems products will be as follows: [**], and
Radius will [**] for, all units of Radius systems [**]. Inventory reports must
be received within thirty (30) days of the effective date of the price reduction
for Ingram to receive a price protection credit. Radius may conduct reasonable
auditing procedures to verify the inventory quantities subject to the credit.
20. The general manager of the Ingram/Radius exclusive alliance for Ingram will
be Sanat Dutta, Executive Vice President.
21. If Radius determines that its revenues will not reach its target for its
third fiscal quarter ending on June 30, 1995 as a result of the announcement of
this exclusive relationship[**].
B. ADDITIONAL ISSUES
There were several other issues and programs discussed on May 19, 1995 that
require further evaluation or will be implemented over time as described in the
Sales and Marketing Plan.
1. We discussed the creation of a [**] collaborative approach leveraging
Ingram's and Radius' corporate marketing organizations. The budget for these
activities has not yet been determined. However, the Sales and Marketing Plan
will include both the marketing activities and the budget requirements when
defined.
2. We discussed the creation of a "Radius Advantage" program utilizing
Ingram's [**]. This resource is critical to Radius, and we will begin to
evaluate the program immediately.
3. We discussed the creation of a [**] program administered through Ingram
logistics. Ingram will buy these [**]at [**]pricing.
4. We discussed the value of enhancing the Radius brand and how important it
is to have Ingram's assistance in that effort. To further that goal, we agreed
that it was to everyone's advantage to [**] for our resellers and end-users that
will include [**].
C. EFFECT OF LETTER
Section A of this letter ("Exclusive Distribution Terms") amends the
Ingram/Radius Distribution Agreement dated June 5, 1991 as amended on April 1,
1992 (the "Distribution Agreement") and is binding on the parties. In the event
that any of the terms of Section A conflict with the Distribution Agreement,
the provisions of Section A will prevail. Otherwise, the terms and conditions
of the Distribution Agreement
CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO INFORMATION
CONTAINED WITHIN THE "[**]." SUCH
MARKED PORTIONS HAVE BEEN OMITTED FROM
THIS FILING AND HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
Mr. Sanat Dutta
May 30, 1995
Page 6 of 6
remain in effect. Please sign below to indicate that you are in agreement with
the terms set forth in Section A.
While the terms of Section A are binding, we will work together to prepare by
July 1, 1995 a new distribution agreement to both further document the terms
that we have agreed to and to address any other issues of concern that may arise
as we begin our exclusive relationship.
On behalf of the entire Radius organization, I want to congratulate Ingram for
an incredibly fast response to this proposition and to Radius' questions and
concerns. Your management team has approached this opportunity in an extremely
professional manner. We look forward to a mutually profitable relationship that
will set a new industry standard for product distribution and marketing.
Personal regards,
RADIUS INC.
/s/ J. Daniel Shaver
J. Daniel Shaver
Vice President Worldwide Sales and Marketing
AGREED AND ACCEPTED BY:
Ingram Micro Inc.
Signature: /S/ SANAT K. DUTTA
--------------------
Name: SANAT K. DUTA
-------------------------
Title: EXECUTIVE VICE PRESIDENT
------------------------
Date: JUNE 2, 1995
-------------------------
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO INFORMATION CONTAINED WITHIN
THE "[**]." SUCH MARKED PORTIONS HAVE BEEN
OMITTED FROM THIS FILING AND HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
July 14, 1995
Mr. Sanat K. Dutta
Executive Vice President
Ingram Micro Inc.
1600 E. St. Andrew Place
P.O. Box 25125
Santa Ana, CA 92799-5125
Dear Sanat:
This is to confirm our most recent discussion regarding [**] and [**].
Radius has agreed to allow Ingram Micro to distribute [**] products provided
that (i) [**]products are designed to be [**] with a suggested retail price of
[**], and (ii) do not directly compete with a product offered by Radius.
In consideration for the above, Radius may use the distribution services of [**]
for the [**] market provided that [**] is not given any marketing or pricing
advantage over Ingram Micro.
If this letter correctly states our understanding and agreement, please sign the
enclosed copy of this letter and return it to me.
Regards, Agreed:
/s/ J. Daniel Shaver /s/ Sanat K. Dutta
-------------------------------- ----------------------------------------
J. Daniel Shaver Sanat K. Dutta
V.P. Worldwide Sales & Marketing Executive Vice President
Radius Inc. Ingram Micro Inc.