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EXHIBIT 10.3
OEM PURCHASE AND SALE AGREEMENT
An Agreement made and entered into on 15 November 1996 between (1) THE WideCom
GROUP INCORPORATED, having its principal place of business at 55 City Centre
Drive, Suite 500, Mississauga, Ontario, Canada L5B 1M3, hereinafter referred to
as "WideCom" and (2) THE IMTEC GROUP LIMITED, having its principal place of
business at 168 Honeypot Lane, Stanmore, Middlesex HA7 lLB, England, hereinafter
referred to as "Imtec"
Whereas
(A) WideCom has designed and produced a Document Scanner known as the
WideCom SLC436
(B) WideCom is engaged in the development of further document scanning
devices, particularly an enhanced version of the SLC436 sensor array
for 400 dots per inch scanning
(C) Imtec is engaged in the manufacture and distribution of equipment and
supplies for the engineering document market
(D) Imtec is desirous of having a source of supply of document scanners and
WideCom is willing to supply such scanners to Imtec
(E) Imtec is desirous of having a source of supply of components and
knowhow related to document scanning devices for incorporation into
machines of Imtec design and manufacture and WideCom is willing to
supply such components and knowhow to Imtec
1. Definitions
(A) "Product" shall mean complete SLC436 scanner, or derivative and related
scanning machines, or a set of the major components used in the
machines, as defined in Appendix 1
(B) "Components" shall mean elements of the 5LC436 scanner, its derivative
and related products, such as the image sensing components, printed
circuit boards, drive motor, illumination components and software code
as defined in, but not limited to, the list in Appendix 1 of this
Agreement.
(C) "Parent machine" shall mean the WideCom machine such as the SLC436
which uses the parts defined as the "Components"
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(D) "Derived Product" shall mean any Imtec machine which is built using
Components supplied by WideCom under this Agreement.
(E) "Exclusive Territory" mean shall those countries listed in Appendix 2,
paragraph 1
(F) "Non-Exclusive Territory" shall mean the World, save for the Exclusive
Territory.
(G) "Territory" shall mean the Exclusive and the Non-Exclusive Territory.
(H) "Intellectual Property" shall mean patents, trade marks (or
applications therefor) copyright, design rights, know-how an d
confidential information.
(I) "Applications" shall mean the applications of the Product for the
purposes of stand alone scanning, and for integration of the Product
into a device which combines electronic document capture with microfilm
document capture
2. SALES PURCHASE AND DISTRIBUTION
2.1
Imtec agrees to purchase from WideCom and WideCom agrees -to supply the Products
to Imtec on a continuous basis on the terms and conditions set forth-in this
Agreement.
2.2
Widecom agrees to appoint Imtec as its sole and exclusive distributor for the
Product, subject to the Applications and the ordering requirements pursuant to
paragraph 3.1, in the Exclusive Territory subject to clause 2.3 below.
Furthermore WideCom shall grant Imtec non-exclusive distribution rights for
other territories as defined in Appendix 2, paragraph 2. WideCom agrees to allow
Imtec to promote itself as the appointed distributor in the Territory and
further shall allow Imtec to appoint sub-distributors and dealers as it sees
fit. Imtec shall be free to sell the Product to OEM distributors for purposes
other than the Applications, subject to giving notice of contact with any such
OEM distributors to WideCom, and subject to the approval of WideCom which shall
not be unreasonably withheld.
2.3
WideCom shall be free to appoint further distributors to operate within the
Territory subject to the following conditions:
2.3.1
The price of the Product to Imtec shall be no more than the price of the Product
to any other distributor, even if this means that the price to Imtec must be
reduced to meet this condition.
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2.3.2
The performance specification of the Product supplied to any other distributor
shall not exceed the performance specification of the Product supplied to Imtec,
unless the improved specification offered by WideCom is declined by Imtec.
2.3.3
If WideCom grant distribution rights to a third party over territory that
includes the Exclusive Territory then this other distributor must have its own
worldwide marketing organization and shall be granted rights to the rest of the
world in addition to the aforementioned Exclusive Territory.
2.3.4
WideCom shall notify Imtec of any discussions with third parties which reach
agreement of intent to appoint the third party as a distributor within the
Exclusive Territory. Any discussions with third parties shall be held
confidential until there is formal written agreement to proceed with
distribution of the Product. WideCom shall require any third party to agree such
confidentiality in writing.
