Exhibit 10.14
[Portions of this Exhibit have been omitted pursuant to a request for
confidential treatment under Rule 406 of the Securities Act of 1933,
as amended. A copy of this Exhibit with the portions included
has been filed with the Securities and Exchange Commission.]
MICR SUPPLIES AGREEMENT
BETWEEN
IBM PRINTING SYSTEMS COMPANY
AND
XXXX SYSTEMS, INC.
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February 6, 1998
TABLE OF CONTENTS
1.0 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 "Custom Material". . . . . . . . . . . . . . . . . . . . . .1
1.2 "End User" . . . . . . . . . . . . . . . . . . . . . . . . .1
1.3 "Engineering Change" . . . . . . . . . . . . . . . . . . . .1
1.4 "Epidemic Failure" . . . . . . . . . . . . . . . . . . . . .1
1.5 "General Availability" . . . . . . . . . . . . . . . . . . .1
1.6 "Invention". . . . . . . . . . . . . . . . . . . . . . . . .1
1.7 "Months" or "months", "Quarters" or "quarters",
or "Days" or "days" . . . . . . . . . . . . . . . . . . . .2
1.8 "Printing System". . . . . . . . . . . . . . . . . . . . . .2
1.9 "Product" or "Products". . . . . . . . . . . . . . . . . . .2
1.10 "Product Specifications" . . . . . . . . . . . . . . . . . .2
1.11 "Reseller" . . . . . . . . . . . . . . . . . . . . . . . . .2
1.12 "Subsidiary" . . . . . . . . . . . . . . . . . . . . . . . .2
1.13 "Term" . . . . . . . . . . . . . . . . . . . . . . . . . . .2
2.0 AGREEMENT PERIOD. . . . . . . . . . . . . . . . . . . . . . . . . .2
2.1 TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
2.2 AGREEMENT EXTENSIONS . . . . . . . . . . . . . . . . . . . .2
3.0 PRICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
3.1 PRODUCT PRICES . . . . . . . . . . . . . . . . . . . . . . .3
3.2 COMPETITIVE PRICES . . . . . . . . . . . . . . . . . . . . .3
3.3 PRICING ASSUMPTIONS. . . . . . . . . . . . . . . . . . . . .3
3.4 REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . .3
3.5 TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . .3
3.6 MOST FAVORED CUSTOMER. . . . . . . . . . . . . . . . . . . .3
4.0 ORDERING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
4.1 FORECASTS. . . . . . . . . . . . . . . . . . . . . . . . . .4
4.2 ORDERS . . . . . . . . . . . . . . . . . . . . . . . . . . .4
4.3 ORDER ACCEPTANCE . . . . . . . . . . . . . . . . . . . . . .5
4.4 ORDER CHANGES. . . . . . . . . . . . . . . . . . . . . . . .5
4.5 CANCELLATION . . . . . . . . . . . . . . . . . . . . . . . .5
5.0 PACKAGING, SHIPMENT AND DELIVERY. . . . . . . . . . . . . . . . . .5
5.1 PACKAGING. . . . . . . . . . . . . . . . . . . . . . . . . .5
5.2 DELIVERY . . . . . . . . . . . . . . . . . . . . . . . . . .5
5.3 TITLE AND RISK OF LOSS . . . . . . . . . . . . . . . . . . .5
5.4 TRANSPORTATION . . . . . . . . . . . . . . . . . . . . . . .5
6.0 INSPECTION AND ACCEPTANCE . . . . . . . . . . . . . . . . . . . . .5
6.1 INSPECTION . . . . . . . . . . . . . . . . . . . . . . . . .5
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February 6, 1998
6.2 REJECTION OF NON-CONFORMING PRODUCTS . . . . . . . . . . . .5
6.3 EFFECT OF REJECTION. . . . . . . . . . . . . . . . . . . . .5
6.4 EFFECT OF PAYMENT. . . . . . . . . . . . . . . . . . . . . .6
7.0 PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
7.1 INVOICING PROCEDURES . . . . . . . . . . . . . . . . . . . .6
7.2 TERMS OF PAYMENT . . . . . . . . . . . . . . . . . . . . . .6
8.0 PRODUCT CHANGES . . . . . . . . . . . . . . . . . . . . . . . . . .6
8.1 SELLER REQUESTED CHANGES . . . . . . . . . . . . . . . . . .6
8.2 BUYER REQUESTED CHANGES. . . . . . . . . . . . . . . . . . .6
8.3 MANDATORY CHANGES. . . . . . . . . . . . . . . . . . . . . .6
8.4 PRODUCT ENHANCEMENTS . . . . . . . . . . . . . . . . . . . .7
8.5 NEW PRODUCTS . . . . . . . . . . . . . . . . . . . . . . . .7
9.0 QUALITY ASSURANCE . . . . . . . . . . . . . . . . . . . . . . . . .7
9.1 QUALITY PROCESS. . . . . . . . . . . . . . . . . . . . . . .7
9.2 ISO 9002 . . . . . . . . . . . . . . . . . . . . . . . . . .7
10.0 WARRANTIES AND REPRESENTATIONS. . . . . . . . . . . . . . . . . . .7
10.1 PRODUCT WARRANTY . . . . . . . . . . . . . . . . . . . . . .7
10.2 CLAIM WARRANTY . . . . . . . . . . . . . . . . . . . . . . .8
10.3 LICENSE WARRANTY . . . . . . . . . . . . . . . . . . . . . .8
10.4 REMEDIES FOR BREACH OF PRODUCT WARRANTY. . . . . . . . . . .8
10.5 EPIDEMIC FAILURES. . . . . . . . . . . . . . . . . . . . . .8
10.6 LIMITATION OF WARRANTIES . . . . . . . . . . . . . . . . . .9
11.0 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . .9
11.1 PATENT, COPYRIGHT, MASK WORK, TRADE SECRET AND
TRADEMARK INDEMNIFICATION. . . . . . . . . . . . . . . . . .9
11.2 PRODUCT INDEMNIFICATION. . . . . . . . . . . . . . . . . . .9
12.0 PRODUCT SUPPORT . . . . . . . . . . . . . . . . . . . . . . . . . .9
12.1 TECHNICAL SUPPORT. . . . . . . . . . . . . . . . . . . . . .9
