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Exhibit 10.6
Groupe SET International
(A Xerox Company)
ZI de Villemilan
2 Boulevard Arago
91320 Wissous
France
Accent Color Sciences Inc
800 Connecticut Boulevard
East Hartford
CT 06108
USA
For the attention of Chuck Buchheit
21st July 1999
RE: VARIATIONS TO AGREEMENT BETWEEN ACS AND SET DATED 27TH AUGUST 1997
("ACS CONTRACT")
Dear Chuck
Following our discussions and negotiations over the past weeks, concluding with
our telephone conversation last Thursday, I should like to confirm the terms
under which our respective companies will do business in future. I have done
this by way of reference to the above agreement which covered the sale of ACS's
TrueColor System Product to SET.
In addition I have dealt with two other matters. Firstly, the agreement by which
SET shall return the 41W system to you. Secondly, the agreement to modify
forthwith the second agreement, also dated 27th August 1997, which covered the
sale of SET's CES product to ACS ("SET Agreement").
1. TERMS OF NEW BUSINESS
Save where indicated below the obligations of ACS and SET shall be as set out in
the ACS Contract and references are to clauses in that agreement. If there is
any conflict between the terms as set out below and those contained in the ACS
Contract the terms here take precedence.
These Terms apply to the following ACS products: 1A (current design), and VE
(both pre-production and production models). They also refer to five exhibits:
I VE System Acceptance Test Plan
II 1A Machine Change List
III RMA Procedure
IV QA Inspection Procedure
V VE System Specification
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Save for Exhibit IV, the Parties agree to use their best efforts to conclude
their agreement of the Exhibits on or by 6th August 1999. If for any reason
agreement cannot be reached by this date then SET reserves the right to cancel
its purchase order for the [*] VE systems without liability to ACS. Following
agreement of the Exhibits they shall be initialled and dated by the parties and
incorporated into this Agreement. Exhibit IV shall be agreed by January 2000.
II. PRODUCT DEVELOPMENT
VE Product
SET's performance and reliability requirements for the VE product and the
schedule for acceptance testing is more fully described in the Acceptance Test
Plan at Exhibit I (sent to you under separate cover). SET has purchased [*]
pre-production VE systems for development and testing purposes. The parties
agree that the three systems shall be deployed and supported as follows:
- - VE System #1
To be located at ACS' premises in East Hartford and fully supported by ACS
at ACS' expense. SET shall ship to East Hartford a 3057 printer with pre-
and post-processing equipment (e.g. an unwinder and either a folding table
or cutter, to be agreed between SET and ACS prior to shipment), together
with SET's CES software (collectively known as the "SET Product") in
accordance with the agreed timetable in Exhibit I. SET shall, via Xerox'
PSSU, provide engineering support and all supplies and consumables, except
paper, for the SET Product at its expense. ACS shall supply all paper. All
of the equipment (SET Product and VE System #1) will remain the property of
SET and shall be delivered up to SET upon request.
If SET requests that the equipment be located off of ACS' premises then ACS
shall provide support for VE System #1 but at its usual rates.
- - VE System #2
Location to be in Europe and advised by SET. Without charge to SET, ACS
shall install VE#2 and provide on-site support to SET until such time as
there has been a satisfactory handover to SET, such period of support not
to exceed five (5) working days. "Satisfactory handover" means that ACS has
used its reasonable efforts to demonstrate to SET that VE#2 meets the
specification more fully described in Exhibit V, and transferred sufficient
documentation, knowledge and skills to SET as is necessary to enable SET
personnel who are reasonably familiar with ACS's M2000 product to perform
tests in accordance with Exhibit I. Following handover clause 9.2 of the
ACS Contract shall apply.
