OEM Purchase Agreement - Fujitsu Computer Products of America Inc. and Kofax Image Products Inc.
OEM PURCHASE AGREEMENT
BETWEEN
FUJITSU COMPUTER PRODUCTS OF AMERICA, INC.
AND
KOFAX IMAGE PRODUCTS, INC.
This Agreement is made and entered as of January 27, 1999 ("Effective Date") by
and between KOFAX IMAGE PRODUCTS, INC. ("KOFAX") located at 3 Jenner Street,
Irvine, CA 92618 and FUJITSU COMPUTER PRODUCTS OF AMERICA, INC.
("FCPA") located at 2904 Orchard Parkway, San Jose, CA 95134.
WHEREAS, KOFAX has developed VRS Products ("Products") as described in Exhibit A
and FCPA wishes to purchase Products and incorporate such Products into FCPA's
M-series scanner line to be resold to FCPA's customers, which include original
equipment manufacturer ("OEM") and Distribution customers. KOFAX and FCPA,
therefore, desire to enter into an OEM purchase agreement (The "Agreement") for
the VRS Products.
In consideration of the mutual promises and covenants of the parties hereto and
other valuable consideration, the parties hereby agree with each other as
follows:
1. DEFINITIONS
As used in this Agreement, the following words shall have only the
following meanings:
(a) "Product(s)" shall mean the VRS Products, conforming to the
specifications ("Specifications") attached hereto as
Exhibit A.
(b) "Order" shall mean a written purchase Order signed by FCPA and
sent by FCPA to KOFAX by mail or facsimile.
(c) "Deliver" and "Delivery" shall mean to transfer by KOFAX to
FCPA's, designated carrier.
2. TERM
This Agreement shall be effective as of the Effective Date and shall
continue in effect for an initial term of one (1) year. Thereafter, it
will renew in one (1) year increments unless terminated pursuant to the
provisions herein.
3. PURCHASE ORDERS
(a) FCPA shall purchase the Products pursuant to written Orders that
will be submitted by FCPA by the twentieth (20th) day of each
month.
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(b) The Terms of this Agreement prevail over any pre-printed
conditions appearing on any form. The printed conditions
appearing on any pre-printed form or purchase Order shall not be
applied if they are incompatible with the provisions of this
Agreement. Each written Order placed by FCPA pursuant to this
Agreement shall state that it is subject to the terms of this
Agreement, shall identify the Products Ordered and shall include
the following information:
(i) Description of the Products Ordered using FCPA's
assigned Product number and KOFAX's assigned part
number;
(ii) Quantities and requested Delivery schedule;
(iii) Shipping instructions including assigned carrier and
destination address;
(c) If an Order is sent by facsimile, the Order shall be followed by
the original sent by mail.
(d) KOFAX shall deliver Products to FCPA pursuant to a written Order
accepted and acknowledged by KOFAX in accordance with the
requested Delivery schedule. Lead time required for Delivery is
sixty (60) days from the date of KOFAX's acceptance of each
Order for normal Orders. FCPA shall have three (3) business days
in which to notify KOFAX that the acknowledged Delivery dates
not meet FCPA's requirements and KOFAX shall use commercially
reasonable efforts to reschedule the Order for an earlier date
as mutually agreed between the parties. FCPA may cancel, without
penalty any Order delayed in excess of sixty (60) days beyond
the acknowledged Delivery date.
(e) Any Order given by FCPA will be deemed accepted by KOFAX unless
it is rejected by KOFAX within two (2) working days after KOFAX
receives it. KOFAX shall be obligated to accept Orders that
conform to, but do not exceed by twenty-five percent (25%) any
forecast provided by FCPA. Upon such acceptance, each Order
shall constitute an individual contract for the transaction of
Products Ordered. KOFAX shall provide a written acknowledgement
for each Order showing acknowledged Delivery dates, quantities
and pricing.
(f) In the case of Orders that do exceed by twenty-five percent
(25%) any forecast provided by FCPA, the agreement of KOFAX is
required before such Order shall be deemed to be accepted.
(g) Unless mutually agreed, Orders for Products shall not exceed the
rolling forecast by more than twenty-five percent (25%).
(h) If KOFAX expects to ship Products late, Products shall be
shipped via next day airfreight. The difference between
airfreight and normal freight charges will be paid for by
KOFAX, if Products arrive at KOFAX on or before the Order due
date. However, if the Products arrive at KOFAX after the Order
due date, the expense for air freight shall be paid for by
KOFAX.