12.2 TONER INTERLOCK SYSTEM . . . . . . . . . . . . . . . . . . 10
12.3 MATERIAL SAFETY DATA SHEETS. . . . . . . . . . . . . . . . 10
13.0 INTELLECTUAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . 10
13.1 PATENT LICENSE . . . . . . . . . . . . . . . . . . . . . . 10
13.2 TRADEMARKS . . . . . . . . . . . . . . . . . . . . . . . . 10
13.3 PATENT AND COPYRIGHT CLEARANCE INVESTIGATION . . . . . . . 10
14.0 CONFIDENTIAL INFORMATION. . . . . . . . . . . . . . . . . . . . . 11
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February 6, 1998
15.0 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
15.1 MATERIAL BREACH. . . . . . . . . . . . . . . . . . . . . . 11
16.0 GENERAL 12
16.1 AUTHORITY. . . . . . . . . . . . . . . . . . . . . . . . . 12
16.2 COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . . 12
16.3 LIMITATION OF ACTIONS. . . . . . . . . . . . . . . . . . . 12
16.4 FORCE MAJEURE. . . . . . . . . . . . . . . . . . . . . . . 12
16.5 WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . 12
16.6 ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . 12
16.7 INDEPENDENT CONTRACTORS. . . . . . . . . . . . . . . . . . 12
16.8 LOST PROFITS/CONSEQUENTIAL DAMAGES . . . . . . . . . . . . 12
16.9 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . 13
16.10 MODIFICATIONS. . . . . . . . . . . . . . . . . . . . . . . 14
16.11 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . 14
16.12 CONTROLLING LAW. . . . . . . . . . . . . . . . . . . . . . 14
16.13 FORUM. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
16.14 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . 14
16.15 SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . . 15
16.16 ORDER OF PRECEDENCE. . . . . . . . . . . . . . . . . . . . 15
16.17 HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . 15
16.18 PUBLICITY. . . . . . . . . . . . . . . . . . . . . . . . . 15
16.19 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . 15
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February 6, 1998
LIST OF ATTACHMENTS
Attachment 1: Products and Prices. . . . . . . . . . . . . . . . . . . . 16
Attachment 2: Packaging Specifications . . . . . . . . . . . . . . . . . 17
Attachment 3: Product Specifications . . . . . . . . . . . . . . . . . . 18
Attachment 4: Quality Plan . . . . . . . . . . . . . . . . . . . . . . . 19
Attachment 5: Technical Support. . . . . . . . . . . . . . . . . . . . . 20
Attachment 6: Warranty Return Process. . . . . . . . . . . . . . . . . . 21
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February 6, 1998
AGREEMENT
This Agreement ("Agreement") is entered into as of this 6th day of February,
1998 ("Commencement Date") between International Business Machines
Corporation, a New York corporation with its principal office at Xxx Xxxxxxx
Xx., Xxxxxx, Xxx Xxxx 00000 ("Buyer") and Xxxx Systems, Inc., a California
corporation with its principal office at 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx
Xxx, Xxxxxxxxxx ("Seller").
Buyer agrees to purchase from Seller and Seller agrees to sell to Buyer the
Products in accordance with the terms and conditions of this Agreement.
1.0 DEFINITIONS
1.1 "Custom Material" shall mean any modifications or enhancements to
Products made by Seller that are funded by Buyer.
1.2 "End User" shall mean a person or other entity that acquires Products
and/or Printing Systems from Buyer or a Reseller for its own use.
1.3 "Engineering Change" shall mean any mechanical, chemical, material,
process, specification or documentation change which, if made to the Products
to be delivered hereunder, would affect the performance, function,
reliability, availability, serviceability, appearance, manufacturability,
dimensions, tolerances, safety, testing or price of the Products.
1.4 "Epidemic Failure" shall mean a condition whereby five percent (5%) or
more of all units of Product delivered by Buyer to its Resellers and End
Users in any single month, or three percent (3%) or more of the total field
population of a Product in any quarter demonstrate defects in design,
materials and/or workmanship including, but not limited to, use of components
with inherent or latent defects, and such defects result from the same or
substantially the same cause.
1.5 "General Availability" shall mean the date upon which Buyer makes
Products generally available for shipment to End Users.
1.6 "Invention" shall mean any idea, design, concept, technique, invention,
discovery or improvement, whether or not patentable, that is (a) incorporated
in the Custom Materials, whether or not made solely by Seller or one or more
Seller employees or made jointly by Seller and/or Seller's employees with
Buyer or one or more employees of Buyer or (b) not incorporated in the Custom
Materials, but made jointly by Seller and/or Seller's employees with one or
more employees of Buyer during the Term and in the performance of this
Agreement.
