Reseller Agreement

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions.







SONY CONSUMER AUDIO/VIDEO PRODUCTS GROUP

SONY ELECTRONICS INC.

RESELLER AGREEMENT



ARTICLE I

PARTIES TO THIS AGREEMENT



This Agreement is entered into and effective as of May 15,1998 ("Effective Date") by and between:



S ony Consumer Audio/Video Products Group Dragon Systems, Inc. Diversified Markets and 320 Nevada Street Sony Electronics Inc. Newton, MA 02160 One Sony Drive Park Ridge, NJ 07 656



(hereinafter referred to as the "SEL") (hereinafter referred to as the

"Reseller")





ARTICLE II

PREMISES OF THIS AGREEMENT



WHEREAS, SEL is engaged in the sale and distribution (or, in the case of software, license) of various kinds of electronics products and accessories; and,



WHEREAS, the Reseller desires to purchase and/or license certain of such products and accessories for resale to Customers (as defined below).



NOW, THEREFORE, by reason of the foregoing premises, and in consideration of the mutual covenants set forth in this Agreement, the parties agree as follows:



ARTICLE III

TERM/RESELLER CLASSIFICATION/DEFINITIONS



(a) TERM: This Agreement shall commence as of the Effective Date and expire on March 31, 1999 (the "Term") unless earlier terminated in accordance with Section 11.0.



(b) RESELLER CLASSIFICATION: Reseller hereby represents and agrees that it will resell only the Products (iii) by adding value to, but not modifying, the Products as described in the Product and Market Schedule attached hereto and defined below.





RESELLER HEREBY ACKNOWLEDGES THAT SEL IS RELYING ON THE ABOVE REPRESENTATION AND AGREEMENT AS A FACTOR IN DECIDING TO ENTER INTO THIS AGREEMENT AS WELL AS TO DETERMINE RESELLER'S CLASS OF TRADE, THE PRODUCTS SEL IS WILLING TO SELL THE RESELLER, THE PRICES FOR SAME AND THE WARRANTY APPLICABLE TO THE PRODUC TS AS TO THE RESELLER AND THE END-USERS.



(c) BUNDLE: Pursuant to Article III (c), "Bundle" shall refer to only the combination of the Product and the Value-Added Component in a physical package which is sold as a single unit.



(d) CUSTOMERS: The term "Cust omer(s)" is defined and limited to those third party business entities not affiliated with the Reseller within a particular customer classification and/or market as set forth in the Product and Market Schedule through which Reseller distributes the Bundle s.



(e) PRODUCT AND MARKET SCHEDULE: The Product and Market Schedule, attached hereto as Article VI and made a part hereof, in addition to defining the Products and Customers, may contain terms and conditions in addition to or different from the General Ter ms and Conditions set forth in Article IV. In the event of a conflict between the terms and conditions of Article IV and the terms and conditions of the Product and Market Schedule, the terms and conditions of the Product and Market Schedule shall control .



(f) PRODUCTS: The term "Product(s)" shall be defined and limited to those products, accessories and software of SEL set forth in the Product and Market Schedule.



(g) SALE/RESALE: The term "Sale" or "Resale" (in any tense or form) whenever used in this Agreement shall mean license in the case of software Products. The term "Resale" (in any tense or form) shall also mean lease.



(h) THE SONY GROUP: The term "Sony Group" shall mean SEL, Sony Corporation of America, Sony Corporation (Tokyo, Japan) and all subsidiaries and affiliates of said companies.



(i) VALUE-ADDED COMPONENT: The term "Value-Added Component" shall mean the product or component created, owned and/or obtained or licensed by Reseller that must be included in the Bundle as set forth in the Product and Market Schedule.







ARTICLE IV

GENERAL TERMS AND CONDITIONS



SECTION 1.0 SCOPE OF THIS AGREEMENT



1.1 RESALE LIMITATION: SEL agrees to sell, and the Reseller agrees to purchase, the Products from SEL for resale only to the Customers upon the terms and conditions set forth in this Agreement.



1.2 NON-EXCLUSIVE: The Reseller acknowledges that its right to resell the Products under this Agreement is non-exclusive, and that SEL reserves the r ight to sell and distribute any of its products to any customers in the world, and to appoint any third party to do so, without giving the Reseller notice thereof and without incurring any liability to the Reseller therefor. Further, nothing herein shall be deemed to preclude the Reseller from selling brands of electronics products and accessories that are competitive with the Products.



