Development and License Agreement - Seagate Technology Inc. and Dragon Systems Inc.


                        DEVELOPMENT AND LICENSE AGREEMENT


         This Development and License Agreement (the "Agreement") is made and
entered into as of this 28th day of June, 1996 between SEAGATE TECHNOLOGY, INC.,
a Delaware corporation, with offices at 920 Disc Drive, Scotts Valley,
California 95066 ("Seagate"), and DRAGON SYSTEMS, INC., a Delaware corporation,
with offices at 320 Nevada Street, Newton, Massachusetts 02160 ("Dragon
Systems").

         WHEREAS, Dragon Systems is developing the voice recognition software
described in Exhibit A hereto; and

         WHEREAS, the parties desire that Dragon Systems complete development
of, and license to Seagate, this software on the terms and conditions set forth
herein;

         In consideration of the mutual promises contained herein, Seagate and
Dragon Systems agree as follows:

         1.       Definitions.

                  The following terms shall have the following meanings herein:

                  1.1 "Software" shall mean all current and future versions
during the term of this Agreement of the software described in Exhibit A hereto,
including all Dragon Systems New Versions of the Software and all Dragon Systems
user documentation with respect thereto.

                  1.2 "New Version" of the Software means each error correction,
improvement, update, new version, new release, or other modification or addition
to the Software.

                  1.3 "Development Task" shall mean the development of the
Software to be performed by Dragon Systems pursuant to this Agreement and
Exhibit B.

                  1.4 "Deliverables" shall mean the items, if any, to be
delivered by Dragon Systems to Seagate in connection with each Milestone, as set
forth in Exhibit B.

                  1.5 "Specifications" shall mean the technical and other
specifications for the Deliverables and Development Task, as set forth in
Exhibit B.

                  1.6 "Development Schedule" shall mean the schedule for
completion of the Development Task, as set forth in Exhibit B.

   2

                  1.7 "Milestone" shall mean each development milestone
identified in Exhibit B.

                  1.8 "Aggregate Payment Cap" for each Milestone shall mean the
amount so specified in Exhibit B. This amount specifies the maximum aggregate
amount payable by Seagate for completion of that Milestone and all prior
Milestones.

                  1.9 "Status Report" shall have the meaning specified therefor
in Section 2.2 below.

                  1.10 "Development Costs" means all direct expenses plus
certain related overhead expended towards the development of the Software by
Dragon Systems pursuant to this Agreement. Overhead is defined as engineering
overhead only (non-S, G, & A) which would encompass such expenses as facilities
overhead costs, miscellaneous equipment and supplies, equipment depreciation,
travel, and MIS support. Direct expenses shall include direct payroll expenses,
and any other direct expenses specifically related to the development of the
Software. In the event that \s\ JKB \s\SL Dragon Systems employees engage in
extraordinary travel, Seagate will be charged only such extraordinary travel
expenses as are directly attributable to the Development Task.

                  1.11 "Complete" or "Completion," with respect to development
of the Software, shall mean that Dragon Systems has certified and Seagate has
confirmed that development and testing of the Software have been completed by
Dragon Systems, and that the Software and related documentation are fully ready
for commercial use and distribution.

                  1.12 "Net Revenue" of a party with respect to a product means
(i) the aggregate license fees and other revenue received by the party from the
licensing and distribution of the product, but only from licensing and
distribution of the product and not including such ancillary revenue as fees
received from support, maintenance, installation, technical assistance, or
consulting, and not including freight, taxes, insurance, and similar ancillary
charges, less (ii) credits for refunds and returns.

                  1.13 "Source Code" means the source code for the Software, in
printed, machine readable, and any other form and including all existing
comments, and all test suites and technical and other documentation reasonably
necessary for a reasonably skilled programmer to understand and use the source
code.

                  1.14 "Affiliate" of a party means any entity which controls,
is controlled by, or is under common control with that party, where "control"
means ownership or control, direct or indirect, of more than fifty percent (50%)
of the stock or other equity interest entitled to vote for the election of
directors or equivalent governing body of the entity.

                                       -2-

   3
          Confidential Materials omitted and filed separately with the
        Securities and Exchange Commission. Asterisks denote omissions.


         2.       Development.

                  2.1      Development.

                           (a) Dragon Systems agrees to use its best efforts to
perform the Development Task in accordance with the Specifications and task
description in Exhibit B, including without limitation completion of the
Development Task, and each Milestone, and delivery to Seagate of all applicable
Deliverables, in accordance with the Development Schedule. Upon completion of
each Milestone, Dragon Systems shall deliver to Seagate all applicable
Deliverables, including documentation, for evaluation by Seagate.

                           (b) Dragon Systems agrees not to engage in any work
or services on its behalf or for any other party which would jeopardize or
conflict with its obligations under this Agreement.

                           (c) Dragon Systems agrees to complete development of
the Software no later than [**] after Dragon Systems incurs [**] in performance
of the Development Task.

                  2.2      Status Reports.

         Within twenty (20) days after the end of each calendar quarter, Dragon
Systems shall deliver to Seagate a written report (the "Status Report")
describing in reasonable detail the status of the development of the Software,
including without limitation the then current status of completed development,
development accomplished during the preceding calendar quarter, known problems
and the anticipated effect on the project, current and planned staffing, whether
Dragon Systems expects to meet the Development Schedule, Specifications, and
other aspects of the Development Exhibit and, if not, the variations, any other
information pertaining to the development of the Software that would reasonably
be of interest to Seagate, as well as any information specifically and
reasonably requested by Seagate. Dragon System represents and warrants that each
Status Report will be reasonably complete and accurate, and Dragon System agrees
to update each Status Report, prior to the delivery of the next quarterly Status
Report, in the event major problems or other major variations are encountered.
Dragon Systems will also respond to reasonable inquiries from time to time from
Seagate concerning the development project.




                                       -3-

   4
                  2.3      Acceptance.

                  Upon delivery to Seagate of the Deliverables for each
Milestone, Seagate shall test and evaluate such Deliverables for conformity to
the Development Task description and Specifications. Seagate shall provide
Dragon Systems within fourteen (14) days after delivery of such materials with
written acceptance thereof, or a statement of defects to be corrected. Dragon
Systems shall promptly correct such defects and return the corrected
Deliverables for retesting and reevaluation, and Seagate shall within fourteen
(14) days after such redelivery provide Dragon Systems with written acceptance
or a statement of defects. The parties shall repeat this procedure until
acceptance of the Deliverables or termination of this Agreement by Seagate.

         3.       Ownership.

                  Dragon Systems will retain ownership of the Software, and no
ownership of the Software is transferred to Seagate by this Agreement. Seagate,
however, shall retain ownership of any modifications, New Versions, or other
derivative works prepared by or for Seagate, subject to Dragon Systems'
ownership of the underlying Software.

         4.       Software License.

                  4.1 Object Code. Dragon Systems grants to Seagate, under all
intellectual property rights with respect thereto, a worldwide, perpetual,
irrevocable (subject only to Section 10.2 below) license, with right to
sublicense, to reproduce, have reproduced, use, import, and distribute the
Software, alone and/or integrated with other software, products, or other items,
and directly to end users and/or through third parties. This license extends to
the Software in executable code, object code, and any other form except Source
Code. Seagate will reproduce Dragon Systems' copyright notice in any copy of the
Software or any portion thereof.

                  4.2 Source Code. Dragon Systems grants to Seagate a worldwide,
perpetual, irrevocable (subject only to Section 10.2 below) license to
reproduce, use, modify and otherwise prepare derivative works of the Source Code
and derivative works thereof. Seagate, however, agrees not to exercise any
rights with respect to the Source Code until it is rightfully in possession of
the Source Code. It is understood that Seagate's right to obtain and possess the
Source Code is set forth exclusively in Section 4.5 below and the escrow
agreement referenced therein. The license granted to Seagate pursuant to Section
4.1 above shall extend to any modifications, New Versions, or other derivative
works of the Software prepared by Seagate pursuant to this section. Seagate
shall own each such modification, New Version, or other derivative work, subject
to Dragon Systems' retention of ownership of the underlying Software. Seagate
shall be entitled to retain consultants or other subcontractors to exercise its
rights pursuant to this section, subject to confidentiality obligations
substantially similar to those set forth in

                                       -4-

   5
          Confidential Materials omitted and filed separately with the
        Securities and Exchange Commission. Asterisks denote omissions.

Sections 9.1, 9.2, and 9.3 below. Seagate shall protect the Source Code with
precautions similar to those used for its own software source code, and shall
restrict access to the Source Code to employees, consultants, and subcontractors
with a need for such access pursuant to this Agreement.

                  4.3 Exclusivity. Seagate's license to distribute the Software,
pursuant to Section 4.1 above, shall be exclusive. Dragon Systems shall refer to
Seagate all customer requests for Software. Except for this exclusive license to
distribute the Software, the licenses and rights granted to Seagate in Sections
4.1 and 4.2 above shall be co-exclusive, i.e., Dragon Systems shall retain the
right itself to also exercise the rights granted to Seagate, but Dragon Systems
shall not grant, and represents and warrants that it has not granted, such
rights, or any of them, to any third party.

                  4.4 Object Code Delivery. Within [**] after Completion of
development of the Software, Dragon Systems shall deliver to Seagate one master
copy of the Software in object code or executable form, suitable for
reproduction and use pursuant to this Agreement. Dragon Systems shall promptly
provide to Seagate each New Version of these materials as such New Version is
created by or for Dragon Systems.

                  4.5 Source Code Delivery. Upon written request of Seagate,
Dragon Systems shall immediately deliver to a third party escrow company
selected by Seagate, pursuant to an escrow agreement substantially in the form
attached hereto as Exhibit E, one copy of the Source Code (in machine readable
form suitable for use by Seagate). The Source Code shall be released and
delivered to Seagate as set forth in the escrow agreement, which shall be
limited to release only if (i) Dragon Systems dissolves or liquidates, or takes
any corporate or other action to achieve dissolution or liquidation, or Dragon
Systems ceases to conduct business in the normal course, or (ii) both (A)
Dragons Systems is a debtor in a bankruptcy proceeding or other proceeding for
the general settlement of its debts, or a receiver or other official is
appointed for all or substantially all of Dragon Systems' assets, or Dragon
Systems makes a general assignment for the benefit of creditors, and (B) Dragon
Systems is unable to perform its obligations pursuant to Section 8 below. Dragon
Systems shall promptly provide to the escrow company each New Version of these
materials as such New Version is created by or for Dragon Systems. Seagate shall
be responsible for the fees of the escrow company.

         5. Dragon Systems Representations, Warranties, and Indemnities.

            5.1 Dragon Systems represents and warrants on a continuing basis:


                                       -5-

   6
                           (a) Corporate Authority. Dragon Systems has the right
to enter this Agreement, is a corporation duly organized, validly existing, and
in good standing under the laws of Delaware, has the power and authority,
corporate and otherwise, to execute and deliver this Agreement and to perform
its obligations hereunder, and has by all necessary corporate action duly and
validly authorized the execution and delivery of this Agreement and the
performance of its obligations hereunder.

                           (b) No Conflicts. The execution, delivery and
performance by Dragon Systems of this Agreement and each other agreement,
document, or instrument now or hereafter executed and delivered by Dragon
Systems pursuant thereto or in connection herewith will not: (i) conflict with
or violate the articles or certificate of incorporation or by-laws of Dragon
Systems or any provision of any law, rule, regulation, authorization or judgment
of any governmental authority having applicability to Dragon Systems, its
employees, or its or their actions; or (ii) conflict with or result in any
breach of, or constitute a default under, any note, security agreement,
commitment, contract or other agreement, instrument or undertaking to which
Dragon Systems is a party or by which any of its property is bound. Dragon
Systems represents and warrants that it is under no obligation or restriction,
and agrees that it will not assume any obligation or restriction or take any
action, that does or would in any way interfere or conflict with, or that does
or would present a conflict of interest, concerning Dragon Systems' performance
under this Agreement or would restrict any of the rights and licenses granted to
Seagate herein.

                           (c) Ownership. Dragon Systems owns and will own the
Software or otherwise has and will have the right and power to grant the
licenses and other rights granted to Seagate hereunder.

                           (d) Independent Work. With exception of Text-to-
Speech \s\ JKB \s\SL, which may be licensed from a third party, the Software has
been and will have been independently created by Dragon Systems' employees,
agents, and consultants, and use and distribution of the Software by Seagate as
contemplated herein will not depend on the acquisition of rights from any third
party.

                           (e) No Infringement or Claims. To the best of Dragon
Systems' knowledge and belief, neither the Software nor the exercise by Seagate
of any of the rights granted hereunder, will infringe any intellectual property
or other right of any third party. There is no pending litigation or claim nor,
to the best of Dragon Systems' knowledge and belief, the basis for any claim,
that Dragon Systems does not own the Software or that the exercise by Seagate of
any right granted hereunder with respect thereto will infringe any intellectual
property right of any third party.

                  5.2 Infringement Indemnity. Dragon Systems agrees to defend
any claim or action against Seagate or any of Seagate's sublicensees or any of
their direct or indirect customers, to the extent alleging that the Software, or
any portion thereof,

                                       -6-

   7
infringes any third party US. or Canadian patent, worldwide copyright, or other
intellectual property right (other than trademarks), and Dragon Systems agrees
to pay all damages awarded, or settlements entered into, in connection
therewith. Seagate agrees to notify Dragon Systems in a timely fashion of each
such claim or action, and agrees to provide to Dragon Systems reasonable
assistance (at Dragon Systems' expense) in connection therewith and to provide
to Dragon Systems the right to control the defense or settlement of the claim or
action, provided that any settlement shall be subject to the prior written
approval of Seagate, which approval shall not be unreasonably withheld. Seagate
shall be entitled to participate in the defense of any such claim or action at
its expense, provided that if Dragon Systems is financially or otherwise unable
to properly undertake the defense of the claim or action, Seagate shall be
entitled to do so at Dragon Systems' expense. If the Software, or any portion
thereof, is held to infringe any U.S. or Canadian patent, worldwide copyright,
or other intellectual property right, or its use or distribution, or the
exercise of any other right granted to Seagate, is enjoined, Dragon Systems will
use its best efforts to modify or replace the Software with equivalent,
noninfringing software, or to obtain all necessary rights with respect thereto
to enable continued use and distribution of the Software and for Seagate to
continue to exercise all rights and licenses granted to Seagate in this
Agreement. If, in Dragon Systems' reasonable judgment, the Software, or any
portion thereof, is likely to be held to infringe any U.S. or Canadian patent,
worldwide copyright, or other intellectual property right, or its use or
distribution, or the exercise of any other right granted to Seagate, is likely
to be enjoined, Dragon Systems may modify or replace the Software with
equivalent, noninfringing software, or to obtain all necessary rights with
respect thereto to enable continued use and distribution of the Software and for
Seagate to continue to exercise all rights and licenses granted to Seagate in
this Agreement. Dragon Systems shall have no liability or obligation pursuant to
this section, however, to the extent the claim or action is caused by
modification of the Software (other than by Dragon Systems) or combination of
the Software with items not supplied by Dragon Systems.

