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Start-Up Agreement - Ingram Micro Inc. and Sonic Foundry

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                              START-UP AGREEMENT

THIS INGRAM MICRO START-UP AGREEMENT("Agreement"), dated this 16th day of 
October, 1997, is made by and between INGRAM MICRO INC. ("Ingram"), a Delaware 
corporation, with its principal place of business at 1600 E. St. Andrew Place, 
Santa Ana, California 92705 and SONIC FOUNDRY, a Maryland corporation, with its 
principal place of business at 754 Williamson Street, Madison, Wisconsin 55703 


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 Ingram's 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 Ingram's 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 Ingram's
     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 
     Ingram's 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. Ingram's 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 mark 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 Ingram 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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                                            Ingram Micro Inc. Start-Up Agreement
5.   Returns of Product.
     a. Ingram 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

     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.

     c. Ingram's 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. Ingram's selling prices to its resellers shall be
     at Ingram's 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 Ingram's customers on the date the reduced
     price is first offered by Vendor if Ingram's customers request a credit
     resulting from Vendor's price reduction. Should any of Ingram's 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

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 Ingram's 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. Ingram's marketing and advertising costs incurred in
     accordance with such agreement shall be pre-approved by Ingram's 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.

     (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

     (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 Ingram's 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 Ingram's 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

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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.

INGRAM MICRO INC.                      SONIC FOUNDRY

By:    /s/ Victoria L. Cotten          By:    /s/ Roy Elkins
       -----------------------------          ----------------------------------
Name:  Victoria L. Cotten              Name:  Roy Elkins
       -----------------------------          ----------------------------------
Title: Sr. Vice President Purchasing   Title: VP Sales & Marketing
       -----------------------------          ----------------------------------
Date:  2/25/98                         Date:  2/22/98        
       -----------------------------          ----------------------------------

A  -  Guide To Bar Code: The Product Label

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