Oem Agreement

PINNACLE SYSTEMS INC.


OEM AGREEMENT


THIS OEM AGREEMENT (the "Agreement") is entered into as of September 4, 1996 ("Effective Date"), between Pinnacle Systems, Inc. ("PINNACLE"), a California corporation with its principal office at 870 West Maude Avenue, Sunnyvale, California 94086, and Data Translation, Incorporated ("OEM"), a Massachusetts corporation with its principal office at 100 Locke Drive, Marlborough, Massachusetts 01752.


In consideration of the mutual promises contained in this Agreement, the parties agree as follows:


1. DEFINITIONS


1.1 The following definitions will apply when used in this Agreement:


(a) "Documentation" means the documentation and
related materials accompanying the Products.


(b) "Product(s)" means those products provided
by PINNACLE as listed in Exhibit A, as
amended from time to time by mutual written
agreement.


(c) "Software" means those software programs
contained within the Products.


2. GRANT OF DISTRIBUTION RIGHTS


2.1 Distribution. During the term of this Agreement, PINNACLE grants to OEM and OEM accepts, the nontransferable, worldwide right to sell the Products to resellers, distributors and end users. PINNACLE grants to OEM and OEM accepts the exclusive right to distribute the Software for use with products designed, developed and marketed by OEM, provided that OEM accepts greater than [REDACTED***] units per quarter after [REDACTED***]. PINNACLE shall take all steps necessary to ensure that all versions of its Software that are distributed by PINNACLE to parties other than OEM [REDACTED***] (b) do not contain any software or artwork provided by OEM. OEM may copy PINNACLE documentation as supplied to OEM for distribution with Product. Documentation is copyrighted and Pinnacle Copyright should be indicated in end user documentation copied by OEM.


2.2 Software. The Products contain Software, which is licensed, but not sold. All right, title and interest in and to the Software remains in PINNACLE, except for those portions of the Software which have been provided by OEM, all right, title and interest to which remains with OEM. PINNACLE grants to OEM the nontransferable right to sublicense the Software in object code format only and the Documentation to Third Party customers provided that customers agree to be bound by the terms and conditions of the end user software license agreement attached hereto as Exhibit B (the


- ----------- *** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.


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"Software License Agreement"), and further provided that OEM continues to be bound by all provisions in this Agreement with respect to such Software and Documentation. OEM may not modify, create derivative works, reverse engineer or otherwise derive source code from the Software. OEM may copy the Software for distribution with product or to update previously distributed Software and will distribute a copy of Exhibit B with the Software. The Software is copyrighted.


3. PURCHASE ORDERS AND PRICES


3.1 Order and Acceptance. Orders will be made by means of signed written or electronic purchase orders mailed, faxed or otherwise transmitted to PINNACLE's Order Administration Department. All purchase orders must include a requested shipment date and shipment location. PINNACLE will normally accept or reject an order in writing within twenty-four (24) hours with a written order acknowledgment but is under no obligation to do so. No order will be binding until accepted by PINNACLE in writing, and PINNACLE will have no liability to OEM with respect to purchase orders that are not accepted in writing.


3.2 Terms and Conditions. All purchases of Products by OEM from PINNACLE during the term of this Agreement will be subject to the terms and conditions of this Agreement. Where the terms and conditions of any purchase order are in conflict with the provisions of this Agreement, the provisions of this Agreement shall take precedence.


3.3 Prices. All prices are F.O.B. PINNACLE's shipping location. Product prices (the "Purchase Price") and additional price terms, if any, are listed in Exhibit A. PINNACLE reserves the right to change the terms in Exhibit A with ninety (90) days notice to OEM.


4. SHIPMENT


4.1 Products will be suitably packed for surface or air shipment, in PINNACLE's discretion and will be shipped F.O.B. PINNACLE's shipping location (at which time risk of loss will pass to OEM) in PINNACLE's standard shipping cartons marked for shipment to the address of the OEM specified in OEM's purchase order. OEM will select the carrier by written instruction to PINNACLE or, if no such instruction is received, PINNACLE will select the carrier. All freight, insurance, and other shipping expenses, as well as any special packing or packaging expense, will be paid by OEM.


4.2 All shipments will be deemed correct unless PINNACLE receives from OEM, no later than thirty (30) days after date of receipt of the shipment, a written notice (addressed to the attention of PINNACLE' s Order Administration Department) specifying the shipment, the purchase order number, and the exact nature of the discrepancy between the order and the shipment.


5. INVOICING, PAYMENT TERMS, AND TAXES


5.1 Invoicing. PINNACLE will invoice OEM upon shipment to OEM. Each invoice will include the aggregate Purchase Price for the shipment plus freight, taxes, duties and other costs prepaid by PINNACLE, if any.