2.3.5
Where possible WideCom shall give at least six (6) months notice of the
commencement of supply to any other distributor which may operate in the
Exclusive Territory. In the case that a price reduction to Imtec will result,
pursuant to paragraph 2.3.1, then this price reduction shall take effect from
the time at which notice is served. If the period of notice given by WideCom is
less than six (6) months, then Imtec shall be free to adjust any outstanding
purchase orders, notwithstanding the conditions of paragraphs 3 and 4.
2.3.6
WideCom shall be free to appoint further distributors for sale of the Product
for any express purpose not included in the Applications, subject to the
conditions set out above in this clause save for 2.3.3
WideCom agrees to allow Imtec to freely distribute the Imtec Derived Products
without restriction.
WideCom agrees to supply the Components to Imtec on an exclusive basis for the
purposes of integration into Imtec scanner and scanner/microfilm camera
products, and shall not supply the Components to any third party for the
purposes of construction of machines of similar function or application, except
under the conditions set out above.
3. Order Procedures
3.1 Imtec will place an initial order within fourteen (14) days of this
Agreement being signed. This order shall be for five hundred (500) units of
product to be delivered to a schedule defined by the order, but in any case
within fifteen (15) months of the formal acceptance by Imtec of the Mark 2
version of the SLC 436.
This order quantity and delivery schedule shall be dependent on the
specification, performance and manufacturing quality of the Mark 2
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version of the SLC 436 being judged by Imtec to be of satisfactory standard for
the market in the Exclusive Territory, and to there being no appointment of any
third party distributors pursuant to paragraph 2.3. The order shall also be
subject to amendment following discussions between the parties in the case of
substantial changes in the general market volumes and selling prices within the
Exclusive Territory.
To facilitate the efficient continuing supply of the Products by WideCom, Imtec
will place a firm purchase order for the Products which covers the shipments to
be made in the fourth calendar month following the calendar month in which the
order is placed.
Orders will specify the following items:
a) Order Number and order date
b) Description and Quantity of the Products
c) Unit Price and total price
d) Means of shipment and required delivery time
e) Shipping destination
f) Month of shipping
A purchase order placed by Imtec with WideCom may by agreement in writing be
altered in respect of means of shipment and shipping destination at any time
prior to shipment.
Each purchase order shall be treated as a separate contract between the parties,
and failure to perform any such separate contract shall not alone be reason to
determine performance under this Agreement as a whole.
Imtec shall place further purchase orders for the supply of the Product to
follow on a continuous basis from the initial purchase order. Imtec shall be the
sole and exclusive distributor in the exclusive Territory, save for the
conditions of paragraph 2.3, 50 long as the annual order quantities shall be
sufficient to give Imtec a market share within the Exclusive Territory which is
approximately equal to the market share of WideCom in the North American market
for the same annual periods.
3.2
WideCom shall, without unreasonable delay but in any case within one (I) month
of receipt of a firm purchase order, inform Imtec that WideCom accepts the order
so long as it is in accordance with Section 3.1 and previous reservation orders
as defined in Section 4. WideCom shall not refuse any order from Imtec which is
in accordance with this Agreement.
3.3
In the case of a firm purchase order which includes material terms or
conditions which deviate from those stipulated in this agreement, WideCom may,
at its discretion, either refuse to accept the order or propose to Imtec that
the particular terms or conditions are amended or deleted.
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4. Reservations and forecast
Imtec shall provide WideCom with Reservation orders and a purchase forecast as
follows:
4.1
Imtec shall each month place a reservation order for the Products, which covers
shipments to be made in the fifth calendar month following the calendar month in
which the reservation order is placed. Such reservation orders shall be subject
to agreement by WideCom.
4.2
Imtec may alter the quantity of Products in a reservation order before
converting it to a firm purchase order. This quantity alteration may be an
increase or decrease, but shall not exceed 25% of the original reserved quantity
4.3
Imtec shall each month place a forecast for the purchase of Products, which will
cover the shipments to be made in the six (6) months period commencing with the
sixth (6) month following the month in which the forecast is placed. Such
forecasts are indicative only and do not create an offer to purchase the
Products.
5. Prices and Payment
5.1
The Prices for the Products are defined in Appendix 1. These Prices are FOB
Noida, and shall include adequate protective packing for shipping by normal
methods. These Prices shall be maintained for the first eighteen (18)months
following the date of signing of this Agreement.