         6. Seagate Representations and Warranties. Seagate represents and
warrants on a continuing basis:

                  6.1 Corporate Authority. Seagate has the right to enter this
Agreement, is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware, has the power and authority,
corporate and otherwise, to execute and deliver this Agreement and to perform
its obligations hereunder, and has by all necessary corporate action duly and
validly authorized the execution and delivery of this Agreement and the
performance of its obligations hereunder.

                  6.2 No Conflicts. The execution, delivery and performance by
Seagate of this Agreement and each other agreement, document, or instrument now
or hereafter executed and delivered by Seagate pursuant thereto or in connection
herewith will not: (i) conflict with or violate the articles of incorporation or
by-laws of Seagate or any

                                       -7-

   8
          Confidential Materials omitted and filed separately with the
        Securities and Exchange Commission. Asterisks denote omissions.

provision of any law, rule, regulation, authorization or judgment of any
governmental authority having applicability to Seagate or its actions; or (ii)
conflict with or result in any breach of, or constitute a default under, any
note, security agreement, commitment, contract or other agreement, instrument or
undertaking to which Seagate is a party or by which any of its property is
bound.

         7.       Fees and Royalties.

                  7.1 Engineering Fee. Together with each Milestone delivery by
Dragon Systems pursuant to Section 2.1(a) above, Dragon Systems shall submit to
Seagate a detailed description of Development Costs incurred by Dragon Systems,
since completion of the preceding Milestone, in developing the Software pursuant
to this Agreement, substantially in the form attached hereto as Exhibit C and
signed and certified as correct by the chief financial officer of Dragon
Systems. Within [**] after Seagate's acceptance of the Milestone as complete
pursuant to Section 2.3 above, Seagate shall pay to Dragon Systems, as a
nonrefundable engineering fee, the amount of such Development Costs, plus any
such Developments Costs incurred and reported by Dragon Systems for prior
Milestones but not paid by Seagate due to the Aggregate Payment Cap, provided
that the aggregate payments by Seagate upon completion of each Milestone, for
that Milestone and all prior Milestones, shall not exceed the associated
Aggregate Payment Cap specified in Exhibit B for that Milestone. In no event
shall Seagate be obligated to pay to Dragon Systems in excess of [**] pursuant
to this section.

                  7.2 Software Royalty. Seagate shall pay to Dragon Systems a
royalty equal to [**] of Seagate's Software Net Revenue. These payments shall be
made within [**] after the end of each calendar quarter, based upon such Net
Revenue during that calendar quarter, and shall be accompanied by a report, in
reasonable detail, specifying the basis for the amount paid. All Software Net
Revenue and payments shall be computed in United States dollars. Net Revenue in
other currencies in any calendar month shall be converted to United States
dollars according to the rate of exchange published in the Wall Street Journal
on the last business day of that calendar month. The parties may, in their
discretion, renegotiate the above [**] royalty rate if Dragon Systems provides
to Seagate significant New Versions.

                  7.3 Audit Rights. Dragon Systems shall be entitled to audit
Seagate's books and records for the sole purpose of confirming the accuracy of
Net Revenue reported pursuant to Section 7.2 above. Seagate shall be entitled to
audit Dragon Systems' books and records to confirm the accuracy of Dragon
Systems' Development Costs reported pursuant to Section 2.2 or 7.1 above. Each
such audit shall be conducted in accordance with the procedures set forth in
this section. The auditing party shall be

                                       -8-

   9
entitled to retain an independent public accounting firm, reasonably acceptable
to the other party, to audit the audited party's books and records solely for
the purposes set forth hereinabove. Any such audit shall be performed at the
auditing party's expense, on at least twenty (20) days' prior written notice to
the audited party, during normal business hours and, at the audited party's
option, subject to the independent accounting firm's execution of a reasonable
confidentiality agreement. The independent accounting firm shall report to the
auditing party only whether the correct Net Revenue or Development Costs, as
applicable, have been reported and/or the correct royalties have been paid, as
applicable, and, if not, the amount of the discrepancy. In no event shall the
audited party's customer names be reported to the auditing party. Audits shall
be conducted no more frequently than twice in any twelve (12) month period,
unless the preceding audit revealed a discrepancy. In the case of any
discrepancy, the appropriate adjustment in payments shall promptly be made. Any
such audit shall be performed at the auditing party's expense, unless the audit
reveals a discrepancy of more than the greater of (i) fifty thousand dollars
($50,000) or (ii) five percent (5%) between the Net Revenue or Development Costs
actually reported and those which should have been reported, in which case the
audited party shall reimburse the audit fee.

         8.       Software Support.

                  Dragon Systems agrees to provide to Seagate the Software
support set forth in Exhibit D hereto.

         9.       Confidential Information.

                  9.1 Confidential Information. The term "Confidential
Information" shall mean any information disclosed by one party to the other (i)
prior to the date of this Agreement but with respect to the subject matter
hereof, or (ii) pursuant to this Agreement, in each case which is in written,
graphic, machine readable or other tangible form and is marked "Confidential,"
"Proprietary" or in some other manner to indicate its confidential nature.
Confidential Information may also include oral information disclosed by one
party to the other pursuant to this Agreement, provided that such information is
designated as confidential at the time of disclosure and reduced to a written
summary by the disclosing party, within thirty (30) days after its oral
disclosure, which is marked in a manner to indicate its confidential nature and
delivered to the receiving party. All Source Code, however, shall be considered
Confidential Information whether or not it is so marked.

                  9.2 Confidentiality. Each party shall treat as confidential
(as set forth herein) all Confidential Information of the other party, and shall
not use such Confidential Information except as contemplated herein or otherwise
authorized in writing. Each party shall implement reasonable procedures to
prohibit the unauthorized disclosure or misuse of the other party's Confidential
Information and shall not intentionally disclose such Confidential Information
to any third party except for the

                                       -9-

   10
purposes of this Agreement, and subject to confidentiality obligations similar
to those set forth herein. Each of the parties shall use at least the same
procedures and degree of care that it uses to prevent the disclosure of its own
confidential information of like importance to prevent the disclosure of
Confidential Information disclosed to it by the other party under this
Agreement, but in no event less than reasonable care.

                  9.3 Exceptions. Notwithstanding the above, neither party shall
have liability to the other with regard to any Confidential Information of the
other which:

                      (i) was publicly available at the time it was disclosed or
becomes publicly available through no fault of the receiver;

                      (ii) was known to the receiver, without similar
confidentiality restriction, at the time of disclosure;

                      (iii) is disclosed with the prior written approval of the
discloser;

                      (iv) was independently developed by the receiver without
any use of the Confidential Information; or

                      (v) becomes known to the receiver, without similar
confidentiality restriction, from a source other than the discloser without
breach of this Agreement by the receiver.

In addition, each party shall be entitled to disclose the other's Confidential
Information to the extent required by any order or requirement of a court,
administrative agency, or other governmental body, provided that the receiver
shall provide prompt, advance notice thereof to enable the discloser to seek a
protective order or otherwise prevent such disclosure.

                  9.4 Residuals. Notwithstanding anything else in this
Agreement, however, each party's employees and consultants shall be entitled to
use, without restriction (subject to the above nondisclosure obligations) or
payment and for any purpose, the other party's Confidential Information retained
in such employees' or consultants' memory as a result of exposure to such
Confidential Information pursuant to this Agreement, subject only to the other
party's patents, copyrights, and mask work rights. Nothing in this Agreement
will restrict each party's rights to assign or reassign its employees, including
without limitation those who have had access to the other party's Confidential
Information, to any project in its discretion.

         10. Termination.


                                      -10-

   11
                  10.1 Term. The term of this Agreement shall commence on the
date first set forth above and shall continue thereafter unless and until
terminated as provided in this section or elsewhere in this Agreement.

                  10.2 Convenience. Seagate shall be entitled to terminate this
Agreement at any time, for any reason or for no reason, on written notice to
Dragon Systems. Upon any such termination by Seagate, the rights and licenses
granted to Seagate in Section 4 shall terminate, provided that Seagate shall be
entitled to retain and use a reasonable number of copies of the Software and
related materials to support existing Software customers. Seagate must reimburse
all reasonable Development Costs incurred by Dragon prior to such termination
subject to the limits set forth in Section 7.

                  10.3 Default. If either party defaults in the performance of
its material obligations hereunder and if any such default is not corrected
within sixty (60) days after it shall have been called to the attention of the
defaulting party, in writing, by the other party, then the other party, at its
option, may, in addition to any other remedies it may have, thereupon terminate
this Agreement by giving written notice of termination to the other party.

                  10.4 Survival. The parties' rights and obligations with
respect to the following sections shall survive any termination of this
Agreement: 3, 4 (subject to Section 10.2), 5, 6, 7.2 (provided that if the
license in Section 4.1 terminates, this section shall survive only as to
Software distribution prior to the effective date of termination), 7.3, 8, 9,
10.2 (second sentence), 11, 12 (unless the licenses pursuant to Sections 4.1 and
4.2 terminate), and 13.

         11. Limitation of Liability.

                  IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR INCIDENTAL,
CONSEQUENTIAL, INDIRECT, OR SPECIAL DAMAGES OF THE OTHER PARTY ARISING OUT OF
THIS AGREEMENT.

         12. Infringement Prosecution.

                  The parties shall cooperate, as set forth herein, to prosecute
any patent, copyright, trade secret, or other intellectual property infringement
action against any third party with respect to the Software, but only with
respect to third party products, items, or activities which Seagate, in good
faith, determines are competitive with, or otherwise detrimentally affect
Seagate's activities with respect to, the Software ("Infringement Action").

                      (a) If either Seagate or Dragon Systems (the "Notifying
Party") wishes to commence an Infringement Action, then such party shall
promptly so notify

                                      -11-

   12
the other party (the "Other Party") in writing of such infringement (the
"Infringement Notice").

                      (b) The Other Party may, by written notice within thirty
(30) days after the Infringement Notice, elect to participate in the
Infringement Action and agree to pay one-half of the costs of such prosecution.
In such event, the parties shall jointly control and cooperate in prosecution of
the Infringement Action and shall share equally in any monetary award resulting
from such prosecution.

                      (c) If the Other Party does not elect to participate and
share expenses as set forth in Section 12(b):

                      (i) If the Notifying Party takes reasonable actions to
prosecute the infringement action within ninety (90) days after the expiration
of the thirty (30) day period specified in Section 12(b), then (A) the Notifying
Party shall have the sole right to prosecute the Infringement Action and retain
any monetary award resulting therefrom and (B) the Other Party shall, at the
Notifying Party's expense, take all actions reasonably requested by the
Notifying Party in such prosecution.

                      (ii) If the Notifying Party does not take reasonable
actions to prosecute the Infringement Action before the end of such ninety (90)
day period, or notifies the Other Party that it does not intend to prosecute
such infringement, then Section 12(a) shall become applicable again.

                      (d) If a party prosecutes an infringement and the other
party does not bear one-half the costs of such prosecution as set forth above,
then the prosecuting party shall retain the entire amount of any monetary award
resulting from such prosecution.

                      (e) If a party prosecuting an Infringement Action on its
own abandons the Infringement Action, then Section 12(a) above shall again apply
with respect to that infringement.

                      (f) Each party shall, at the other party's reasonable
expense, take all actions reasonably requested by the other party with respect
to any Infringement Action prosecuted pursuant to this section, including
without limitation the registration of copyrights (on an expedited basis if
reasonably requested by the prosecuting party), providing witnesses and
evidence, and/or joining the Infringement Action as a party plaintiff if
necessary.

         13.      General Provisions.

                  13.1 This Agreement shall be governed by and interpreted in
accordance with the laws of the State of California, without reference to
conflict of laws principles.

                                      -12-

   13
                  13.2 All disputes arising out of this Agreement shall be
subject to the exclusive jurisdiction of the state and federal (United States
District Court for the Northern District of California) California courts, and
the parties agree and submit to the personal and exclusive jurisdiction and
venue of these courts.

                  13.3 Dragon Systems shall perform its obligations hereunder as
an independent contractor and shall be solely responsible for its own financial
obligations. Nothing contained herein shall be construed to imply a partnership,
joint venture, or principal and agent relationship between the parties, and
neither party shall have any right, power or authority to create any obligation,
express or implied, on behalf of the other in connection with the performance
hereunder.

                  13.4 At any time or from time to time on and after the date of
this Agreement, Dragon Systems shall at the request of Seagate take or cause to
be taken all such other actions, at Seagate's expense, as Seagate may reasonably
deem necessary or desirable in order for Seagate to obtain the full benefits of
this Agreement and the transactions contemplated hereby.

                  13.5 This Agreement shall inure to the benefit of, and shall
be binding upon, the parties hereto and their respective successors and assigns,
but neither party may assign this Agreement, by operation of law or otherwise,
without the prior written consent of the other except that (i) Seagate at any
time, and (ii) Dragon Systems only after Completion of development of the
Software, may assign this Agreement to a person into which it has merged or who
has otherwise succeeded to all or substantially all of its applicable business
and assets. Notwithstanding the foregoing, however, Seagate (and any Seagate
assignee) shall be entitled to assign this Agreement to any of its Affiliates.

                  13.6 Notice by either party under this Agreement shall be in
writing and personally delivered or given by registered mail, overnight courier,
or telecopy confirmed by registered mail, addressed to the other party at its
address given herein (or at such other address as may be communicated to the
other party in writing) and shall be deemed to have been served when delivered
or, if delivery is not accomplished by reason of some fault of the addressee,
when tendered.

                  13.7 No alteration, amendment, waiver, cancellation or any
other change in any term or condition of this Agreement shall be valid or
binding on either party unless the same shall have been mutually assented to in
writing by both parties.

                  13.8 The failure of either party to enforce at any time any of
the provisions of this Agreement, or the failure to require at any time
performance by the other party of any of the provisions of this Agreement, shall
in no way be construed to be a present or future waiver of such provisions, nor
in any way affect the right of either party to enforce each and every such
provision thereafter. The express waiver by either

                                      -13-

   14
party of any provision, condition or requirement of this Agreement shall not
constitute a waiver of any future obligation to comply with such provision,
condition or requirement.

