Hardware Distribution Agreement

BELL MICROPRODUCTS, INC.

HARDWARE DISTRIBUTION AGREEMENT



This Agreement, made this 10 day of October, 1996, is by and between Bell Microproducts, Inc. ("Distributor"), a California Corporation having its principal place of business at 1941 Ringwood Avenue, San Jose 95131-1721, and Sage Inc. ("Vendor"), a California Corporation having its principal place of business at 4633 Ironsides Drive, Suite 420, Santa Clara, California, 95054.







Vendor manufactures, produces and/or supplies computer products and desires to grant to Distributor the right to sell and distribute the products, as hereinafter defined, upon the terms and conditions set forth below.



Distributor is engaged in the sale and distribution of computer products and desires to have the right to sell and distribute Vendor's products and upon said terms and conditions.



In consideration of the mutual covenants and agreements set forth below, the parties hereto agree as follows:



1. RECITALS



The recitals stated above are incorporated herein by reference.





2. GRANT OF DISTRIBUTION RIGHTS



2.1 Vendor hereby grants to Distributor, and Distributor accepts, the

non-exclusive right to distribute in the geographic regions

("Territory") and to customers ("Customers") as defined in Exhibit A,

attached hereto, all computer products ("Product" or "Products")

listed on Exhibit B, attached hereto and made a part hereof, as

amended from time to time by mutual written agreement.



2.2 Vendor agrees to make available and to sell to Distributor such

Product as Distributor shall order from Vendor at the prices and

subject to the terms set forth in this Agreement. Vendor reserves the

right at any time to change, modify or discontinue any Product, model,

type or design furnished hereunder. In addition, Vendor reserves the

right to change its published Distributors' Price for any Product at

any time.



2.3 Vendor may appoint other distributors to distribute its Products. 3. TERM



The term of this Agreement shall be for a period of one (1) year, beginning

on the date first above written. Thereafter, the Agreement shall be renewed

for successive terms of one (1) year without further notice unless

terminated sooner as provided under the provisions of the Agreement.





4. OBLIGATIONS OF VENDOR



4.1 Vendor shall use its best efforts to ship Product promptly after

receipt of Distributor's Purchase Order for Product, unless otherwise

directed by Distributor.



4.2 At the time of initial order and from time to time thereafter, Vendor

shall provide at no charge reasonable amounts of sales literature,

which amounts shall be solely determined by Vendor.



4.3 For each Product shipment to Distributor, Vendor shall issue to

Distributor an invoice showing Distributor's Purchase Order number and

Product part number, description, price and any discount. At

Distributor's request, Vendor shall provide Distributor with a current

statement of account, listing all invoices outstanding and any

payments made and credits given since the date of the previous

statement, if any.





5. OBLIGATIONS OF DISTRIBUTOR



5.1 Distributor must submit written Purchase Orders (which may be

transmitted via facsimile) for all Products purchased under this

Agreement. Purchase Orders must specify Product model numbers,

quantity ordered, shipping destinations, shipping dates and preferred

carrier (if any). All such Purchase Orders are subject to the terms

and conditions set forth in this Agreement and in the attached Exhibit

C. Any terms or conditions which add to or differ from the terms and

conditions of this Agreement shall be invalid. Distributor agrees,

subject to Vendor's ability to supply Product(s), that Distributor

will carry a sufficient inventory of Product(s) to provide immediate

"off-the-shelf" delivery to Distributor's Customers, and that, upon

request, Distributor will make available to Vendor its current Product

inventory status.



5.2 Distributor will handle all Product returns from its Customers and

batch them for return to Vendor at regular intervals.



5.3 Distributor agrees to consistently use best efforts to market, sell,

promote and otherwise encourage the purchase of Products by Customers.

Distributor shall factually present Products in terms of function and

performance, and conduct its business in a manner reflecting favorably

upon Vendor's valuable good will and reputation. Distributor further

agrees to display, demonstrate and market Products prominently and

favorably in comparison with other competitive products.



