Vendor Agreement - Best Buy Co. Inc. and TiVo Inc.
VENDOR AGREEMENT
Effective Date: March 3, 2002.
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This Vendor Agreement ("Agreement") is between:
Best Buy Co., Inc. (on behalf of its TiVo Inc. ("Vendor")
designated affiliates and subsidiaries)
7075 Flying Cloud Drive and 2160 Gold Street
Eden Prairie, MN 55344 Alviso, CA 95002
This Agreement is intended to set forth the terms and conditions applicable to
the purchase of goods from Vendor and their distribution, marketing and resale
by Best Buy Co., Inc. and its designated affiliates and subsidiaries.
1. License To Sell Products
1.1 Appointment of Authorized Dealer. Vendor appoints Best Buy Co., Inc., and
each of its designated affiliates and subsidiaries (collectively, "Dealer") as
an authorized dealer. The designated affiliates and subsidiaries shall include
Best Buy Stores, L.P., BestBuy.com, Inc., and Musicland Stores Corporation and
its subsidiaries, or as updated from time to time upon notice to Vendor
("Affiliates").
1.2 Territory. Vendor grants Dealer an exclusive retail distribution license to
distribute all hardware products Vendor sells to Dealer ("Product" or
"Products"), to end-users and commercial buyers in the United States (and its
territories), and other territories as agreed from time to time through Dealer's
sales channels including but not limited to its present and future retail stores
as outlined in the Vendor Program Agreement attached hereto, Internet web sites,
distribution centers and mail order distribution centers.
2. Pricing and Taxes
2.1 Prices. Vendor will sell the Products to Dealer at the prices then in effect
on its current price list, as may be changed from time to time, or as otherwise
agreed between the parties. All prices, benefits and allowances offered to
Dealer shall not be less favorable than those prices, benefits or allowances
extended to any other customers of Vendor. Vendor's prices do not include sales,
use, excise, or similar taxes.
2.2 Taxes. The amount of any valid present or future sales, use, excise, or
other similar tax that is attributable to Dealer shall be paid by Dealer; or in
lieu thereof, Dealer shall provide Vendor with a tax exemption certificate
acceptable to the taxing authorities.
2.3 No Minimum Purchase Requirement. There shall be no minimum purchase or
inventory commitments required of Dealer and Dealer does not guaranty any
particular sales volume with respect to Vendor's Products.
3. Purchase Orders
Orders for Vendor's Products shall be initiated by electronic purchase orders
submitted by Dealer and shall be binding upon the parties upon acceptance by
Vendor. Vendor shall be deemed to have accepted a purchase order if Vendor fails
to reject the purchase order by notifying Dealer within [*] of its receipt
thereof, not including weekends and nationally recognized holidays. Dealer will
provide Vendor with a rolling [ * ] forecast of anticipate orders. The parties
agree to use commercially reasonable efforts to leave unchanged a similar [ *
]rolling forecast. Absent the occurrence of a Force Majeure event, purchase
orders issued by Dealer cannot be canceled within [ * ] of scheduled delivery.
4. Payment
4.1 Invoices. Vendor will send an electronic invoice to Dealer no earlier than
the Product shipment date in connection with each accepted and fulfilled
purchase order. Dealer will pay amounts due in each such invoice pursuant to the
credit terms established by the parties, which shall be set forth in the Vendor
Program Agreement attached as an addendum hereto, as further described in
Section 10. The designated credit term shall commence on the later of (a) the
date Dealer receives Products at the FOB point specified in Section 5, or (b)
the date Dealer is authorized to resell the applicable Products, i.e. the
"street date." Payment shall not be considered late by Vendor for purposes of
calculating early payment discounts if payment is sent by Dealer within one (1)
week of the due date or if payment is delayed because of an indebtedness of
Vendor to Dealer. No interest or other charges shall be payable by Dealer upon
this Agreement, or any resulting invoice,
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[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
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whether claimed by reason of late payment or otherwise. All transactions must be
valued and paid in United States currency.
4.2 Right to Make Offset. Dealer may offset from Vendor's invoice any
indebtedness of Vendor to Dealer, whether or not related to this Agreement.
Vendor agrees to not contest Dealer's deduction if Vendor fails to send a
written denial thereof, including all supporting documentation, to Dealer within
ninety (90) days of the date of deduction (Dealer's check date). Such written
denial shall be made by Vendor by submitting notice to Dealer via Dealer's
standard Dispute Control Document, available at Dealer's Vendor Extranet web
site, www.extendingthereach.com
4.3 Debit Balances. If Vendor is indebted to Dealer but there is no outstanding
balance due to Vendor, Vendor shall pay the amount due to Dealer via check or
wire transfer in full within thirty (30) days of receipt of notification thereof
from Dealer. Dealer reserves the right to charge Vendor interest at the rate of
1.5% per month for any debit balance not paid within such time. If the amount in
question is disputed, the parties agree to work in good faith to reconcile the
matter so that payment to Dealer of any undisputed amount will be made within
sixty (60) days of Dealer's original notice to Vendor. In no event shall Dealer
be obligated to take a credit against future purchases.
4.4 Purchase Agents. Vendor will submit its invoices in the format and to the
locations/entities designated by Dealer. Vendor understands that Dealer may
utilize one or more purchasing agents to initially assume title to all Products,
process invoices, and pay applicable taxes. All such purchase transactions shall
be governed exclusively by the terms and conditions of this Agreement and Best
Buy Co., Inc. hereby guarantees the performance required of any such purchasing
agent.
