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EXHIBIT 10.33
LETTER OF AGREEMENT
The purpose of this Agreement is to establish terms and formalize
procedures pertaining to the sale of Visioneer products to Best Buy Co.,
Inc.. This agreement replaces all prior agreements and understandings
between the two companies. Reference to "Seller" or "Vendor" shall mean
Visioneer; reference to "Buyer" shall mean Best Buy Co., Inc.
I. GENERAL
The relationship between Visioneer and Best Buy Co., Inc. will begin on
the date this agreement is signed by an authorized representative of
Best Buy Co., Inc.. This agreement will control as to matters covered
herein and will continue unless and until termination. Either party may
terminate this agreement by giving the other party sixty (60) days
written notice of their request to terminate. Section III will survive
the termination of this agreement until all of Vendor's merchandise has
been sold. Section V.B. and V.C. will survive the termination of this
agreement until ninety (90) days following the sale to an end-user of
the last piece of Vendor's product.
II. PRICING AND PURCHASE ORDERS
A. PRICING, PRICE REDUCTIONS AND PRICE PROTECTION
For products not purchased through a Distributor, Vendor agrees
that all prices offered to Best Buy Co., Inc. will be no higher
than prices charges to any other reseller. Best Buy may audit
Vendor's pricing if Best Buy reasonably believes that Best Buy is
not receiving the lowest pricing. In the event Visioneer reduces
prices on its product carried by Best Buy Co., Inc., Vendor will
accept Best Buy Co., Inc.'s debit memo in an amount equal to the
price reduction times quantity on hand and in transit at the time
of the change. In the event of a price reduction for product
purchased through a distributor, Vendor will issue a credit to
the distributor, under the terms of Vendor's agreement with such
distributor.
B. PURCHASE ORDERS AND CONVEYANCE
Vendor agrees to be bound by the Purchase Order Terms and
Conditions set out in Exhibit 1 which is attached and
incorporated herein by reference. This applies regardless whether
orders are transmitted by delivery of a hard copy or by facsimile
transmission. Best Buy Co., Inc. agrees that if it revises those
Terms and Conditions, it will provide the text to the Vendor for
inspection prior to transmitting any additional purchase orders.
C. TERMS
1. Freight - All shipments to Best Buy Co., Inc. shall be
made F.O.B. origin; with title and risk of loss or
damage to pass to Best Buy Co., Inc. upon delivery by
Vendor to the common carrier, and insurance and handling
charges to be paid by Best Buy Co., Inc.. Vendor shall
bear all shipping charges for orders comprising one (1)
or more whole pallets shipped to a single location.
2. Credit Terms - Except for specially negotiated
purchases, Best Buy Co., Inc. will pay for ordered goods
within thirty (30) days of receipt of an invoice.
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3. Acceptance of debit memos - Vendor agrees to accept
debit memos issued by Best Buy Co., Inc. for price
protection, returns, Co-op/MDF and in fractions as
described in Best Buy Co., Inc.'s standard Purchase
Order Terms and Conditions in lieu of issuing Best Buy
Co., Inc. a credit. In the event Vendor disputes a debit
memo, Best Buy Co., Inc. agrees to provide sufficient
back-up detail supporting the debit memo within sixty
(60) days of Vendor request. Vendor must submit any
debit memo claims to Best Buy within sixty (60) of
receipt of the debit memo or shall otherwise be deemed
to have waived any such claims.
D. SELL-THROUGH DATA
Best Buy Co., Inc. shall provide product performance reports by
SKU no less frequently than weekly via electronics means to be
determined by Visioneer and Best Buy buyer. They will indicate
sales by SKU and store location, for the prior week and will
include on-hand inventory information. There is no charge to
receive this data. Best Buy will agree to provide Vendor with
electronic media of monthly sales out data by no less than zip
code.
III. VENDOR AUTHORIZATION
It is understood by parties that Vendor's products are authorized to be
sold by any Best Buy Co., Inc. location on the North American continent
regardless of geographic location.
IV. HARDWARE MODEL AND SOFTWARE VERSION CHANGES
Vendor will make best efforts to notify Best Buy Co., Inc. Merchandising
of all new releases and product replacements, at least thirty (30) days
prior to public announcement.