                  13.9 (a) If the performance of this Agreement or any
obligations hereunder is prevented, restricted or interfered with by reason of
fire or other casualty or accident, strikes or labor disputes, war or other
violence, any law, order, proclamation, regulations, ordinance, demand or
requirement of any government agency, or any other act or condition beyond the
reasonable control of the parties hereto ("Event of Force Majeure"), the party
so affected upon giving prompt notice to the other party shall be excused from
such performance to the extent of such prevention, restriction or interference;
provided that the party so affected shall use its reasonable best efforts to
avoid or remove such causes of nonperformance and shall continue performance
hereunder with the utmost dispatch whenever such causes are removed.

                      (b) The party suffering an Event of Force Majeure shall
notify the other party within fifteen (15) days of the occurrence of such Events
and within thirty (30) days shall furnish the other party with a recovery plan
of action. Without limiting the foregoing, a party suffering an Event of Force
Majeure shall use its reasonable best efforts to limit the impact of the Event
of Force Majeure on such party's performance of this Agreement.

                  13.10 If any provision in this Agreement shall be found or be
held to be invalid or unenforceable in any jurisdiction in which this Agreement
is being performed, then the meaning of said provision shall be construed, to
the extent feasible, so as to render the provision enforceable, and if no
feasible interpretation would save such provision, it shall be severed from the
remainder of this Agreement which shall remain in full force and effect. In such
event, the parties shall negotiate, in good faith, a substitute, valid and
enforceable provision which most nearly effects the parties' intent in entering
into this Agreement.

                  13.11 In the event of any conflict or inconsistencies between
the provisions of this Agreement and the provisions of any exhibits attached
hereto or the provisions of any documents incorporated by reference, the
provisions of this Agreement shall prevail.

                  13.12 Each party may disclose the existence and general nature
of this Agreement, but agrees that the specific terms and conditions of this
Agreement shall be held in confidence and may not be disclosed without the
consent of the other party, except:

                           (i)      as required by any court or other
                                    governmental body;

                           (ii)     as otherwise required by law;

                                      -14-

   15
                           (iii) to legal counsel of the parties;

                           (iv) in confidence, to accountants, banks, and
financing sources and their advisors;

                           (v) in confidence, in connection with the enforcement
of this Agreement or rights under this Agreement; or

                           (vi) in confidence, in connection with an actual or
prospective merger, acquisition or similar transaction.

         14.      Entire Agreement.

                  The terms and conditions herein contained constitute the
entire agreement between the parties and supersede all previous agreements and
understandings, whether oral or written, between the parties hereto with respect
to the subject matter hereof



SEAGATE TECHNOLOGY, INC.                             DRAGON SYSTEMS, INC.

By:   \s\ Stephen J. Luczo                           By: \s\ James K. Baker
      ----------------------                             --------------------

Print Name: Stephen J. Luczo                         Print Name: James K. Baker
      ----------------------                             --------------------
Title: EVP Corporate Development                     Title: CEO
      ----------------------                             --------------------


                                      -15-

   16
                                    EXHIBIT A

                                    SOFTWARE

         This Exhibit consists of a general description and specification for
the Software, attached hereto as Exhibit A-1, and a detailed description and
specification for the Software, to be attached hereto as Exhibit A-2 within
fourteen (14) days after the date of this Agreement. Exhibit A-2 will be
supplied by Dragon Systems to Seagate, for Seagate's approval, and shall be
consistent with Exhibit A-1.




                                      -16-

   17
                                   EXHIBIT A-I

                                    SOFTWARE


         The software under development provides remote telephone access to the
reports contained within the Crystal-Info software using Dragon Systems speech
recognition technology. Once a user has identified him or herself, and selected
the appropriate Crystal-Info APS, users are able to query the software as to the
available reports by means of a voice-recognition "dialog," and are able to
select an individual report for FAX transmission. Users are also able to specify
the destination as an existing pre-programmed destination, or to enter a new
phone number for this FAX transmission. Access to the system is gained by
calling a telephone line that is connected to the system that this software
operates on.



                                      -17-

   18
          Confidential Materials omitted and filed separately with the
        Securities and Exchange Commission. Asterisks denote omissions.

                                    EXHIBIT B

                               DEVELOPMENT EXHIBIT



1.       Development Task Description.

         Dragon Systems shall develop and deliver to Seagate the Software in
         accordance with Exhibit A and the Specifications.

2.       Specifications.

         See Exhibit A.