5. Shipping
5.1 Shipping Terms: The parties hereby agree to the ground shipment terms
selected below:
[X] FOB Destination, Freight Prepaid by Vendor. Vendor shall be responsible for
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carrier selection and routing instructions. Vendor shall pay all costs and
expenses incurred prior to the FOB point, including without limitation,
insurance, freight, and any notification, sort and segregation charges.
Title and risk of loss passes upon delivery at the destination specified by
Dealer, which may include but is not limited to its stores, distribution
centers, and third-party fulfillment providers. Vendor is encouraged to
utilize Dealer's preferred carriers to improve on-time performance,
minimize transit times and reduce the need for expedited shipments.
[ ] FOB Origin, Freight Collect and Allowed. Dealer shall be responsible for
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carrier selection, routing instructions and pick-up appointments at
Vendor's domestic origin facility. In addition, Dealer is responsible for
carrier freight payments, submitting freight claims for loss and damage,
scheduling appointments at destination, and tracking and tracing freight in
transit. Title and risk of loss passes upon delivery at Vendor's domestic
origin shipping dock. Vendor agrees to have Products in ship-ready
condition on the ship date specified in the applicable purchase order and
provide forty-eight (48) hour notice of pick-up request to Dealer for
truckload shipments and twenty-four (24) hour notice of pick-up request to
Dealer for less-than-truckload shipments. The attached Collaborative
Transportation Agreement, as amended from time to time by the parties, if
applicable, contains additional terms that define the parties'
responsibilities under this shipping arrangement.
5.2 Time is of the Essence. TIME IS OF THE ESSENCE OF THIS AGREEMENT WITH
RESPECT TO THE SPECIFIED DATES FOR SHIPMENT OF PRODUCT; provided that the
parties will work together to mitigate any damages or adverse effects caused by
any shipment delays.
5.3 Expedited Shipments. Vendor will pay any additional freight expenses
incurred in connection with an expedited shipment arising from a shipment delay
or other cause attributable to Vendor.
5.4 Other Charges. Any charges related to special requests of Vendor to carrier,
including loading assistance, detention, or any other instructions, prior to
title passage, shall be the responsibility of the Vendor.
5.5 Direct Import Addendum. Terms relating to Products that are imported by Best
Buy, if applicable, are set forth in the attached Direct Import Addendum, which
is incorporated herein by reference.
6. Price Protection; Notice of Price Increases
6.1 Price Protection. If Vendor issues a price decrease to the Products (a) the
lower price shall be reflected on Vendor's invoice with respect to any price
decrease that occurs prior to shipment and (b) Dealer will receive price
protection credit with respect to Dealer's on-hand inventory existing on the
effective date of the price decrease, which shall include Product wherever
located (e.g., inventory located in stores, warehouses, return centers and
Product in transit between these locations or from Vendor to Dealer). Dealer
will submit a cost adjustment claim to Vendor that is supported by documentation
that reflects Dealer's inventory records of Product subject to price protection
credit.
6.2 Notice of Price Increases. Except as otherwise agreed, Vendor must give
Dealer ninety (90) days prior written notice to Dealer of the effective date of
any price increases. A price increase will not affect Dealer's cost on a
purchase order accepted by Vendor prior to the
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effective date of such price increase.
7. Returns
7.1 Return Rights. Dealer shall have the right to return at Vendor's expense,
and for full credit or refund of Dealer's cost, any Products (a) against which a
legitimate and credible allegation is made against Dealer that the use of such
Products infringes on any patent, trademark, trade secret, copyright, right of
privacy or publicity, or any other tangible or intangible proprietary or
intellectual property right; (b) that are not manufactured, packaged, or labeled
in accordance with industry standards and/or all applicable laws, ordinances,
rules, and regulations; (c) that are shipped in error or in non-conformance with
Dealer's purchase order; (d) that have caused injury to person or property; or
(e) that are damaged or defective.
7.2 Defective Products. For the purposes of this Agreement, the term "defective"
shall include Product that is visually or operationally defective and Product
that has been returned by a customer in accordance with Dealer's end-user return
policy. Dealer's end-user return policy allows for the return of most Products
with or without cause for a specified period after purchase, regardless of
whether the Product packaging has been opened or whether the Product is actually
defective.
7.3 Return Authorizations. If a Vendor return authorization is first required by
either party prior to Dealer's return of Product to Vendor, Vendor agrees to
provide such return authorization to Dealer within forty-eight (48) hours of
Dealer's request. Vendor shall allow delivery of return Product as of the day
the return authorization is issued to Dealer. If Vendor requires that Dealer
make an appointment to deliver returned Product, such appointment will be
provided by Vendor within three (3) days of the carrier's expected arrival time.
If Vendor receives Product from Dealer that Vendor believes is non-returnable,
Vendor will return such Product to Dealer's originating Product returns location
within ninety (90) days of Vendor's determination and the shipment cartons must
reference the original return shipment's return authorization or
return-to-vendor number. Product returned to Vendor shall be delivered in their
original, undamaged containers, except that Vendor shall not consider a
container with a removed UPC to be damaged for purposes of calculating the
return credit if such UPC was removed by an end-user in connection with a
Vendor-sponsored rebate offer.