V. RETURNS/SELL THROUGH
A. STOCK BALANCE RETURNS
Best Buy Co., Inc. may exercise net returns of new goods once
each calendar quarter, equivalent to 10% of prior quarter's
purchases; at any time during each calendar quarter. Vendor will
accept Best Buy's debit memo for the quantity of product
authorized to be returned or the quantity of product actually
returned, whichever is less. At Best Buy Co., Inc.'s option,
Vendor will refund the net amount in cash (less any Co-op paid
for original purchases). If Vendor receives product in excess of
the authorized amount, the excess amount will be returned to Best
Buy Co., Inc. shipping location at Best Buy's expense for freight
and any handling charges that may be incurred; Vendor will issue
a debit memo to Best Buy Co., Inc. for these charges.
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B. CUSTOMER SATISFACTION RETURNS
Visioneer defines customer satisfaction returns as the return of
product with which a customer is not happy because it is
defective or not what the customer wanted and which is returned
to Best Buy within thirty (30) days of original end-user
purchase. If the product is new and has never been opened, Best
Buy Co., Inc. will return it to the shelf. If the product is not
resellable as new, the Vendor agrees to accept its return.
Returned products need to be substantially complete. That is, the
package must include the principle items and accessories
ordinarily included with the product from the Vendor. Vendor
agrees to accept customer satisfaction returns and to refund the
then current cost of goods to Best Buy Co., Inc. via debit memo
issued by Best Buy Co., Inc.
C. OUT-OF-BOX FAILURES
Vendor will automatically accept return of product that is
defective out of the box and returned by the end-user to Best Buy
Co., Inc. within a period of thirty (30) days after original
purchase date by end-user of new product. Any other defective
return requests will be considered on a case by case basis and
will require advance authorization from Vendor's customer
satisfaction and/or sales administration personnel.
VI. ADVERTISING AND MARKETING EFFORTS
A. RESPONSIBILITIES
Vendor shall have the responsibility for developing and accessing
demand for the Vendor's products and providing product
differentiation from competitive products. In pursuit of these
efforts, Vendor is encouraged to state in their advertising that
products are available at Best Buy Co., Inc. locations. Best Buy
Co., Inc. will be given the opportunity to pre-approve any use of
its name or logo in order to assure its image is maintained.
B. BEST BUY CO., INC. RESPONSIBILITIES
Best Buy Co., Inc.'s responsibilities are to take the appropriate
steps to cause customers to visit Best Buy locations, make a
pleasant and attractive retail environment conducive for the
purchase of the Vendor's product(s), to represent those products
in a positive and ethical manner and, in conjunction with
Vendor's marketing research recommendations, to purchase a supply
of the Vendor's products in adequate quantity to satisfy demand.
C. ACCOUNT REVIEWS
Regular account reviews play a valuable role in both parties
common objectives of selling more product to our mutual
customers. Best Buy Co., Inc. Buyers will make themselves
available for regular account reviews with its vendors. They may
be in person or via telephone. Requests for review should be
accompanied by an agenda.
Typical agenda might be:
- Review and analysis of past programs and promotions to
evaluate effectiveness
- Short, Medium and Long range product and programs
- Product performance - Inventory/Stock Levels,
Competitive Landscape
- Administrative Issues (Orders, Shipments, Payments,
etc.)
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D. RETAIL CO-OP PROGRAM
This section generally describes the marketing/sales program
relative to Best Buy Co., Inc.'s store-based retail business.
Vendor shall accept Best Buy Co., Inc.'s debit memo for five
percent (5%) based upon net receipts from the Vendor for coop
accrual. These funds shall be used strictly to:
- Support basic shelf merchandising of the Vendor's
products
- Cover the cost of line listing of Vendor's products in
Best Buy Co., Inc.'s retail catalog
- Newspaper ads as deemed appropriate by Best Buy Co.,
Inc.
- Inclusion of Vendor's products in Best Buy Co., Inc.
direct response marketing program
- Provide for the delivery of SKU performance data as
described in ll.D. above.
Marketing and/or sales development funds may be available on a
periodic basis at Visioneer's discretion in addition to accrued
coop funds.
Proof of performance - "Proof of performance" as it relates to
these four items shall be the responsibility of the Vendor. Best
Buy Co., Inc. will cooperate by 3roviding reasonable access to
advertising access tear sheets, copies of catalogs, etc.
Collection of funds - Best Buy Co., Inc. will collect the 5% coop
reimbursement via debit as described in II.C.3 above. It will be
collected regardless of whatever action the Vendor chooses to
take to verify use of these funds in the agreed upon manner.
Incremental marketing activities - Best Buy Co., Inc. may
periodically solicit its Vendors, from time to time, with offers
to participate in additional marketing activities for additional
costs.
