Confidential Treatment Requested
Omitted Portions Marked with [ * ] and Filed
Separately with the SEC
Exhibit 10.34
October 15, 2004
Arrow Electronics, Inc.
25 Hub Drive
Melville, New York 11747-3509
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Re:
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Inventory
Advances Arrangement Letter Agreement Pursuant to Distribution
Agreement, Dated February 18, 1999, As Amended, Between Altera
Corporation (“Altera”) and Arrow Electronics, Inc.
(“Distributor”)
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As you are a franchised distributor
of Altera, you currently sell Altera Products pursuant to the
referenced Distribution Agreement. You have recently requested
financial assistance to offset the carrying cost of the book cost
value of the Products purchased from Altera and held in your
inventory.
We are not prepared to change any of
the terms or conditions of our Distribution Agreement with you in
response to these circumstances or by virtue of this letter
agreement. The Distribution Agreement between us shall remain in
effect in accordance with its terms, as mutually agreed in writing
from time to time, without regard to the Advances we are prepared
to extend under this letter agreement but with certain additional
rights as expressly granted to Altera herein.
In response to your request, Altera
is prepared to make certain non-interest bearing cash advances
(“Advances”) to you, subject to the terms and
conditions as provided below. We are not committed to extend any
particular amount of Advances or for any particular duration. In
any case, we will only consider extending Advances upon the
following terms and conditions:
1. Prerequisites to Receiving Advances .
Prior to Altera making any Advances under this letter agreement,
the following prerequisites must be met in all
instances:
1.1. Financial Obligations .
All amounts due and payable to Altera under the Distribution
Agreement and this letter agreement must be current, including, but
is not limited to, receivable payments maintained pursuant to the
Distribution Agreement, all Distributor Pricing Authorizations
(DPAs) claims must be submitted within [ * ] of date of resale and
submission of all requests for credit notes from Altera within [ *
].
2. Calculation of the Initial Advance .
Upon Altera’s satisfaction that the requirements of Section 1
have been achieved, Altera may provide Advances to Distributor
under the following terms and conditions:
2.1. Altera may provide an initial
Advance (“Initial Advance”) calculated as follows: (a)
The amount of Distributor’s ending inventory balance of
Products (as reported as of October 1, 2004 (“Initial
Inventory Balance”), multiplied by (b) the DPA percentage
during the third (3 rd ) fiscal quarter of 2004, [ * ]. The
Initial Inventory Balance and the Subsequent Inventory Balance (as
defined below) will be calculated using the book cost of standard
Products in Distributor’s inventory and excludes Products
that are defective, scrap or to which Distributor does not have
title and possession, custody or control.
Confidential Treatment Requested
Omitted Portions Marked with [ * ] and Filed
Separately with the SEC
2.2. Altera may submit a detailed
Initial Advance calculation, within ten (10) days after mutual
execution of this letter agreement, to Distributor for review and
acceptance by Distributor within 7 days. Upon receipt of written
acceptance, Altera may issue a wire transfer for the Initial
Advance to Distributor within 7 days. Altera’s calculation of
the Initial Advance and “Advance Adjustment Payments”
(as defined below) will be final absent manifest error which
Distributor can provide reasonable validation.
3. Advance Adjustment Payments
.
3.1. At the end of each fiscal
calendar quarter after payment of the Initial Advance, Altera will
calculate the amount of the “Adjusted Advance Balance”
as follows: (a) The amount of Distributors ending inventory balance
of Products (as reported for the last full month of the prior
fiscal quarter) (“Subsequent Inventory Balance”),
multiplied by (b) the DPA percentage during the same fiscal quarter
[ * ]. In the event that Arrow’s DPA percentage [ * ], the
parties may review and mutually agree upon changes to this Section
3.1.
3.2. Altera may submit a detailed
Adjusted Advance Balance calculation, within 10 days of the end of
the fiscal quarter, to Distributor for review and acceptance by
Distributor within 7 days. Distributor will have 7 days to provide
written acceptance or rejection (and including the specific reasons
and adequate data supporting a claim) of the schedule. Altera will
evaluate any rejection and will determine, in its reasonable
discretion, the outcome. In the event that a response is not timely
received, the schedule will be deemed accepted and conclusively
established as accurate. In the event that:
3.2.1. the current Adjusted Advance
Balance calculated above exceeds the Adjusted
Advance