1.7 "Months" or "months", "Quarters or quarters", or "Days" or "days" shall,
unless otherwise specified, respectively mean calendar months, calendar
quarters or calendar days.
1.8 "Printing System" shall mean a printing device that contains one (1) or
more Products.
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1 February 6, 1998
1.9 "Product" or "Products" shall mean any or all of the items acquired by
Buyer from Seller under this Agreement.
1.10 "Product Specifications" shall mean the specifications set forth in
Attachment 3.
1.11 "Reseller" shall mean a person or other entity that acquires Products
from Buyer for eventual resale or lease to End Users.
1.12 "Subsidiary" or "Subsidiaries" shall mean a corporation, company or other
entity:
(a) more than fifty percent (50%) of whose outstanding shares or
securities (representing the right to vote for the election of
directors or other managing authority) are now or hereafter owned or
controlled, directly or indirectly, by a party hereto, but such
corporation, company or other entity shall be deemed to be a
Subsidiary only so long as such ownership or control exists; or
(b) which does not have outstanding shares or securities, as may be
the case in a partnership, joint venture, or unincorporated
association, but more than fifty percent (50%) of whose ownership
interest representing the right to make the decisions for such
corporation, company or other entity is now or hereafter owned or
controlled, directly or indirectly, by a party hereto, but such
corporation, company or other entity shall be deemed to be a
Subsidiary only so long as such ownership or control exists.
1.13 "Term" shall mean the period of time from the Commencement Date until the
termination or expiration of the Agreement.
2.0 AGREEMENT PERIOD
2.1 TERM. This Agreement shall begin on the Commencement Date and shall
continue in effect for three (3) years.
2.2 AGREEMENT EXTENSIONS. This Agreement can be extended for additional one (1)
year terms by mutual written agreement that is entered into no later than ninety
(90) days from the expiration of the current Term.
3.0 PRICES
3.1 PRODUCT PRICES. Prices of the Products are specified in Attachment 1.
3.2 COMPETITIVE PRICES. Buyer and Seller agree to work together, commencing at
the end of the third year of the contract during which the prices specified in
Attachment 1 are fixed, to maintain competitive Product prices and to implement
cost reduction programs and other pricing actions required to maintain
competitiveness. Commencing at the end of the third year of the contract: (a)
Buyer and Seller will meet periodically to review marketing survey information
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2 February 6, 1998
concerning prices of equivalent products and to determine the actions
required to keep the Products in a leadership position; (b) Seller also
agrees to use its best efforts to provide the Buyer with competitive prices
for the Products; and (c) Seller and Buyer agree to cooperate in putting in
place action plans to improve the life, reliability and cost of the Products.
3.3 PRICING ASSUMPTIONS. Unless otherwise noted, prices shall include the
costs associated with packaging the Products in accordance with the packaging
specifications set forth in Attachment 2. Except as provided in Sections 3.2
and 3.6, all prices shall remain firm as specified in Attachment 1.
3.4 REQUIREMENTS. For the first three (3) years of this Agreement, Buyer
agrees to purchase its requirements necessary to satisfy End User demand for
MICR toner and developer for the IBM 3900 and InfoPrint 4000 family of high
speed laser printers exclusively from Seller provided that, as determined in
IBM's sole discretion, (i) the Products are readily available to Buyer and
(ii) the Products satisfy the Product Specifications as described in
Attachment 3. In exchange for this commitment by Buyer, Seller agrees that
Seller will not sell the Products, which were developed by Seller according
to Buyer's specification, other than to Buyer.
3.5 TAXES. All prices for Products are exclusive of excise, sales, value
added, use and similar taxes. Buyer shall be responsible for the payment of
all such taxes, except those taxes imposed on the Products prior to delivery
to the carrier and taxes based on Seller's net income. Buyer hereby certifies
that it holds a valid reseller's exemption certificate in each applicable
taxing jurisdiction for Products purchased for resale. Where required by
state or local law, Buyer shall provide Seller with a valid reseller's
exemption certificate for each taxing jurisdiction to which Seller will ship
Products.
3.6 MOST FAVORED CUSTOMER. Seller warrants that the prices for the Products
under this Agreement do not now exceed prices offered by Seller to any other
customer purchasing the same or substantially similar Products in like or
lesser quantities upon similar terms and conditions. Commencing at the end of
the third year of this Agreement: (a) Seller warrants that the prices for
the Products under this Agreement will not exceed prices offered by Seller to
any other customer purchasing the same or substantially similar Products in
like or lesser quantities upon similar terms and conditions; and (b) in the
event Seller offers to sell any such Products at a price that is lower than
the price that Buyer is being charged, Seller shall immediately advise Buyer
of such lower price and Buyer shall, with respect to deliveries occurring
after the date of such offer, receive the benefit of such lower prices.
4.0 ORDERING
4.1 FORECASTS. During the last week of each month Buyer shall supply to
Seller a rolling six (6) month forecast of its anticipated requirements for
Products. Such forecasts shall be used by Seller for planning purposes only
and shall not be construed as a purchase commitment.
Both Buyer and Seller understand and agree that the Agreement does not
obligate Buyer to purchase a minimum amount of Products.
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3 February 6, 1998
4.2 ORDERS. Purchase orders shall serve as Buyer's sole commitment to purchase.
All purchase orders shall reference this Agreement, and include the following:
a) the Products being purchased,
b) the quantity requested,
c) the price,
d) the receiving location,
e) the requested delivery dates, and
f) the carrier and mode of transportation.