1.3 STATUS AS INDEPENDENT CONTRACTOR: The relationship established between SEL and the Reseller by this Agreement is that of a vendor to its vendee and nothing herein contained shall be deemed to establish or otherwise create a relationship of principal and agent between SEL and the Reseller. The Reseller represents that it is an independent contractor who will not be deeme d an agent of SEL for any purpose whatsoever and neither the Reseller nor any of its agents or employees will have any right or authority to assume or create any obligation of any kind, whether express or implied, on behalf of SEL. This Agreement is not a f ranchise agreement and does not create a franchise relationship between the parties and if any provision of this Agreement is deemed to create a franchise between the parties, then this Agreement will be deemed null and void and will automatically termina te as if such provision had been deemed unenforceable by a court as provided in Section 12.8.



SECTION 2.0 ACCESS AND AUDIT



In order to verify the Reseller's compliance with this Agreement, the Reseller shall give SEL reasonable access to the Reseller's f acilities during normal business hours to make inspections of the Reseller's premises and to audit the books and records of the Reseller relating to the Products purchased by the Reseller, including the right to make copies of or abstracts from such books and records.



SECTION 3.0 SALE OF THE PRODUCTS



3.1 TERMS: SEL shall sell the Products to the Reseller upon the terms and conditions set forth in this Agreement.





Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions.



3.2 PRICES: SEL shall sell the Products to the Reseller at the prices and/or fees set forth on the Products and Market Schedule attached to the Agreement and made a part hereof subject to adjustment as p rovided in Section 3.3. SEL may increase or decrease the price of the Products by giving the Reseller notice and such new pricing will apply to all of the Reseller's orders received by SEL after the effective date set forth in such notice. The Reseller ma y terminate this Agreement by giving SEL notice within [**] days after the issuance of any such price increase to the extent of any orders not yet shipped by SEL. If SEL offers price, payment or promotional discounts or other special pricing or similar pro g rams to other value-added resellers, integrators or bundlers who compete with the Reseller for the Customers in the Market (as both Market and Customer are described in the Product and Market Schedule), then SEL will make such offer(s) available to the Re seller. SEL will use commercially reasonable efforts to provide the Reseller with forty-five (45) days notice of any such change.



3.3 ADJUSTMENTS: If the prices at which the Products are sold hereunder represent a price which has been reduced based on a re presentation by the Reseller that the Reseller would make certain volume purchases, and the Reseller fails to make purchases in the volumes represented, SEL may in its sole discretion adjust prices to the otherwise prevailing prices for the number of item s actually purchased, and the Reseller will pay SEL the difference promptly upon receipt of SEL's invoice therefor. If the Reseller resells any of the Products to any party other than the Customers or to any party on a stand-alone basis (i.e., not within a System) the Reseller shall pay SEL an adjustment charge equal to the difference between the price charged the Reseller for such Products and the then-current single lot list price of SEL for such Products.



3.4 ALLOCATIONS: SEL may, in its sole discretion, allocate its inventory of the Products.



3.5 DISCONTINUATION/CHANGES TO PRODUCTS: SEL may, in its sole discretion, discontinue the sale of any of the Products and any parts/accessories thereto (except where continued availability is required by law) and m ake such changes affecting their form, fit or function as it, in its sole discretion, determines, by giving the Reseller prior notice thereof but without incurring any liability to the Reseller therefor. SEL will use commercially reasonable efforts to pro v ide such notice at least [**] days in advance. If, because of any discontinuance or change to the Products affecting their form, fit or function, the Reseller does not wish to purchase same or any of the other Products covered by this Agreement, then the R eseller may terminate this Agreement by giving SEL notice thereof within [**] days of SEL's notice to it. SEL agrees that for any outstanding orders of the Reseller it will provide Products which are greater than or equal to the discontinued Product in fo rm, fit and function at the same or lesser price subject to availability and the provisions of Section 3.4 above.





3.6 TAXES: The Reseller shall bear the cost of any taxes (exclusive of taxes based on the net income of the Sony Group), levies, duties and f ees of any kind, nature or description whatsoever applicable to any of the Products supplied by SEL to the Reseller. The Reseller will pay SEL all such sums upon demand unless the Reseller provides SEL, at the time of the submission of its purchase orders , tax exemption certificates or licenses acceptable to the appropriate taxing authorities.