3.       Development Schedule, Milestones and Deliverables.



Aggregate Payment Milestones Deliverables Completion Date Cap ---------- ------------ --------------- --- 1. Initial Demonstration to August 15, 1996 [**] operation of Seagate of first first prototype prototype of Software Software 2. First prototype Working version of October 15, 1996 [**] Software system (Software (not necessarily including all features) integrated with IMG Crystal Info software) 3. Complete Demonstration November 8, 1996 [**] demonstration version of Software version of suitable for Software for demonstration at COMDEX COMDEX
-18- 19 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. 4. Final Functionally complete February 1, 1997 [**] prototype final prototype Software version of Software 5. Complete Revised Beta version April 15, 1997 [**] revised Beta of Software version of Software (release candidate 1) 6. Complete Commercial release June 1, 1997 [**] commercial version of Software release version of Software
5. Special Terms and Conditions. It is understood that the above Schedule contemplates Software changes as a result of potential customer and other information obtained as a result of demonstration of the Software at COMDEX. If the parties agree that these changes are sufficiently significant to cause a change in the Schedule for Completion of Milestones 4, 5, and 6, then the parties will agree on new dates for those milestones. -19- 20 EXHIBIT C FORM OF DEVELOPMENT COSTS REPORT A. Direct Expenses 1. Labor Name Rate Hours Total ---- ---- ----- ----- 2. Direct material costs Item Amount ---- ------ B. Overhead Expenses Overhead expenses will be determined by taking the total number of salary dollars allocated to the Development Task, dividing that by the total number of salary dollars spent by the department(s) involved in the Development Task, and applying the resulting percentage to the total overhead cost attributed to those department(s). Dragon Systems will provide detailed expense summaries showing department spending for each month. -20- 21 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. EXHIBIT D SOFTWARE SUPPORT Seagate will be responsible for all direct telephone support of its Software customers. Dragon Systems will provide to Seagate all second line, backup support, for the Software, during those hours when Dragon System makes such support available to its customers (but in any event at least 9:00 a.m. - 5:00 p.m. eastern time), to enable Seagate to do so. If Seagate is unable, notwithstanding its diligent, reasonable best efforts, to resolve any particular customer Software problem, it shall be entitled to require direct contact for that problem between Dragon Systems and the customer for direct resolution by Dragon Systems. Dragon Systems will use its diligent, reasonable best efforts to solve each problem presented by Seagate within [**], provided that if a problem reveals a Software error which requires program coding modifications, Dragon Systems will use its diligent, reasonable best efforts to provide a correction or suitable workaround within [**]. -21- 22 EXHIBIT E FORM OF SOURCE CODE ESCROW AGREEMENT (ATTACHED) -22- 23 ESCROW AGREEMENT This Escrow Agreement is entered into this 28th day of June, 1996, between and among Seagate Technology, Inc. (hereinafter called "Seagate"), a California corporation with its principal place of business at 920 Disc Drive, Scotts Valley, California 95066; Dragon Systems, Inc., (hereinafter called "Dragon Systems"), a Delaware corporation, with its principal place of business at 320 Nevada Street, Newton, Massachusetts 02160; and the "Escrow Agent" set forth at the end of this Agreement. WHEREAS, Dragon Systems and Seagate have entered into a Software Development and License Agreement dated June 28, 1996 (the "License Agreement"), whereby Seagate is authorized to reproduce and distribute, in object code form, the Software (as defined in the License Agreement); WHEREAS, Dragon Systems desires to provide assurance to Seagate that, in the event of certain conditions specified in the License Agreement, access to the source codes for the Software, and related documentation, as specified in Exhibit 1 hereto (the "Escrow Materials") may be obtained for the purpose of providing maintenance, support, improvement, enhancement, and other modification of or addition to the Software; WHEREAS, Dragon Systems desires to enter into an escrow arrangement with Seagate to provide for the deposit of the Escrow Materials to be held by Escrow Agent pursuant to all of the terms and conditions of this Agreement; and WHEREAS, the Escrow Agent is willing to act as escrow agent for Dragon Systems and Seagate on the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the mutual covenants, agreements and conditions set forth herein, the parties agree as follows: 1. Appointment. Dragon Systems and Seagate hereby appoint Escrow Agent as the escrow holder of the Escrow Materials under this Escrow Agreement, and the Escrow Agent accepts such appointment on the terms and conditions set forth in this Escrow Agreement. 2. Deposit of Escrow Materials. Dragon Systems agrees to deposit with the Escrow Agent one copy of the Escrow Materials within thirty (30) days after the date of this Agreement. Dragon Systems agrees to deposit updated versions, if any, of the Escrow Materials [STRIKE-THROUGH TEXT]upon completion of any new Revisions, Upgrades, etc \s\ JKB \s\SL. Escrow Agent shall hold and dispose of the Escrow Materials only in accordance with the terms of this Escrow Agreement. 24 3. Transfer of Copy Title. Title to the physical Escrow Materials shall vest in the Escrow Agent when material constituting the Escrow Materials comes into possession of the Escrow Agent. The Escrow Agent shall have no rights with respect to the intellectual property embodied in the Escrow Materials and shall have no right to use the Escrow Materials except to hold and dispose of the Escrow Materials as set forth herein. 4. Purpose. The Escrow Materials shall constitute a reserve to be made available to Seagate, under the terms of this Escrow Agreement, only upon the occurrence of one of the release conditions set forth in Section 4.5 of the License Agreement, i.e., in the event (i) Dragon Systems dissolves or liquidates, or takes any corporate or other action to achieve dissolution or liquidation, or Dragon Systems ceases to conduct business in the normal course, or (ii) both (A) Dragons Systems is a debtor in a bankruptcy proceeding or other proceeding for the general settlement of its debts, or a receiver or other official is appointed for all or substantially all of Dragon Systems' assets, or Dragon Systems makes a general assignment for the benefit of creditors, and (B) Dragon Systems is unable to perform its obligations pursuant to Section 8 of the License Agreement. 5. Escrow Release. Subject to Sections 6, 7, and 8, the Escrow Agent shall promptly, release and deliver the Escrow Materials to Seagate following the receipt of written authorization, but not sooner than sixteen (16) days following the date of such notice, from an officer of Seagate certifying that Seagate is entitled to the Escrow Materials (the "Notice") pursuant to Section 4 above, which is not disputed by Dragon Systems in accordance with Section 6 below. Seagate shall concurrently provide a copy of the Notice to Dragon Systems. 6. Disputed Notice. If Dragon Systems disputes the existence of the conditions upon which the Notice is based, then Dragon Systems shall, within fifteen (15) days following its receipt of the Notice, submit a "Counternotice" to the Escrow Agent explaining the basis for its dispute, with a concurrent copy to Seagate. If the Counternotice is received by the Escrow Agent and Seagate before the close of business on the fifteenth (15th) day following receipt of the Notice by Dragon Systems (or, if the fifteenth day is not a Seagate business day, the first Seagate business day thereafter), then the Escrow Agent shall withhold delivery of the Escrow Materials pending receipt of (a) a decision evidencing the outcome of the arbitration provided for in Section 7 below, or (b) other written instructions signed by both Seagate and Dragon Systems. Upon receipt of said decision or other instructions, the Escrow Agent shall deliver a copy of the Escrow Materials only in accordance with the decision or instructions. -2- 25 7. Arbitration of Disputed Notice. Dragon Systems and Seagate agree that, if the Counternotice is given by Dragon Systems pursuant to Section 6 above, then Seagate and Dragon Systems shall submit to the jurisdiction of the American Arbitration Association to resolve the dispute promptly and shall commence the hearing before a Board of Arbitrators (the "Board") in San Jose, California, within thirty (30) days following receipt of the Counternotice by the Escrow Agent. The Board shall consist of three (3) members selected by the American Arbitration Association. The sole question before the Board shall be whether there existed, at the time Seagate transmitted the Notice to the Escrow Agent under Section 5 above, any of the conditions specified in Section 4. This arbitration shall be governed by the then-current rules of the American Arbitration Association. The parties agree that the decision of the Board shall be final and binding and that this decision shall be immediately delivered to the parties to the arbitration and to the Escrow Agent. If the Board finds that the Notice was properly given by Seagate on the basis of the existence of a condition specified in Section 4 above, then the Escrow Agent shall promptly deliver the Escrow Materials to Seagate. If the Board finds to the contrary, then the Escrow Agent shall not release the Escrow Materials. All fees and charges by the American Arbitration Association shall be paid by the nonprevailing party in the arbitration; each party, however, shall be responsible for the payment of all fees and expenses connected with the presentation of its respective case. 8. Termination. This Escrow Agreement and the escrow established pursuant to this Escrow Agreement shall terminate upon (a) notice of such termination by Seagate, or (b) termination of Seagate's Software license pursuant to the License Agreement, and all materials comprising the Escrow Materials, and title thereto, shall thereupon be returned to Dragon Systems. 9. Notices. 9.1 It is understood that the Escrow Agent will incur no liability for acting upon any instruction, notice, direction or other document believed by it in good faith to be genuine and to have been made, signed, sent or presented by the person or persons authorized to perform such act under the terms of this Escrow Agreement. 9.2 Each Notice, Counternotice, and all other notices, instructions, deliveries and other communications required or permitted to be given hereunder or necessary or convenient in connection herewith shall be in writing and shall be deemed to have been given and received when personally delivered (by overnight delivery or courier service or otherwise), when sent by telecopy, or two (2) days after mailing if mailed by registered or certified mail, return receipt requested, as follows (provided that notice of change of address shall be deemed given only when actually received): -3- 26 To Escrow Agent: To the address set forth at the end of this Escrow Agreement, and to the attention of the person signing this Escrow Agreement on behalf of Escrow Agent. To Dragon Systems: To the address first set forth above. To Seagate: To the address first set forth above. or to such other name or address as the Escrow Agent, Dragon Systems or Seagate, as the case may be, shall designate by notice to the other party hereto in the manner specified in this section. 10. Liability of Escrow Agent. The duties and obligations of the Escrow Agent shall be determined solely by the express provisions of this Escrow Agreement, and the Escrow Agent shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Escrow Agreement. In the event of any controversy hereunder or with respect to any questions as to the construction of this Escrow Agreement or any action to be taken by the Escrow Agent, the Escrow Agent may, at its expense, consult with counsel selected and employed by it, and the Escrow Agent shall incur no liability for any action taken or suffered in good faith in accordance with the opinion of such counsel. The Escrow Agent shall not be responsible in any manner whatsoever for any failure or inability of Dragon Systems, Seagate, or for anyone else, to perform or comply with any of the provisions of this Escrow Agreement. 11. Governing Law; Forum Selection. This Escrow Agreement shall be governed by the laws of the State of California, without reference to conflict of laws principles. All disputes arising out of this Agreement, other than the arbitration pursuant to Section 7, will be subject to the exclusive jurisdiction and venue of the California state courts (or, if there is exclusive federal jurisdiction, the United States District Court for the Northern District of California), and the parties consent to the personal and exclusive jurisdiction of these courts. 12. Entire Agreement. This Escrow Agreement sets forth the entire understanding of the parties hereto with respect to the subject matter hereof and cannot be changed, modified, or terminated orally. 13. Validity. No action taken by the Escrow Agent in accordance with the terms and provisions hereof shall be deemed to constitute a representation of the Escrow Agent as to the validity or value of any documents or instructions held by, or delivered to, it. -4- 27 14. Resignation/Replacement. 14.1 Upon sixty (60) days' prior written notice given to Dragon Systems and Seagate, the Escrow Agent may resign. Within fifteen (15) days after the giving of such notice, Dragon Systems and Seagate shall mutually designate a successor Escrow Agent. Such successor Escrow Agent shall be bound by the terms and provisions of this Escrow Agreement. In the event that no such agreement is reached within such fifteen (15) day period, the Escrow Agent shall continue to hold the Escrow Materials then held by it and shall take no further actions and shall have no further obligations hereunder except as required by the last sentence of this Section 14(a). The Escrow Agent named herein shall cooperate with its successor in order to effectuate the transfer of its duties to the successor Escrow Agent. 14.2 Upon notice, Dragon Systems and Seagate may replace Escrow Agent with a successor, who shall replace Escrow Agent and be bound by all the terms and conditions of this Agreement. 15. Fees and Expenses. Seagate agrees to pay the fees of the Escrow Agent for its services hereunder during the term of this Agreement. Such fees shall consist of periodical escrow maintenance charges, at Escrow Agent's standard rates, and fees charged for carrying out its duties hereunder. In all other cases, each party shall be responsible for its expenses incurred in connection with this Agreement. 16. Indemnification. Seagate and Dragon Systems jointly and severally agree to indemnify, [STRIKE-THROUGH TEXT] defend and hold harmless \s\ JKB \s\SL \s\KY the Escrow Agent from and against any and all third party claims, suits and other proceedings, and all judgments and other awards against the Escrow Agent in connection therewith, in each case which may be imposed on, or incurred by, or asserted against, the Escrow Agent in any way relating to, or arising out of, this Agreement, or any action taken or omitted by the Escrow Agent under this Agreement, provided that neither Seagate nor Dragon Systems shall be liable for that portion of any such indemnification amount resulting from the Escrow Agent's gross negligence or willful misconduct or violation by the Escrow Agent of any terms or provisions of this Escrow Agreement. This indemnity shall be conditioned in each case on the Escrow Agent's providing to Seagate and Dragon Systems prompt written notice of the claim, allowing Seagate and Dragon Systems to control the defense and settlement of the claim, and providing reasonable assistance to Seagate and Dragon Systems in connection therewith. -5- 28 IN WITNESS WHEREOF, the parties by their duly authorized representatives have executed this Agreement as of the date set forth above. SEAGATE TECHNOLOGY, INC. By: \s\ Stephen J. Luczo --------------------------- Print Name: Stephen J. Luczo --------------------------- Title: EVP Corporate Development --------------------------- DRAGON SYSTEMS, INC. By: \s\ James K. Baker --------------------------- Print Name: James K. Baker --------------------------- Title: CEO --------------------------- ESCROW AGENT: Data Securities International, Inc. Name: Contract Administration 9555 Chesapeake Drive. Suite 200 Address: San Diego, CA 92123 By: \s\ Katherine C. Young --------------------------- 10-1-96 Print Name: Katherine C. Young --------------------------- Title: Senior Contracts Administrator --------------------------- -6- 29 EXHIBIT 1 ESCROW MATERIALS 1. All source code (with all comments) in machine readable form. 2. All tools necessary to build the Software, and all necessary documentation with respect thereto. -7- EX-10.12 7 DISTRIBUTION AGREEMENT DATED 12/15/97 1 Exhibit 10.12 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. [INGRAM MICRO LOGO] DISTRIBUTION AGREEMENT THIS DISTRIBUTION AGREEMENT ("Agreement"), is entered into this 15th day of December, 1997, by and between INGRAM MICRO INC. ("Ingram"), a Delaware corporation, having its principal place of business at 1600 E. St. Andrew Place, Santa Ana, California 92705, and DRAGON SYSTEMS INC. ("Vendor"), a Delaware corporation, having its principal place of business at 320 Nevada Street, Newton, Massachusetts 02160. The parties desire to and hereby do enter into a distributor/supplier relationship, the governing terms and mutual promises of which are set out in this Agreement. This Agreement, upon the full execution hereof, shall supersede in its entirety the mutual Start-up Agreement dated July 14, 1997. 1. DISTRIBUTION RIGHTS 1.1 Territory Vendor grants to Ingram, including its affiliates for resale, and Ingram accepts, the non-exclusive right to distribute in North America all computer products produced and/or offered by Vendor ("Product") during the term of this Agreement. Ingram shall have the right to purchase, sell and ship to any reseller within the territory or to Ingram's affiliate, or at Vendor's option Ingram's affiliate may purchase direct from Vendor. 1.2 Product Vendor agrees to make available and to sell to Ingram such Product as Ingram shall order from Vendor at the prices and subject to the terms set forth in this Agreement. Ingram shall not be required to purchase any minimum amount or quantity of the Product. 2. TERM AND TERMINATION 2.1 Term The initial term of this Agreement is one (1) year. Thereafter the Agreement will automatically renew for successive one (1) year terms, unless it is earlier terminated. 