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[*]OMITTED INFORMATION SUBJECT TO PENDING CONFIDENTIAL TREATMENT REQUEST AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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- VE System #3
To be located at the premises of a customer of SET's in Europe: ACS to
be advised of location. Without charge to SET or to the customer, ACS
shall install VE#3 and provide on-site support until such time as
there has been a satisfactory handover to SET. "Satisfactory handover"
is as defined above save that an additional pre-condition is that the
customer must formally sign off that it is satisfied with the
installation of the VE system. Following handover clause 9.2 of the
ACS Contract shall apply.
SET agrees to waive the requirement for ACS to supply a declaration of
conformity with EEC Directives, in accordance with section A of
Exhibit I, prior to shipment of VE System #3 to the customer.
Reviews: The parties shall perform periodic reviews of their progress against
the agreed timetable as set out in Exhibit I using a combination of telephone
calls to each other and face-to-face meetings, to be agreed by the parties.
III. PURCHASE AND SALE OF PRODUCTS FOLLOWING DEVELOPMENT
1A (M2000HC) Product
ACS shall provide to SET such support as described below to ensure the
saleability before the end of 1999 of the [*] 1A systems already purchased by
SET. Specifically, ACS shall
i) close all items on the 1A Machine Change List (attached as Exhibit II)
which are outstanding on the date of execution of this Variation; and
ii) provide technical support by telephone in accordance with clause 9.2 of the
ACS Contract.
Items which are added to the 1A Machine Change List following execution of this
Variation shall be addressed according to a timetable to be agreed by the
parties.
The parties acknowledge and confirm that the terms of the ACS Contract apply to
SET's purchase of these systems, in particular ACS confirms that it shall
continue after 1999 to support the systems and supply spares and consumables in
accordance with the terms of the ACS Contract.
VE Product
- - Prices, Ordering, Payment: [*]
- - Cancellation: Provided that ACS meets the requirements and timetable set
out in Exhibit I SET shall not cancel its order for [*] of the VE systems.
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[*]OMITTED INFORMATION SUBJECT TO PENDING CONFIDENTIAL TREATMENT REQUEST AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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Save as set out above, SET may cancel any portion of the remainder of the
1999 Purchase Order, without cause, and with the following liability, if a
written notice (facsimile is acceptable) of such cancellation is given by
SET at least [*] days prior to the scheduled delivery date. [*] Upon
receipt of notice of cancellation, ACS shall make every reasonable effort
to cancel commitments for, resell or divert materials and work-in-progress.
If requested by SET, ACS shall Deliver to Set the materials and
work-in-progress paid for by SET as a result of the cancellation of the
remainder of the 1999 Purchase Order or any portion thereof.
ACS's failure to complete all aspects of the Acceptance Test Plan (Exhibit
I) by the agreed deadline of 22nd March 2000 shall give to SET the right to
cancel the 1999 Purchase Order in its entirety without liability provided
that notice of cancellation is prompt and in writing.
- - Delivery Schedule: ACS shall deliver the systems to SET at the rate of [*]
systems per month, the first delivery to be in March 2000, unless
instructed otherwise by SET in writing.
- - Inspection: Within a reasonable period following its arrival at SET's
premises, SET shall inspect each system according to a QA procedure to be
agreed by the Parties by January 2000. The agreed procedure, which shall be
based upon suggestions made by Jean Luc Laurent and Michel Lemoine, shall
be documented by the parties and incorporated into this agreement as
Exhibit IV. In the event that a system fails such QA procedure ACS may, at
its discretion, either send an engineer from the United States to inspect
the system or recall the system to the United States at its expense to
investigate the cause of non-compliance. If upon investigation by ACS the
system is found to be to the agreed specification then ACS' costs shall be
shared between the parties equally.
- - Support: Unless agreed otherwise, ACS shall install [*] VE systems and
provide on-site support until such time as there has been a satisfactory
handover to SET. "Satisfactory handover" shall be as defined above. ACS
agrees to meet the "out of pocket" expenses of its personnel i.e. travel,
accommodation and subsistence, up to a cumulative total of [*], beyond
which SET agrees to reimburse ACS for all reasonable "out-of-pocket"
expenses upon production of receipts.