During the last week of each calendar month, Buyer shall update its purchase
orders by confirming the quantity of Products to be purchased for the first
month following the update and also confirming its requirements for the second
and third months following the update. The first calendar month after such
update shall be considered the "Frozen Zone" in which no alternations,
modifications or cancellations can be made to the quantity of Products on order
unless mutually agreed to by the Buyer and Seller.
All purchases hereunder shall be solely pursuant to the terms and conditions of
this Agreement, notwithstanding any preprinted terms and conditions on an order
or order acceptance.
4.3 ORDER ACCEPTANCE. Seller shall provide Buyer with a written or electronic
notice of acceptance or rejection of a purchase order no later than seven (7)
days after receipt of the order. If Buyer fails to receive such notice within
seven (7) days, the purchase order shall be deemed to have been accepted by
Seller. Any rejection shall include the reasons for rejection. Seller may reject
a purchase order only if it fails to comply with the terms and conditions of
this Agreement.
4.4 ORDER CHANGES. Except during the "Frozen Zone" Buyer may, upon written or
electronic notice to Seller, change the quantity, delivery locations or delivery
dates of the Products.
4.5 CANCELLATION. Buyer may cancel an order by giving Seller written notice of
cancellation prior to the scheduled delivery date of the Products, except that
purchase orders for Products scheduled to be delivered during the "Frozen Zone"
may not be canceled, unless mutually agreed to by Buyer and Seller.
5.0 PACKAGING, SHIPMENT AND DELIVERY
5.1 PACKAGING. Seller shall, at its expense, package Products for shipment in
accordance with the packaging specifications set forth in Attachment 2.
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4 February 6, 1998
5.2 DELIVERY. Delivery of Products shall be F.O.B. Seller's location
("Delivery").
5.3 TITLE AND RISK OF LOSS. Title to Products and all risk of loss shall
pass to Buyer upon Delivery.
5.4 TRANSPORTATION. The carrier and mode of transportation shall be selected
by the Buyer.
6.0 INSPECTION AND ACCEPTANCE
6.1 INSPECTION. Products delivered by Seller shall be subject to inspection
by Buyer at any time prior to acceptance by an End User to determine whether
such Products are in compliance with the Product Specifications and free from
defects in design, material and workmanship.
6.2 REJECTION OF NON-CONFORMING PRODUCTS. Buyer may reject any Product that
is not in compliance with the Product Specifications or that has defects in
design, material or workmanship.
6.3 EFFECT OF REJECTION. Any nonconforming Product that has been rejected by
Buyer can, at Buyer's option after consultation with Seller:
a) be returned to Seller for repair, replacement or a refund of the
original purchase price, freight collect,
b) be repaired by Seller at Buyer's designated facility, or
c) be repaired by Buyer at Seller's expense.
6.4 EFFECT OF PAYMENT. Payment by Buyer shall not constitute acceptance of the
Products or impair Buyer's remedies for non-conformance.
7.0 PAYMENT
7.1 INVOICING PROCEDURES. Seller shall issue individual invoices to Buyer for
each shipment no earlier than the Delivery date of the Products.
7.2 TERMS OF PAYMENT. Buyer shall pay Seller in full in U.S. dollars within
thirty (30) days of receipt of Seller's invoice.
8.0 PRODUCT CHANGES
8.1 SELLER REQUESTED CHANGES. Seller shall provide Buyer with the earliest
possible notice and a written evaluation of the anticipated effect of any Seller
requested Engineering
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5 February 6, 1998
Change. Seller shall not make an Engineering Change to the Products without
Buyer's prior written consent.
8.2 BUYER REQUESTED CHANGES. Buyer may propose Engineering Changes to the
Products by providing Seller with written notification. Seller agrees to
respond to Buyer's request in writing within thirty (30) days of receipt of
such notification. Seller's response shall include an evaluation of the
impact of the proposed Engineering Changes on the price, performance and
delivery of the Products. Once Buyer agrees in writing to accept the impact
of such proposed Engineering Change as specified by Seller, Seller agrees to
incorporate into the Products any Engineering Changes.
8.3 MANDATORY CHANGES. In the event an Engineering Change is required to
comply with the Product Specifications or in order to comply with
governmental regulations or judicial decisions in order to satisfy
governmental standards, including safety and environmental laws and
regulations, Seller shall issue a mandatory Engineering Change upon
reasonable written notification to Buyer. Seller shall also provide the
required parts, materials, documentation, detailed installation instructions
and any special tools, equipment, or media to Buyer at no charge and shall
reimburse Buyer for the expenses it incurs in implementing the mandatory
Engineering Change.
8.4 PRODUCT ENHANCEMENTS. If during the Term Seller offers any improvement,
additional function, or other enhancement to any Product, Seller shall offer
such improvement, additional function or other enhancement to Buyer at prices
that do not exceed those charged to any other of Seller's customers.
8.5 NEW PRODUCTS. If during the Term Seller develops any new or successor
product which may reasonably be considered as a functional replacement for
any Products, such new or successor products shall be included in this
Agreement at a mutually agreed upon price and shall be considered "Products"
for the purposes of this Agreement.
9.0 QUALITY ASSURANCE
9.1 QUALITY PROCESS. Seller shall maintain a quality assurance program and
adhere to the quality inspection and acceptance testing procedures described
in Attachment 4.
Seller shall subject all Products to quality inspection testing procedures
prior to Delivery to Buyer.
Buyer shall have the right to make periodic, on-site, typical quality
assurance reviews to ensure Seller's compliance with its quality assurance
program and quality inspection procedures.
Seller shall provide Buyer with access to its quality inspection testing
results upon request.