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5.2 Payment Terms. All payments under this Agreement will be made in U.S. Dollars. OEM shall pay PINNACLE in full for the Products within thirty (30) days of the date of invoice. PINNACLE may, if OEM fails to make payments when due, or otherwise defaults hereunder, either alter terms of payment, delay shipment until terms are met, or pursue any remedies provided by this Agreement or by law.


5.3 Taxes and Customs Duties. OEM's Purchase Price does not include any governmental taxes, duties or similar charges of any kind that may be applicable to the purchase or transportation of the Products. OEM will pay all such taxes, duties and charges levied against OEM (including, without limitation, sales, withholding, value-added and similar taxes) and customs duties paid or payable, however designated, levied, or based, in a timely manner. PINNACLE will provide prompt notice to OEM of any assessment for which OEM may be liable hereunder, and will provide to OEM the opportunity to defend or settle such assessment.


5.4 U.S. Sales and Use Taxes


(a) OEM hereby certifies that it holds a valid Reseller Exemption Certificate for Products purchased for resale in each applicable taxing jurisdiction. Based on this certification, PINNACLE agrees, where the law permits, to treat OEM as exempt from applicable state and/or local sales tax for Products purchased hereunder. Where required by state or local law, OEM agrees to provide PINNACLE with a valid Resellers Exemption Certificate for each taxing jurisdiction to which Products will be shipped by PINNACLE.


(b) OEM agrees to notify PINNACLE promptly in writing of any addition(s), modification(s), deletion(s) or revocation of its exempt status, and further agrees to reimburse PINNACLE for any and all assessments resulting from a refusal by a taxing jurisdiction to recognize any of OEM's exemption certificates or from OEM's failure to have a valid certificate.


(c) OEM will notify PINNACLE of any Products it is acquiring under the Agreement for internal use and agrees to pay applicable sales tax for such Products.


6. MARKETING FORECASTS, MINIMUM ORDER QUANTITIES, ORDER LEAD
TIMES, RESCHEDULING AND CANCELLATION


6.1 Placement of Orders/Releases. It is the desire of PINNACLE to support OEM with products in a timely fashion, and with a continuous flow of products, as uninterruptable as possible. Therefore:


(a) OEM will issue orders/releases for individual items set forth under Exhibit A attached hereto, including quantities, delivery requirements and contract pricing.


(b) Initial delivery of the order/releases shall be in accordance with the material/assembly lead-times stated in PINNACLE's quotation.


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(c) OEM agrees that subsequent with placement of the initial orders/releases, OEM will place additional orders/releases through a [REDACTED***] window. As time moves on and the [REDACTED***] window shrinks to [REDACTED***] days, OEM will place additional orders/releases that again increases the order/releases window up to [REDACTED***] days. OEM agrees to maintain this [REDACTED***] day window with orders/releases through the term of this Agreement.


(d) In order for PINNACLE to maintain a continuous flow of long lead-time material, OEM agrees to issue nonbinding rolling forecasts to PINNACLE that covers an additional [REDACTED***] day period beyond the existing orders/releases that exist at any given time.


(e) OEM agrees to take delivery of [REDACTED***] units of GenieDVE Product by [REDACTED***]. Payment terms [REDACTED***] units shall be [REDACTED***] days from date of shipment. PINNACLE will extend terms day for day, up to a maximum of [REDACTED***] days, for each day that delivery from PINNACLE to OEM of [REDACTED***] of the Media 100 Genie Plug-in application software [REDACTED***]. Terms will be net 30 for the balance of units shipped by PINNACLE to OEM. OEM agrees to take delivery of an additional [REDACTED***] units of GenieDVE by [REDACTED***]. OEM agrees to take delivery of an additional [REDACTED***] units, for a total of [REDACTED***] units, by [REDACTED***]. Terms of Section 6.2 are not applicable to the [REDACTED***] units.


(f) PINNACLE agrees that for every [REDACTED***] units, up to [REDACTED***] units, purchased by OEM, PINNACLE will ship [REDACTED***] GenieDVE Product units [REDACTED***] OEM to be used as OEM deems necessary to support the distribution of the products.


6.2 Rescheduling/Cancellation of Orders/Releases. PINNACLE recognizes that OEM's requirements will change from time to time, and it is the desire of the PINNACLE to support as much of these changes as possible without PINNACLE bearing a financial burden to do so. Therefore:


(a) OEM agrees that all orders/releases that call for delivery from [REDACTED***] out are non-rescheduleable/non-cancelable.


(b) OEM agrees that all orders/release that call for delivery from [REDACTED***] days out are rescheduleable out, to a maximum of [REDACTED***] days from the original delivery date.


(c) OEM agrees that all orders/releases that call for delivery from [REDACTED***] days out are rescheduleable out to a maximum of [REDACTED***] days from the original delivery date.


(d) After OEM takes delivery of the first [REDACTED***] units, PINNACLE agrees that OEM may cancel any order/release that calls for delivery more than [REDACTED***] days out from the date that notice of cancellation is given. OEM understands that OEM will be obligated for the inventory and cancellation charges with respect to material associated with any canceled order/release; provided that PINNACLE shall use its best efforts to cancel orders for material and/or transfer material to other PINNACLE products or programs to the maximum extent possible to reduce OEM's cancellation liability.