2.2 Termination (a) Either party may terminate this Agreement, with or without cause, by giving thirty (30) days written notice to the other party. (b) Either party may immediately terminate this Agreement with written notice if the other party: 2 (i) materially breaches any term of this Agreement and such breach continues for thirty (30) business days after written notification thereof; or (ii) ceases to conduct business in the normal course, becomes insolvent, makes a general assignment for the benefit of creditors, suffers or permits the appointment of a receiver for its business or assets, or avails itself of or becomes subject to any proceeding under any Bankruptcy Act or any other federal or state statute relating to insolvency or the protection of rights of creditors; or (iii) attempts to assign or otherwise transfer its rights hereunder unless both have agreed in writing to such assignment or transfer. 3. INGRAM OBLIGATIONS 3.1 Product Availability Ingram will list Product in its catalog(s) as appropriate and endeavor to make such Product available to customers. 3.2 Advertising Ingram will advertise and/or promote Product in a commercially reasonable manner and will transmit as reasonably necessary Product information and promotional materials to its customers. 3.3 Support Ingram will make its facilities reasonably available for Vendor and will assist in Product training and support. Ingram will provide reasonable, general Product technical assistance to its customers, and will direct all other technical issues directly to Vendor. 3.4 Administration (a) Upon request, Ingram will furnish Vendor with a valid tax exemption certificate. (b) Ingram will provide Vendor standard sales-out and inventory reports via its electronic Bulletin Board System. (c) Ingram may handle its customers' Product returns by batching them for return to Vendor at regular intervals. 4. VENDOR OBLIGATIONS 4.1 Shipping/Export (a) Vendor shall ship Product pursuant to Ingram purchase order(s) ("P.O."). Product shall be shipped F.O.B. Ingram's designated warehouse with risk of -2- 3 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. loss or damage to pass to Ingram upon delivery to the warehouse specified in Ingram's P.O. (b) Ingram requires concurrent with the execution of this Agreement Export Administration Regulations product classification and supporting documentation: Certificate of Origin (General Use and/or NAFTA), Export Commodity Control Number's; (ECCN's), General License and/or Individual Validated License information and Schedule "B"/Harmonized Numbers. This applies when distribution rights granted under Section 1.1 are outside the United States for the initial Product/s and when additions or changes to these Products occurs. 4.2 Invoicing For each Product shipment to Ingram, Vendor shall issue to Ingram an invoice showing Ingram's order number, the Product part number, description, price and any discount. At least monthly, Vendor shall provide Ingram with a current statement of account, listing all invoices outstanding and any payments made and credits given since the date of the previous statement. 4.3 Product Availability Vendor agrees to maintain sufficient Product inventory to fill Ingram's orders. If a shortage of any Product exists, Vendor agrees to allocate its available inventory of such Product to Ingram in proportion to Ingram's percentage of all of Vendor's customer orders for such Product during the previous sixty (60) days. 4.4 Product Marketing Vendor will clearly mark each unit of Product with the Product name and computer compatibility. Such packaging will also bear a machine-readable bar code identifier scannable in standard Uniform Product Code (UPC) format. The bar code must identify the Product as specified by the Uniform Code Council (UCC). If the Vendor or Ingram customers' require serial number tracking the serial number must be clearly marked and bar coded on the outside of the individual selling unit. The bar code shall fully comply with all conditions regarding standard product labeling set forth in Exhibit B in the then-current Ingram Guide to Bar Code: The Product Label. Vendor may be assessed a reasonable per unit charge for all Product not in conformance herewith. 4.5 TechNotes Vendor will within thirty (30) days of execution of this Agreement sign the CIS/ Manufacture Product Information Library - TechNotes and Content Distribution Agreements as shown in Exhibit C and provide the required product information in the designated template format. 4.6 Support [**], Vendor shall support Product and any reasonable Ingram efforts to sell Product. Vendor shall also provide to Ingram, its employees, and its -3- 4 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. customers reasonable amounts of sales literature, advertising materials, and training and support in Product sales, during Vendor's regular business hours. 4.7 New Product Vendor shall endeavor to notify Ingram at least thirty (30) days before the date any new Product is introduced. Vendor shall make such Product available for distribution by Ingram no later than the date it is first offered for sale in the marketplace. 4.8 Insurance Vendor shall carry insurance coverage for product liability/completed operations with minimum limits of [**]. Within ten (10) days of full execution of this Agreement, Vendor shall provide Ingram with a Certificate of Insurance. This Certificate of Insurance must include: (i) a broad form endorsement naming Ingram as an additional insured, and (ii) a mandatory thirty (30) day notice to Ingram of insurance cancellation. 4.9 Warranties/Certification (a) General Warranty Vendor represents and warrants that (i) it has good transferable title to the Products, (ii) the Product will perform in conformity with specifications and documentation supplied by Vendor, (iii) to the best of Vendor's knowledge, the Product or its use does not infringe any patents, copyrights, trademarks, trade secrets, or any other intellectual property rights, (iv) to the best of Vendor's knowledge, there are no suits or proceedings pending or threatened which allege any infringement of such proprietary rights other than described in Exhibit G, and (v) the Product sales to Ingram do not in any way constitute violations of any law, ordinance, rule or regulation in the distribution territory. (b) Warranty Vendor hereby represents and warrants that any Product offered for distribution does not contain any obscene, defamatory or libelous matter or violate any right of publicity or privacy. (c) End-User Warranty Vendor shall provide a warranty statement with Product for end user benefit. This warranty shall commence upon Product delivery to end-user. NO OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE WARRANTIES OF MERCHANTABIITY AND FITNESS FOR A PARTICULAR PURPOSE ARE MADE BY VENDOR WITH RESPECT TO THE PRODUCT. INGRAM SHALL NOT EXTEND ANY ADDITIONAL WARRANTIES TO ANY RESELLERS OR END-USERS OF THE PRODUCT. IN NO EVENT WILL INGRAM BE LIABLE FOR ANY LOST PROFITS OR ANY OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGES, EVEN IF INGRAM HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. VENDOR SHALL IN NO EVENT BE LIABLE -4- 5 FOR ANY DAMAGES RESULTING FROM LOSS OF DATA, PROFITS OR USE OF EQUIPMENT, OR FOR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN CONNECTION WITH THE USE OR PERFORMANCE OF THE LICENSED PROGRAM. IT IS ALSO UNDERSTOOD BY BOTH PARTIES TO THIS AGREEMENT THAT SPEECH RECOGNITION IS INHERENTLY A STATISTICAL PROCESS; THAT SPEECH RECOGNITION ERRORS ARE INHERENT IN THE PROCESS OF SPEECH RECOGNITION; THAT SPEECH RECOGNITION APPLICATIONS AND USAGE MUST BE DESIGNED TO ALLOW FOR SUCH ERRORS IN THE SPEECH RECOGNITION PROCESS. (d) Millennium Compliance Warranty Vendor warrants and represents that the Product will properly (a) record, store, process, calculate or present calendar dates falling on and after (and if applicable, spans of time including) January 1, 2000 as a result of the occurrence, or use of data consisting of, such dates and (b) calculate any information dependent on or relating to dates on or after January 1, 2000 in the same manner, and with the same functionality, data integrity and performance, as such Product records, stores, processes, calculates and presents calendar dates on or before December 31, 1999, or information dependent on or relating to such dates. (e) EU Warranty Vendor further warrants and represents for Products distributed to the European Union ("EU") that the Products will be accepted under all EU directives, regulations and the EU country's legislation. (f) Made in America Certification Vendor by the execution of this Agreement certifies that it will not label any of its products as being "Made in America," "Made in U.S.A.," or with similar wording, unless all components or elements of such Product is in fact made in the United States of America. Vendor further agrees to defend, indemnify and hold harmless from and against any and all claims, demands, liabilities, penalties, damages, judgments or expenses (including attorney's fees and court costs) arising out of or resulting in any way from Product that does not conform to the Certification. 5. PRICING 5.1 Ingram Pricing The suggested retail price and any Ingram discount for Product is set out in Exhibit D. Vendor may modify Exhibit D with a minimum of thirty (30) days advance written notice to Ingram. All Ingram orders for Product will be billed at the price in effect when the order is placed. Ingram shall have sole discretion as to selling price of Product to its customers. -5- 6 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. 5.2 Vendor Pricing Vendor agrees that [**]. If Vendor [**] Vendor's other like distributors. 5.3 International Pricing If Vendor [**] into that territory. 5.4 Price Adjustments If Vendor [**], Vendor will [**] and its customers' Product inventory, including: (i) any Customer Product in-transit from/to Ingram, (ii) any unshipped orders, and (iii) orders in-transit to Ingram [**]. In the event that Vendor shall raise the list price of a Product, all orders for such Product placed prior to the effective date of the price increase [**]. Vendor shall provide Ingram with thirty (30) days advance notice of any price increases. 5.5 Payment Terms Payment terms shall be [**]. Payment shall be deemed made on the payment postmark date. All checks will be sent via FedEx at Vendor's expense. 5.6 Right to Withhold Notwithstanding any other provision in this Agreement to the contrary, Ingram shall not be deemed in default if it withholds any specific amount to Vendor because of a legitimate dispute between the parties as to that specific amount pending the timely resolution of the disputed amount. 5.7 Bulletin Board System (BBS) Ingram will provide the Detailed Vendor Buying Report weekly by its electronic BBS. The standard reports will include sales by zip code, state, product/quantity sold and the detailed Vendor Buying Report. Ingram will provide reporting on a monthly basis on sell-through including SKU, title, version, company, zip, number sold subject to a separate Proprietary Information Non-Disclosure Agreement attached hereto as Exhibit H. 5.8 Rebate Vendor will provide a guaranteed [**], for reporting under Section 5.7. In addition, Vendor will offer Ingram a minimum [**], based on gross sales, for achieving sell-through quotas. The sell through quotas shall be mutually agreed between both parties. The rebate will be paid by check within thirty (30) days after the quarter end. If no check is received within that period Ingram shall deduct that amount from the Vendor's next payment. 6. MARKETING 6.1 Trademarks Ingram may advertise and promote the Product and/or Vendor, and may thereby use Vendor's trademarks, service marks and trade names according to Vendor's guidelines. Neither party shall acquire any rights in the trademarks, service marks or trade names of the other. -6- 7 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. 6.2 Advertising Vendor agrees to cooperate in Ingram's or Ingram's customers' advertising and promotion of Product and hereby grants Ingram a cooperative advertising allowance of [**] of Product invoice amount for such advertising featuring Product and/or Vendor. Ingram shall submit advertising to Vendor for review and approval prior to any initial release, and Vendor shall not unreasonably withhold or delay such approval. Upon receipt of reasonable evidence of such advertising expenditures, Vendor agrees to credit the amount thereof against future Ingram purchases. 6.3 Programs (a) Ingram may offer marketing programs to Vendor including but not limited to launch programs and reseller pass through opportunities. If Vendor elects to participate, Vendor agrees to pay such funds as may be required for this purpose. (b) Vendor may be asked to prepay all marketing activities until a mutually agreed upon sell through rate is achieved. (c) All marketing pass through activities are subject to Ingram/buyer pre-approval. 6.4 Support Product Vendor shall consign a reasonable amount of demonstration Product to aid Ingram in its support and promotion of Product. All such consigned Product will be returned to Vendor upon request. 7. RETURNS 7.1 Stock Balancing Notwithstanding anything herein to the contrary, Ingram may return throughout the term any Products which are in their original packaging to Vendor [**]. Ingram will pay all freight charges for returned Products. 7.2 Post-Term/Termination [**], Ingram may return to Vendor any Product for credit against outstanding invoices, or if there are no outstanding invoices for a cash refund. Any credit or refund due Ingram for returned Product shall be equal to the Product purchase price plus all freight charges incurred by Ingram in returning the Product. 7.3 Product Discontinuation Vendor shall give Ingram thirty (30) days' advance written notice of Product discontinuation. Ingram may return all such Product to -7- 8 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Vendor for full credit of Product purchase price plus all freight charges incurred by Ingram in returning the Product, [**]. 7.4 Defective Product (a) Ingram may return any Product to Vendor that Ingram or its customer finds defective. Vendor shall immediately credit Ingram for the Product purchase price, plus all freight charges incurred by Ingram in returning the defective Product. (b) If any Product is recalled by Vendor because of defects, revisions or upgrades, Ingram will, at Vendor's request, provide reasonable assistance with the recall. Vendor will pay Ingram's expenses in connection with such recall. 8. INDEMNIFICATION 8.1 Product Indemnity Vendor shall defend, indemnify, and hold harmless Ingram from and against any claims, demands, liabilities, or expenses (including attorney's fees and costs) for any injury or damage, including, but not limited to, any personal or bodily injury or property damage, arising out of or resulting in any way from any defect in Products. This duty to indemnify Ingram shall be in addition to the warranty obligations of Vendor. 8.2 General Indemnity Each party shall indemnify, defend and hold the other harmless from and against any and all claims, actions, damages, demands, liabilities, costs and expenses, including reasonable attorney's fees and expenses, resulting from any act or omission of the acting party or its employees under this Agreement, that causes or results in property damage, personal injury or death. 8.3 Intellectual Property Rights Indemnity Vendor shall defend, indemnify and hold Ingram, its resellers and their customers, harmless from and against all damages and costs incurred by any of them arising from the infringement of any patent, copyright, trademark, trade secret or other proprietary right by reason of the manufacture, sale, marketing, or use of Product. 8.4 Product Infringement Upon threat of claim of infringement, Vendor may, at its expense and option (i) procure the right to continue using any part of Product, (ii) replace the infringing Product with a non-infringing Product of similar performance, or (iii) modify Product to make it non-infringing. If Vendor does not so act within ninety (90) days after such claim, Ingram may return Product to Vendor for a full credit against future purchases or for a cash refund, at Ingram's option. -8- 9 8.5 Multi-Media Indemnity Vendor shall defend, indemnify and hold Ingram, its resellers and their customers, harmless from and against all damages and costs incurred by any of them to the extent it is based upon a claim that the Product either (i) violates a third party's right of publicity and/or right of privacy, or (ii) contains any obscene, defamatory or libelous matter. 8.6 European Indemnity For Products distributed to a country of the EU, the Vendor accepts full responsibility for, and will indemnify Ingram for, all costs and damages arising from any non-compliance with any manufacturer-directed EU decree, regulation or directive. 8.7 Millennium Compliance Indemnity Vendor agrees to indemnify and hold Ingram and its shareholders, officers, directors, employees, agents, successors, and assigns harmless from and against any and all claims, suits, actions, liabilities, losses, costs, reasonable attorney's fees, expenses, judgments or damages, whether ordinary, special or consequential, resulting from any third party claim made or suit brought against Ingram or such persons, to the extent such results from Vendor's breach of the warranty specified in Section 4.9(d). 8.8 Limitation of Liability NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR LOST PROFITS OF BUSINESS, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES, WHETHER BASED IN CONTRACT OR TORT (INCLUDING NEGLIGENCE, STRICT LIABILITY OR OTHERWISE), AND WHETHER OR NOT ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THIS LIMITATION IS IN NO WAY MEANT TO LIMIT VENDOR'S LIABILITY FOR PERSONAL INJURY OR DEATH AS A RESULT OF A DEFECT IN ANY PRODUCT IN THOSE JURISDICTIONS WHERE THE LAW DOES NOT ALLOW THIS LIMITATION. 9. COMPLIANCE WITH FEDERAL LAWS AND REGULATIONS 9.1 Executive Order 11246 Vendor agrees to include the Equal Employment Opportunity Clause by reference in every contract, agreement and purchase order entered into with subcontractors or suppliers as required by 41 CFR 60-1.4. 9.2 Employer Information Report EEO-1 Written Affirmative Action Program Vendor agrees that if the value of any contract or purchase order is fifty thousand dollars ($50,000) or more and the Vendor has fifty (50) or more employees, Vendor will (i) file an EEO-1 report (Standard Form 100) and comply with and file such other compliance reports as may be required under Executive Order 11246, as amended, and Rules and Regulations adopted thereunder and (ii) will develop a written -9- 10 affirmative action compliance program for each of its establishments as required by Title 41 CFR 60-1.40. 9.3 Veterans Employment Clause Vendor agrees to abide by and comply with the provisions of the Affirmative Action Clause, 41 CFR 60-250.4. 9.4 Employment of Handicapped Persons Vendor agrees that it will abide by and comply with the provisions of the Affirmative Action Clause, 41 CFR 60-741.4. 