9.2 ISO 9002. Seller agrees to use the practices and procedures required by
ISO 9002 certification.
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6 February 6, 1998
10.0 WARRANTIES AND REPRESENTATIONS
10.1 PRODUCT WARRANTY. Seller warrants that title to all Products delivered
to Buyer under this Agreement will be free and clear of all liens,
encumbrances, security interests or other claims. Seller also warrants that
the Products will conform to the Product Specifications for twelve (12)
months following Delivery of the Products at an End User's location provided
that the proper handling and storage procedures and conditions are
continuously complied with throughout such period. Buyer's inspection or
acceptance of, or payment for, any Products shall not constitute a waiver of
any breach of warranty. The procedure to be followed by Buyer and Seller in
the event Buyer needs to return Products under this warranty is set forth in
Attachment 7.
Seller warrants that none of the Products contain and none of the Products
will be manufactured using ozone depleting substances including, without
limitation, chloroflouocarbons, halons, methyl chloroform, carbon
tetrachloride, PCB and trichlorethylene.
In addition, Seller represents and warrants that all Products provided to
Buyer hereunder are made of new parts, new components and new subassemblies.
In the event that Seller has a desire to provide Buyer with Products that are
not made from new parts, new components and new subassemblies, Seller shall
(1) immediately notify Buyer in writing; and (2) seek written approval from
Buyer to do so.
10.2 CLAIM WARRANTY. Seller hereby represents and warrants that it has not
received and knows of no claim made or proceeding brought by a third party on
the basis that any Product infringes or utilizes a patent, copyright, mask
work, trade secret or trademark of a third party and that no patent,
copyright, mask work, trade secret or trademark of a third party has been
used without permission in or to manufacture, assemble or integrate, any
Product.
10.3 LICENSE WARRANTY. Seller hereby represents and warrants that it has the
full power and right to grant to Buyer each of the licenses set forth in
Section 13 of this Agreement.
10.4 REMEDIES FOR BREACH OF PRODUCT WARRANTY. In the event of a breach of the
warranty set forth in the first paragraph of Subsection 10.1, the
nonconforming Products shall be remedied in accordance with any of the
following options as mutually agreed upon by Buyer and Seller:
a) the nonconforming Products or any parts thereof shall be returned to
Seller for repair, replacement, or a refund or credit in the amount of the
original purchase price, freight collect;
b) Seller shall make the necessary repairs.
c) Buyer shall make the necessary repairs, with Seller furnishing the
necessary parts and reimbursing Buyer for its cost of labor at Buyer's then
current labor rates; or
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7 February 6, 1998
d) Seller shall refund the Products equivalent price to the Buyer for all
Products replaced during the warranty period and Buyer shall scrap the
replaced Products.
10.5 EPIDEMIC FAILURES. In the event of an Epidemic Failure, Seller shall at
its expense repair the defective Products, replace the defective Products or
reimburse Buyer for the actual costs it incurs correcting the defect;
provided, however, Buyer agrees to use reasonable efforts to mitigate such
costs it incurs. Any Products returned to Seller shall be returned freight
collect.
10.6 LIMITATION OF WARRANTIES
There is NO WARRANTY, representation or condition of ANY KIND, expressed or
implied (INCLUDING NO WARRANTY OF MERCHANTABILITY OR FITNESS OF THE PRODUCT FOR
THE USE CONTEMPLATED BY IBM) concerning the Product sold hereunder or containers
in which it is shipped and none shall be implied by law.
11.0 INDEMNIFICATION
11.1 PATENT, COPYRIGHT, MASK WORK, TRADE SECRET AND TRADEMARK
INDEMNIFICATION. Seller shall, at its own expense, indemnify, defend and hold
harmless Buyer, its Subsidiaries, its and their successors and assigns,
officers, employees, agents, End Users and Resellers from and against all
damages, costs or expenses incurred as a result of any claim that a Product
provided hereunder infringes a patent, copyright, mask work, trade secret or
trademark. Buyer shall promptly notify Seller of any such claim, and
cooperate fully with Seller. Seller shall have control of the defense against
such claim, except that Buyer shall have the right to retain counsel and
participate in the defense or settlement, at Buyer's expense.
In the event that a claim is made against the use or sale of a Product,
Seller may, or in the event that an injunction is obtained against the use or
sale of a Product, Seller shall, at its own expense, either:
a) procure for Resellers or End Users the right to continue using the
Product,
b) replace or modify the Product so that it is noninfringing, so long as it
continues to conform to the specifications, or
c) accept the return of the Product and refund the purchase price to Buyer.
Notwithstanding the foregoing, Seller shall not be obligated to indemnify
Buyer if the infringement is caused by Buyer's modification of the Product
after delivery by Seller and such infringement would not have occurred but
for such Buyer modification.
11.2 PRODUCT INDEMNIFICATION Seller shall indemnify and hold Buyer, its
Subsidiaries, its and their successors and assigns, officers, employees,
agents, End Users and Resellers harmless from any claims for personal injury
or property damage caused by any defect
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8 February 6, 1998
in design or manufacture of the Products or by Seller's negligent act,
omission or willful misconduct.
12.0 PRODUCT SUPPORT
12.1 TECHNICAL SUPPORT Seller shall provide Buyer and Resellers with
telephone technical support at no charge to Buyer or Resellers as set forth
in Attachment 5. If a technical problem cannot be resolved by telephone
technical support, Seller shall provide on site technical support to Buyer or
Resellers at the rates specified in Attachment 5 provided, however, that
Buyer or Resellers shall not be required to make any payments to Seller for
on site technical support if the technical problem is due to a defect in
design, materials or workmanship, or failure of the Products to conform to
the Product Specifications.