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4. BUFFER STOCK
KOFAX will maintain a buffer stock amount of Products to be ordered
under this Agreement equal to two (2) weeks in inventory and one (1)
week in transit according to the then current rolling forecast. This
buffer stock will be considered consigned for FCPA and will be purchased
upon termination of this Agreement as defined in Section 30.
5. EMERGENCY ORDERS
KOFAX shall maintain a stock of Product for emergency Product Orders at
a quantity to be determined mutually between KOFAX and FCPA.
Emergency Orders of Products shall be delivered within twenty-four (24)
hours of receipt of such Order, provided such Products are available
from KOFAX. If necessary KOFAX may pull Product for emergency Orders
from the buffer stock provided KOFAX uses reasonably commercial efforts
to replenish the buffer stock immediately. Emergency Orders are deemed
to be those Orders in which a Product is needed immediately because of a
service related issue and not for fulfillment purposes.
6. FORECAST
By the twentieth (20th) day of each month, FCPA will provide a
non-binding six (6) month rolling forecast to KOFAX.
7. CHANGE/CANCELLATION OF ORDER
(a) Orders accepted by KOFAX may be modified or cancelled by FCPA
with written notice to KOFAX thirty (30) calendar days prior to
the acknowledged date of shipment. If such Orders cancelled less
than sixty (60) days prior to the acknowledged ship date may be
subject to reimbursement of the raw materials that are
associated with the Product that cannot be re-used or re-sold by
KOFAX, and provided such cost for raw materials do not exceed
the then current price of the Product. Should KOFAX develop and
sell other VRS products that also use the raw materials listed
below, KOFAX will identify and remove those raw materials from
the list. The list of raw materials subject to reimbursement at
the time of execution of this Agreement are as follows:
Part Number Description
12000162-000 PCB FUJI INTERNAL SCA
14001018-000 CAP .33uF 50V 20% 805
14350045-000 RES 22 OHM, 1/8W 5% 8
14350047-000 RES NTWK 2.2K OHM 1/8
14350048-000 RES NTWK 22 OHM 1/8W
15250764-000 IC 74FCT162245 SSOP 4
15501009-000 IC DS229S TRNSM/RCVR
15603037-000 IC PROG QUAIL 3 MACH 1
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15701022-000 IC FIFO MEM 5Kx8 SOIC
15701023-000 IC FIFO MEM 10Kx8 TSO
15701025-000 IC SDRAM 4X16 TSOP 54
15701030-000 IC PROG FLASH ROM 256
15800046-001 IC DS1233DZ-10 SOT
15800050-002 IC RISK CNTLR MCF5206
15801029-000 IC FPGA 10K30A 208PQF
15801028-000 IC ALTERA 6024A 3.3V
15901005-000 IC ASIC DESKEW 208PQF
16100008 CONN 37 PIN FEMALE DS
16100063-002 HEADER2X5SMT
16100066-000 CONN 44 PIN DIN MALE
16120005 SHUNT JUMPER
There will be no cancellation or reimbursement fees applicable
to orders cancelled more than sixty (60) days prior to the
acknowledged ship date.
(b) Deliveries may be rescheduled one time per Order up to 100% with
fifteen (15) days written notice from FCPA.
8. DELIVERY TERMS
Delivery terms shall be FOB Irvine, California. KOFAX shall use its best
effort to ship the Product according to FCPA's then current freight
routing guide, a copy of which is attached as Exhibit G. Title to and
risk of loss of all Products purchased by FCPA hereunder shall pass from
KOFAX to FCPA upon Delivery.
9. PACKAGING
All packaging materials and methods shall be KOFAX's standard commercial
materials and/or the methods set forth in Exhibit B. If FCPA requests
any special packaging materials or methods different from those noted
above, and if KOFAX agrees to use such special materials or methods, the
additional cost thereof shall be paid by FCPA. If FCPA and KOFAX agree
that the standard packaging is inadequate, then KOFAX will implement
improved packaging at no extra cost to FCPA.
10. LABELING
Labeling shall be designed in accordance with the specifications set
forth in Exhibit B entitled Product Requirements.
11. PRICES
(a) The price to be paid by FCPA to KOFAX for the Product is
attached as Exhibit C.
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(b) KOFAX warrants that the price and terms set forth herein do not
exceed those charged or imposed on any other customer
purchasing the same Product for like quantities, terms and
conditions.