ACS shall provide on-site technical and marketing support as requested in
writing by SET at ACS's usual rates. SET shall reimburse to ACS all
reasonable expenses for travel upon production of receipts. If requested by
SET in writing ACS shall perform sample generation support without charge
on the following conditions:
i) the SET Product and VE#1 system remain installed and operational in E
Hartford and
ii) development and support activities take priority and
iii) SET pays for the ink.
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[*]OMITTED INFORMATION SUBJECT TO PENDING CONFIDENTIAL TREATMENT REQUEST AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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ACS has the right to refuse to perform sample generation without charge if
the request has above average resource/cost implications for ACS.
- - Training: ACS shall, at its expense, provide formal "train the trainer"
training for up to ten (10) SET and/or Xerox engineers at a location to be
decided by SET. Class sizes are restricted to five (5) attendees. In the
event that the training is at ACS' premises in the US, SET shall meet its
attendees' expenses; else if it is in Europe then ACS will meet the
expenses of its own personnel. ACS agrees to provide future training
classes upon SET's request, the charges for which will be agreed beforehand
(Chuck/Fred, please let me have your current charges). SET agrees to give
ACS at least 30 days notice of its requirement for training.
In addition the following shall apply to all ACS Products:
8.1 Express Warranties
ACS warrants that its Products are Year 2000 compliant and thus shall be able to
accurately process date data (including but not limited to, calculating,
comparing and sequencing from, into and between the twentieth and twenty-first
centuries, including leap year calculations.
Abnormal Frequent Failures
The parties agree to list those parts that have seen abnormal frequent failures
by March 2000. The parties agree to follow the procedure known as the "RMA
procedure" and more fully described in Michel Lemoine's note dated 2nd June 1999
(as updated) and extracted and attached as Exhibit III.
8.3 Mandatory Retrofits
This clause is varied such that ACS shall bear the cost of installation. In
addition, ACS to decide whether to implement the retrofit themselves or to
compensate SET; if SET perform retrofit the parties will agree on SET's rates
and on a cap to SET's total cost beforehand and SET's costs will be auditable by
ACS.
19.1 Accent Color Indemnity
This clause is varied such that the indemnity extends to infringements of any
patent recognized in Germany, Italy and Spain. ACS shall so indemnify all VE
systems delivered to SET from March 2000.
2. RETURN OF 41W WITHOUT LIABILITY
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With respect to the 41W system that SET has in its possession SET agrees to
return this to ACS by the end of 1999 at SET's expense. ACS shall not charge SET
for the system or hold SET liable in any way for any damage to the system or
loss to ACS. Notwithstanding the foregoing, ACS shall charge SET for the costs
of replacing any missing parts on the 41W.
3. VARIATION TO THE SECOND PRODUCT DEVELOPMENT AND DISTRIBUTION AGREEMENT
("SET AGREEMENT")
The parties agree to vary the above agreement dated 27th August 1997 between SET
and ACS under which SET agreed to sell to ACS its CES Product without liability
in the following manner:
SET shall have the right to refuse to supply its CES product to ACS if in the
opinion of either SET and/or Xerox ACS intends to supply CES to a competitor of
SET and/or Xerox, save that SET shall lose this right if it has not purchased
and received into Europe any ACS product, excluding spares or ink, in the 12
months preceding ACS's order for CES. For the avoidance of doubt, "Xerox" shall
mean Xerox Corporation, Xerox Limited or any associate or subsidiary company of
Xerox Corporation.
Please execute both copies of this letter where indicated below acknowledging
your agreement to the above.
Yours sincerely
Jerry Luckett
Managing Director
SET Electronique S.A.
We, Accent Color Sciences Inc., hereby acknowledge and agree to the terms set
out in this letter.
