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Inventory Management and Product Purchase Agreement

Category: Management, Purchase Agreement



THIS AGREEMENT (“Agreement”), dated this 17 of May, 2002, (the “Effective Date”), is made by and between Ingram Micro Inc. (“Ingram”), a Delaware corporation, with their principal place of business at 1600 East Saint Andrew Place, Santa Ana, California 92705 and VMware Inc., (“Vendor”), a Delaware corporation, with its principal place of business at 3145 Porter Drive, Building F, Palo Alto, CA 94304.


This Agreement sets forth the parties’ understanding and agreement with respect to (a) Ingram’s management of Vendor’s product inventory and (b) the purchase of such products by Ingram for resale to its customers.

Ingram and Vendor agree as follows:




1.1 Inventory Management. Ingram shall store and manage computer technology products manufactured, produced or supplied by Vendor (the “Products”). All products shall be delivered to Ingram on a consignment basis. Ingram and Vendor shall mutually agree on which Products will be consigned to Ingram under this Agreement before the Products are delivered to Ingram’s Facilities. “Facility” or “Facilities” shall be as defined on Schedule A attached hereto. For purposes of this Agreement, all Products have been delivered to and received at the Facilities shall be referred to as “Managed Inventory”.

1.2 Space Allocation. Ingram shall store the Managed Inventory at the Facility or Facilities. Ingram reserves the right to store the Managed Inventory at other Ingram facilities or at a third party warehouse location, provided that it advises Vendor of where the Managed Inventory is located and that it bears all costs associated with relocating the Managed Inventory to the other Ingram facilities. Ingram shall allocate the number of bin locations per day stated in Schedule A for storage of the Products at each Facility. In the event that the Managed Inventory levels exceed the number of allocated bin locations at a Facility, Ingram reserves the right to charge Vendor for the additional bin locations actually used each day at the rate stated in Schedule A. Vendor may request that Managed Inventory be located at additional Ingram facilities; provided that Ingram may accept or reject any such request in its sole discretion. Vendor shall bear all costs associated with relocating Managed Inventory to additional or alternative facilities.


1.3 Inventory Level Maintenance. Vendor shall use commercially reasonable efforts to maintain Managed Inventory at each Facility at a level at least equal to Ingram’s sell through rate during the preceding two weeks. Once per week, Vendor shall advise the Ingram Product Manager in charge of Vendor’s account of the quantity and type of Managed Inventory that should be consigned to each Facility. The Product Manager shall then issue an order to Vendor for the quantity and type of Product to be consigned (a “Stock Order”). Vendor understands and agrees that a Stock Order (even if the order document is entitled or referred to as a “Purchase Order”) is only a request for delivery of consigned Products to Ingram and is not and shall not be deemed to be a commitment to purchase the Products, except as required under this Agreement. Unless otherwise agreed by Ingram, Stock Orders shall be limited to no more than twenty-five Product line items. Vendor may request that Ingram place up to a maximum of four Stock Orders in any month. Vendor shall pay an additional fee for any Stock Orders in excess of four in any month.

1.4 True Consignment. To the extent that Vendor delivers the Products to Ingram or places them under Ingram’s control, this is a true consignment agreement. Vendor shall retain title to the Managed Inventory shipped hereunder until the Managed Inventory is purchased by Ingram at the time of sale to its customers.

1.5 Buyback of Existing Inventor. Following the Effective Date of this Agreement, Ingram shall provide Vendor with a list of Products, if any, held by Ingram in its inventory on the Effective Date (“Pre-Existing Inventory”). Vendor agrees to repurchase within ten (10) days of such list, any Pre-Existing Inventory that Ingram has previously purchased from Vendor. Vendor agrees to repurchase the Pre-Existing Inventory at the price Ingram paid to Vendor. Any Products in Pre-Existing Inventory for which Ingram has not paid Vendor shall automatically become Managed Inventory for purposes of this Agreement, In the event that Ingram decides to consolidate Managed Inventory into on Facility, Vendor agrees to pay for costs associated with picking, packing and shipping Managed Inventory to the desired Facility.



2.1 Freight and Risk of Loss. Product shall be shipped by Vendor CIF (cost, insurance, freight) destination to Ingram’s designated warehouse or other specified location whereby Vendor pays all freight with risk of loss or damage to pass to Ingram upon delivery to the location specified in the Stock Order. In the event that the parties agree that Ingram should handle inbound shipment of the Product using its freight carriers, Ingram shall charge Vendor for all freight costs incurred monthly.

2.2 Shipments to Facilities. For all shipments Vendor agrees to comply with Ingram’s Vendor Routing and Packaging Guide (“Routing Guide”) attached hereto as Attachment I. Vendor is not obligated to utilize the carrier selection as specified in the routing matrix section of the Routing Guide but is encouraged to do so. Vendor agrees to immediately reimburse Ingram via credit (or via a check if there are no outstanding invoice amounts due Vendor) for the cost of any freight erroneously charged to Ingram for Product shipments to the Facilities.

2.3 Product Markings and Coding. Prior to delivering the Product to Ingram, Vendor shall clearly mark on the packaging of each unit of Product the Product’s name and computer


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