12.2 TONER INTERLOCK SYSTEM In consideration of the exclusivity arrangement,
Seller will design a toner interlock system that will prevent the accidental
introduction of non-MICR toner into the MICR version of the IBM 3900 or
InfoPrint 4000. Seller will have all right, title, and interest in such
design. Seller hereby grants Buyer 1) an irrevocable, nonexclusive,
worldwide, paid-up license to use, reproduce, distribute (internally and
externally) copies of, and prepare derivative works based on such design and
2) the right to authorize others to do any of the former.
12.3 MATERIAL SAFETY DATA SHEETS. Seller agrees to provide for all Products
all relevant Material Safety Data Sheet (MSDS) Notices, as well as a letter
of compliance with Toxic Substance Control Act (TSCA) Regulations.
13.0 INTELLECTUAL PROPERTY
13.1 PATENT LICENSE. Seller hereby grants Buyer a worldwide, non-exclusive
non-transferable, fully paid-up and royalty-free patent license to all
patents owned or licensable by Seller that cover or relate to use of the
Products only to the extent necessary to allow Buyer to market, distribute
and sell the Product purchased by Buyer from Seller hereunder. Seller also
grants Buyer the right to sublicense its End Users to use, and to sublicense
its Subsidiaries and its and their agents, Resellers, and distributors to use
and sublicense End Users to use Products.
13.2 TRADEMARKS. Except to the extent permitted by local law, neither party
shall have the right to use the trademarks, trade names or logos of the other
party in connection with any product, promotion or publication without the
prior written approval of the other party.
13.3 PATENT AND COPYRIGHT CLEARANCE INVESTIGATION. Subject to Section 14 of
this Agreement, Seller will disclose to Buyer in writing, within thirty (30)
days of Buyer's request thereof, sufficient technical information necessary
to enable Buyer to conduct a patent and copyright clearance investigation
with respect to Products to be delivered hereunder, or Seller will provide
Buyer with adequate assurances to Buyer's satisfaction that Seller has
sufficiently investigated the Products for possible patent and copyright
infringement and cleared the Products for sale to Buyer. Seller shall also
promptly notify Buyer in writing of any patents
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9 February 6, 1998
or copyrights of third parties which pertain to the Products which come to
the attention of Seller, and of any suits or claims of patent or copyright
infringement which have made against Seller with respect to the Products.
14.0 CONFIDENTIAL INFORMATION
Seller understands that Buyer does not wish to receive from Seller any
information which may be considered confidential or proprietary to Seller or
to any third party. Seller represents and warrants that no information has
been provided that is confidential or proprietary to Seller or any third
party and Buyer will not be obligated to retain in confidence or restrict
Buyer's use of any information received from Seller. Buyer understands that
Seller does not wish to receive from Buyer any technical information which
may be considered confidential or proprietary to Buyer or to any third party.
Buyer represents and warrants that no technical information has been provided
that is confidential or proprietary to Buyer or any third party and Seller
will not be obligated to retain in confidence or restrict Seller's use of any
technical information received from Buyer. Seller agrees that Buyer will,
during the course of this Agreement, disclose certain of its business plans
and projected sales of Products which Buyer considers confidential to Buyer,
and Seller agrees to use the same care and discretion to avoid disclosure of
such information as Seller uses with its own similar information which it
does not wish to disclose. Other than such business plans and projected
sales, in the event it becomes necessary to provide or exchange information
that is deemed confidential or proprietary to either party, such provision or
exchange shall not take place prior to execution of an Agreement for Exchange
of Confidential Information.
15.0 TERMINATION
15.1 MATERIAL BREACH. Either party may terminate this Agreement or any
purchase order issued hereunder effective immediately upon written notice of
termination to the other party in the event the other party materially
breaches this Agreement and such breach is not cured within thirty (30) days
after receipt of written notice of breach from the terminating party or a
plan to cure such breach is not accepted by the non-breaching party within
such thirty (30) day period. If this Agreement is terminated by Seller due to
Buyer's breach, Buyer's sole obligation to Seller for such breach shall be
payment to Seller for all Products shipped to and accepted by Buyer prior to
the effective date of such termination.
15.2 INSOLVENCY. Buyer can terminate this Agreement if:
a) Seller becomes insolvent,
b) a petition or proceeding, voluntary or involuntary, for relief under
bankruptcy, insolvency, reorganization, dissolution, winding-up,
receivership, liquidation or similar law is filed or commenced by or against
Seller, or
c) a trustee, custodian, receiver or similar officer is appointed to take
charge of all or part of Seller's business.
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10 February 6, 1998
In the event of termination for a), b) or c) above, Seller shall provide to
Buyer any and all Requisite Documentation.
16.0 GENERAL
16.1 AUTHORITY. Each party represents that it has the authority to enter into
and perform all of the obligations set forth in this Agreement.
16.2 COMPLIANCE WITH LAWS. Each party shall comply with all applicable laws,
regulations and ordinances including, but not limited to, the regulations of
the United States Department of Commerce relating to the export of products
or technical data.
16.3 LIMITATION OF ACTIONS. Neither party may bring an action, regardless of
form, arising out of this Agreement, more than two (2) years after the cause
of action has arisen.
