***Text Omitted and Filed Separately with the
Commission
Confidential Treatment Requested
Under 17 C.F.R. Sec. 200.80(b)(4),
200.83 and 240.24b-2
MEDIA DISTRIBUTION
AGREEMENT
This Media Distribution Agreement ("Agreement") is entered into
as of November 7, 2003 ("Effective Date"), between EXABYTE
CORPORATION , a Delaware corporation with principal offices at
2108 55 th Street, Boulder, Colorado 80301 and
IMATION CORP. , a Delaware corporation with principal
offices at 1 Imation Place, Oakdale, Minnesota 55128.
Whereas Imation and Exabyte are worldwide leaders in the business
of manufacturing, procuring, marketing and distributing removable
data storage media; and
Whereas Imation desires to be the exclusive marketer and
distributor of removable data storage media for Exabyte, and
Exabyte desires to give Imation such exclusivity in exchange for a
payment and other consideration;
Now, in consideration of the foregoing and the promises contained
in this Agreement, the parties agree as follows:
1.
DEFINITIONS
When used in this Agreement, the following words and phrases shall
have the meaning set forth below:
"Affiliate" means a corporation, company or other entity
controlling, controlled by or under common control with a
party.
"Agreement" means this agreement, including any exhibits or
other attachments.
"Competing Product Agreement" means any agreement (whether
in writing, verbal, or established by course of dealing) between
Exabyte and a data storage media manufacturer which permits such
media manufacturer to sell Products or products substantially
comparable to the Products.
"Exabyte" means Exabyte Corporation and its current and
future Affiliates.
"Exabyte Drive " means a data storage tape drive
manufactured, procured, marketed or distributed by Exabyte.
"Gross Margin" means Net Sales less invoice price for
purchased Products.
"Imation" means Imation Corp. and its current and future
Affiliates.
"Distribution Fee" means the fee described in Section
3.A.
"Patents" has the definition set forth in Exhibit G.
"Trademarks" means all current and future trademarks,
service marks, logos and trade dress used by Exabyte to identify
Exabyte Drives and/or Exabyte removable data storage product media,
including but not limited to those trademarks, service marks, logos
and trade dress listed or described in Exhibit A, including all
registrations, applications, renewals, and common law rights
pertaining thereto.
"Products" means all current and future removable data
storage media products manufactured, procured, marketed, or
distributed by Exabyte, regardless of whether such media products
are (1) intended for use with an Exabyte Drive, or (2) bear
Trademarks. Products include, but are not limited to, those data
storage media products identified in Exhibit B.
"Net Sales" means net sales as defined by GAAP (including
subtracting for programs, discounts, and rebates, as agreed to by
both parties, such programs, discounts and rebates not to exceed
[...***...]%; except that where Imation sells Imation branded media
at a price premium Imation may have larger programs, discounts, and
rebates up to the amount of such price premium).
"Product Specifications" means the standards of quality in
materials, design, manufacturing processes and workmanship for a
Product as determined solely by Exabyte.
"Reseller" means an OEM, wholesaler, dealer, retailer,
distributor, or other reseller that purchases Products for further
resale.
2.
INTELLECTUAL PROPERTY RIGHTS
A.
Imation is not authorized to use
Trademarks except in connection with the procurement, marketing,
advertising, sale and distribution of Products in accordance with
the terms and conditions of this Agreement. This permitted use
shall be exclusive to Imation as set forth in Section 4. Imation
shall not use Trademarks after the termination or cancellation of
this Agreement. Imation agrees to not modify Trademarks, challenge,
obtain, or attempt to obtain during the continuance of this
Agreement or at any time thereafter, by registration or any other
method, any right, title, or interest to any of the Trademarks or
trade names or those which may be similar. All right, title, and
interest in such modified Trademarks and trade names shall accrue
to the benefit of Exabyte. Imation shall report to Exabyte any
potential, suspected, or actual infringement of Trademarks of which
Imation becomes aware. Imation does not acquire any proprietary
right to Trademarks by Imation's use thereof. Imation may allow
Resellers to use the Trademarks in connection with the promotion,
advertisement, and sale of Products purchased from Imation.