(c) If KOFAX lowers its prices for the Product that meet the pricing
requirements summarized in paragraph 11 (b) during the term of
the Agreement; KOFAX shall immediately extend such lower prices
to FCPA. If KOFAX decreases the price of any Product purchased
by FCPA and still in FCPA's inventory, FCPA will be entitled to
a credit on Products delivered to and paid for by Distributor,
less any prior credits granted by FCPA, in the amount of the
purchase price less the new decreased price for the Products
multiplied by the quantity of such Products in FCPA's inventory
on the effective date of the price decrease. Similar price
adjustment will also be made on (i) all such Products in transit
to FCPA on the effective date of such price decrease, and (ii)
all Orders for such Products previously accepted by KOFAX but
remaining unshipped on the effective date of such price
decrease.
(d) Upon reasonable notice and during normal working hours, FCPA may
appoint an independent auditor to review KOFAX records to
determine if FCPA is receiving pricing as agreed to hereunder
and that KOFAX is complying with the terms of this Agreement.
KOFAX shall allow such independent auditor access to all
applicable records of KOFAX for the purpose of conducting such
audit. The independent auditor shall only report to FCPA whether
KOFAX is complying with the terms of this Agreement.
(e) KOFAX will engage in ongoing cost reduction efforts, and where
practicable, KOFAX will pass price reductions on to FCPA.
12. PAYMENT
(a) All payment for the Products shall be made in U.S. Dollars.
(b) Payment will be Net 45 days from date of invoice.
(c) FCPA shall be responsible for the payment of all taxes, tax
levies, or tax assessments imposed on the subject transactions
or Products. FCPA shall be responsible for providing in a timely
manner all documentation, in the nature of exemption
certificates or otherwise, necessary to allow KOFAX to refrain
from collections, such as sales tax, it is otherwise obligated
to make. FCPA's obligations shall survive the termination of
this Agreement.
13. STOCK ROTATION
FCPA shall be eligible to rotate Product stock in its inventory for new
Product which has been upgraded to a new version of VRS, provided such
new version of the Product affects the form, fit or function of the
preceding version, under the following terms:
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(a) FCPA shall be eligible for, subject to full compliance with
Subsections (b) and (c) below, stock rotation privileges for a
dollar amount of Product not to exceed ten percent (10%) of the
then current dollar value of Product shipped to FCPA, less any
credits or returns, for the three month period immediately prior
to the stock rotation months of April, July, October and
January. No percentage of rotation allowable shall accrue from
one period to the next. Credit shall be at the net current value
of the Product, which is the price paid by FCPA, less any
credits granted to FCPA.
(b) An off-setting, non-cancelable Order for the same dollar amount
in different Products than those rotated, must be submitted with
request for stock rotation. Delivery dates scheduled under this
purchase order shall not exceed thirty (30) days.
(c) Product returned for stock rotation must have been purchased
from KOFAX during the previous six (6) months, be new, unused
and in factory sealed containers, and be returned to KOFAX
freight prepaid.
14. TRADEMARK
(a) All Products purchased by FCPA from KOFAX under this Agreement
shall be used, leased, rented, licensed or sold by FCPA only
under trademarks and/or trade names of FCPA or those of FCPA's
customers or their customers. FCPA shall not use KOFAX's
trademarks or trade names on or in connection with Products
except as required by law or governmental regulation or as
expressly authorized by KOFAX.
(b) FCPA grants KOFAX the right and KOFAX agrees to apply FCPA's
trademarks or those of FCPA's customers to which FCPA has the
right to have KOFAX apply to the Products (excluding any third
party software which KOFAX may be licensed to use) to be
manufactured and delivered to FCPA according to this Agreement,
but at the expense of FCPA.
(c) FCPA agrees to defend KOFAX against any claim of trademark
infringement by reason of the use upon the Products and/or upon
any printed material in connection therewith of FCPA's trademark
and trade names or those of FCPA's customers when so directed by
FCPA. FCPA shall indemnify and hold harmless against any damages
and cost reasonably incurred by KOFAX in any such claim to the
extent attributable to such claim. FCPA's obligations with
respect to such claims are expressly conditioned upon KOFAX
giving FCPA prompt notice of any such claim and granting FCPA in
writing exclusive control over its defense or settlement and
cooperation with FCPA in the defense of such claim at FCPA's
expense.