Imtec and WideCom will discuss and agree the prices which will take effect
eighteen (18) months from the date of this Agreement and thereafter at eighteen
(18) month intervals. The price of the Product shall not be increased by more
than the percentage change of the UK Retail Price index during the preceding
eighteen (18) month period.
5.2
The Prices defined in Appendix 1 are based on an exchange rate of 1.55 US
Dollars to one Pound Sterling. If the rate of exchange moves outside the range
of 1.45 to 1.65 US Dollars to one pound sterling, then the loss or gain to Imtec
of the exchange rate being outside the range shall be equally shared with
WideCom, such losses or gains being calculated from the upper and lower limits
of the range. The exchange rate used in computing any losses or gains shall be
the spot exchange rate prevailing in London at the time that transfer payments
are made. The parties should issue invoices at quarterly intervals for any
payments due pursuant to the above. Such invoices should be paid by the other
party within thirty (30) days.
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5.3
Payment will be made by Telegraphic Transfer to a bank nominated by WideCom,
within ninety (90) days of receipt of the shipment.
5.4
Payment shall be made in United States Dollars.
6. Delivery
Shipment of the Products shall be made FOB Noida in accordance with the
Incoterms in effect at the date of shipment. Subject to satisfactory inspection
as set out in Section 7, WideCom shall deliver the Products in accordance with
the necessary instructions from Imtec. Any item shall be deemed to have been
delivered to Imtec when title to and risk of such item pass on the basis of
Section 6.2 below. WideCom shall advise Imtec about the specifics of shipment
immediately the information is available.
6.2
Title and risk to any Products to be purchased will pass to Imtec when the
Products are placed on board at FOB port of export in Noida, suitably packed and
marked for delivery as mutually agreed.
7. Quality and Inspection
7.1
The Products to be shipped to Imtec will meet the specific quality requirements
as detailed in Appendix 3. In addition to these requirements all items shipped
shall function correctly, be free from defects such as external scratches,
corrosion, paint defects, and meet normal engineering standards of workmanship
for build quality and finish.
7.2
WideCom will inspect Products prior to shipment to Imtec. Imtec may, at their
discretion, give concessions on quality, but only if the concession is requested
in writing by WideCom and accepted by Imtec in writing prior to shipment.
Products received by Imtec shall be subject to inspection pursuant to the terms
of Section 7.1 within a reasonable time of arrival at their destination. WideCom
will be notified in writing within fifteen (15) days of arrival of any Products
which do not meet satisfactory quality levels, and these Products will be
rejected back to WideCom for replacement, at no cost to Imtec.
7.3
In the event that the Product delivered is consistently not of merchantable
quality, then Imtec reserves the right to cancel any outstanding orders until
quality problems are resolved to their satisfaction. If the problems cannot be
resolved to the satisfaction of Imtec then Imtec may terminate the agreement
pursuant to paragraph 17.
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8. Continuity of Supply
In the event that WideCom is unwilling or unable to supply the Products within
the period of this Agreement, then WideCom shall supply to IIrLtec all the
information and data necessary to allow Imtec to produce the Products. This
information and data shall be supplied free of charge, within 14 days of request
by Imtec, and shall include but not be limited to all documents, drawings,
patent licences, manufacturing rights, supplier information and know how
necessary for the manufacture of the Products.
9. Spare Parts
WideCom shall continue ~o supply reasonable quantities of Components for use as
spare parts for at least five (5) years after the expiry or termination of the
Agreement.
10. Documentation and Training
WideCom shall provide Imtec with all necessary documentation needed for the
integration of the Components into Imtec Derived Products and allow Imtec to
repair, service and maintain the Products. This documentation shall include
dimension mechanical drawings detailing mounting holes and fixing points,
electrical schematic diagrams of individual circuit boards (with the exception
of the specifications relating to the FPGA circuits, and of the Averaging PCB
for the Colour scanner only), electrical interconnections and all other relevant
data concerning the successful installation of the Components in the Derived
Products.
WideCom shall, before the first delivery of Products, provide a training course
for up to four (4) Imtec engineers regarding the operation, maintenance and
repair of the Products. The training course may be held in either England or
Canada, and at WideCom's expense except for any travel and subsistence expenses
for either WideCom or Imtec staff which will be borne by Imtec.