9.5 Small Business Concerns and Small Business Concerns Owned and Controlled by Socially and Economically Disadvantaged Individuals Where a government contract is expected to exceed five hundred thousand dollars ($500,000), Vendor agrees to comply with all requirements of P.L. 95-507 and regulations promulgated thereunder. Vendor shall comply with instructions contained in Exhibit E. 9.6 Women-Owned Business Concerns Vendor shall comply with instructions contained in Exhibit F. Where a government contract is expected to exceed five hundred thousand dollars ($500,000), Vendor agrees to comply with all requirements of Executive Order 12138 and all regulations promulgated thereunder. 10. GOVERNMENT PROGRAM 10.1 Partnership America Vendor may, at its sole option, participate in Ingram's government reseller program in which case the provisions of Exhibit F, Partnership America, shall apply. A draft copy is provided solely for your information and review. 11. GENERAL PROVISIONS 11.1 Notices Any notice which either party may desire to give the other party must be in writing and may be given by (i) personal delivery to an officer of the party, (ii) by mailing the same by registered or certified mail, return receipt requested, to the party to whom the party is directed at the address of such party as set forth at the beginning of this Agreement, or such other address as the parties may hereinafter designate, and (iii) by facsimile or telex communication subsequently to be confirmed in writing pursuant to item (ii) herein. 11.2 Governing Law This Agreement shall be construed and enforced in accordance with the laws of the State of California, except that body of law concerning conflicts of law. The United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Agreement. -10- 11 11.3 Cooperation Each party agrees to execute and deliver such further documents and to cooperate as may be necessary to implement and give effect to the provisions contained herein. 11.4 Force Majeure Neither party shall be liable to the other for any delay or failure to perform which results from causes outside its reasonable control. 11.5 Attorneys Fees In the event there is any dispute concerning the terms of this Agreement or the performance of any party hereto pursuant to the terms of this Agreement, and any party hereto retains counsel for the purpose of enforcing any of the provisions of this Agreement or asserting the terms of this Agreement in defense of any suit filed against said party, each party shall be solely responsible for its own costs and attorney's fees incurred in connection with the dispute irrespective of whether or not a lawsuit is actually commenced or prosecuted to conclusion. 11.6 Export Regulations Ingram agrees by the purchase of Products to conform to, and abide by, the export laws and regulations of the United States, including but not limited to, the Export Administration Act of 1979 as amended and its implementing regulations. Ingram shall include a statement in it's standard sales terms and conditions that any shipment of Product outside the United States will require a valid export license. Ingram further agrees to distribute Product in accordance with the territory as defined in Section 1.1. Whenever a EU country is specified as Territory under Section 1.1, Territory shall include all EU countries. 12. AGREEMENT 12.1 Counterparts This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 12.2 Section Headings Section headings in this Agreement are for convenience only, and shall not be used in construing the Agreement. 12.3 Incorporation of all Exhibits Each and every exhibit referred to hereinabove and attached hereto is hereby incorporated herein by reference as if set forth herein in full. 12.4 Severability A judicial determination that any provision of this Agreement is invalid in whole or in part shall not affect the enforceability of those provisions found to be valid. -11- 12 12.5 No Implied Waivers If either party fails to require performance of any duty hereunder by the other party, such failure shall not affect its right to require performance of that or any other duty thereafter. The waiver by either party of a breach of any provision of this Agreement shall not be a waiver of the provision itself or a waiver of any breach thereafter, or a waiver of any other provision herein. 12.6 Binding Effect/Assignment This Agreement shall be binding upon and shall inure to the benefit of the parties hereto, and their respective representatives, successors and permitted assigns. This Agreement shall not be assignable by Vendor, without the express written consent of Ingram, which consent shall not be unreasonably withheld, except to a Person in which it has merged or which has otherwise succeeded to all or substantially all of such party's business and assets to which this Agreement pertains and which has assumed in writing or by operation of law its obligations under this Agreement. Any attempted assignment in violation of this provision will be void. 12.7 Survival Sections 5.5 (Payment Terms), 5.6 (Right to Withhold), 7.2 (Post-Term Termination) and 8. (Indemnification) shall survive the expiration or earlier termination of this Agreement. 12.8 Entirety This Agreement constitutes the entire agreement between the parties regarding its subject matter. This Agreement supersedes any and all previous proposals, representations or statements, oral or written. Any previous agreements between the parties pertaining to the subject matter of this Agreement are expressly terminated. The terms and conditions of each party's purchase orders, invoices, acknowledgments/confirmations or similar documents shall not apply to any order under this Agreement, and any such terms and conditions on any such document are objected to without need of further notice or objection. Any modifications to this Agreement must be in writing and signed by authorized representatives of both parties. -12- 13 12.9 Authorized Representatives Either party's authorized representative for execution of this Agreement or any amendment hereto shall be president, a partner, or a duly authorized vice-president of their respective party. The parties executing this Agreement warrant that they have the requisite authority to do so. IN WITNESS WHEREOF, the parties hereunto have executed this Agreement. "Ingram" "Vendor" Ingram Micro Inc. Dragon Systems Inc. 1600 E. St. Andrew Place 320 Nevada Street Santa Ana, California 92705 Newton, Massachusetts 02160 By: \s\ VL Cotten By: \s\ Janet M. Baker -------------------------- ------------------------------- Name: Name: Janet M. Baker ------------------------ ----------------------------- Victoria L. Cotten Title: Sr. Vice President Purchasing Title: President ---------------------- ---------------------------- Date: 1-15-98 Date: 31 Dec. 1997 ------------------------ ----------------------------- * AGREEMENT MUST BE SIGNED BY PRESIDENT OR BY A DULY AUTHORIZED VICE PRESIDENT OR PARTNER. -13- 14 EXHIBITS: A - Vendor Routing Guide (if applicable) B - Guide to Bar Code: The Product Label C - TechNotes D - Product Price List E - Small And Disadvantaged Business Certification F - Partnership America G - Pending Litigation H - Proprietary Information Non-Disclosure Agreement -14- 15 EXHIBIT A VENDOR ROUTING GUIDE Not Applicable ------------------- Attached ------------------- 16 EXHIBIT C Vendor #: ____________ PA #: ____________ Job #: __________ CIS Manufacturer Product Information Library TechNotes Agreement This agreement ("Agreement") is made and entered into as of the ________ day of _________,1997 between _________ ("Manufacturer Name"), with its principle place of business at __________ ("Manufacturer Address") and Ingram Micro Inc. ("lngram"), with its principal place of business at 1600 E. St. Andrew Place, Santa Ana, California 92705. By Manufacturer's signature below, Manufacturer agrees to participate in Ingram's TechNotes program, according to and bound by the terms and conditions of this Agreement including those printed on the reverse side of this page. PARTICIPATION DETAILS AND REQUIREMENTS: 1. Ingram will distribute all information authored by the Manufacturer under the terms and conditions of this Agreement. 2. Ingram will provide the Manufacturer with authoring screens for product templates via the World Wide Web, (Manufacturer must have Internet access and a frame compatible browser such as Netscaps(R) 2.0. or later or Internet Explorer 3.0.) 3. Manufacturer must maintain the content in the Electronic Catalog by either maintaining product templates via the authoring tools OR provide Ingram with product information necessary for Ingram to complete the TechNotes Templates. 4. Manufacturer agrees to identify a contact person: ____________________ _____________________________________________________________________. (person who will be providing the content to Ingram and can authorize its distribution) Title:___________ Telephone #:_____________ FAX #: ___________________ Address:______________________________________ E-mail:________________ 5. 1997 SIGN UP/ OPTIONAL TEMPLATE PARTICIPATION FEE STANDARD BASE PRICE ENTRY SERVICE ----------------- ------------------- ------------- FREE if you sign up in 1997 $1,000 Value $50 Per SKU (1-100 SKUs) $35 Per SKU (101-150 SKUs) and $25 Per SKU (150+ SKUs) vendor maintains 80% TechNotes completion rate within 60 days of signing up for program. See details below. 17 TEMPLATES WILL BE FILLED AND UPDATED BY (check one) / / Manufacturer / / Ingram (must indicate $ amount below) Manufacturer will incur no sign up fees in 1997 if Manufacturer agrees to the program prior to December 30, 1997. Fee will be completely waived in 1997 if Manufacturer completes 80% of eligible TechNotes within 60 days of signing contract and maintains an average completion rate of 80%. Manufacturer will be notified in the event participation level drops below 80% and will be given a grace period in which to complete necessary TechNotes. If Manufacturer selects the "Ingram" box above, Manufacturer agrees to have Ingram's Technical Support department fill out TechNotes on Manufacturer's behalf and agrees to pay the service fees indicated above and below. Billing will be done on a quarterly basis for TechNotes authored during the previous quarter. Fees for the first 100 TechNotes will be $50 each. The next 50 TechNotes will be $35 each. Additional TechNotes will be $25 each. $ THERE ARE TWO TYPES OF AUTHORING FEES AVAILABLE TO MANUFACTURERS WHO HAVE SELECTED TO HAVE INGRAM COMPLETE TECHNOTES: A ONE-TIME START-UP FEE AND A QUARTERLY MAINTENANCE FEE. Start-up fees should be used to fund initial TechNote completion for existing products. Quarterly Maintenance Fees are to be used for completion of TechNotes for new products as they are released each quarter. Please indicate the amount Manufacturer agrees to pay for each of the following: Start-up: $______ OR/AND Quarterly Maintenance $ ______. MANUFACTURER WILL ONLY BE BILLED FOR COMPLETED TECHNOTES UP TO THE MAXIMUM AMOUNT INDICATED. Payment is due within thirty (30) days of the invoice billing date. If payment is not received within 30 days, Ingram has the right to deduct monies from Manufacturer's invoices.
METHOD OF PAYMENT SOURCE OF FUNDS (Check One) ONLY FILL IN THIS SECTION IF INGRAM WILL FILL TECH/NOTES (Check One) ______ Check Payable to ______ MDF ______ CO-OP Ingram Micro ______ Credit Memo (Request ______ In-House MDF ______ Other (MVP, Etc) _____ (Please Specify) Buyer Approval)
Agreement will continue one year from the date above. Thereafter, the Agreement will be automatically renewed for additional one year periods, subject to the right of either party to terminate at the end of the term by delivering written notice to the party at least thirty (30) days prior to the end of the period. Manufacturer may terminate this Agreement, with or without cause. Ingram reserves the right, at any time, to review and/or edit information added to the Manufacturer Product Information. 18 Library's Electronic Catalog without notice, and to refuse or cancel participation for any reason at any time. [3 arrows] THE FOLLOWING INFORMATION IS VERY CRITICAL. PLEASE COMPLETE! [2 arrows] PLEASE INDICATE ALL VENDOR NUMBERS ASSOCIATED WITH THIS MANUFACTURER: ____________________________________________ [1 arrow] WHO IS THE BUYER __________________________ EXT. _______ AND MARKETING MANAGER ____________________________________ EXT._____________ Return completed agreement to marketing manger or buyer. 19 CIS/MANUFACTURER PRODUCT INFORMATION LIBRARY CONTENT DISTRIBUTION AGREEMENT The agreement "Agreement" is made and entered into as of the ____day of __________1997 (The "Commencement Date") between Ingram Micro Inc., a Delaware corporation ("Ingram"), and ________________________________("Manufacturer"), a _______________________________ corporation. The parties agree as follows: 1. DELIVERY AND LICENSE. Manufacturer agrees to provide Ingram data and information regarding Manufacturer's products and services (collectively "Information") for distribution by Ingram through its information distribution services which may be updated from time to time (hereinafter referred to as the "Manufacturers Product Information Library" or "MPIL"), including, but not limited to, distribution via the World Wide Web, Fax, CD-ROM, Floppy disk, and other electronic media. Manufacturer hereby grants Ingram a non-exclusive worldwide license to market, license, distribute, display, perform, transmit and promote the information through the MPIL. Manufacturer agrees to deliver the information to Ingram in the manner and format set forth in the MPIL Policies and Procedure Manual ("Procedures"). Manufacturer agrees that it is both necessary and of mutual benefit to the parties that the Information be as error free as is commercially feasible. 2. USE. Both parties agree that the MPIL (and Manufacturer's Information therein) will be made available to users which have registered with Ingram to use the MPIL. Manufacturer acknowledges that the Information will be made available to such users worldwide via the World Wide Web or other methods of distribution. 3. INFORMATION WARRANTIES. Manufacturer hereby represents and warrants that the Information (i) will not infringe on or violate any copyright, patent or any other proprietary right of any third party, and (ii) will not contain any content, materials or services which violate any applicable law, regulation or third party right, and (iii) contains no computer virus or similar program or data. 4. INGRAM OPERATING RESPONSIBILITIES. Ingram will maintain and implement such facilities, equipment, programming and data communications network and any other combination of hardware and software as are necessary to offer and provide MPIL. Ingram shall not be responsible for screening, editing, or monitoring the information prior to its distribution by MPIL. 5. LIMITATION OF LIABILITY. UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES (EVEN IF THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES), ARISING FROM THE USE OR INABILITY TO USE THE MPIL OR THE INFORMATION, OR ANY OTHER PROVISIONS OF THIS AGREEMENT, SUCH AS, BUT NOT LIMITED TO, 20 LOSS OF REVENUE OR ANTICIPATED PROFITS OR LOST BUSINESS. 6. NO ADDITIONAL WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY, AND EACH PARTY HEREBY SPECIFICALLY DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPUED, REGARDING THE MPIL OR THE INFORMATION, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND IMPLIED WARRANTIES ARISING FROM COURSE OF DEALING OR COURSE OF PERFORMANCE. 7. INDEMNITY. Either party will defend, indemnify, save and hold harmless the other party and the officers, directors, agents, affiliates, distributors, franchisees and employees of the other party from any and all third party claims, demands, liabilities, cost or expenses, including reasonable attorney's fees ("Liabilities"), resulting from the indemnifying party's material breach of any duty, representation, or warranty in this Agreement, except where Liabilities result from the gross negligence or knowing and willful misconduct of the other party. 8. LAW. The validity, construction, and performance of this Agreement will be governed by the substantive law of the State of California, not including its law on conflicts of laws. If any provision of this Agreement is held by a court of competent jurisdiction to be illegal, invalid, unenforceable, or otherwise contrary to law, the remaining provisions of this Agreement shall remain in full force and effect. 9. INDEPENDENT CONTRACTORS. The parties hereto hereby agree that in the performance of their respective obligations hereunder, they are, and shall be independent contractors, and not agents of each other. 10. WAIVER. The failure of either party to enforce or to exercise, at any time or for any period of time, any term of or any right arising pursuant to this Agreement does not constitute, and shall not be construed as, a waiver of such term or right, and shall in no way affect that party's right later to enforce or exercise it. 11. CONFIDENTIAL INFORMATION. Each party acknowledges that Confidential Information may be disclosed to the other party during the course of this Agreement. Each party agrees that it shall take reasonable steps, at lease substantially equivalent to the steps it takes to protect its own proprietary information, during the period this Agreement is in effect, and for a period of three (3) years following expiration or termination of this Agreement, to prevent the duplication or disclosure of Confidential Information, other than by or of its employees or agents who must have access to the Confidential Information to perform such party's obligations hereunder, who shall each agree to comply with this Section 11. Nor shall there be "Confidential Information" for purposes of this Agreement, any information relating to or disclosed in the course of the Agreement, which is or should be reasonably understood to be confidential or proprietary to the disclosing party, including, but not limited to, the material terms of this Agreement, technical processes and formulas, and 21 source codes, sales, projections and marketing data. 12. NOTICES. All notices or other communications required to be given hereunder shall be in writing and delivered either personally or by mail or overnight courier to the parties at the address provided by each party below, unless such address has been changed and notice of such change has been delivered in accordance with this provision. 13. ENTIRE AGREEMENT. The provisions of this Agreement or other agreements authorizing Ingram to distribute manufacturer's information constitute the entire Agreement between the subject matter hereof, except other related agreements referenced herein. No amendment, modification, or waiver of any provision of this Agreement shall be effective unless it is set forth in a writing that refers to the Agreement and provisions so affected and is executed by authorized representatives of both parties. -------------------------------------------------------------------------------- AGREED AS OF THE COMMENCEMENT DATE STATED ABOVE. "MANUFACTURER" (Company Name)_________________________________________________________________ (Mailing Address)______________________________________________________________ (City, State, Zip)_____________________________________________________________ By: _________________________________________________________________ (print) _____________________________________________________________________ (sign) Title:_________________________________________________________________________ "INGRAM" Ingram Micro Inc. 1600 E. St. Andrew Place Santa Ana, California 92705 By: _________________________________________________________________ (print) _____________________________________________________________________ (sign) Title:___________________________________________________________ Ext,_________ (must be signed by marketing manager or buyer) 22 EXHIBIT D PRODUCT PRICE LIST The prices for the Products offered under this Agreement shall be (check one): ___________ As shown on Vendor's price list dated ________________. ___________ As shown below.