(d) KOFAX agrees to defend FCPA against any claim of copyright or
trademark
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infringement by reason of the use upon the Products and/or upon
any printed material in connection therewith of KOFAX's
software, trademark and trade names or those of KOFAX's
customers when so directed by KOFAX. KOFAX shall indemnify and
hold harmless against any damages and cost reasonably incurred
by FCPA in any such claim to the extent attributable to such
claim. KOFAX's obligations with respect to such claims are
expressly conditioned upon FCPA giving KOFAX prompt notice of
any such claim and granting KOFAX in writing exclusive control
over its defense or settlement and cooperation with KOFAX in the
defense of such claim at KOFAX's expense.
15. SOFTWARE LICENSE
(a) Object License. KOFAX grants FCPA a non-exclusive,
non-transferable worldwide license to reproduce and distribute
each Licensed Software (object code form only), for which the
Licensed Software is to be integrated or adapted, as described
in Exhibit B.
(b) Internal Copies. FCPA may use the Licensed Software internally
for testing, demonstrating, training, customer support, and
promotional purposes. No royalty shall be due KOFAX for copies
of the Licensed Software which have been distributed for
testing, training, demonstration and promotional purposes.
16. DOCUMENTATION
KOFAX hereby grants FCPA the royalty-free right to reproduce,
use, distribute and sell in FCPA's name all documentation
associated with the Product under this Agreement. These rights
with respect to documentation shall extend solely to FCPA.
17. SHIPPING INSPECTION/ACCEPTANCE
(a) KOFAX shall cause inspection of each lot of the Products, prior
to shipment of such lot to FCPA, and shall provide to FCPA the
records of such inspection upon written request by FCPA. KOFAX
at FCPA's request will supply a Certificate of Conformance on
each lot shipping to FCPA.
(b) FCPA may attend and witness or participate in such inspection of
the Products at the source as made by or for KOFAX, in order to
determine that the Products conform with the Specifications,
prior to acceptance of Delivery.
(c) FCPA shall have twenty (20) days from the date of receipt of the
Products to perform incoming inspection and acceptance testing
on the Products to determine whether the Product performs in
accordance with the Product Specifications as set forth in
Exhibit A and in accordance with procedures agreed to between
the parties.
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(d) In the event that any Products delivered by KOFAX fail to pass
such incoming inspection, FCPA shall notify KOFAX of such
failure specifying the nature of the failure within the twenty
(20) day acceptance period.
(e) Within five (5) business days after receipt of the notice of
such defective Products, KOFAX shall:
(i) Replace such defective Products at KOFAX's expense,
(ii) Replace any service parts at KOFAX's own cost, including
labor.
18. WARRANTY/DEFECTIVE PRODUCTS
(a) KOFAX warrants that all Products shall meet the Product
Specifications set forth in Exhibit A and that all Products
shall be free from material defects in design and workmanship.
(b) KOFAX further represents and warrants that KOFAX Products
purchased under this Agreement will be Year 2000 compliant as
set forth in Exhibit H and therefore will process date/time data
during the transition from, into, and between the 20th and 21st
centuries, provided that the computer system(s) to which the
Products are connected accurately process the transition from,
into, and between the 20th and 21st centuries. This warranty
does not apply to any third-party branded products that may be
bundled with Products or otherwise distributed by KOFAX.
(c) If a Product is found to be defective within ninety (90) days
from date of Delivery to FCPA, FCPA may return the defective
Product to KOFAX for credit utilizing the then current RMA
procedure as set forth in Exhibit D, in the container specified
by KOFAX, transportation prepaid. Any revisions to the RMA
Procedure shall be reasonably agreed to by both parties and
shall be deemed incorporated into this Agreement upon its
acceptance by FCPA.
(d) After the initial ninety (90) day period, should any material
defect in the Products be discovered by FCPA within the next
twenty-four (24) months following the Delivery of such Products,
FCPA shall notify KOFAX in writing of such defect promptly after
discovery of such defect. In such case, KOFAX shall, within ten
(10) business days after receipt of the notices of such
defective Products specifying the nature of the defect, take
appropriate measures including but not limited to the following
as reasonably agreed to between FCPA and KOFAX.
(i) To supply to FCPA, free of charge, at KOFAX's discretion
repair and/or replacement Product of such material
defective Products. FCPA will ship back defective
Products to a location designated by KOFAX at KOFAX's
expense.
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(ii) To replace such defective Products at KOFAX's expense.
(iii) To modify the design of any Products (either delivered
or undelivered to FCPA) at KOFAX's expense so as to make
them non-defective Products.