7.4 Additional Return Rights. Additional or different return rights may be
specified in a Vendor Program Agreement (e.g., stock-balancing, defective
allowances) as further described in Section 10. If the parties agree to a
defective allowance, such allowance will replace Dealer's right to return
defective Products as provided herein, except that if the actual defective rate
for a particular Product exceeds the applicable allowance, Dealer may either
adjust the allowance accordingly or return the excess defective Product to
Vendor for full credit or refund. A defective allowance shall have no effect
upon Dealer's return rights as otherwise provided in this Agreement.
7.5 Warranty Returns; Appointment of Authorized Return Center. Vendor appoints
Dealer as an "Authorized Return Center" for the return by end-users of those
Products under a manufacturer's warranty. Except as may otherwise be agreed in a
comprehensive Product Service Agreement, which shall be an addendum hereto as
further described in Section 11, Dealer will (a) receive the in-warranty Product
from the end-user, (b) provide the end-user with an in-store credit ("In-Store
Credit"), and (c) send the end-user's defective Product to Vendor after
receiving Vendor's return authorization, if required. The appointment of Dealer
as an Authorized Return Center is non-exclusive and shall include all present
and future Dealer locations which Dealer designates to accept the Product
returns. This appointment of Dealer as an Authorized Return Center shall survive
the expiration or termination of this Agreement to the extent necessary to
satisfy end-user warranty requests.
8. Discontinued Product
A "Discontinued Product" means any Product that Vendor has stopped manufacturing
or any Product that undergoes a change in appearance or packaging. Vendor agrees
to provide Dealer with at least ninety (90) days advance written notice of the
occurrence of a Discontinued Product, or as soon as possible in the event that
the discontinuance is caused by actions taken by a component part supplier of
Vendor. Upon notice of such Discontinued Product, Dealer may, without penalty or
liability, cancel any outstanding purchase orders pertaining to the Discontinued
Product. With respect to Dealer's existing inventory of Discontinued Product,
Dealer may, in its sole discretion, either return such Discontinued Product at
any time to Vendor for full credit or refund, or Vendor and Dealer shall
negotiate a cost markdown of such existing inventory.
9. Vendor Performance and Operations Standards
Other terms that are relevant to doing business with a particular operating
division of Dealer or Affiliate may be found in the Vendor Performance and
Operations Standards, which is a part of this Agreement and incorporated herein
by reference. The Vendor Performance and Operations Standards may be accessed at
Dealer's Vendor Extranet web site, www.extendingthereach.com The Vendor
Performance and Operations Standards includes but is not limited to information
concerning Electronic Data Interchange (EDI), Shipping and Routing Guides and
the Shipping Performance Management Program, all of which may be updated from
time to time by Dealer upon notice to Vendor.
10. Vendor Program Agreement
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Dealer and Vendor may agree upon certain business terms from time to time
concerning matters such as Products, pricing, market development/cooperative
advertising/merchandising funds, invoice credit terms, stock rotation, volume
rebates, new store allowances, etc. Such terms shall be contained in one or more
Vendor Program Agreements, which shall be considered an addendum hereto, as
amended from time to time by the parties. In the event of conflict between
business terms of any Vendor Program Agreement and this Agreement, the business
terms contained in such Vendor Program Agreement will control.
11. Product Service and Warranty Repairs
Dealer is committed to meeting its customers' high expectations concerning
post-sale service and warranty repairs. A comprehensive Product Service
Agreement between the parties may be necessary to ensure customer satisfaction.
If applicable, the attached Product Service Agreement controls the servicing and
warranty repairs of the Products and must be executed by both parties prior to
or simultaneous with the execution of this Agreement.
12. Trademarks; Vendor-Provided Content
12.1 Trademark Use. Vendor grants Dealer a license to use, exhibit, excerpt,
reproduce, publish, publicly perform and transmit via the Internet and otherwise
use all trade names, trademarks, and service marks associated with the Products
to promote and sell the Products. This Agreement does not grant Vendor any right
or license to use Dealer's trade names, trademarks or service marks, promotional
material, copy, graphics, themes, strategies, inventions, program, and files
without first obtaining Dealer's express written approval. Dealer agrees to
comply with Vendor's trademark usage guidelines that are attached hereto, as may
be modified from time to time; provided that Vendor shall give Dealer ninety
(90) days notice of any material modification to such guidelines and Dealer and
Vendor shall negotiate in good faith, a commercially reasonable amount of time
for Dealer to implement such changes. Notwithstanding the foregoing, if any
modification by Vendor is likely to result in a significant adverse or
detrimental economic impact on Dealer, Dealer will not be required to implement
such modification while such impact exists. Vendor has and shall retain
exclusive ownership of Vendor's marks. Neither Dealer nor its affiliates shall
contest or challenge or do anything inconsistent with, Vendors exclusive
ownership of Vendors marks.
12.2 Vendor Content. Vendor may provide to Dealer, without limitation, Product
specifications, images, and other textual, graphical and/ or multimedia content
regarding the Products for use in preparing advertising and promotional material
("Vendor Content"). Subject to any limitations which Vendor previously
communicated to Dealer in writing. Vendor hereby grants Dealer a license to use,
exhibit, excerpt, reformat, modify, reproduce, publish, publicly perform and
transmit via the Internet and otherwise use such Vendor Content for the purpose
of advertising and promoting the Products.
