EXHIBIT 10.3
SUBCONTRACT AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into as of December 27,
2004, by and between Scan-Optics, Inc. (hereinafter referred to as
"Scan-Optics"), a Delaware Corporation with a principal place of business at 169
Progress Drive, Manchester, Connecticut and Columbia Electrical Contractors,
Inc. d/b/a Columbia Tech, a Massachusetts corporation with a principal place of
business at 17 Briden Street, Worcester, MA 01605, (hereinafter referred to as
"Columbia", and together with Scan-Optics), the "parties" hereto.
WHEREAS, Columbia, as a vendor or subcontractor, seeks to provide
certain goods, services and products to, or at the request of, Scan-Optics
according to specifications provided by Scan-Optics (hereinafter "Goods", or
"Services" or "Products"); and
NOW THEREFORE, in consideration of the agreement of the parties to
enter into the covenants contained herein and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged by
the parties, the parties agree as follows:
1. Price. Subject to the terms and conditions of this Agreement, Columbia
agrees to provide Scan-Optics with the Services, Goods and Products,
which Scan-Optics requests in writing according to the specifications
provided by Scan-Optics, at the agreed upon price, and the subject to
the other terms thereunder to the extent those terms do not conflict
with the terms of this Agreement. In the event of any contrary or
conflicting terms between the written request and the terms of this
Agreement, the terms of this Agreement shall prevail. The Parties shall
set forth in writing such non-cancellable requests for Goods, Services
and Products, and establish scheduled delivery dates (the "Scheduled
Delivery Dates") with corresponding payment dates. Columbia will allow
Scan-Optics to reschedule deliveries up to a maximum of ninety days
from originally scheduled delivery dates. Scan-Optics agrees to provide
Columbia with a deposit equal to twenty-five (25) percent of the
purchase order value, each payment due Columbia in net forty-five (45)
days from shipment, with the deposit being applied to the last
twenty-five (25) percent of the order.
2. Term and Termination. The term of this Agreement shall commence on the
date first stated above and continue until terminated by either party
with the giving of One Hundred and Eighty (180) days written notice
delivered to the other party at the address referenced hereinabove. If
one party breaches any of its obligations under this Agreement, the
other party shall have the right to terminate this Agreement by
delivery of ten (10) days written notice of such breach to the other
party, if the breach is curable, such non-breaching party shall have
the option to allow the breaching party an opportunity to cure the
breach during the ten (10) day period. If Scan-Optic becomes unable to
pay its debts as they mature, makes a general assignment for the
benefit of creditors, or has a petition for bankruptcy filed, Columbia
shall have the right to terminate this Agreement by delivery of five
(5) days written notice to the other party. Notwithstanding the
foregoing, in all instances of termination, Scan-Optic shall be fully
liable for all payments due to Columbia in connection with all written
requests for Goods, Services or Products received by Columbia prior to
such termination.
3. Indemnification. Scan-Optics agrees to Indemnify, release and discharge
Columbia, its officers and representatives from all debts, actions,
causes of action, suits, accounts, covenants, contracts, agreements,
damages and any and all claims, demands and liabilities whatsoever of
every name and nature both in law and in equity, and bear all costs of
Columbia's defense and indemnification, which may arise from Columbia's
delivery of Goods, Services or Products that substantially conformed to
Scan-Optics' written specifications.
4. Warranty. Columbia Tech expressly warrants that all materials,
workmanship, and assemblies covered by this agreement shall conform to
specifications, drawings, instructions and descriptions, which have
been provided in writing by Scan Optics. Columbia Tech warrants the
workmanship for a period of 12 months from the date of delivery.
Further, Columbia Tech shall, on behalf of Scan Optics, use all
reasonable efforts to enforce warranties on materials that it gets from
its vendors and suppliers; and shall have no liability for materials
after the expiration of such warranties. Columbia Tech, at its sole
discretion, agrees to replace or correct any products or services not
conforming to the foregoing warranty promptly, when notified of such
nonconformity by Scan Optics within the Warranty Period. This warranty
does not cover damage caused by products, services, designs,
specifications, instructions, or information not supplied by Scan
Optics or failure which result from accident, misuses, abuse, neglect,
mishandling, alteration or modifications by anyone other than Columbia
Tech.
Columbia Tech shall not be liable for incidental or consequential
damages resulting from the use of this product or arising out of any
breach of this warranty. The foregoing warranty is excusive and in lieu
of all other warranties (whether express, implied, or statutory)
including, without limitation the warranties of merchantability and
fitness for a particular purpose.
5. General Provisions
5.1 Complete Agreement. This Agreement shall constitute the entire
agreement between the parties hereto with respect to the
subject matter hereof and supersede all prior agreements
whether written or oral relating hereto. Any amendment to this
Agreement shall be in writing and signed by the parties
hereto.
5.2 Survival. Except as otherwise provided herein, the rights and
obligations of the parties intended to be observed and
performed by the parties after the termination of this
Agreement shall survive the same and continue thereafter in
full force and effect, including without limitation warranties
and indemnification.
5.3 Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the Commonwealth of
Massachusetts, including all matters of construction,
validity, performance and enforcement, without giving effect
to principles of conflict of laws.
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5.4 Severability. If any provision of this Agreement is held
invalid, unenforceable or void by a court of competent
jurisdiction, the remaining provisions shall nonetheless be
enforceable according to their terms. In such case, the
parties agree to use their best efforts to achieve the purpose
of the invalid provision. Further, if any provision is held to
be overbroad as written, such provision shall be deemed
amended to narrow its application to the extent necessary to
make the provision enforceable according to applicable law and
shall be enforced as amended.
5.5 Columbia agrees that in six months from the date of this
agreement that it will review the then current financial
position of Scan-Optics. Once this review has taken place,
Columbia will consider, in its sole discretion, whether it
will be possible to eliminate the requirement of the
twenty-five (25) percent deposit.
6. In accordance with this agreement, Columbia agrees not to pursue any
contract manufacturing business opportunities with the companies listed
on Exhibit A for a period of twelve months from the date of this
agreement.
IN WITNESS WHEREOF, each of the Parties has caused this Subcontract Agreement to
be executed in the manner appropriate for each, as of the date first above
written.
SCAN-OPTICS, INC.
By /s/ Joseph P. Crouch
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Joseph P. Crouch
Its VP, Manufacturing Services
COLUMBIA ELECTRICAL CONTRACTORS, INC. D/B/A COLUMBIA TECH
By /s/ Christopher J. Coghlin
--------------------------
Christopher J. Coghlin
Its President
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