B.
If Exabyte modifies any Trademark, or
if Exabyte adopts any new trademark, service mark, logo or trade
dress, Imation shall be authorized to use such new or modified mark
immediately under the terms and conditions of this Agreement.
C.
Exabyte grants Imation the rights set
forth in Exhibit G.
* Confidential
Treatment Requested
3.
DISTRIBUTION FEE.
A.
Imation shall pay Eighteen
Million, Five Hundred Thousand Dollars ($18,500,000.00) to Exabyte
as a pre-paid fee for the rights granted to Imation under this
Agreement (the "Distribution Fee"). The Distribution Fee shall be
paid as follows:
1.
Ten Million Dollars ($10,000,000.00)
shall be paid by Imation within five (5) working days of the
Effective Date; and
2.
Eight Million, Five Hundred Thousand
Dollars ($8,500,000.00) shall become due once Imation has been able
to sell Products purchased from Exabyte with monthly Net Sales of
at least $3.0 million ($3,000,000.00) over a 30-day rolling period
commencing on or after the Effective Date. Imation shall pay such
fee within five (5) working days of the attainment of the monthly
Net Sales as set forth herein.
There shall be no other fees owed by Imation to Exabyte for the
rights granted to Imation under this Agreement. Imation shall pay
the Distribution Fee to Exabyte by wire transfer.
B.
Prior to January 1, 2007,
Exabyte will not use the Distribution Fee to accelerate payments to
suppliers, repurchase shares of Exabyte stock, or pay dividends on
shares of Exabyte stock, unless agreed to in advance by Imation.
Exabyte will use the Distribution Fee only for the following
purposes:
(i) to fund operations;
(ii) to fund development of VXA and
related technology and related automation products, including
LTO;
(iii) to repay bank debt;
(iv) to fund cost reduction efforts
for Exabyte's drive manufacturing operations; and
(v) as may be agreed by
Imation and Exabyte.
Provided Exabyte uses the Distribution Fee for the foregoing
purposes, Exabyte may otherwise exercise its sole discretion in
applying such proceeds.
4.
EXCLUSIVITY.
A.
Subject to Exhibit C, Exabyte
represents and warrants to Imation that no agreement (whether in
writing, verbal or established by course of conduct) exists on the
Effective Date which permits any third party to use any of the
Trademarks on and in connection with the procurement, marketing,
advertising, sale or distribution of Products, except for
distribution agreements described in Section 4.C. Exabyte shall not
grant to any third party a license to use any of the Trademarks on
or in connection with the procurement, marketing, advertising,
sale, or distribution of Products, except as may be approved by
Imation in writing.
B.
Exabyte shall not sell
Products, nor shall Exabyte permit any third party to sell Products
(other than (i) Resellers that have purchased Product from Imation
for resale and (ii) subject to Exhibit C), regardless of whether
such products bear any of the Trademarks, to any third party,
except for pack-in of Products with Exabyte Drives where Exabyte
has purchased such Products from Imation as provided in Section
8.E. Subject to Section 8.E, Exabyte shall sell Products
exclusively to Imation.
C.
Exabyte is responsible for
notifying all Resellers to which Exabyte has been selling Products
prior to the Effective Date of this Agreement that Exabyte will no
longer sell Products to them. Within five (5) days of the Effective
Date, Exabyte shall notify all such Resellers that if they would
like to continue to purchase Products in the future that they
should contact Imation about purchasing such Products from Imation.
All such Resellers will be transitioned to Imation within sixty
(60) days of the Effective Date, and Exabyte shall not supply
Products to such Resellers after such date. Imation will cooperate
with Exabyte in collecting media-related accounts receivable
balances due to Exabyte before and after the Effective Date from
such Resellers. [...***...] Exabyte represents and warrants that it
has not entered into any agreement (whether written, verbal or
established by course of conduct) to sell Products directly to any
end-user or that if Exabyte has that at Imation's request Exabyte
shall assign and hereby assigns its rights under all such
agreements to Imation for fulfillment by Imation.