12.3 Use After Termination. Upon termination of this Agreement, Dealer may
continue to advertise and promote the Products, using the Vendor's trade names,
trademarks, service marks and Vendor Content until inventory depletion.
13. Confidentiality
This Agreement and any information marked as confidential or, regardless of form
(written/electronic/oral) or marking, is of the nature that a reasonable person
would understand its owner would not want it disclosed to the public will be
considered to be Confidential Information. Further, Confidential Information
shall also include (a) any document or data transaction between the parties; (b)
matters of a technical nature such as trade secret processes or devices,
know-how, data, formulas, inventions (whether or not patentable or copyrighted),
specifications and characteristics of products or services planned or being
developed, and research subjects, methods and results, (c) matters of a business
nature such as information about costs, profits, pricing, policies, markets,
sales, suppliers, customers (e.g., names and addresses), product plans, and
marketing concepts, plans or strategies, (d) matters relating to project
initiatives and designs, (e) matters of a human resources nature such as
employment policies and practices, personnel, including individual names,
addresses, and telephone numbers; compensation and employee benefits, (f) other
information of a similar nature not generally disclosed to the public. Each
party agrees not to disclose Confidential Information except to employees, or a
third party subject to a similar confidentiality agreement, which have a need to
know to perform their responsibilities. Each party agrees to take at least the
same precautions to protect Confidential Information as such party would utilize
to ensure the protection, confidentiality and security of its own confidential
information. Each Party, at it's own expense, will properly use security
procedures which are reasonably sufficient to ensure that all transmissions of
documents are authorized and to protect its business records and data from
improper access. Confidential Information shall not include any information
which (a) is or becomes generally known or available through no act or failure
to act by the receiving party; (b) is already known by the receiving party as
evidenced by its written records; (c) is hereafter rightfully furnished to the
receiving party by a third party without restriction on disclosure; or (d) is
disclosed in response to a valid order by a court or other governmental body, or
pursuant to the rules and regulations of any stock exchange or stock association
in which the securities of the receiving party may be traded from time to time,
provided that the receiving party provides the disclosing party with prior
written notice of such disclosure as soon as reasonably possible in order to
permit the disclosing party to seek confidential treatment of such information.
Upon the expiration or earlier termination of this Agreement, a party may, in
writing, request either the prompt return or destruction, and a written
certification of such destruction, of any Confidential Information provided to
the other party. Each party further acknowledges that monetary damages may not
alone be a sufficient remedy for unauthorized disclosure of Confidential
Information and that the non-disclosing party shall be entitled to seek all
remedies and damages available in law and equity, including but not limited to
such injunctive relief as may be deemed proper by a court of competent
jurisdiction.
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14. Additional Obligations of Vendor
14.1 Product Materials. Vendor shall provide to Dealer, at no charge, adequate
copies of any marketing and technical information, service manuals, detailed
Product specifications, end-user warranties and other Product data and
materials.
14.2 Training. Vendor will assist with the training of Dealer personnel on
Dealer's premises as reasonably necessary to ensure that Dealer's sales and
service personnel will be adequately knowledgeable with respect to the Products.
14.3 Product Samples. If requested, Vendor must deliver ten functioning Product
samples with lifetime service enabled, and two non-functioning Product Samples
on a timely basis and at no cost to Dealer.
14.4 Compliance with Laws. Vendor shall notify Dealer within ten (10) days
regarding the existence and nature of Vendor's knowledge of any possible
material non-compliance with applicable laws, or its notice of a claim from a
consumer (which, individually or in the aggregate, may reasonably be expected to
result in material liability to Vendor and/or Dealer) that a Product is
defective or does not comply with all applicable laws.
15. Representations and Warranties
15.1 Vendor's Representations and Warranties. Vendor represents and warrants to
Dealer that (a) it has the authority to enter into this Agreement and to sell
the Products to Dealer, free and clear of all liens, charges, encumbrances, or
other restrictions, and that the persons signing this Agreement on behalf of
Vendor are authorized to sign; (b) the Products shall be free from defects in
material and workmanship, and shall be fit and safe for the use(s) normally and
reasonably intended; (c) the Products are of merchantable quality and shall
perform in conformance with specifications and Vendor samples; (d) it will
provide a manufacturer's warranty to end-users of the Products that is generally
consistent with or superior to industry standards; (e) it will comply with all
applicable federal, state, and local laws and regulations in performing its
obligations under this Agreement, including but not limited to laws and
regulations pertaining to product design, manufacture, packaging and labeling
and, if applicable, importation and the Foreign Corrupt Practices Act; and (f)
the Products are not produced, manufactured, assembled or packaged by the use of
forced labor, prison labor or forced or illegal child labor and that the
Products were not trans-shipped for the purpose of mislabeling, evading quota or
country of origin restrictions or for the purpose of avoiding compliance with
forced labor, prison labor or child labor laws.
15.2 Dealer's Representations and Warranties. Dealer represents and warrants to
Vendor that (a) it has the authority to enter into this Agreement, and that the
persons signing this Agreement on behalf of Dealer are authorized to sign; (b)
it will comply with all applicable federal, state, and local laws; (c) it will
exert commercially reasonable efforts to promote and sell the Products
consistent with Dealer's sales, marketing and merchandising plans, as may be
amended from time to time in Dealer's sole and absolute discretion, and (d) it
will not make false or misleading representations about the product.