(e) In the case of Epidemic Failure, KOFAX shall repair or replace
any Product which does not conform to the foregoing warranties
set forth herein, including reimbursement of labor incurred by
FCPA. FCPA will ship back defective parts to a location
designated by KOFAX in connection with repairing such Products
at KOFAX's expense and pursuant to its then current RMA
procedures. Epidemic Failure means any out of specification
Product or Part failure, resulting from the same cause or
phenomena, which can be found (i) on a minimum of 5 units per
shipment and (ii) affects at least 5% of the total shipments
received by FCPA.
(f) The Warranty hereunder shall not apply to any Product:
(i) Which has not been operated in accordance with the
applicable operators manual, or
(ii) Which has not been maintained in accordance with the
Product Specifications.
19. TRAINING
For a period of ninety (90) days from the Effective Date of this
Agreement, KOFAX will provide at no charge a reasonable amount of
initial training, but no less than forty (40) hours of training, to
corporate FCPA training personnel, sales persons, engineers, and all
FCPA personnel necessary at the discretion of FCPA. After the initial
training, FCPA and KOFAX will mutually agree on a training schedule,
cost and location and FCPA will reimburse for actual per diem expenses
of KOFAX Personnel. Training shall be adequate and sufficient to acquire
all necessary information for the Product. Training shall include, at
KOFAX's expense, the most current Product information, training
materials updates, upgrades or enhancements to the Product.
20. PRODUCTS LIABILITY AND INDEMNITY
(a) KOFAX will defend at its own expense any suit brought against
FCPA to the extent that it is based on a claim that Product made
for FCPA in the form delivered to FCPA, caused damages to
tangible property or personal injury, including death, of third
parties provided that (i) FCPA shall notify KOFAX promptly in
writing of any claim, (ii) KOFAX shall have sole control of the
defense of any claim and all negotiations for its settlement or
compromise, and (iii) FCPA shall provide complete authority,
information, and assistance to KOFAX and its counsel for the
defense of such claim Subject to subsection (b)
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hereof, KOFAX shall indemnify and hold harmless FCPA against any
damages finally awarded against FCPA in any such suit to the
extent attributable to such claim.
(b) KOFAX shall have no liability or obligation to FCPA hereunder
with respect to such claims if the Product was used for other
than its intended use or if the damages resulted from the gross
negligence or willful misconduct by the end user. Neither Party
nor its affiliates shall be liable for indirect, special or
consequential damages.
(c) THE FOREGOING STATES THE ENTIRE LIABILITY OF KOFAX AND ITS
AFFILIATES WITH RESPECT TO PRODUCTS LIABILITY FOR ANY PRODUCTS
DELIVERED UNDER THIS AGREEMENT.
21. REGULATORY AGENCY COMPLIANCE
KOFAX shall be responsible for obtaining certification of approvals from
agencies listed in the Specification attached hereto.
22. INDEPENDENT CONTRACTOR
KOFAX is an independent contractor, and is not and shall not be deemed
to be the legal representative or agent of FCPA for any purpose
whatsoever, and KOFAX is not authorized by FCPA to transact business,
incur obligations (express or implied), bill goods, or otherwise act in
any manner in the name or on behalf of FCPA, or to make any promise,
warranty or representation with respect to the Products or any other
matter in the name or on behalf of FCPA. FCPA shall have no control over
the manner of performance of KOFAX except as expressly provided herein.
23. EXPORT LICENSES
FCPA agrees that it will not export, directly or indirectly, any
Products or technical data obtained under this Agreement to any country
without first obtaining proper governmental licenses and/or approvals.
24. SUPPORT
(a) KOFAX will provide technical information (including technical
bulletins and tips) to FCPA for support of Products and Parts.
KOFAX hereby grants FCPA the right to duplicate and distribute
technical information regarding Products which is not
proprietary or confidential on an as needed basis with the prior
approval of KOFAX. If available, KOFAX will provide to FCPA any
user documentation and/or software (including technical
information) for Products or similar KOFAX Products so that FCPA
may use the contents, where applicable and allowable, in
creating FCPA's user documentation. This does not imply any
transfer of, and does not expressly transfer any ownership of
intellectual
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property rights from KOFAX to FCPA.
(b) KOFAX will provide reasonable program assistance and technical
support capable of answering questions and resolving purchasing,
shipment, billing and technical issues at the KOFAX location
that processes FCPA's Orders.