All documentation and training shall be in the English language.
11. Developments, Improvements and Modifications
11.1
WideCom shall keep Imtec informed of Product developments within the scope of
Section 1 (A) of this Agreement, and shall offer such developments to Imtec
under the terms of this Agreement.
11.2
WideCom shall only introduce modifications to the Products supplied under this
Agreement if these modifications are considered by WideCom and Imtec to be
improvements. All proposed modifications must be formally accepted in writing by
Imtec prior to introduction.
All modifications which affect performance, compatibility with other parts and
physical changes which affect fitting to Imtec Derive& Products must be notified
in writing by WideCom at least four (4) months before delivery.
No price increase as a result of a modification will be accepted by Imtec unless
the increase has been accepted by Imtec in writing.
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12. Warranties
12.1
WideCom shall warrant the quality of material and workmanship of the Products
for a period of twelve (12) months from date of the Bill of Lading of the
shipment. WideCom will within a reasonable period replace any defective Products
free of charge, and send the replacements on a CIF basis, provided that Imtec
has a) sent a written notice of the defect to WideCom, together with a technical
description thereof promptly after the defect is found, or in any case within
twelve months of the shipment of the Component b) Sent the allegedly defective
component to WideCom for inspection, if so requested by WideCom
12.2
WideCom shall not be responsible for any defects caused by transportation or
storage conditions after loading at the FOB port, or for inadequate installation
or maintenance by Imtec.
13. Intellectual Property
If any third party should bring a suit or any other form of legal claim against
Imtec resulting from an alleged infringement of Intellectual Property as a
result of the use or sale of the Products then Imtec shall inform WideCom of
this action in writing without delay and in any case within thirty (30) days of
receipt.
WideCom shall hold Imtec harmless in the case of any claim or suit brought by a
third party concerning infringement of Intellectual Property provided that: a)
The Products have not been altered by Imtec in such a way as t~ have caused the
infringement b) The alleged infringement relates to the Products supplied by
WideCom and not the configuration of these Components in the Imtec designed
Derived Product
14. Trade Marks
Imtec shall be allowed to sell the Products under the Imtec trade mark, and to
sub-license such right to sub-distributors. The Components supplied to Imtec
shall be built into Derived Products manufactured by Imtec, and sold under the
Imtec trade mark or any other trade mark allowed by Imtec under their terms of
distribution of the Derived Product.
15. Confidentiality and Non-Competition
15.1
Each party will hold confidential any information or data from the other party
which relates to the Product and the business between the parties in connection
with this Agreement. The information shall include, but not be limited to, any
design drawings, data, process technology, technical and market know how,
pricing and sales data, and ideas and suggestions related to the Product or the
business. Each party shall hold such information confidential, and shall not
disclose it to any third party without the written permission of the supplying
party, except when the information is required for the maintenance and repair of
the Product by third
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party distributors. Each party shall ensure that confidential information is
only disclosed to those employees who need this information for the business
between the two parties.
15.2
Neither party shall be restricted from disclosing information which becomes
generally known to the public by no fault of either party, or which was known to
a party prior to this Agreement, or which is independently obtained or developed
by one of the parties.
15.3
Imtec affirms that other than with respect to the proposed business relationship
between the two parties, it is neither engaged in nor intends to be engaged in,
either directly or indirectly, any business involving single line contact
scanner technology which involves products which are in direct competition to
the Products, either existing or known to Imtec to be in development. Subject to
Imtec continuing to be the sole and exclusive distributor in the Exclusive
Territory for the Products pursuant to paragraph 2.2, Imtec agrees not to enter
any such business during the five (5) year period following the date of this
Agreement unless Imtec gives WideCom sixty (60) days notice thereof and proves
to WideCom's reasonable satisfaction, prior to such entry, that Imtec is not
utilizing any of the Confidential Information in connection with this Agreement.
16. Product promotion
Imtec shall promote the Products by means of exhibitions, advertising, press
editorial features and other methods. For each six (6) month period thereafter
Imtec shall agree a programme of marketing promotion with WideCom. WideCom
agrees to assist Imtec with subsidies 50% of the cost the floor space of the
agreed trade shows, and 50% of the insertion costs of the agreed advertising
expenditure. Other items of promotional expenditure may also be subsidized,
subject to case by case agreement by WideCom. Imtec will issue invoices for the
agreed subsidies to WideCom at quarterly intervals. Such invoices shall be
payable by WideCom within thirty (30) days.