16. Term and Termination
16.1 Term. This Agreement will be effective for an initial term commencing on
the Effective Date hereof and ending on February 1, 2003, or unless sooner
terminated as provided herein.
16.2 Termination. Either party may terminate this Agreement at any time without
cause upon sixty (60) days written notice to the other party. In the event a
party is in material breach of this Agreement, this Agreement may be terminated
immediately by the non-breaching party, provided that notice describing the
breach has been provided to the breaching party and the breaching party has
failed to cure such breach within thirty (30) days of its receipt thereof.
16.3 Events on Termination.
(a) Without Cause. Upon expiration or the termination of this Agreement
without cause, the parties shall agree to either (i) completion by Dealer of
sell-through of the remaining Product inventory; or (ii) return of the remaining
Product inventory to Vendor, for which Dealer shall receive a refund, at cost,
less one-half (1/2) of the return freight expenses.
(b) For Cause. Upon termination of this Agreement for cause, the parties
shall agree to either (i) completion by Dealer of sell-through of the remaining
Product inventory; or (ii) return of the remaining Product inventory to Vendor
at the breaching party's expense, and Dealer shall receive a refund at cost for
all returned Products.
17. Indemnification
Vendor will indemnify, defend, and hold Dealer, its parent, affiliates, agents
and employees, harmless from and against any and all claims, actions,
liabilities, losses, costs and expenses arising from or in connection with (a)
Vendor's breach of this Agreement, including but limited to its representations
and warranties; (b) acts or omissions of Vendor relating to the Products which
includes, but is not limited to claims that the Products, or use thereof, caused
personal injury, death, or real or personal property damage; (c) a Product
recall, whether initiated by
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Vendor or a valid order by a court or other governmental body; (d) claims that
the Products or any Vendor Content infringe, misappropriate or injure a third
party's intellectual property or proprietary rights; (e) false or misleading
Product specifications or other Vendor Content provided to Dealer to promote and
sell the Products; and (f) Vendor's failure to promptly perform its obligations
in connection with a manufacturer's rebate offer. Dealer agrees to give Vendor
prompt written notice of any claims, to tender the defense to Vendor, and to
grant Vendor the right to control settlement and resolution. Vendor agrees to
pay all costs of liability, settlement and defense, including reasonable
attorney fees and costs.
If Vendor receives written notice of an alleged infringement or believes that a
Claim of infringement if likely, Vendor may, at its sole option and expense: (i)
procure for Dealer the right to continue to use Vendor's Product at Vendor's
sole expense; (ii) modify Vendor's Product so that it no longer infringes; (iii)
replace the infringing portion of Vendor's Product with material that does not
infringe; or (iv) terminate this Agreement.
Dealer will indemnify, defend, and hold Vendor, its parent, affiliates, agents
and employees harmless from and against any and all claims, actions,
liabilities, losses, costs and expenses arising from or in connection with
Dealer's breach of this Agreement, including false or misleading statements made
by Dealer about Vendor's Product. Vendor agrees to give Dealer prompt written
notice of any such claims, to tender the defense to Dealer, cooperate fully with
any investigative or other requests, and to grant Dealer the right to control
settlement and resolution. Dealer agrees to pay all costs finally awarded by a
court of competent jurisdiction or agreed in a settlement of any such Claim,
including reasonable attorney fees and costs.
18. Insurance
Vendor agrees to procure and maintain a minimum amount of $5,000,000 of
appropriate insurance against the types of claims for which Vendor has agreed to
indemnify Best Buy, to name BEST BUY CO., INC., ITS SUBSIDIARIES & AFFILIATES as
an Additional Insured, and to supply Best Buy with a Certificate of Insurance
that names BEST BUY CO., INC. ITS SUBSIDIARIES & AFFILIATES as an Additional
Insured, and which also provides that such insurance will not be canceled or
changed unless at least thirty (30) days prior written notice has been given to
Dealer of such changes. Dealer does not represent or warrant that the coverage
of insurance specified herein is sufficient or adequate to protect Vendor's
interests or liabilities. If Vendor fails to procure or at any time fails to
maintain insurance as required by this section, Dealer may immediately terminate
this Agreement.
19. Assignment
19.1 Assignment. This Agreement may not be assigned by either party without
first obtaining the other party's express written consent, which consent shall
not be unreasonably withheld; provided, however, that Dealer may assign this
Agreement, without obtaining Vendor's express written consent, to (a) a
successor corporation resulting from a merger, consolidation, or non-bankruptcy
consolidation or to a purchaser of all or substantially all of Dealer's assets
or a majority, or controlling interest in Dealer's voting stock, provided that
the purchaser's net worth at the time of purchase is equal to or greater than
that of Dealer, and further provided that the purchaser is not a competitor of
Vendor; and (b) a present or future subsidiary or affiliate. Any attempted
assignment in violation of this Agreement shall be null and void.
19.2 Assignment of Accounts Receivable. If Vendor assigns payments to an
assignee/factor, Vendor understands and agrees that Vendor and the
assignee/factor will be required to sign Dealer's standard acknowledgment form
to assure Dealer that the assignee/factor understands the rights and obligations
being assigned, including the right of Dealer to make offsets.