(c) KOFAX agrees to provide Repair Service for Product during the
term of this Agreement at a mutually agreed upon price and for a
minimum period of five (5) years following the last shipment of
Product hereunder based on raw material availability at the
price in effect at the time of last shipment. Product provided
to FCPA under repair service shall be covered by a ninety (90)
day warranty when the warranty period on the Product has passed.
KOFAX shall have the option of not repairing Product one (1)
year after last shipment to FCPA, however, if KOFAX elects to
exercise this option FCPA will be provided with an alternative
that is acceptable to FCPA, which such acceptance shall not be
unreasonably withheld.
(d) Product returned to KOFAX for repair shall be repaired and
updated to the specifications of the original Product and
updated with the latest Engineering Changes. KOFAX shall use
commercially reasonable efforts to repair and ship the repaired
Product back to FCPA within ten (IO) business days from receipt.
(e) The VRS Problem Escalation Process, as set forth in the attached
Exhibit E, will be used as a communication tool between FCPA and
KOFAX to discuss Product problems and Product enhancement
requests.
25. PROPRIETARY INFORMATION
(a) During the term of this Agreement each party may acquire
valuable trade secrets and/or confidential and proprietary
information of the other party or its affiliates. Confidential
Information means all confidential and proprietary information
which is disclosed by one party to the other party, which is
marked confidential or which is identified in writing to be
confidential within thirty (30) days after disclosure to the
receiving party ("Confidential Information").
(b) Each party agrees not to use the Confidential Information for
any purpose whatsoever except for the purpose set forth herein.
Each party agrees not to disclose the Confidential Information
to any third person or to its employees or those of its
affiliates except those employees who have a legitimate need to
know and who agree to keep such information confidential. Each
party agrees that it shall protect the confidentiality of, and
take reasonable steps to prevent disclosure or unauthorized use
of, the Confidential Information in order to prevent it from
falling into the public domain or the possession of persons not
legally bound to maintain its confidentiality, provided that in
no event shall such party's obligations exceed the standard of
care taken to protect its own
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confidential information of like importance. Each party will
promptly advise the other party in writing of any
misappropriation or misuse by any person of such Confidential
Information and provide assistance to the injured party in any
lawsuit related thereto. Each party acknowledges that its
obligations hereunder survive in accordance with the terms
hereof, notwithstanding the termination of the business
relationship of the parties, for a period of five (5) years
following the last disclosure of Confidential Information by the
other party hereunder.
(c) No copies of any Confidential Information may be made except to
implement the purposes of this Agreement. Any materials,
documents, notes, memoranda, drawings, sketches and other
tangible items containing, consisting of or relating to the
Confidential Information of a party which are furnished to the
other party in connection with this Agreement, or are in the
possession of the other party, and all copies thereof, remain
the property of the party to which the Confidential Information
is proprietary and shall be promptly returned to the party
supplying the same upon a party's request therefor. Nothing
contained in this Agreement shall be construed as granting any
rights, by license or otherwise, in any Confidential Information
except as specified in this Agreement.
(d) Each party's obligations under this Agreement shall not apply to
information which: (a) is known by that party or is publicly
available at the time of disclosure by the disclosing party to
the receiving party; (b) becomes publicly available after
disclosure by the disclosing party to the receiving party
through no act of either party; (c) is hereafter rightfully
furnished to the receiving party by a third party without
restriction as to use or disclosure; (d) is disclosed with the
prior written consent of the disclosing party; (e) is
information that was independently developed by the receiving
party; or (f) is required to be disclosed pursuant to any
judicial or administrative proceeding, provided that the
receiving party immediately after receiving notice of such
action notifies the disclosing party of such action to give the
disclosing party the opportunity to seek any other legal
remedies to maintain such information in confidence.
26. INFRINGEMENT
(a) KOFAX warrants that to its knowledge all of the Products
furnished hereunder do not infringe any patent or copyright or
other industrial property rights, trademark or tradename of a
third party. KOFAX shall defend, indemnify and save FCPA and
it's customers harmless from any loss, damage, cost or liability
incurred by FCPA as a result of any action or suit based on a
claim which, if true, would constitute a breach of the foregoing
warranties (hereinafter "Infringement Claims"), provided,
however, that KOFAX's said obligation shall be conditioned upon:
(i) FCPA's notifying KOFAX of the existence of such action
or suit promptly;
(ii) FCPA's giving KOFAX full control of the conduct,
including settlement
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of such action or suit;
(iii) FCPA's cooperating with KOFAX, at KOFAX's expense.