Signed
Name:
Title:
Date:
Exhibit I VE System Acceptance Test Plan
[*]
Exhibit II 1A Machine Change List
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[*]OMITTED INFORMATION SUBJECT TO PENDING CONFIDENTIAL TREATMENT REQUEST AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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[*]
Exhibit III RMA Procedure
Subject: EXHIBIT III - WARRANTY PARTS REPLACEMENT PROCEDURE FOR CONTRACT
AMENDMENT
Warranty, In-warranty parts replacement procedure, and Emergency Part Request
procedure:
- - WARRANTY
- - Inspection clause:
- Upon receipt, a new machine will undergo a QC acceptance inspection
(see Exhibit IV) and then run 5000 feet in Belgium. At the conclusion
of this inspection SET will send a QC report to ACS. The report will
be discussed as part of the weekly call and both parties will agree on
closure that the machine has passed inspection.
- 40WH is only machine that has not passed SET inspection.
- - Abnormally Frequent Failure clause:
- Both parties will agree on a list of parts that have seen abnormally
frequent failures. Any parts on this list will be considered under
warranty until they are removed from the list.
- Parts will be removed from the list based upon EC and field kit
acceptance by SET.
- Other parts may be added to the list based upon the abnormally
frequent failures criteria set forth in the contract.
- Any other part failures on a machine, after it has passed inspection,
will be considered out of warranty. This includes early life failures
of parts not on the abnormal failure list.
- - IN-WARRANTY PARTS REPLACEMENT PROCEDURE
1. If a part has failed and is considered by SET to be in-warranty (see
above), SET faxes an RMA request to ACS to return the failed part. RMA
request includes:
- SET request # (for reference until ACS sends an actual RMA #)
- Part # to be returned (if printhead, the printhead serial #)
- Description of problem
- Printer serial #
- Point of contact to clarify questions
2. ACS determines expected ship date (based upon request date & part
availability)
3. ACS emails RMA with planned ship date "and SET reference number" to
SET (address needed!).
4. If ACS Tech Support closes out an RMA because of direct action on
their part, they will notify ACS Materials group to close out the RMA.
5. SET generates a separate purchase order for the full value of the
part. Included on the purchase order is:
- Full price of the part
- Requested ship date based on ACS expected ship date -
discrepancies will be escalated to ACS and SET management
- Ship To information
6. ACS sends the part to SET - sent UPS Ground International - at ACS
expense - referencing the PO (if SET requires expedited shipment, ACS
will send the part UPS Red International - but at SET expense).
7. ACS issues an invoice to SET against the purchase order for the full
value of the part at time of shipment.
8. Upon receipt of the replacement part, SET will return the failed part
to ACS within 45 days; shipping charges are at ACS expense.
a) If part failure is determined to be covered by warranty, ACS will issue
full credit to SET for the value of the part, cancelling out the open
invoice issued above.
b) If part failure is determined by ACS to be out of warranty, ACS' invoice
for the replacement part will remain and no credit will be issued. At SET's
request, ACS can return the failed parts to SET, at SET expense.
- - EMERGENCY PARTS PROCESS
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[*]OMITTED INFORMATION SUBJECT TO PENDING CONFIDENTIAL TREATMENT REQUEST AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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1. "When a part fails that is not in SET inventory - EMERGENCY PART
REQUEST PROCESS - get part out within 24 to 48 hours - based upon
availability.
2. SET generates a part request, by fax, with a PO# on it (viewed as an
emergency PO - with normal price for the part on it) and sends to ACS.
3. ACS sends a confirmation to SET, by fax, with expected part
availability.
4. ACS ships the part out. SET is responsible for all shipping and
handling charges (It is understood that this is an expedited part
request - emergency)
5. If it is an "EMERGENCY - EMERGENCY" - for example on the weekend - a
call is made to 001-860-610-4040 and information will be left with the
answering service of who and where ACS can call to get accurate
information. The answering service will contact ACS, ACS will call SET
to confirm the requirements. ACS will then take appropriate action.
Exhibit IV QA Inspection Procedure
Exhibit IV shall be agreed by January 2000
Exhibit V VE System Specification
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[*]OMITTED INFORMATION SUBJECT TO PENDING CONFIDENTIAL TREATMENT REQUEST AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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