Product List Price Discount ------- ---------- --------
23 EXHIBIT E BUSINESS SIZE AND CLASSIFICATION CERTIFICATION Contact Name:__________________________________________________________________ Company:_______________________________________________________________________ Address:_______________________________________________________________________ City, State & Zip:_____________________________________________________________ (Please correct your address if it is incorrect or incomplete) In order for INGRAM MICRO INC. to comply with federal and state guidelines, we must obtain certain information about our suppliers. This information will be requested on an annual basis only. Therefore, please complete the basic information requested below. Please complete, sign and return this certification to the address or fax below at your earliest convenience. FAILURE TO PROVIDE THIS INFORMATION, MAY RESULT IN YOUR COMPANY BEING REMOVED FROM OUR VENDOR LIST. Thank you in advance for helping us in out efforts to maintain accurate records, which will in return facilitate an on-going relationship with your company.
Return this form by mail to: Ingram Micro Inc. OR FAX to: (714) 566-1767 Attn: Government Division PO Box 25125 Santa Ana, CA 92799-5125 -------------------------------------------------------------------------------------------------------------------
Indicate the category which appropriately describes your business: (Refer to the reverse of this form for category definitions.) 1. Business Size: / / Small Business / / Large Business 2. Business Classification (if applicable): / / Disadvantaged Business / / Women-owned Business / / Minority Business 3. Business Status: Corporation: / / Yes / / No Taxpayer ID No. (TIN) # _ _ - _ _ _ _ _ _ _ 24 OR Social Security # _ _ _ - _ _ - _ _ _ _ (if individual) The above information is certified true and correct on ___________ day of _______________________ , 19 ______ by: __________________________________ ___________________________________ Authorized Signature Title __________________________________ ___________________________________ Name (print or type) Phone Number 25
BUSINESS SIZE SMALL A business concern that, including domestic and foreign affiliates is independently owned and operated, not dominant in the field of operation in which it is bidding on Government contracts, and qualifies as a small business under the criteria and size standards set forth in Title 13 of the Code of Federal Regulations (CFR), Part 121. LARGE The business concern exceeds the small business size code standards established by the Small Business Administration as set forth in Title 13 of the Code of Federal Regulations (CFR), Part 121. BUSINESS CLASSIFICATION SMALL DISADVANTAGED A small business concern that is at least 51% owned by one or more socially and economically disadvantaged individuals (or a publicly owned business having at least 51% of its stock unconditionally owned by one or more socially or economically disadvantaged individuals) and whose management an daily business operations are controlled by one or more of such individuals. WOMEN-OWNED A business concern that is at least 51% owned, controlled and operated by a woman or women. MINORITY LARGE BUSINESS A concern which meets the criteria and definition of 'Disadvantaged' business, but which is not a small business by the SBA's size standards. FOREIGN BUSINESS More than 50% of production or services must be performed outside of the United States or its possessions. NONPROFIT BUSINESS Any organization not conducted or maintained for the purpose of making profit. Included in this category are sheltered workshops, universities, colleges and local, state and federal governments. BUSINESS STATUS
26
CORPORATION A business entity that is registered with a state in the United States as a corporation, including non-profit corporations, but excluding professional corporations. OTHER DATA Enter Federal Employer ID number or social Security number, whichever is applicable.
27 EXHIBIT F PARTNERSHIP AMERICA(SM) PROGRAM ADDENDUM THIS PARTNERSHIP AMERICA(sm) PROGRAM ADDENDUM ("Addendum") is made and entered into this _________________ day of __________________________ 199____________ by and between INGRAM MICRO INC., a Delaware corporation ("Ingram") and ________________________________________("Vendor") a ________________________ corporation (state of incorporation). RECITALS A. On or about 199 , Ingram and Vendor entered into a Distribution Agreement ("Distribution Agreement"), whereby Ingram was granted the right to distribute in the U.S., all microcomputer products manufactured, produced and/or offered by Vendor ("Vendor Products"). B. Ingram and Vendor now desire to sell and distribute Vendor Products, through resellers and system integrators, to federal, state and local governments and their various agencies and departments ("Government") in accordance with the terms and conditions of this Addendum. NOW, THEREFORE, for valuable consideration, receipt of which is hereby acknowledged, and in consideration of the mutual covenants and promises contained herein, the parties agree as follows: 1. PARTNERSHIP AMERICA(SM) PROGRAM Vendor hereby grants to Ingram, and Ingram hereby accepts, the non-exclusive right to provide product and services to resellers and system integrators in connection with Ingram's sale and distribution of Vendor Product(s) to the Government in support of specific government contract opportunities. 2. VENDOR OBLIGATIONS 2.1. PRODUCT NOTIFICATION Vendor shall notify Ingram of any new Vendor Product(s), or any major revision of a Vendor Product(s), and shall make such Vendor Product(s) available for distribution by Ingram no later than the date of first introduction into the Government marketplace. 2.2. FIRM FIXED PRICING Upon request, Vendor shall provide "Firm Fixed Pricing" which shall guarantee the pricing of the Vendor Product(s) for the effective term of a specific Government contract. Vendor shall give Ingram thirty (30) days advance written notice of any Vendor Product(s) being discontinued. 28 2.3. REPRESENTATIONS AND CERTIFICATIONS Vendor understands that due to the nature of Government bidding, Vendor may be required to enter into a procurement specific nondisclosure agreement or make certain representations and certifications before any Vendor Product(s) are sold or distributed into the Government marketplace. In addition, Vendor agrees to provide Ingram with an annual statement of representations and certifications. 3. INGRAM OBLIGATIONS 3.1. GOVERNMENT SALE SPECIALISTS Ingram shall maintain a separate government sales office, which shall include sales specialists with an understanding of Government regulations and Government contract terms and conditions, to support resellers and system integrators in the Government marketplace. 3.2 CONFIGURATION Ingram shall maintain a configuration facility for system integration and testing in support of Government specific contracts and opportunities for resellers. 3.3. REPORTS Ingram agrees to make available to Vendor, within ten (10) days after the close of each month, via an electronic bulletin board system, a point-of-sale report, by zip code, of Vendor Products sold or distributed to resellers for Government specific contracts. Vendor shall provide Ingram with a list of individuals authorized to receive such reports. 4. PRICING The price and applicable discount for all Vendor Products sold through the Partnership America(sm) Program is set forth in Exhibit "A" attached hereto. The pricing and discounts for Vendor Products set forth therein shall only apply to Vendor Products sold through the Partnership America(sm) Program into the Government marketplace. Ingram will, in its sole discretion, determine the sale price to resellers and system integrators for all Vendor Products. All Vendor Product pricing and discounts set forth pursuant to this Section shall not apply to, amend or affect the pricing and discounts set forth in connection with any Vendor Products sold and distributed pursuant to the Distribution Agreement. Vendor understands and agrees that for certain Government proposals/quotes, which specify a significant quantity of Vendor Products, Vendor shall provide program specific pricing that will include additional discounts to those set forth in Exhibit "A". 5. TERMINATION Either Vendor or Ingram may terminate this Addendum, with or without cause, by giving the other ninety (90) days written notice. Termination of this Addendum shall not result in the termination of the Distribution Agreement. Termination of this 29 Addendum shall not affect the terms and conditions of any Letter of Supply, issued by Vendor pursuant to Subsection 2.2. In the event this Addendum is terminated, the rights of the parties shall be determined under the terms and conditions of the Distribution Agreement. 6. DISTRIBUTION AGREEMENT TERMS AND CONDITIONS Except as otherwise provided pursuant to this Addendum, all terms and conditions of the Distribution Agreement shall apply to the Partnership America(sm) Program. -------------------------------------------------------------------------------- 30 AMENDMENT March 10, 1998 Ms. Victoria L. Cotten Sr. Vice President Purchasing Ingram Micro Inc. 1600 E. St. Andrew Place Santa Ana, California 92705 Dear Ms. Cotten: In light of the training and special use requirements of Dragon NaturallySpeaking(TM), Deluxe Edition and other high-end products, we are now requiring Certification of all our Resellers who resell our Deluxe Edition. Distributors may not sell such product to any Reseller who does not have this Certification. Therefore, the following provision amends the December 15, 1997 Agreement between DRAGON and Ingram Micro Inc. and is to be inserted as Paragraph 3.5 in the Agreement. 3.5 "Reseller Certification. Commencing on March 1, 1998, DRAGON requires that all its Distributors ensure that their resellers procure a Certification Number from DRAGON that allows the reseller to sell Dragon NaturallySpeaking(TM), Deluxe Edition and other high-end DRAGON products. Resellers are specifically prohibited from selling these products without this Certification. Distributor may not sell such products without first ascertaining that the reseller has procured such Certification." Please sign below indicating your acknowledgment and acceptance of this Amendment. Sincerely, \s\ S. Semenzato ---------------------------------- Steve Semenzato Director, North American Sales ACKNOWLEDGED AND ACCEPTED By: \s\ V.L. Cotten ------------------------------------ Signature: Victoria L. Cotten ----------------------------- Title: Sr. Vice President Purchasing --------------------------------- Date: 3/25/98 ---------------------------------- May 21, 1998 31 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. AMENDMENT #2 This Amendment Agreement effective as of the 21st day of May, 1998 (the "Effective Date") is between Ingram Micro Inc. ( hereinafter the "Distributor") and Dragon Systems, Inc. (hereinafter "Dragon.") Notwithstanding any provision to the contrary, the Agreement between the Parties is hereby amended as follows: Section 7.1 is hereby deleted in its entirety and the following Section 7.1 is inserted in its place: SECTION 7.1 STOCK ROTATION AND BALANCING During the term of this Agreement, DISTRIBUTOR may return the Product(s) which require Dragon certification and are sold through VAR Resellers i.e. non-retail to DRAGON for stock rotation up to [**] of the dollar value of DISTRIBUTOR's prior quarter's product orders, subject to the following conditions: (a) DISTRIBUTOR must submit its request for stock rotation to DRAGON in writing at least 14 days in advance of Distributor's proposed stock return date, indicating in the request the identity, quantity, order and invoice dates of the Products to be returned; (b) The version of the Products being returned must be the current version or the version immediately preceding the then-current version; (c) Distributor must submit to DRAGON concurrently with its rotation request, an order for Products equal to or greater than the value of the Products being returned (d) Distributor may submit only one stock rotation request [**] (e) Products returned for rotation may not have been shipped by DRAGON more than [**] before the date of the request; and (f) the Products being returned must be new, resaleable, and in their original, unopened packaging (g) return shipping will be paid for by DISTRIBUTOR. DRAGON, at its sole option, may amend or discontinue its stock rotation program. For all other Products, Distributor may return such to DRAGON throughout the term of this Agreement for full credit of the Product's purchase price provided such Products are in their original packaging. Distributor will pay all freight charges for returned Products. 32 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Section 7.3 is hereby deleted in its entirety and the following Section 7.3 is inserted in its place: SECTION 7.3 DISCONTINUED PRODUCTS Within [**] after notice by DRAGON of product discontinuance, DISTRIBUTOR may return for credit all units of such Product then held by DISTRIBUTOR in inventory, purchased [**] preceding such notice and not committed to sale. The return rights set forth in this section are in addition to the Stock Rotation rights described above. Except as expressly modified herein, the Parties hereby ratify and affirm all terms of the original agreement which terms and condition remain in full force and effect as originally agreed to by the parties unless otherwise modified or amended in writing. IN WITNESS WHEREOF, each party has signed this Agreement on the day and year written below effective as of the Effective Date. DRAGON SYSTEMS, INC. INGRAM MICRO, INC. By/s/ Janet M. Baker By: /s/ S. Semenzato --------------------------- ------------------------------------- Printed Name Janet M. Baker Printed Name S. Semenzato ----------------- ---------------------------- Title President Title Director ----------------------- ---------------------------------- Date 5/21/98 Date 5/21/98 ------------------------ ------------------------------------ EX-10.13 8 DISTRIBUTION AGREEMENT DATED 4/30/98 1 Exhibit 10.13 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. DISTRIBUTION AGREEMENT This Agreement (the "Agreement") is made on the 30th day of April 1998. BETWEEN INGRAM EUROPEAN COORDINATION CENTER N.V./S.A. whose registered office is situated at Leuvensesteenweg 11, B-1932 Zaventem, Belgium, on behalf of its Ingram Micro affiliate companies in Europe (including but not limited to those companies listed on the attached schedule 1) "Ingram") and DRAGON SYSTEMS INC of 320 Nevada Street, Newton, MA 02160, USA ("Vendor"). IT IS AGREED: The terms and conditions of the distribution agreement between Ingram Micro Inc. and Vendor dated 15th December 1997 ("Distribution Agreement"), attached hereto as Exhibit A and made a part hereof by reference, are hereby agreed to and accepted by Ingram and Vendor (as amended by the terms of this document) to govern any distribution relationship in Europe between Ingram and Vendor and the terms of sale and purchase of Products between Ingram and Vendor. Amendments to the Distribution Agreement Clause 4: deliveries will be FOB Ingram's designated European warehouse. This shall be one location designated by Ingram. All other terms of clause 4 of the Distribution Agreement remain unchanged. Additional Clauses The following provisions will be deemed to be added. This Agreement shall be construed and enforced in accordance with the laws of the State of California, except that body of law concerning conflicts of law. The United Nations Convention on Contracts for the International Sale of Goods shall not apply to this agreement. [STRIKE-THROUGH TEXT] \s\JB 2 Vendor warrants, in addition to any other warranties, that the Products will comply with all health and safety regulations applying at the date of supply in the place where the Products are to be used by the end-user. The provisions of the attached Schedule 2 shall apply in addition to the other terms and conditions of this Agreement in respect of all Products supplied by Vendor for the purposes of retail sale and/or which are supplied by IM for the purposes of retail sale to its customers. In the event of the Distribution Agreement containing provisions which are in breach of European Union Law, it is expressly agreed that such provisions will be void and non applicable. All product must be packaged and include sufficient components (or advice thereon) as to make them suitable for retail sale. INGRAM EUROPEAN COORDINATION CENTER N.V./S.A. DRAGON SYSTEMS INC. By: \s\ Karel Everaet By: \s\ Janet M. Baker -------------------------------- ----------------------------- Name: Karel EVERAET Name: Janet M. Baker -------------------------------- ----------------------------- Title: MANAGING DIRECTOR Title: President -------------------------------- ----------------------------- Date: N30538 Date: 30 April 1998 -------------------------------- ----------------------------- -2- 3 SCHEDULE 1 AUSTRIA: Ingram Micro Computer Ges.m.b.H Concorde Business Park CS 2320 Schwechat Tel: +43 1706 17 77 10 Fax: +43 1706 17 77 18 Reg. No. 131945m VAT No. ATU 38585401 BELGIUM: Ingram Micro NV Leuvensesteenweg 11 1932 Sint-Stevens-Woluwe Tel: +32 27 22 95 11 Fax: +32 27 25 15 11 Reg. No. HRB 456.077.106 VAT No. BE 425.077.655 DENMARK: Ingram Micro A/S Slobemarken 15 2970 Hereholm Tel: +45 45 16 55 00 Fax: +45 42 76 55 80 Reg. No. 110598 VAT No. DK 70562618 FINLAND: Ingram Micro OY Sinimlentle 10B 02631 Espoo Tel: +35 89 50 27 41 Fax: +35 89 50 27 499 Reg. No. 565-016 VAT No. 0690814/0 FRANCE: Ingram Micro S.A.R.L. Carrefour de l'Europe 59812 Lesquin Cedex (Lille) Tel: +33 3 20 88 58 00 Fax: +33 3 20 88 58 88 Reg. No. R.C. LILLE 928127 VAT No. FR 50 344658117 GERMANY: Ingram Micro Deutschland GmbH Hans-Pinsel-Strasse 9B 85540 Haar (Munchen) Tel: +49 89 46 18-0 Fax: +49 89 46 18 1190 Reg. No. HRB Munchen 115953 VAT No. DE 812261350 ITALY: Ingram Micro SpA Via Prima Maggio 2/4 20068 Peschlera Borromeo (Milano) Tel: +39 255 351 Fax: +39 255-38401 Reg. No. 1367714 VAT No. IT 10297220153 THE NETHERLANDS: Ingram Micro BV Mississippidreef 87 3506 CE Ultrecht Tel: +31 30 285 1801 Fax: +31 30 262 1330 Reg. No. 85572 VAT No. NL 8047.55.486.BO1 NORWAY: Ingram Micro AS Brobeldnvelen 80 0583 Oslo Tel: +47 23 05 0000 Fax: +47 23 05 0001 Reg. No. 963054432 VAT No. NO 963054432 SPAIN: Ingram Micro SA C/Sant Farran 52-68 Pol. Ind. Almeda 08940 Cornella de Llobragat (Barcelona) Tel: +34 3 474 90 90 Fax: +34 3 377 34 50 Reg. No. A-75/076395 VAT No. ESA78076395 SWEDEN: Ingram Micro AB Kronborgsgrand 1 15487 Kista Tel: +46 8 477 15 00 Fax: +45 8 703 93 48 Reg. No. 556254/8452 VAT No. SE 556254845201 SWITZERLAND: Ingram Micro AG Hardlinstrasse 15 8957 Spreltenbach Tel: +41 56 4197 929 Fax: +41 56 4197 977 Reg. No. CH 400.3.017.0363 VAT no. CH 393154 UNITED KINGDOM: Ingram Micro (UK) Ltd Garamond Drive Wymbush Milton Keynes MK8 8DF Buckinghamshire, UK Tel: +44 1908 260 422 Fax: +44 1908 265 526 Reg. No. 1609968 VAT No. GB 440.3552.80 -3- 4 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. SCHEDULE 2 RETAIL PRODUCTS 1. Defective Products Vendor agrees to accept back for credit any Product returned to Ingram as defective by Ingram's retail customers which has been returned to the retail customer within [**] of the date of sale to the end user. 2. Pass through MDF Vendor agrees to make a Marketing Development Fund available for Ingram and Ingram's retail customers 3. Promotional opportunities Vendor will from time to time subscribe to Ingram's promotion opportunities. 