(b) Following the notification of FCPA defined under Subsection
26(a)(i), KOFAX will at its own expense, either (i) procure for
FCPA the right to continue using such Products royalty free,
(ii) replace such Products to FCPA's reasonable satisfaction
with non-infringing Products or equivalent quality and
performance, or (iii) modify such Products so that they become
non-infringing Products of equivalent quality and performance.
If KOFAX is unable to provide any of the above alternatives,
KOFAX must pay FCPA for all units sold to FCPA and then may
terminate this Agreement by giving a written notice to FCPA. The
foregoing constitutes the sole remedies available to FCPA and
it's customers in the event of any such infringement.
27. INTELLECTUAL PROPERTY RIGHTS
KOFAX claims all rights, title and interest in the Products delivered by
KOFAX under this Agreement and in all of KOFAX's patents, trademarks,
trade names, inventions, copyrights, know-how and trade secrets relating
to the design and operation of that Product. FCPA agrees that the
execution of this Agreement does not in any way give FCPA rights to any
KOFAX' intellectual property or patents. However, should there be any
work product developed during the term of the Agreement which is a
result of any intellectual property provided by FCPA, it shall be
licensed subject to the terms of a separate agreement to be mutually
agreed upon between the parties at a later date.
28. ENGINEERING CHANGE NOTICES/PRODUCT CHANGES
(a) KOFAX shall give FCPA at least ninety (90) days advance written
notice of engineering changes that will affect the form, fit or
function of any Product in FCPA's inventory.
(b) KOFAX shall not make any form, fit, or function changes to the
Product without the approval of FCPA. Subject to KOFAX's Quality
Procedure, as set forth in the attached Exhibit F, KOFAX will
document all proposed engineering changes as an Engineering
Review Order ("ERO"). If applicable, sample of the proposed
product change shall be provided with each ERO. FCPA shall have
fifteen (15) business days to accept or reject such engineering
change.
(c) Following FCPA's approval of the ERO, KOFAX shall follow with an
Engineering Change Order ("ECO") for FCPA's formal acceptance of
the change. FCPA shall have eight (8) business days from ECO
delivery for approval. FCPA's failure to approve the ECO within
this stipulated time, shall deem the ECO officially accepted.
(d) Accepted changes will be cut-in with the next production build
of the Product or Product delivery. If FCPA rejects a change
which affects the form, fit or
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<PAGE> 14
function, rendering the Product unusable by FCPA, the parties
shall work together to determine a reasonable resolution to the
problem. Any safety related ECO's shall be corrected under
warranty.
(e) The implementation of KOFAX's Design and Change Control
Procedure shall commence with initial production shipments to
FCPA.
29. END OF LIFE PRODUCTS
Should Products be discontinued or should an ECN create modifications to
the Product that require KOFAX to assign a new Product number to the
affected Product then FCPA shall be entitled to make an End-of-Life
("EOL") buy or return the Product for credit as specified below. Should
FCPA decide to make an EOL buy the Order must be within thirty (30) days
of the date of notice and FCPA agrees to take Delivery of that Product
within thirty (30) days of the date EOL Order is placed.
FCPA shall use commercially reasonable efforts to sell any Product which
have been deemed EOL'd during the EOL notice period. Any EOL Products
remaining unsold and in FCPA's inventory, which was returned to FCPA by
its OEM's and Distributors upon the date the Product is EOL'd may be
returned for credit subject to the following terms:
(a) All EOL'd Product returns must be made within sixty (60) days
from the date the Product is EOL'd.
(b) FCPA shall receive a credit for all such EOL'd Products
returned, provided the EOL'd Product being returned was
purchased and paid for by FCPA within six (6) months of the date
of EOL notice.
(c) Credit shall be based on the then current list price for the
EOL'd Product as noted on the last version of KOFAX' price list
containing the EOL'd Product, less any previously given credits
or returns.
(d) FCPA shall return the EOL'd Products utilizing KOFAX's then
current RMA procedure.
(e) Products returned must be new, unused and in factory sealed
containers.
(f) KOFAX shall pay freight charges provided that the choice of
carrier remains solely with KOFAX.
30. TERMINATION
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<PAGE> 15
(a) Either Party may terminate this Agreement in whole or in part
for any reason and without liability for that termination by
giving a written ninety (90) day notice of termination to the
other party.