17. Term
This Agreement shall take effect on the day it is signed by authorized
representatives of both parties. This Agreement shall remain in force for a
period of eight (8) years for the date of signing, unless earlier terminated
pursuant to Section 19. Imtec shall be the sole and exclusive distributor for
the Products, pursuant to paragraph 2, for an initial period of three (3) years,
subject to the provisions of paragraph 2.3. Imtec and WideCom shall meet at
least six (6) months before the end of this period to discuss the renewal of
these sole and exclusive marketing rights, which renewal shall not be withheld
if Imtec is marketing the Product effectively.
An extension to the Agreement may be negotiated at the request of either party
provided that such negotiation shall start not later than nine (9) months prior
to the expiry of this Agreement.
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18. Force majeure
Neither party shall be liable for delays in or failure of performance due to
causes beyond such party's reasonable control, or Acts of God, strike, lockout
or other interference with work, war declared or undeclared, blockade,
disturbance, fire, legal acts of public authorities, unavailability or delay of
transportation or any other causes beyond the reasonable control of either
party. In the event of any delay or failure the affected party shall promptly
give notice to the other party giving details of the force majeure, and shall
make its best efforts to remove the force majeure as soon as possible.
The performance of the affected party shall be deemed suspended so long as and
to the extent that any force majeure continues, provided however that after one
hundred and twenty (120) consecutive or cumulative days the other party, at its
sole discretion, may terminate the Agreement without liability.
19. Early termination
If any party hereto fails or refuses to perform any of its obligations under the
prime terms of this Agreement and shall continue such failure or refusal for a
period of sixty (60) days after having received written notice thereof , then
the party giving such notice may terminate the Agreement forthwith by sending
written notice to the defaulting party. Written notices will be sent pursuant to
Section 21.
20. Non-Assignability
Neither party may, in whole or in part, assign, transfer, pledge, encumber or
otherwise dispose of this Agreement or any interest, right or obligation created
thereunder to any third party, without the prior consent of the other party to
this Agreement.
21. Notice
All notices specifically required by this Agreement shall be in writing in the
English language and shall be sent by registered airmail or by telex or
facsimile subject to confirmation within 15 days of receipt of such telex or
facsimile, unless otherwise instructed by written notice of the other party:
If to WideCom: WideCom Group Incorporated
55 City Centre Drive,
Suite 500,
Mississauga,
Ontario,
Canada L5B 1M3,
Attention : S. Tuli, Director
Facsimile: 001 416 566 0181
If to Imtec: The Imtec Group Limited
168 Honeypot Lane
Stanmore
Middlesex HA7 lLB
England
Attention : S. Brewster, Director
Facsimile : UK 181 204 9496
Telex : UK 924574 Imtec G
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The notices shall be deemed to have been duly served, and made unless otherwise
specifically provided for in this Agreement, i) when registered airmail shall
have been deposited in. the mail, postage pre-paid, or ii) when such telex or
facsimile shall have been received by the other party, subject to receipt by
such other party of the confirmation thereof by registered mail, postage
pre-paid, within fifteen (15) days.
22. Disputes
This Agreement shall be governed by the laws of England and both parties submit
to the non-exclusive jurisdiction of English courts, and the rights and
obligations of the parties shall be enforceable accordingly.
In witness whereof, the parties hereto have caused their duly authorized
representatives to execute this Agreement as of the date first above written.
The Imtec Group Ltd Widecom Group Inc
/s/_________________________ /s/________________________
Signed by Starr Brewster Signed by: Suneet S. Tuli
Title: Managing Director Title: Executive Vice President
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APPENDIX 1
This exhibit is filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment.
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APPENDIX 2
1 EXCLUSIVE TERRITORIES:
United Kingdom Spain
France Portuga1
Holland Sweden
Belgium Denmark
Germany Finland
Italy Norway
Switzerland Greece
Austria Cyprus
Poland Turkey
Czech Republic Malta
Hungary Serbia
Bosnia Eire
Croatia
2 NON EXCLUSIVE TERRITORIES:
All countries not listed in Paragraph 1.
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APPENDIX 3
This exhibit is filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment.
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