VII. EMPLOYEE INCENTIVES
Vendor is prohibited from providing compensation, incentives, SPIFFS, or
gifts of any kind directly to Best Buy Co., Inc. employees without prior
written approval of a disinterested Best Buy Co., inc. officer.
Prohibited incentives would include, but not be limited to free product,
cash, meals or travel awards. Violations of this policy would constitute
grounds for the immediate discontinuance of the Vendor's product from
the Best Buy Co., Inc. line.
BEST BUY CO., INC. VISIONEER COMMUNICATIONS, INC.
By: ▇▇▇▇▇ De ▇▇▇▇▇ By: ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Signed: /s/ ▇▇▇▇▇ DE ▇▇▇▇▇ Signed: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Title: Sr. Buyer Title: V.P. Sales
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Date: 9/11/96 Date: 9/11/96
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EXHIBIT I
PURCHASE ORDER TERMS AND CONDITIONS
1. ACCEPTANCE
This Purchase Order ("Order") constitutes Best Buy Co., Inc.'s offer and
SELLER'S acceptance and is expressly subject to the terms and conditions
in this Order unless otherwise agreed to in writing by an officer of
BUYER. Any provisions in SELLER'S invoices, billing statements,
acknowledgment forms or similar documents which are at variance with the
provision of this Order shall be of no force or effect unless
specifically agreed to in writing by an officer of BUYER. Any request or
demand for or statements purporting to make SELLER'S acceptance
conditional on BUYER'S assent to additional or different terms are
hereby rejected and shall be of no effect. Any of the following acts by
SELLER shall constitute acceptance of this Order and all of the terms
and conditions; signing and returning a copy of this Order; delivery of
any items ordered; informing the BUYER in any manner of commencement of
performance; or returning SELLER'S own form of acknowledgment. This
Order may not be changed or terminated verbally.
2. INVOICING
Each shipment must contain a packing slip showing Order number, number
of cartons and quantity in each carton. Unless otherwise specified in
the Order, the prices, in U.S. dollars, appearing herein shall include
packaging, crating and are firm for the delivery period shown. BUYER
shall be responsible for any federal and/or local taxes imposed by the
jurisdiction in which the items are delivered.
3. TERMS COMMENCEMENT
Any cash discount terms will begin upon date of receipt of the items or
invoice, whichever is later.
4. EXTRA CHARGES
BUYER shall pay no extra charges, including but not limited to charges
for prepacks, cartons, handling, or minimum Order or because of any
taxes or excises levied on manufacturers, wholesalers or otherwise,
unless agreed to in writing and signed by an officer of BUYER.
Merchandise shipped by freight or express will be packed, marked and
described so as to obtain the lowest rate possible under freight or
express classifications, except when otherwise specified by BUYER and
penalties or increased charges for failure to do so will be charged to
SELLER.
5. DELIVERY AND ACCEPTANCE OF ITEMS
The time specified for delivery of the items covered by this Order is of
the essence. All items will be subject BUYER Inspection at BUYER'S
receiving location. In addition to other rights provided by law, BUYER
reserves the right to cancel any unshipped portion of this Order, and to
reject all or part of items shipped hereunder, which: are defective in
material or workmanship; differ in any way from specifications or
warranties herein contained or implied by law; are shipped contrary to
instruction, not in recognized standard containers, or not on specified
shipping dates. SELLER shall have no right to cure such defects or
failure to perform after BUYER gives notice of cancellation. At its
option, BUYER may return rejected items or hold items at SELLER'S risk
and expense, and may in any event charge SELLER with cost of
transportation, shipping, unpacking, examining, recapping, reshipping,
and other like expenses. SELLER
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may not refuse any return so made, and shall be liable for all charges,
costs, expenses and consequential damages resulting from or arising out
of said refusal. In the event BUYER shall have made payments to SELLER
for items so returned, SELLER shall promptly refund such payments to
BUYER. Notwithstanding the foregoing: BUYER shall be under no duty to
inspect items prior to resale and neither retention nor resale of such
items shall be construed as an acceptance of items not in compliance
with the requirements of this Order.