20. Audit Rights; Claims
20.1 Audit Rights. Each party shall have the right to, upon reasonable prior
written notice and at reasonable times during regular business hours, audit the
other party to assure compliance with the terms and conditions of this
Agreement. If the audit reveals that a party is not performing in material
compliance with the terms of this Agreement, then, in addition to any other
legal and equitable rights and remedies available, the party not in compliance
shall reimburse the other for the reasonable costs of the audit.
20.2 Claims. Except as otherwise provided in this Agreement, claims by either
party, however asserted, shall be commenced within two (2) years from the date
the cause of action accrues.
21. Conflict of Interest and Code of Conduct Policies
Vendor agrees to respect and abide by Dealer's conflict of interest and code of
conduct policies, which may be provided to Vendor periodically and amended from
time to time by Dealer. Vendor should contact Dealer's Open Line
(1-800-520-1132) for information concerning Dealer's policies and to discuss any
ethical or conduct concerns that they may have as a result of their contact with
Dealer personnel. Vendor understands and acknowledges that Dealer's conflict of
interest and code of conduct policies address Vendor-paid travel, gifts and
gratuities, offering and accepting bribes, family members and close personal
relationships involving employees of both parties, personal investments in the
other party, Vendor-sponsored charitable and other events, Vendor product
samples, Vendor promotional copies,
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direct personal purchases from Vendors by Dealer employees, and awards,
incentives and other spiffs from vendors. Vendor agrees to avoid conflict of
interest situations with Dealer, to deal at arms length with Dealer, and to
contact Dealer's Open Line to address Vendor's concerns. Dealer similarly agrees
to abide by Vendor's policies concerning these subject matters.
22. Force Majeure
Neither party shall be in breach of this Agreement solely due to causes beyond
the control and without the fault or negligence of such party. Such causes may
include, but are not restricted to, acts of God or of a public enemy, acts of
the government in either its sovereign or contractual capacity, fires, floods,
epidemics, quarantine restrictions, strikes, freight embargoes, power failure,
or failure of the U.S. postal system, but in every case the failure to perform
must be beyond the control and without fault or negligence of the party failing
to perform. Each party must inform the other of any Force Majeure event within
five (5) business days of its occurrence.
23. Notices
All notices, requests, demands and other communications which are required or
may be given under this Agreement shall be in writing and shall be deemed to
have been duly given if hand-delivered or mailed by either registered or
certified mail, return receipt requested, or by a nationally recognized
overnight courier service, receipt confirmed. In the case of notices via
first-class mail or courier service, notices shall be deemed effective upon the
date of receipt. Notices shall be addressed to the parties as set forth below,
unless either party notifies the other of a change of address, in which case the
latest noticed address shall be used:
<TABLE>
<CAPTION>
Notices To Vendor: Notices To Dealer:
------------------ ------------------
<S> <C>
TiVo Inc. Best Buy Co., Inc.
2160 Gold Street 7075 Flying Cloud Drive
Alviso, CA 95002 Eden Prairie, MN 55344
Attn: Senior Vice President & General Manager, TiVo Service Attn: Senior Vice President, Merchandising
Copy To: Vice President, Marketing & Sales Copy To: Senior Buyer,
---------------------------
Copy To: General Counsel Copy To: General Counsel, Legal Department
</TABLE>
24. General
24.1 Relationship of the Parties. The relationship between the parties shall be
that of independent contractor. Nothing herein shall be construed as creating or
constituting the relationship of employer/employee, franchiser/franchisee,
principal/agent, partnership, or joint venture between the parties.
24.2 Governing Law; Jurisdiction. This Agreement shall be governed by and
interpreted under the laws of the State of Minnesota. Vendor and Dealer
expressly consent and submit to the exclusive jurisdiction of the state and
federal district courts located in Minneapolis, Minnesota.
24.3 Enforceability. If any provision of this Agreement is held to be
unenforceable by a court of competent jurisdiction, such provision shall be more
narrowly and equitably construed so that it becomes legal and enforceable, and
the entire Agreement shall not fail on account thereof and the balance of the
Agreement shall continue in full force and effect.
24.4 No Waiver. Any of the provisions of this Agreement may be waived by the
party entitled to the benefit thereof. Neither party will be deemed, by any act
or omission, to have waived any of its right or remedies hereunder unless such
waiver is in writing and signed by the waiving party, and then only to the
extent specifically set forth in such writing. A waiver with reference to one
event will not be construed as continuing or as a bar to or waiver of any other
right or remedy, or as to a subsequent event.
24.5 Counterparts and Electronics Signature. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original but all of
which together will constitute one and the same instrument. This Agreement may
be executed by facsimile or other "electronic signature" (as defined in the
Electronic Signatures in Global and National Commerce Act of 2000) in a manner
agreed upon by the parties hereto.
24.6 Entire Agreement; Amendments. This Agreement, including any addenda or
exhibits attached hereto, contains the entire Agreement between the parties with
respect to the subject matter hereof, supersedes all prior agreements,
negotiations and oral understandings, if any, and may not be amended,
supplemented, or modified in any way, except by an amendment in writing and
signed by authorized representatives of the parties hereto. No amendment shall
be effected by the acknowledgement or acceptance of a purchase order, invoice,
or other forms stipulating additional or different terms. This Agreement shall
inure to the benefit of and be binding upon each of the parties and their
respective successors, assigns, heirs, executors, administrators, trustees and
legal representatives.