D.
Exabyte shall not enter into any new
Competing Product Agreement. Subject to Exhibit C, Exabyte
represents and warrants that there are no Competing Product
Agreements in effect as of the Effective Date. Exabyte also
represents and warrants that, subject to Exhibit C, no third party
has the right to sell VXA cartridged media to any entity other than
Exabyte. The terms of Exhibit H also apply.
E.
In order to effectuate the Agreement
and to ensure that Imation receives full value under this
Agreement, Exabyte agrees to not take any unusual actions prior to
or after the Effective Date which would have the effect of delaying
the installation of Imation as Exabyte's exclusive distributor
(subject to the other terms of this Agreement).
F.
Imation represents that it
will only purchase VXA technology compatible finished cartridges
and Mammoth I and II technology compatible finished cartridges from
Exabyte during the term of this Agreement and will not purchase any
such products from any third party or otherwise sell such products
obtained from third parties, all subject to (1) Exabyte performing
its obligations under this Agreement, (2) the terms of Exhibit H,
and (3) the other terms of this Agreement.
G.
Subject to paragraph F above,
nothing in this Agreement shall be deemed to prohibit or restrict
Imation in the manufacture, marketing, distribution or sale of
removable data storage media products bearing brands other than the
Trademarks.
*Confidential
Treatment Requested
5.
PRODUCT PROCUREMENT, LABELING AND PACKAGING
A.
Exabyte shall procure
Products from suppliers and resell the Products to Imation. Exabyte
will be responsible for managing all suppliers of Products
including entering into and managing supply agreements,
qualification of vendors and products, forecasting, negotiation of
purchase prices, and obtaining buffer inventory. Exabyte will be
solely responsible for paying the purchase price and any applicable
royalties for all Products to Exabyte's suppliers.
B.
Imation and Exabyte will use
their best efforts to work with suppliers of Products to establish
consignment inventories of Products at Imation locations. If the
suppliers are unwilling or unable to establish such consignment
inventories, then Exabyte and Imation will work to limit
inventories at up to 5 Imation-specified locations to no more than
fifteen (15) days based on the past 30 days of Imation sales or
agreed upon forecasts.
C.
Exabyte shall determine the
Product Specifications for the Products, but shall consider input
from Imation. Exabyte shall determine the suppliers that it uses
for the Products, but shall consider input from Imation.
D.
Exabyte and Imation shall
cooperatively and jointly manage labeling, packaging configurations
and packaging specifications for the Products, provided that
Exabyte is solely responsible for the compliance of Product
labeling with all applicable international, national, state and
local laws, rules, regulations, ordinances and standards.
6.
SALE OF PRODUCTS TO IMATION
A.
Each month Imation shall
supply to Exabyte with a written six (6) month rolling forecast of
Imation's demand for Products.
B.
Imation shall order Products
using purchase orders and/or blanket orders and releases. Each
purchase order or release shall include Product names and
descriptions, part numbers, quantities purchased, routing
instructions, shipping schedule, destination and confirmation of
price. Exabyte shall drop ship all Products to be delivered to
Imation, whether subject to consignment arrangements or otherwise,
to any of the up to 5 locations specified by Imation. To the extent
the terms and conditions of any purchase order and/or blanket order
and release conflict with the terms of this Agreement, the terms of
this Agreement shall prevail.
C.
Shipping terms are FOB shipping
point, freight prepaid by Exabyte. Payment terms are net
[...***...] days from date of invoice.
D.
Exabyte shall be responsible
for shipping all ordered Products to arrive at Imation locations
within agreed lead times. If there is any reason to believe that
Exabyte will be unable to fully supply the forecasted purchase
amount, then Exabyte shall provide Imation with immediate written
notice. If a purchase order for Products is placed by Imation
within agreed upon lead times and within forecasted quantities, and
if Exabyte is unable to deliver such Products in a
*Confidential
Treatment Requested
timely manner by normal delivery methods, then Exabyte shall
have such Products shipped by air freight at its expense unless the
parties agree otherwise.
7.
PRICE OF PRODUCTS SOLD TO IMATION
A.