A. MERCHANTABILITY. SELLER represents and warrants for a period
of ninety (90) days after end-user purchase that all items delivered
pursuant to this Order will, in addition to any express warranty or
guarantees heretofore or hereafter made by samples or other descriptions
previously furnished by SELLER be free from any defect in material or
workmanship, be merchantable at the time of delivery to BUYER and at the
time of use by BUYER'S customers and be fit and safe for sale and any
use by BUYER, or its customers for which such items are ordinarily
intended and any particular intended use for which SELLER or its agents
should have or do have knowledge of. SELLER will maintain and carry
liability insurance which includes but is not limited to employer's
liability, workers compensation, general liability, public liability,
property damage liability, product liability, and contract liability in
amounts set forth or incorporated in this order, with insurance carriers
acceptable to BUYER and if no amounts are so set forth herein, amounts
as acceptable to and approved by the BUYER, but in no event shall such
amounts be less than minimum statutory requirements, if any. SELLER
will, at BUYER'S request, furnish certificates of insurance from its
carrier on the foregoing coverage's, which shall provide that such
coverage shall not be reduced without thirty (30) days advance written
notification to the BUYER from the carrier.
B. GOVERNMENTAL REQUIREMENTS. SELLER represents and warrants that
all items; delivered pursuant to this Order are manufactured in
compliance with and meet the standards of United States Consumer Product
Safety Act ("CPSA") and the rules, regulations and standards of the
United States Consumer Product Safety Commission; furnished hereunder
which are produced in the United States will be produced in compliance
with the applicable requirements of the Fair Labor Standards Act of
1938, as amended to the sale hereof, and regulations and orders of the
United States Department of Labor issued under Section 14 thereof, and
that all provisions of Executive Order as amended, 4 1 CFR60-250 and 4 1
CFR60-741 are incorporated by reference herein as though set forth in
full; are manufactured, sold, shipped, packaged, labeled, tagged and
invoiced in compliance with all applicable federal, national, state, and
local laws, statutes, rules, regulations or ordinances, including but
not limited to the Consumer Packaging and Labeling Act, the Hazardous
Products Act, the National Trademark and True Labeling Act and the Food
and Drug Act and all other warrants that it will, upon written demand,
furnish BUYER with Material Safety Data Sheets ("MSDS'S") for items
furnished hereunder. Said MSDS's are to comply with requirements of
Federal and State Right to Know Laws and Occupational Safety and Health
Acts.
C. ANTITRUST. SELLER represents and warrants that the prices
hereunder on the items covered by this Order are lawful under all
applicable laws and regulations, including but not limited to Section 2
of the ▇▇▇▇▇▇▇ Antitrust Act, as amended by the ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇ Act, and
further specifically, expressly, and unconditionally represents and
warrants to BUYER that any and all payments or allowances to be made to
BUYER by SELLER for services or facilities to be furnished by SELLER are
on proportionally equal terms to other similar customers of SELLER
competing with BUYER in the description of the same item.
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6. PATENT INDEMNITY
A. REPRESENTATIONS. SELLER represents and warrants that:
1. It has the right to disclose or use, without
liability to others, all processes, designs and methods the
SELLER will disclose or use in performance of this Order.
2. The items, and BUYER'S use thereof, do not and will
not infringe on any U.S. patent, trademark, trade name, service
▇▇▇▇, trade secret, mask work, copyright, design or any other
proprietary right of others and
3. In connection with its performance under this Order,
SELLER will not knowingly infringe on any U.S. patent,
trademark, trade name, service ▇▇▇▇, trade secret, mask work,
copyright, design or any other proprietary right of a third
party.
B. INDEMNITY BY SELLER. SELLER will indemnify, hold harmless, and
at BUYER'S request, defend BUYER and BUYER'S subsidiaries,
affiliates, and customers from and against any loss, or liability
or expense (including court costs and reasonable legal fees)
arising out of or resulting from any breach or alleged breach of
the above representations or from any claim that BUYER's use,
sale or other disposition of the items purchased hereunder
infringes on any U.S. patent, trademark, trade name, service
▇▇▇▇, trade secret, mask work, copyright, design or any other
proprietary property of any third party. In the event of any such
claim, BUYER agrees (i) to notify SELLER of claim, (ii) if BUYER
has not requested that SELLER defend the claim, to permit SELLER,
at SELLER's expense to participate in the defense thereof with
counsel of SELLER'S choosing, subject to BUYER'S participation
and supervision, and (iii) if BUYER has requested that SELLER
defend the claim, to provide SELLER with all needed information,
assistance and authority necessary for SELLER to do so. If the
use by BUYER or any of its customers of any of the items
purchased under this Order is enjoined, or in BUYER'S opinion is
likely to be enjoined, at BUYER'S request and option, and without
prejudice to BUYER'S rights and remedies SELLER at its expense
will: (1) procure from the person or persons claiming or likely
to claim infringement, a license for BUYER and its customers to
continue to use such items; or (2) modify such items to avoid the
infringement, a license for BUYER and its performance or
compliance with BUYER'S specifications on this Order; or (3)
refund to BUYER the net amounts paid by BUYER, less applicable
discounts and credits for infringing items returned at Seller's
expense by BUYER to SELLER.