24.7 Reservation of Rights. Duties and obligations imposed by this Agreement and
rights and remedies available hereunder shall be in addition to and not a
limitation of duties, obligations, rights and remedies otherwise imposed or
available by law except as otherwise provided herein. In particular, the rights
and remedies available to Dealer under the Uniform Commercial Code are
specifically incorporated
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<PAGE>
herein. When Dealer has exercised the right to reject a nonconforming shipment
or elected to return Product to Vendor as provided herein, Vendor shall not have
the right to cure improper tender which might otherwise be available under law.
24.8 Headings. Headings used in this Agreement are for the purposes of
convenience only and shall not affect the legal interpretation of this
Agreement.
24.9 Draftsmanship. Each of the parties hereto has been represented by its own
counsel. In the event of a dispute, no provision of this Agreement shall be
construed in favor of one party and against the other by reason of the
draftsmanship of this Agreement.
24.10 Survival. The expiration or termination of this Agreement shall not
terminate vested rights of either party from any liabilities or obligations
incurred under this Agreement prior to or which by their nature are intended to
survive expiration or termination, including but not limited to provisions
relating to confidentiality, indemnification, returns, and proprietary rights.
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<PAGE>
Addenda (check if applicable)
Each checked Addendum is hereby incorporated into and made a part of this
Agreement:
<TABLE>
<S> <C>
[X] Vendor Program Agreement [ ] Configure to Order Agreement
[ ] Product Service Agreement [ ] Consignment Agreement
[X] Certificate of Insurance [ ] Collaborative Transportation Agreement
[X] Vendor Performance and Operations Standards [ ] Direct Import Addendum
(available at www.extendingthereach.com)
</TABLE>
IN WITNESS WHEREOF, this Agreement is made effective as of the date first
written above.
<TABLE>
<CAPTION>
BEST BUY CO., INC. TiVo Inc.
(on behalf of its Affiliates)
<S> <C>
Authorized Officer: /s/ Pete Bosse Authorized Officer: /s/ Brodie Keast
--------------------------------- ----------------------------------
(Signature) (Signature)
Name: Pete Bosse Name: Brodie Keast
----------------------------------------------- -----------------------------------------------
(Please Print) (Please Print)
Title: VP/GM Digital Solutions Title: SVP & GM TiVo Service Business
---------------------------------------------- ----------------------------------------------
Date: 02/28/02 Date: 02/25/02
----------------------------------------------- -----------------------------------------------
</TABLE>
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<PAGE>
VENDOR PROGRAM AGREEMENT
------------------------
Capitalized terms used without definition herein shall have the respective
meanings assigned to them in that certain Vendor Agreement dated March 3, 2002,
by and between TiVo Inc. ("Vendor"), Best Buy Co., Inc. ("Best Buy") and Best
Buy Purchasing LLC (the "Vendor Agreement"). To the extent the terms and
conditions set forth in this Vendor Program Agreement (the "VPA") conflict, or
are inconsistent with, the terms and conditions of the Vendor Agreement, the
terms and conditions set forth in this VPA shall govern.
Dealer initially will limit distribution of Vendor's Product to Best Buy Stores,
L.P. and BestBuy.com. Expansion to other distribution outlets such as Musicland
Stores Corporation will be mutually agreed upon between Dealer and Vendor.
1. Vendor shall deliver Digital Video Recorder or Recording ("DVR") devices
ready for activation. Dealer shall be entitled to a residual for each DVR
purchased from Vendor pursuant to the Vendor Agreement and sold by Dealer to a
customer who subsequently subscribes to the TiVo Service (Subscriber). The
amount of such residual shall be [*]such other amount as otherwise provided
below, (the "Residuals"). Vendor shall make payment of Residuals on a monthly
basis in arrears, such payment will be delivered to Dealer within thirty (30)
days after the end of the applicable month. Accompanying the payment will be an
electronic file in a format agreed upon by the parties containing information
sufficient to substantiate the Residual amounts. The Residuals for a Subscriber
shall continue; in the case of a Lifetime Subscriber for a period of [ * ]; or
in the case of a Monthly subscriber until termination of its subscription to the
TiVo service on the DVR purchased from Vendor under this Agreement. Lifetime
Subscribers are those Subscribers who have opted to pay for a subscription to
the TiVo service for the lifetime of the particular DVR purchased from Vendor in
lump sum at the then current rate ("Lifetime Subscriber"). Monthly Subscribers
are those Subscribers who pay for a subscription to the TiVo service on a
month-to-month basis ("Monthly Subscriber"). The Residuals may be altered based
upon a good faith negotiation occurring on each six month anniversary of the
signing of this Agreement ("Residual Adjustment").