4. Merchandising services Vendor will from time to time subscribe to Ingram's store Merchandising providing in-store focus. 5. Product Requirements 5.1 PRODUCT CHANGES; All version changes for any product must be notified in writing to Ingram as soon as reasonably practical with details of Ingram's cost price and any RRP (or similar) and in any event, at least 30 days before release date. 5.2 NEW PRODUCTS; Vendor must inform Ingram as soon as reasonably possible of all new product releases and supply to Ingram sufficient samples free of charge, as Ingram need to supply to its retail customers for advertising purposes or evaluation. Vendor will also supply bar code information, product dimensions (both outer case and contents) and key selling points. 5.3 BAR CODES All product must bear EAN-13/UPC bar code number and code readable on an external facing of the packaging of each product, any change of code must be notified in writing to Ingram 14 days prior to the date of any change. 5.4. SHRINK WRAPPING If required by a particular retail customer of Ingram's products must be shrink-wrapped. 5.5 SECURITY TAGGING All Products must be security tagged to a standard agreed between Ingram, Vendor and its retail customers. 5.6 CERTIFICATE RATINGS All age restricted Products must display the appropriate symbol on the Product and advice given to Ingram's Buyer in this respect -4- 5 6. Dummy Boxes Reasonable quantities of dummy boxes will be supplied to Ingram from time to time as Ingram requests. 7. Specifications -5- 6 EXHIBIT A DISTRIBUTION AGREEMENT THIS DISTRIBUTION AGREEMENT ("Agreement"), is entered into this 15th day of December, 1997, by and between INGRAM MICRO INC. ("Ingram"), a Delaware corporation, having its principal place of business at 1600 E. St. Andrew Place, Santa Ana, California 92705, and DRAGON SYSTEMS INC. ("Vendor"), a Delaware corporation, having its principal place of business at 320 Nevada Street, Newton, Massachusetts 02160. The parties desire to and hereby do enter into a distributor/supplier relationship, the governing terms and mutual promises of which are set out in this Agreement. This Agreement, upon the full execution hereof, shall supersede in its entirety the mutual Start-up Agreement dated July 14, 1997. 1. DISTRIBUTION RIGHTS 1.1 Territory Vendor grants to Ingram, including its affiliates for resale, and Ingram accepts, the non-exclusive right to distribute in North America all computer products produced and/or offered by Vendor ("Product") during the term of this Agreement. Ingram shall have the right to purchase, sell and ship to any reseller within the territory or to Ingram's affiliate, or at Vendor's option Ingram's affiliate may purchase direct from Vendor. 1.2 Product Vendor agrees to make available and to sell to Ingram such Product as Ingram shall order from Vendor at the prices and subject to the terms set forth in this Agreement. Ingram shall not be required to purchase any minimum amount or quantity of the Product. 2. TERM AND TERMINATION 2.1 Term The initial term of this Agreement is one (1) year. Thereafter the Agreement will automatically renew for successive one (1) year terms, unless it is earlier terminated. 2.2 Termination (a) Either party may terminate this Agreement, with or without cause, by giving thirty (30) days written notice to the other party. (b) Either party may immediately terminate this Agreement with written notice if the other party: (i) materially breaches any term of this Agreement and such breach continues for thirty (30) business days after written notification thereof; or -6- 7 (ii) ceases to conduct business in the normal course, becomes insolvent, makes a general assignment for the benefit of creditors, suffers or permits the appointment of a receiver for its business or assets, or avails itself of or becomes subject to any proceeding under any Bankruptcy Act or any other federal or state statute relating to insolvency or the protection of rights of creditors; or (iii) attempts to assign or otherwise transfer its rights hereunder unless both have agreed in writing to such assignment or transfer. 3. INGRAM OBLIGATIONS 3.1 Product Availability Ingram will list Product in its catalog(s) as appropriate and endeavor to make such Product available to customers. 3.2 Advertising Ingram will advertise and/or promote Product in a commercially reasonable manner and will transmit as reasonably necessary Product information and promotional materials to its customers. 3.3 Support Ingram will make its facilities reasonably available for Vendor and will assist in Product training and support. Ingram will provide reasonable, general Product technical assistance to its customers, and will direct all other technical issues directly to Vendor. 3.4 Administration (a) Upon request, Ingram will furnish Vendor with a valid tax exemption certificate. (b) Ingram will provide Vendor standard sales-out and inventory reports via its electronic Bulletin Board System. (c) Ingram may handle its customers' Product returns by batching them for return to Vendor at regular intervals. 4. VENDOR OBLIGATIONS 4.1 Shipping/Export (a) Vendor shall ship Product pursuant to Ingram purchase order(s) ("P.O."). Product shall be shipped F.O.B. Ingram's designated warehouse with risk of loss or damage to pass to Ingram upon delivery to the warehouse specified in Ingram's P.O. (b) Ingram requires concurrent with the execution of this Agreement Export Administration Regulations product classification and supporting documentation: Certificate of Origin (General Use and/or NAFTA), Export Commodity Control -7- 8 Number's; (ECCN's), General License and/or Individual Validated License information and Schedule "B"/Harmonized Numbers. This applies when distribution rights granted under Section 1.1 are outside the United States for the initial Product/s and when additions or changes to these Products occurs. 4.2 Invoicing For each Product shipment to Ingram, Vendor shall issue to Ingram an invoice showing Ingram's order number, the Product part number, description, price and any discount. At least monthly, Vendor shall provide Ingram with a current statement of account, listing all invoices outstanding and any payments made and credits given since the date of the previous statement. 4.3 Product Availability Vendor agrees to maintain sufficient Product inventory to fill Ingram's orders. If a shortage of any Product exists, Vendor agrees to allocate its available inventory of such Product to Ingram in proportion to Ingram's percentage of all of Vendor's customer orders for such Product during the previous sixty (60) days. 4.4 Product Marketing Vendor will clearly mark each unit of Product with the Product name and computer compatibility. Such packaging will also bear a machine-readable bar code identifier scannable in standard Uniform Product Code (UPC) format. The bar code must identify the Product as specified by the Uniform Code Council (UCC). If the Vendor or Ingram customers' require serial number tracking the serial number must be clearly marked and bar coded on the outside of the individual selling unit. The bar code shall fully comply with all conditions regarding standard product labeling set forth in Exhibit B in the then-current Ingram Guide to Bar Code: The Product Label. Vendor may be assessed a reasonable per unit charge for all Product not in conformance herewith. 4.5 TechNotes Vendor will within thirty (30) days of execution of this Agreement sign the CIS/ Manufacture Product Information Library - TechNotes and Content Distribution Agreements as shown in Exhibit C and provide the required product information in the designated template format. 4.6 Support At no charge to Ingram, Vendor shall support Product and any reasonable Ingram efforts to sell Product. Vendor shall also provide to Ingram, its employees, and its customers reasonable amounts of sales literature, advertising materials, and training and support in Product sales, during Vendor's regular business hours. 4.7 New Product Vendor shall endeavor to notify Ingram at least thirty (30) days before the date any new Product is introduced. Vendor shall make such Product available for distribution by Ingram no later than the date it is first offered for sale in the marketplace. -8- 9 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. 4.8 Insurance Vendor shall carry insurance coverage for product liability/completed operations with minimum limits of [**]. Within ten (10) days of full execution of this Agreement, Vendor shall provide Ingram with a Certificate of Insurance. This Certificate of Insurance must include: (i) a broad form endorsement naming Ingram as an additional insured, and (ii) a mandatory thirty (30) day notice to Ingram of insurance cancellation. 4.9 Warranties/Certification (a) General Warranty Vendor represents and warrants that (i) it has good transferable title to the Products, (ii) the Product will perform in conformity with specifications and documentation supplied by Vendor, (iii) to the best of Vendor's knowledge, the Product or its use does not infringe any patents, copyrights, trademarks, trade secrets, or any other intellectual property rights, (iv) to the best of Vendor's knowledge, there are no suits or proceedings pending or threatened which allege any infringement of such proprietary rights other than described in Exhibit G, and (v) the Product sales to Ingram do not in any way constitute violations of any law, ordinance, rule or regulation in the distribution territory. (b) Warranty Vendor hereby represents and warrants that any Product offered for distribution does not contain any obscene, defamatory or libelous matter or violate any right of publicity or privacy. (c) End-User Warranty Vendor shall provide a warranty statement with Product for end user benefit. This warranty shall commence upon Product delivery to end-user. NO OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE WARRANTIES OF MERCHANTABIITY AND FITNESS FOR A PARTICULAR PURPOSE ARE MADE BY VENDOR WITH RESPECT TO THE PRODUCT. INGRAM SHALL NOT EXTEND ANY ADDITIONAL WARRANTIES TO ANY RESELLERS OR END-USERS OF THE PRODUCT. IN NO EVENT WILL INGRAM BE LIABLE FOR ANY LOST PROFITS OR ANY OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGES, EVEN IF INGRAM HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. VENDOR SHALL IN NO EVENT BE LIABLE FOR ANY DAMAGES RESULTING FROM LOSS OF DATA, PROFITS OR USE OF EQUIPMENT, OR FOR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN CONNECTION WITH THE USE OR PERFORMANCE OF THE LICENSED PROGRAM. IT IS ALSO UNDERSTOOD BY BOTH PARTIES TO THIS AGREEMENT THAT SPEECH RECOGNITION IS INHERENTLY A STATISTICAL PROCESS; THAT SPEECH -9- 10 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. RECOGNITION ERRORS ARE INHERENT IN THE PROCESS OF SPEECH RECOGNITION; THAT SPEECH RECOGNITION APPLICATIONS AND USAGE MUST BE DESIGNED TO ALLOW FOR SUCH ERRORS IN THE SPEECH RECOGNITION PROCESS. (d) Millennium Compliance Warranty Vendor warrants and represents that the Product will properly (a) record, store, process, calculate or present calendar dates falling on and after (and if applicable, spans of time including) January 1, 2000 as a result of the occurrence, or use of data consisting of, such dates and (b) calculate any information dependent on or relating to dates on or after January 1, 2000 in the same manner, and with the same functionality, data integrity and performance, as such Product records, stores, processes, calculates and presents calendar dates on or before December 31, 1999, or information dependent on or relating to such dates. (e) EU Warranty Vendor further warrants and represents for Products distributed to the European Union ("EU") that the Products will be accepted under all EU directives, regulations and the EU country's legislation. (f) Made in America Certification Vendor by the execution of this Agreement certifies that it will not label any of its products as being "Made in America," "Made in U.S.A.," or with similar wording, unless all components or elements of such Product is in fact made in the United States of America. Vendor further agrees to defend, indemnify and hold harmless from and against any and all claims, demands, liabilities, penalties, damages, judgments or expenses (including attorney's fees and court costs) arising out of or resulting in any way from Product that does not conform to the Certification. 5. PRICING 5.1 Ingram Pricing The suggested retail price and any Ingram discount for Product is set out in Exhibit D. Vendor may modify Exhibit D with a minimum of thirty (30) days advance written notice to Ingram. All Ingram orders for Product will be billed at the price in effect when the order is placed. Ingram shall have sole discretion as to selling price of Product to its customers. 5.2 Vendor Pricing Vendor agrees that the [**]. If Vendor [**] also be entitled to participate in and receive notice of the same [**]. 5.3 International Pricing If Vendor [**] into that territory. 5.4 Price Adjustments If Vendor reduces any Product price, or offers increased discounts to any customers, Vendor will promptly credit Ingram for the difference between the original Product price and the reduced Product price for Ingram's and its customers' Product inventory, including: (i) any Customer Product in-transit from/to -10- 11 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Ingram, (ii) any unshipped orders, and (iii) orders in-transit to Ingram on the price reduction or increased discount offer date. In the event that Vendor shall raise the list price of a Product, all orders for such Product placed prior to the effective date of the price increase shall be invoiced at the lower price. Vendor shall provide Ingram with thirty (30) days advance notice of any price increases. 5.5 Payment Terms Payment terms shall be [**]. Payment shall be deemed made on the payment postmark date. All checks will be sent via FedEx at Vendor's expense. 5.6 Right to Withhold Notwithstanding any other provision in this Agreement to the contrary, Ingram shall not be deemed in default if it withholds any specific amount to Vendor because of a legitimate dispute between the parties as to that specific amount pending the timely resolution of the disputed amount. 5.7 Bulletin Board System (BBS) Ingram will provide the Detailed Vendor Buying Report weekly by its electronic BBS. The standard reports will include sales by zip code, state, product/quantity sold and the detailed Vendor Buying Report. Ingram will provide reporting on a monthly basis on sell-through including SKU, title, version, company, zip, number sold subject to a separate Proprietary Information Non-Disclosure Agreement attached hereto as Exhibit H. 5.8 Rebate Vendor will provide a guaranteed [**], based on gross sales, for reporting under Section 5.7. In addition, Vendor will offer Ingram [**], based on gross sales, for achieving sell-through quotas. The sell through quotas shall be mutually agreed between both parties. The rebate will be paid by check within thirty (30) days after the quarter end. If no check is received within that period Ingram shall deduct that amount from the Vendor's next payment. 6. MARKETING 6.1 Trademarks Ingram may advertise and promote the Product and/or Vendor, and may thereby use Vendor's trademarks, service marks and trade names according to Vendor's guidelines. Neither party shall acquire any rights in the trademarks, service marks or trade names of the other. 6.2 Advertising Vendor agrees to cooperate in Ingram's or Ingram's customers' advertising and promotion of Product and hereby grants Ingram a cooperative advertising allowance of [**] of Product invoice amount for such advertising featuring Product and/or Vendor. Ingram shall submit advertising to Vendor for review and approval prior to any initial release, and Vendor shall not unreasonably withhold or delay such approval. Upon receipt of reasonable evidence of such advertising expenditures, Vendor agrees to credit the amount thereof against future Ingram purchases. -11- 12 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. 6.3 Programs (a) Ingram may offer marketing programs to Vendor including but not limited to launch programs and reseller pass through opportunities. If Vendor elects to participate, Vendor agrees to pay such funds as may be required for this purpose. (b) Vendor may be asked to prepay all marketing activities until a mutually agreed upon sell through rate is achieved. (c) All marketing pass through activities are subject to Ingram/buyer pre-approval. 6.4 Support Product Vendor shall consign a reasonable amount of demonstration Product to aid Ingram in its support and promotion of Product. All such consigned Product will be returned to Vendor upon request. 7. RETURNS 7.1 Stock Balancing Notwithstanding anything herein to the contrary, Ingram may return throughout the term any Products which are in their original packaging to Vendor [**]. Ingram will pay all freight charges for returned Products. 7.2 Post-Term/Termination For [**] of this Agreement, Ingram may return to Vendor any Product [**]. Any credit or refund due Ingram for returned Product shall be equal to the Product purchase price plus all freight charges incurred by Ingram in returning the Product. 7.3 Product Discontinuation Vendor shall give Ingram thirty (30) days' advance written notice of Product discontinuation. Ingram may return all such Product to Vendor for full credit of Product purchase price plus all freight charges incurred by Ingram in returning the Product, [**]. 7.4 Defective Product (a) Ingram may return any Product to Vendor that Ingram or its customer finds defective. Vendor shall immediately credit Ingram for the Product purchase price, plus all freight charges incurred by Ingram in returning the defective Product. (b) If any Product is recalled