16.4 FORCE MAJEURE. Neither party shall be responsible for failure to fulfill
its obligations under this Agreement due to causes beyond its control
including, but not limited to, accidents, labor disputes, military conflicts,
insurrections, riots, explosions, lightning, earthquakes, fires, storms and
floods. In addition, neither party shall be responsible for failure to meet
its obligations under this Agreement due to non-delivery or lateness of its
suppliers as long as such lateness or non-delivery is due to reasons
described in the sentence immediately above.
16.5 WAIVER. Failure of either party to enforce any provision of this
Agreement shall not be deemed a waiver of future enforcement of that or any
other provision.
16.6 ASSIGNMENT. Neither party can assign its rights or delegate its
obligations under this Agreement without the prior written consent of the
other party, except that Buyer can assign its rights and delegate its
obligations hereunder to the successor in interest of the business unit of
IBM currently known as The IBM Printing Systems Company.
16.7 INDEPENDENT CONTRACTORS. Both parties are independent contractors.
Nothing in this Agreement shall be deemed to create an agency, partnership,
joint venture, or employer/employee relationship.
16.8 LOST PROFITS/CONSEQUENTIAL DAMAGES. In no event shall either party be
liable for any lost profits, consequential damages, indirect damages, special
damages or punitive damages arising out of, or relating to this Agreement.
16.9 NOTICES. Any notice which may be or is required to be given under this
Agreement shall be in writing, and shall be deemed to have been received:
a) when delivered personally,
b) when sent by confirmed facsimile,
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11 February 6, 1998
c) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or
d) one (1) day after deposit with a commercial overnight carrier with
written verification of receipt.
All notices shall be sent to the addresses set forth below:
Notices regarding technical information:
BUYER: SELLER:
Xxxx Xxxxxx Xxxxxx Xxxxx
Business Line Manager Xxxx Systems, Inc.
IBM Printing Systems Company 0 Xxxxx Xxxxx
0000 Xxxxxxxx Xxxxxxx Xxxxxxxx, XX 00000
Xxxxxxx, XX 00000 (000) 000-0000
(000) 000-0000
Backup:
Xxxxxxx Xxxxx
Technical Product Manager
Xxxx Systems, Inc.
0 Xxxxx Xxxxx
Xxxxxxxx, XX 00000
(000) 000-0000
Notices regarding Agreement Administration:
BUYER: SELLER:
Xxxxxxx X. Xxxxxxxx Xxxxxxx Xxxxxxx
Director, Business Alliances Director of Consumable Sales
IBM Printing Systems Company Xxxx Systems, Inc.
0000 Xxxxxxxx Xxxxxxx 0 Xxxxx Xxxxx
Xxxxxxx, XX 00000 Xxxxxxxx, XX 00000
(000) 000-0000 (000) 000-0000
Backup:
Xxxxx Xxxxxx
Sales Administrator
Xxxx Systems, Inc.
0 Xxxxx Xxxxx
Xxxxxxxx, XX 00000
(000) 000-0000
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12 February 6, 1998
16.10 MODIFICATIONS. This Agreement can be modified only by a written
amendment signed by the authorized representatives of the parties.
16.11 SEVERABILITY. If any provision of this Agreement or the application
thereof is held by any court of competent jurisdiction to be invalid, illegal or
unenforceable, such invalidity shall not affect the other provisions of this
Agreement, the enforceability of this Agreement as a whole or the enforceability
of such provision in other jurisdictions to the extent permitted by law.
16.12 CONTROLLING LAW. This agreement shall be governed and construed in all
respects in accordance with the laws and regulations of the State of New York,
without reference to choice of law principles. The Nations Convention on
Contracts for the International Sale of Goods does not apply.
16.13 FORUM. Any action or proceeding brought by Seller to enforce or
resolve disputes relating to this Agreement shall be brought before a court of
competent jurisdiction in the city of New York in the State of New York,
including a Federal District Court sitting within such city. Any action or
proceeding brought by Buyer to enforce or resolve disputes relating to this
Agreement shall be brought before a court of competent jurisdiction in Orange
County in the State of California, including the Federal District Court sitting
within such county. Neither party shall attest that such court lacks
jurisdiction over such party or the subject matter hereof.
16.14 WAIVER OF JURY TRIAL. The parties expressly waive any right they may
have to a jury trial.
16.15 SURVIVAL. All provisions which by their nature extend beyond the
termination or expiration of this Agreement shall remain in effect beyond any
termination or expiration.
16.16 ORDER OF PRECEDENCE. To the extent any terms and conditions of this
Agreement conflict with the terms and conditions of any invoice, purchase order
or purchase order acknowledgment, the terms and conditions of this Agreement
shall control. In addition, to the extent any terms and conditions of the main
body of this Agreement conflict with the terms and conditions of any attachment,
the terms and conditions of the main body of the Agreement shall control.
16.17 HEADINGS. The headings and titles of the provisions of this Agreement
are inserted for convenience only and shall not affect the construction or
interpretation of any provision.
16.18 PUBLICITY. Neither party shall publicly disclose the existence of this
Agreement, any information concerning this Agreement or the terms and conditions
of this Agreement, except as required by law, without the prior written consent
of the other party; provided, however, either party may communicate the fact of
the relationship to current or potential mutual customers without obtaining the
other party's consent. In the event that disclosure is required by law, the
disclosing party agrees to provide the non-disclosing party with prior written
notice of such disclosure.
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13 February 6, 1998
16.19 ENTIRE AGREEMENT. This Agreement is the complete and exclusive
statement of the agreement between the parties and supersedes any and all
prior oral or written communications between the parties relating to the
subject matter hereof.