2. a. Subject to Vendor's right to change Product prices upon ninety (90) days
advanced written notice to Dealer, Vendor shall sell the following products, and
Dealer shall purchase such products at the following costs:
Product Description Purchase Order Cost Minimum Advertised Price
TiVo Series2, 60-hour [*] [*]
DVR--Model: [*]
b. Payment terms for the TiVo Series2, 60-hour DVR Model [*] (the
"Devices") will be net 45 days from receipt of goods.
c. Vendor may at its discretion change prices for the TiVo service upon 45
days written notice to Dealer. Provided however that Vendor agrees to compensate
dealer for any additional expenses associated with retracting incorrect
information or producing new material associated with the new pricing.
d. Excluding [*] and [*], all [*] and [*] offered to Dealer with respect to
the Devices [*] or [*] by [*] to [*] customers. [*] customers shall exclude OEM,
CE customers, Vendor licensees, cable operators, satellite operators and other
[*] entities and their customers.
3. Device Exclusivity. During the original term of this agreement Dealer will be
the exclusive retail distributor of the Model [*] DVR. Dealer agrees that unless
and until notice is given to Vendor as provided below the Model [*] DVR will be
the only stand-alone DVR with Electronic Program Guide ("EPG") based service
sold by Dealer. Dealer agrees to provide Vendor with [*] days advanced written
notice prior to Dealer making any other stand-alone DVR with EPG available for
retail sale. Upon such notice Vendor has the right to terminate Dealers
exclusive distribution rights.
4. a. Vendor shall provide Dealer with Market Development Funds ("MDF") of up to
[*] as follows. [*] within fifteen (15) days of the execution of this agreement,
[*] on [*], 2002, [*] on [*], 2002, and [*] on [*], 2002. The parties
acknowledge that, unless Vendor agrees otherwise pursuant to Section 4(b), the
MDF Budget shall be sufficient to reimburse Dealer for all costs and expenses
associated with marketing the Devices in the approximate minimum equivalent of
[*] in the Best Buy Sunday circular.
b. Not less than [*] days prior to the end of each quarter during the term
of this Agreement, Dealer shall deliver to Vendor its marketing plan for the
Devices for the following quarter (the "Marketing Plan"). The Marketing Plan
shall set forth (i) the proposed frequency of such advertising, and (ii) the
estimated total amount of MDF to be expended by Vendor in connection with the
proposed advertising and marketing efforts during such quarter. Unless agreed
otherwise Vendor is not responsible for any marketing or advertising expense
which exceeds the Vendor's MDF budget. Provided however in the event that Vendor
fails to pay such MDF as provided above Dealer is not required to expend any
resources or money in the marketing or advertising of the Products or the TiVo
service.
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[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
Page 10 of 11
<PAGE>
c. Dealer will also make available opportunities for: the incorporation of
TiVo specific content into [*] bestbuy.com, updates of standard in-store
signage, inclusion of Vendor Devices and the TiVo service in the Best Buy [*],
and the incorporation of Vendor Devices and the TiVo service in the Best Buy[*].
5. In addition to the [*] outlined above, Vendor agrees to [*] the
following [*] support:
>> [*] Best Buy [*] of [*] on [*], including [*] package in CQ1.
>> [*] Best Buy [*] on [*] advertising.
>> [*] marketing including up to [*] Minutes per [*] in [*]
>> Best Buy [*] promotions.
>> E-mail campaigns.
>> [*] messages.
6. For those [*] Devices under this Agreement, Dealer will use commercially
reasonable efforts to [*] to [*] as [*]at [*]. The [*] at[*] is [*] into [*] and
[*] to Vendor according to Dealers then current practices. [*] may not be [*] in
a [*] with the [*] and applicable [*]. During the term of this Agreement or any
subsequent renewal, neither party may [*] in any way that would tend to harm or
disadvantage the other party. Subject to mutual agreement, [*] may be used for
either joint or independent [*] initiatives. Notwithstanding anything to the
contrary in this agreement Dealer will not be restricted or encumbered in any
fashion from marketing as in the ordinary course of business.
7. For the purposes of this VPA, any of Dealer's customers purchasing a DVR from
Dealer shall be referred to as a "Subscriber". Vendor and the Subscriber,
exclusively, shall set the terms and conditions that govern the provisioning of
the TiVo service by Vendor to Subscriber's DVR, and Vendor reserves the right,
in its sole discretion, to refuse to provide service to Subscriber(s). With
respect to the provisioning of such service, such Subscriber shall be deemed in
privity of contract with Vendor.
8. The parties agree to issue a mutually agreeable joint press release
announcing this agreement within a reasonable period after the execution of this
agreement.
9. Nothing in this VPA or the Agreement shall restrict Dealer in anyway with
respect to the use of information gathered by Dealer from its customers in the
regular course of business.
10. Dealer will make commercially reasonable efforts to minimize [*] to Vendor.
Such efforts shall include:
a. Point of sale messaging, including in-store signage and brochures,
that the [*] a [*] to the [*] and [*] to a [*] for the use normally
and reasonably intended;
b. A disclaimer on [*] sales [*] for the [*] of the [*] informing the
customer that the [*] a [*] to the [*] and a [*] to a [*] for the use
normally and reasonably intended;
c. At point of purchase, Dealer will offer each customer a [*] option;
Dealer will provide training on [*] and a checklist (i.e. why are you
[*] this product?) to [*]; and
d. Provided that Vendor reinstates [*] program, Dealer will
support [*] program.
11. Except for Vendor's obligation to pay Residuals to Dealer for DVR Devices
purchased from Vendor through the date of termination of the Vendor Agreement,
Dealer and Vendor's obligations under this Vendor Program Agreement will cease
upon termination of the Vendor Agreement.
----------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
Page 11 of 11