Exabyte's pricing to Imation
will be such that: (1) Exabyte is able to sell Products to Imation
while obtaining at least a [...***...]% Gross Margin on such sales,
and (2) Imation is able to re-sell Products while obtaining at
least a [...***...]% Gross Margin on sales to third parties (in
other words, excluding sales to Exabyte, and as further described
in Exhibit H). Imation and Exabyte negotiated the initial pricing
of Products provided in Exhibit B to accomplish these goals.
Additionally, Exabyte agrees to respond within 24 hours to Imation
requests for special bid pricing and to provide information and
consultation to Imation regarding OEM pricing. Specific pricing
terms are provided in Exhibit H.
B.
On a quarterly basis Exabyte and
Imation shall negotiate changes to the price of Products sold by
Exabyte to Imation, however Exabyte may reduce prices to Imation at
any time without prior discussion. Exabyte and Imation will agree
on a pricing mechanism for determining pricing from Exabyte to
Imation.
C.
Prices charged by Exabyte to
Imation shall not increase without Imation's prior written consent,
which shall not be unreasonably withheld. Exabyte will use
commercially reasonable efforts and will cooperate with its
suppliers so that the price that Imation pays Exabyte for Products
is competitive. This effort and cooperation by Exabyte and its
suppliers will include periodic review, enhancement, and
improvement of manufacturing costs, production technology and/or
know-how. Exabyte is expected to conduct programs with its
suppliers that reduce its suppliers' cost of manufacture each
calendar quarter. Notwithstanding anything to the contrary herein,
the parties agree to use best efforts so that each party is able to
maintain Gross Margins of at least [...***...]%.
8.
RESALE OF PRODUCTS BY IMATION
A.
Imation shall determine and
manage Imation's distribution of Products in Imation's sole
discretion, including whether and to what extent Imation will sell
Products through Resellers or directly to end-users, but shall
consider input from Exabyte.
B.
Imation shall unilaterally
determine the prices, private labeling, and other terms and
conditions of Imation's resale of Products to Resellers, end-users,
and other third parties in Imation's sole discretion.
C.
Imation shall be responsible
for market development of Products bearing the Trademarks, although
the parties agree that it is expected that there will be limited
need for media market development as most if not all marketing will
be done by Exabyte through the marketing of Exabyte Drives.
*Confidential
Treatment Requested
D.
Imation will sell Products to Exabyte
at Imation's cost plus [...***...]% for Exabyte's internal use,
including manufacturing consumption, engineering, and quality
control. Such Product sales are "as is".
E.
Imation will sell Products to Exabyte
at Imation's cost plus [...***...]% for re-sale packed-in with
Exabyte Drives, provided that the total number of units packed-in
by Exabyte in any calendar quarter shall not exceed 5% of the total
number of units sold to Imation for such format of Products in such
calendar quarter. Such Product sales are "as is". Exabyte may sell
Products to third parties only as provided in this Section 8.E.
9.
CUSTOMER SUPPORT REQUIREMENTS.
A.
The parties acknowledge and
agree that Exabyte is relying upon Imation as the exclusive
marketer and distributor of removable data storage media for
Exabyte.
B.
Transition of Resellers. So as to maintain the continuity of
supply of Product to Resellers, Imation will immediately commence
accepting Reseller purchase order(s) as soon as Exabyte has
provided notification under Section 4.c of this Agreement.
C.
Performance. Imation acknowledges its obligation to
competently perform as a distributor and to meet customers'
reasonable expectations regarding supply of Products to such
customers, including the following:
1.
To maintain a well-trained and
well-managed sales force capable of and committed to maximizing
sales of Products through proper means and maintaining Exabyte's
good will in the marketplace;
2.
To promptly fill and manage orders
for Products;
3.
To maintain adequate warehousing of
Products; and
4.
To extend credit to customers on
commercially reasonable terms.
If Exabyte is concerned that Imation is not meeting Imation's
obligations hereunder, Exabyte shall so inform Imation and the
parties will discuss what steps Imation and/or Exabyte can take to
imp