IN WITNESS WHEREOF, both Buyer and Seller have executed this Agreement by their
respective authorized representatives.
XXXX SYSTEMS, INC. INTERNATIONAL BUSINESS
MACHINES CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------ ------------------------------
Xxxxxx X. Xxxxxxx (Signature)
President and Chief Operating
Officer Name: Xxxxxxx X. Xxxxxxxx
----------------------------
Title: Director Business Alliances
---------------------------
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14 February 6, 1998
ATTACHMENT 1: PRODUCTS AND PRICES
[Portions of this Attachment 1 have been omitted pursuant to a request
for confidential treatment under Rule 406 of the Securities Act of 1933, as
amended. A copy of the Agreement with this Attachment 1 intact has been filed
separately with the Securities and Exchange Commission.]
PRODUCT DESCRIPTION VOLUME PRICE
(cartons (per carton)
MICR Toner, IBM P/N 1 to 149 $ X
1402824, eight bottles per
carton, 1.5 kg per bottle
MICR Toner, IBM P/N 150 and up $ X
1402824, eight bottles per
carton, 1.5 kg per bottle
MICR Developer, IBM P/N 1 and up $ X
1402825, 2 bottles per carton,
3.5 kg per bottle
Notes:
1. The prices set forth above are fixed for thirty-six (36) months from
the Commencement Date.
2. Seller and Buyer shall meet each year to review the latest volume
requirements together with opportunities for price reductions to
Products.
3. Terms as provided in Section 7.0.
4. Prices shall include the costs associated with packaging the
Products.
5. Prices specified shall apply to quantities ordered on a single
purchase order and shipped to a single receiving location.
6. Prices do not include carrier freight charges.
X Information has been redacted pursuant to a request for confidential
treatment.
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15 February 6, 1998
ATTACHMENT 2: PACKAGING SPECIFICATIONS
1. Seller shall package all Products in accordance with the IBM
Packaging and Handling Specifications, Document Number GA2 0-0000-00.
2. Toner and developer bottles will be individually labeled with IBM
labels. Buyer will supply Seller with the label artwork and related
specifications, and Seller will procure the labels as required to
meet production schedules.
3. Buyer will supply the artwork for the outer cartons.
4. If bar coding is required on the outer carton, Buyer will
incorporate the bar code into the artwork to be placed on outer
carton.
5. Seller will provide Buyer with an initial production sample for
approval prior to beginning large scale shipments.
6. Seller will palletize all toner and developer shipments to Buyer.
Each pallet will normally contain 24 cartons of toner or 50 cartons
of developer, except for one pallet in each shipment that may contain
less than the full number of cartons. Pallets will be wrapped in
plastic for protection.
7. Seller's name shall not appear on the Products, packaging or any
documentation contained within the packaging.
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16 February 6, 1998
ATTACHMENT 3: PRODUCT SPECIFICATIONS
[Portions of this Attachment 3 have been omitted pursuant to a request
for confidential treatment under Rule 406 of the Securities Act of 1933, as
amended. A copy of the Agreement with this Attachment 3 intact has been filed
separately with the Securities and Exchange Commission.]
TONER SPECIFICATION
X
DEVELOPER SPECIFICATIONS
X
X Information has been redacted pursuant to a request for confidential
treatment.
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17 February 6, 1998
ATTACHMENT 4: QUALITY PLAN
Seller shall provide a Quality Plan to Buyer within four (4) months of the
Commencement Date.
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18 February 6, 1998
ATTACHMENT 5: TECHNICAL SUPPORT
TELEPHONE TECHNICAL SUPPORT
Seller will maintain a toll-free telephone number so as to provide
technical assistance to Buyer or its customers for any MICR related issue for
IBM 3900 and InfoPrint 4000 printers utilizing Seller's Products. Telephone
support will be available between the hours of 8 a.m. to 5 p.m., Pacific time.
FIELD SUPPORT
Buyer may request field support from Seller to address Customer concerns
with Products, and Seller agrees to use best efforts to comply. If the field
problem is found to be caused by Products supplied by Seller, Seller agrees to
cover all expenses incurred by Seller in addressing such concern. If the field
problem is not caused by Products supplied by Seller, then Buyer agrees to
reimburse Seller for all reasonable travel expenses incurred, plus $500.00 per
day.
PAPER TESTING
Seller will initially provide for each new IBM 3900 and InfoPrint 4000 MICR
customer, upon request by Buyer, analysis of the customer's check paper stock to
determine whether it meets ANSI standards for check processing. Seller will
provide a written report to Buyer that contains an analysis of paper
characteristics, plus any appropriate recommendations to insure acceptable check
processing quality.
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19 February 6, 1998
ATTACHMENT 6: WARRANTY RETURN PROCESS
Should it become necessary to return any Product to the Seller under the terms
of the warranty, the Buyer should contact the Director of Sales in Wheeling, WV
(Xxxx Xxxxxxx) at 0-000-000-0000. Seller will issue a return goods authorization
(RGA) number to Buyer along with shipping instructions. Seller will test the
returned Product to confirm that it is defective, and that the defect is a
design or quality defect. Upon confirmation that Seller is responsible for the
defect that was the reason for its return, Seller will arrange to replace or
repair the defective Product.
Seller will use best efforts to accomplish such repair or replacement within ten
(10) days of receipt of defective Products at Seller's plant of manufacture.
Seller shall maintain a small inventory of Product for replacement if Seller's
manufacturing facility cannot meet the specified replacement delivery
commitment.
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20 February 6, 1998