5.4 Distributor will maintain sufficient facilities, personnel and

demonstration units of Products so as to be able to effective

demonstrate Products. Vendor agrees to provide technical assistance on

an ongoing basis to its Customers. Distributor will make its

facilities available for Product training and support, with the

assistance of Vendor.



5.5 Distributor agrees to provide to Vendor sell-through data, including

customer name, address, and Product type for each Product within

fifteen (15) days of the end of each month.





6. PRICE AND TERMS



6.1 The net price (excluding taxes, duties, freight charges and insurance)

for Products sold by Vendor to Distributor shall be Vendor's

Distributors' Price appearing in effect on the date Vendor receives

Distributor's Purchase Order. Vendor may change the Distributor's

Price of any or all of its Products with thirty (30) days written



6.2 In the event that Vendor increases its published Distributors' Price

for any Product which Distributor is authorized to resell, only

Purchase Orders previously accepted by Vendor will be invoiced at the

lower price. All new Purchase Orders will be subject to the price



6.3 In the event that Vendor decreases its published Distributors' Price

for any Product which Distributor is authorized to resell, Vendor will

apply "Price Protection" to any Purchase Order in process, and to any

Product which is in Distributor's inventory at the time of the price

decrease, with the following restrictions:



(i) Products in inventory must have been purchased directly from

Vendor. Vendor reserves the right to verify Price Protection

claims and audit inventory at Distributor's sites;



(ii) Only Product(s) with invoices issued within the previous one

hundred eighty (180) days will be protected;



(iii) Distributor must present a written request for credit within

thirty (30) days of the price decrease, including the serial

numbers of Product(s) affected; and



(iv) Once Price Protection is approved by Vendor, Distributor must

submit a Purchase Order for Product(s) with a dollar value equal

to or greater than the price protection credit total.



7. SHIPPING



Vendor shall ship Product only pursuant to Distributor Purchase Orders

received by Vendor. Product shall be shipped F.O.B. Vendor's warehouse,

with risk of loss or damage as set forth in Standard Terms and Conditions,

Exhibit C, Section 9, attached hereto. Further, Vendor's standard shipping

and handling charges, as set forth in Standard Terms and Conditions,

Exhibit C, Section 9, attached hereto and amended from time to time, shall

apply to all Purchase Orders.



8. CANCELLATIONS



Distributor may, without charge, cancel any Products on order, provided

that Vendor receives written confirmation of such cancellation at least

two (2) days prior to the original scheduled shipment date.



9. PROMOTIONAL ACTIVITIES



9.1 Distributor may advertise and promote Product ("Promotional

Activities") in a commercially reasonable manner and may use Vendor's

trademarks, service marks and trade name in connection therewith;

provided that Distributor shall submit the advertisement or promotion

to Vendor for review and approval prior to the occurrence of the

promotion, which approval shall not be unreasonably withheld or

delayed. Vendor retains all rights, title and interest in its trade

mark, and all use by Distributor of such trademarks inures to

Vendor's benefit.







9.2 Vendor agrees to cooperate with Distributor in Promotional Activities

and hereby grants Distributor a Cooperative Promotion Allowance

("CPA"). Vendor shall accrue the CPA at a rate of two percent (2.0%)

of invoice amounts for Product purchased from Vendor and paid by

Distributor, excluding shipping, handling, taxes and the like, and

adjusted for credits.



9.3 Distributor shall use the CPA for Promotional Activities such as, but

not limited to, seminars, print advertising and direct mail, which

prominently and positively feature Products. Upon receipt of

reasonable evidence of such expenditures, Vendor will debit the full

amount of qualifying expenditures from the CPA accrued to date by

Distributor, and Vendor will credit the same amount against Vendor's



9.4 CPA credits must be used within twelve (12) months of accrual or be

lost by Distributor.



10. STOCK ROTATION



Distributor may return Products which Distributor has previously taken

delivery of subject to the following conditions:



10.1 Stock rotation may occur in the months of March, June, September and



10.2 Product must have been purchased directly from Vendor and must be in

restockable and salable condition, including their original Vendor



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