- ----------- *** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.


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7. LIMITED WARRANTY AND DISCLAIMER


7.1 Warranty and Disclaimer. PINNACLE makes a limited [REDACTED***] warranty to OEM as set forth in the attached Limited Warranty as Exhibit C (the "Pinnacle Systems, Inc. Limited Warranty"). EXCEPT FOR SUCH EXPRESS LIMITED WARRANTY, PINNACLE MAKES AND OEM RECEIVES NO OTHER WARRANTIES OR CONDITIONS ON THE PRODUCTS, EXPRESS, IMPLIED, STATUTORY, OR IN ANY OTHER PROVISION OF THIS AGREEMENT OR COMMUNICATION WITH OEM, AND PINNACLE SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY OR CONDITION OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE. NOTWITHSTANDING THE FOREGOING, PINNACLE DOES NOT EXCLUDE LIABILITY TO THE EXTENT THAT SUCH LIABILITY MAY NOT BE EXCLUDED OR LIMITED BY LAW.


8. RETURNS AND REPLACEMENTS


8.1 Out of Warranty Repairs. Subsequent to the expiration of the applicable warranty period, PINNACLE shall service and maintain the GenieDVE Product at a price to OEM equal to PINNACLE's standard out-of-warranty terms for so long as PINNACLE is generally servicing and maintaining its product similar to the GenieDVE Product.


8.2 Warranty Returns. For Product to be returned under the provisions of Section 7.1, OEM must provide serial numbers of Products to be returned, and obtain a Return Material Authorization number ("RMA") from PINNACLE's Order Administration Department for the specific product and quantity to be returned. OEM will return the Product, freight prepaid and properly insured, in a suitable shipping carton with the RMA number displayed on the outside of the carton. OEM will use such carrier as PINNACLE may specify or, if no such specification is made, OEM will select the carrier. PINNACLE may refuse to accept return shipments that do not have an RMA number on the outside of the carton. The return must be received by PINNACLE within thirty (30) days from date of issuance of the RMA number. OEM will prepay the cost of freight and insurance related to the shipment of units to PINNACLE. PINNACLE will reimburse OEM for such freight and insurance costs with respect to all Products returned and confirmed as defective. In addition, PINNACLE will bear freight and insurance costs on the shipment of all replacement units to OEM. Shipment of replacement units to OEM will be made by PINNACLE within fourteen (14) days from date of receipt of returned Product. If PINNACLE finds no defects or deviations from the PINNACLE Product specification, and OEM cannot duplicate the problem for PINNACLE, OEM agrees to accept such Products and pay the cost of return shipment.


8.3 No Other Right to Return. Except as set forth in this Section 8, OEM has no right to return any other Product purchased from PINNACLE pursuant to the terms of this Agreement.


9. EXPORT REQUIREMENTS


OEM agrees that it will comply with export licensing requirements imposed by the United States Government and import requirements of destination countries for all exported Products, and will


- ----------- *** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.


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require all of its authorized resellers to agree to similar compliance provisions in their respective agreements.


10. TERM AND TERMINATION


10.1 This Agreement will continue in force for [REDACTED***] after the Effective Date. The Agreement will be renewed for [REDACTED***] periods unless either party notifies the other party of its desire to terminate [REDACTED***] days prior to the applicable anniversary of the Effective Date.


10.2 Termination for Convenience. After [REDACTED***], this Agreement may be terminated by either party at any time and for any reason by giving the other party written notice [REDACTED***] days in advance of said termination. In the event of such termination, neither party will be liable to the other party other than for payment for delivery of all Product prior to the effective date of termination and such other obligations as set forth in Section 7.2 hereof.


10.3 Termination for Cause.


(a) Either party's failure to perform any of its obligations under this Agreement in any material respect will be a default. In the event of a default, the nondefaulting party may send a written notice to the defaulting party describing the nature of the default. If the default is not corrected within thirty (30) days from the date of such notice, the nondefaulting party may immediately terminate the Agreement by written notice to the defaulting party.


(b) If PINNACLE terminates the Agreement for default by OEM, OEM will pay PINNACLE for all Products already delivered.


(c) If PINNACLE is determined to be in default, OEM is under no obligation to accept further delivery of Products following the termination date. OEM will pay for all Products received by the OEM under the terms and conditions of the Agreement.


10.4 Termination for Insolvency. This Agreement will terminate immediately without notice (i) upon the institution by or against either party of insolvency, receivership or bankruptcy proceedings, or any other proceedings for the settlement of debt, (ii) following either party's making an assignment for the benefit of creditors, or (iii) following either party's dissolution.


10.5 Return of Materials. All of PINNACLE's trademarks, Confidential Information, trade names, patents, copyrights, d ...