7. PRICE PROTECTION
SELLER represents and warrants on date of this Order, that the prices
charged for the items covered by this Order will be as low as the lowest
prices charges by SELLER to any similar customers purchasing such items
in similar quantities and under like circumstances. This Order is not to
be filled at a higher price than shown on the Order unless authorized in
writing by an officer of BUYER. Should there be a SELLER imposed
reduction in price between the date of this Order and the delivery date
specified in this Order or the actual delivery date, whichever is later,
BUYER may charge back to SELLER'S account the amount of decline on any
items on hand or in transit at the time of the price reduction.
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8. TERMINATION
At its option, BUYER may terminate all or part of this Order for any
reason, within 24 hours prior to SELLER'S scheduled shipment to BUYER,
upon prior written notification being faxed, telexed or mailed to
SELLER, which is received no later than 24 hours prior to scheduled
shipment; such termination shall be at no charge, cost or expense to
BUYER.
9. FORCE MAJEURE
Neither BUYER nor SELLER shall be liable for any failure to perform in
accordance with the terms of this Order due to wars, strikes, fires,
acts of God or the public enemy, labor difficulties, freight embargoes
or other causes beyond their control. In the event SELLER is unable to
perform due to any of the foregoing events, BUYER shall be entitled,
except for BUYER'S monetary obligation under this Agreement and, in
addition to its right to terminate pursuant to paragraph 9; to (a)
reduce pro lento, and without any obligation to SELLER, the quantity of
items specified by this Order.
10. WAIVER
No course of dealing of BUYER nor any delay or omission of BUYER to
exercise any right or remedy under this Order shall operate as a waiver
of any rights of BUYER, and every right and remedy of BUYER provided
herein shall be cumulative and concurrent, unless otherwise expressly
provided herein, and shall be in addition to every other right or remedy
provided for herein or now or hereafter existing in law or equity. In
the event BUYER waives any term or condition, such waiver shall not
constitute a waiver of the same terms or conditions in prior or
subsequent transactions or different terms or conditions in the same,
prior or subsequent transactions.
11. ASSIGNMENT
Neither party may assign or transfer any of the rights, duties, or
obligations herein without the prior written consent of the other, and
any purported attempt to do so shall be null and void. Notwithstanding
anything set forth above, BUYER or SELLER may assign or transfer its
rights, duties and obligations under this Agreement to a subsidiary or
Affiliate; in the case of SELLER, to a subsidiary or affiliate of
SELLER, or, in the case of Buyer or Seller, to a third party in
connection with the merger, sale, consolidation or transfer of
substantially all of such party's assets or stock, provided that such
third party is not a competitor of the non-assigning party. The
provisions of this Agreement shall be binding upon and inure to the
benefit of the parties, their successors and permitted assigns.
12. SEVERABILITY
If any provisions of this Order is found to be illegal or otherwise
unenforceable by any court or other judicial or administrative body, it
shall be severed and the remaining provision of this Order shall remain
in full force and effect.
13. ENTIRE AGREEMENT
This document contains the entire agreement of the parties upon the
subject matter hereof. There is no agreement, oral or otherwise, which
is not set forth in writing. No modifications of this agreement shall be
binding unless in writing and signed by both parties.
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14. SERVICE OR PROCESS
This Agreement shall be governed by the laws of the State of Delaware.
15. ADDITIONAL REMEDIES
The rights and remedies herein expressly provided shall be in addition
to any other rights and remedies given by law or equity.
16. JURISDICTION
Except as otherwise specifically provided in this contract, any dispute
concerning a question of fact and/or law arising under this Order which
is not disposed of by agreement of the parties, shall be decided by a
court of competent jurisdiction in the United States District Courts in
the Northern District of California or in the Superior Court in Santa
▇▇▇▇▇ County if Visioneer sues; jurisdiction in State of Delaware courts
if Best Buy Co., Inc. sues. Pending settlement or final decisions of any
dispute, the SELLER shall proceed diligently with the performance of
this Order in accordance with the directions of the BUYER.
17. SURVIVAL
The terms, provisions, representations, and warranties contained in this
Order shall survive the delivery of the items, payment of the purchase
price and transfer of title.