3.7 PURCHASE ACCEPTANCE/CONTROLLING TERMS: SEL shall have the right in the exercise of its sole and absolute discretion to reject any purchase order, either in whole or in part, placed by the Reseller, and no purchase order shall be binding upon SEL unless accepted by SEL in writing or by delivery of Products in whole or partial fulfillment thereof.



Anything herein to the contrary notwithstanding, unless otherwise ex pressly agreed to in writing by SEL, any shipment of Products to the Reseller in whole or partial fulfillment of any purchase order placed by the Reseller shall not be deemed to constitute an acceptance by SEL of any of the terms and conditions of such pu rchase order, except as to the identification of the Products, and the quantities involved. All such purchase orders shall be governed by the provisions of this Agreement.



SECTION 4.0 TRADEMARKS



The Reseller acknowledges the validity of trade names and t rademarks of the Sony Group ("Trademarks'") and that it shall NOT, as a result of this Agreement, have any right to or interest in any tradenames or trademarks owned, used or claimed now or in the future by the Sony Group. Notwithstanding the foregoing, R eseller shall have the right to use relevant Trademarks in conjunction with the authorized sale of the Bundle, subject to SEL's prior written approval for each particular use, which approval shall not be unreasonably withheld.



SECTION 5.0 SHIPMENTS



5.1 S HIPMENTS: The Reseller shall bear all costs and expenses incident to SEL's shipment of the Products to it, except in the case of any shipment which qualifies for prepaid freight under SEL's program then in effect. SEL shall select the method of shipment a nd the carrier. SEL will ship the Products only to locations in the continental United States, including Alaska.



5.2 TITLE AND RISK OF LOSE: Title to all of the Products sold by SEL to the Reseller shall pass upon SEL's delivery thereof to the carrier. Ris k of loss or damage to any of the Products in transit, without regard to whether SEL paid the shipping charges therefor or whether any third party is designated as consignee thereof, is the Reseller's, whose responsibility it will be to file claims with t he carrier.





Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions.



5.3 TIME OF DELIVERY: Delivery dates set forth in any Reseller order or other purchasing documents, or any confirmation thereof by SEL, shall be deemed to be estimated only and subject to SEL's then current leadtimes for the Products. The Reseller will not be excused from payment of any amounts it owes (invoices for Products sold are only issued upon s h ipment) to SEL or from the performance of any of its other obligations under the terms and conditions hereof as a result of, and SEL will not be liable to the Reseller for damages resulting from, SEL's failure to meet any of those dates. However, if SEL's delay in shipment or delivery of any ordered Products exceeds by thirty (30) days such first estimated date, then either party may cancel any Reseller order or part thereof not previously fulfilled by giving the other written notice thereof and without in curring any liability to the other therefor.



5.4 SEPARATE TRANSACTION: Each Reseller order for the Products under this Agreement shall be deemed a separate transaction and each shipment of the Products by SEL will constitute a separate sale, obligating the Reseller to pay therefor, whether such shipment be in whole or only in partial fulfillment of such order.



5.5 SHIPMENTS AFTER EXPIRATION: SEL's acceptance or shipment of any order from the Reseller for Products after the termination or expiration of this Agreement will not be construed as a renewal or extension of this Agreement nor as a waiver of termination or expiration of this Agreement. Any such acceptance or shipment shall be deemed an accommodation only.



5.6 STOP SHIPMENTS: SEL may, in its sole di scretion, cancel any Reseller orders previously accepted by SEL or delay the delivery of any of the Products covered thereby if the Reseller defaults in any of its obligations under this Agreement or if SEL reasonably believes that the Reseller may do so for or with respect to any past or pending Reseller order.



SECTION 6.0 CREDIT; PAYMENT AND INDEBTEDNESS



6.1 MAINTENANCE OF CREDIT LINE: The Reseller shall maintain a credit line sufficient to support its purchases of the Products and to pay any indebtedn ess to SEL when due. SEL may, in its sole discretion, either generally or with respect to any specific Reseller order, vary, change or limit the amount or duration of credit allowed to the Reseller. The Reseller will make available to SEL such statements of its financial condition as SEL may, from time to time, reasonably request.



6.2 PAYMENT TERM: Unless otherwise provided in the Product and Market Schedule, payment terms are net [**] days from the date of SEL's invoice; invoices are issued only on the date of shipment.



6.3 UNAUTHORIZED DEDUCTIONS: The Reseller shall not make deductions of any kind from any monies it owes to SEL unless the Reseller has received an official credit memorandum from SEL authorizing such deduction.

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