(b) Either party may terminate this Agreement, effective upon
written notice to the other, if any one of the following events
occur: (i) the other files a voluntary petition in bankruptcy;
(ii) the other is adjudicated bankrupt; (iii) the other makes an
assignment for the benefit of its creditors; (iv) a court
assumes jurisdiction of the assets of the other under a federal
bankruptcy or reorganization act; (v) a trustee or receiver is
appointed by a court for all or a substantial portion of the
assets of the other; (vi) there is a substantial change in the
financial conditions of the other; or (vii) the other is unable
to pay its debts as they become due.
(c) Either party may terminate this Agreement upon written notice if
the other party breaches this Agreement and fails to correct the
breach within thirty (30) days following the receipt to a
written notice specifying the breach.
(d) Upon termination FCPA's inventory will be repurchased as
follows: (i) KOFAX shall buy back FCPA inventory of KOFAX
Products purchased and paid for during the previous six (6)
months and on hand at FCPA's location as of the effective date
of termination, and KOFAX shall have the option to buy back FCPA
inventory of KOFAX Products purchased more than six (6) months
previously and on hand at FCPA location as of the effective date
of the termination. All Products returned by FCPA to KOFAX shall
comply with the following conditions: (1) be returned freight
prepaid within sixty (60) days of receipt of notification by
KOFAX, (2) be shipped in the original shipping container to
eliminate Product damage during shipment, and (3) be received at
KOFAX's facility new, unused, undamaged and in good working
condition.
(e) Upon the giving by KOFAX or FCPA of notice of election to
terminate this Agreement, excluding termination as provided in
subsection (b) above, KOFAX agrees to accept Orders on cash
terms, or such other terms as may be mutually agreed, for
Products which FCPA is contractually obligated to furnish prior
to termination and does not have in its inventory, provided that
FCPA within ten (10) days after the expiration of this Agreement
or termination, as hereinabove provided, furnishes evidence to
KOFAX's satisfaction of the existence of the contractual
obligation; and provided further that KOFAX has a sufficient
number of Products in stock and available for distribution to
supply the same to FCPA.
(f) BOTH PARTIES ACKNOWLEDGE THAT IN THE EVENT OF TERMINATION OF
THIS AGREEMENT NEITHER PARTY SHALL HAVE ANY RIGHT TO DAMAGES OR
INDEMNIFICATION OF ANY NATURE, WHETHER BY WAY OF LOSS OF
GOODWILL, FUTURE PROFITS, OR REVENUE, ON ACCOUNT OF
EXPENDITURES, INVESTMENTS,
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LEASES, OR OTHER COMMITMENTS IN CONNECTION WITH THE BUSINESS OR GOODWILL
OF EITHER PARTY, OR OTHERWISE
31. MARKET DEVELOPMENT
(a) KOFAX agrees to cooperatively work with FCPA in developing joint
marketing programs for KOFAX VRS Ready scanners. KOFAX will
offer cooperative marketing funds as well as supplement joint
efforts with its own marketing programs.
(b) KOFAX will terminate current plans to market a KOFAX VRS
configuration for Fujitsu M-Series video scanners through the
FCPA channel and will allow FCPA to OEM several VRS components
for inclusion in new FCPA VRS Ready scanners.
(c) KOFAX will not allow the shipment of non Fujitsu VRS enabled
scanners prior to the first customer ship date of the KOFAX VRS
Ready M3097DE scanner. For purposes of this Section, first
customer ship shall be defined to mean no sooner than twenty
(20), but no more than sixty (60), days KOFAX delivery of the
initial purchase order issued by FCPA ("FCS").
(d) KOFAX agrees to not allow the inclusion of the VRS Auto
Adjustment brightness and contrast features in non-Fujitsu VRS
scanners prior to six (6) months after the first shipment by
FCPA of a mutually agreed upon version 1.03 of the Product.
(e) FCPA will include a VRS logo, as approved by KOFAX, which will
be installed by FCPA in a prominent location on the front of
each scanner.
(f) FCPA agrees to create an additional part number consisting of
the three VRS components (VRS Grayscale Scanner Adapter, VRS
cable, VRS software) which can be sold by FCPA for use with
existing M-Series video scanners in the field as an upgrade kit.
(g) FCPA agrees to use commercially reasonable efforts to
participate in cooperative marketing efforts in conjunction with
KOFAX's VRS marketing efforts.
(h) A Shockwave version of the VRS interactive demo CD presentation
will be provided to FCPA for use on the FCPA website.
32. PUBLICITY
Both parties agree not to disclose the terms and conditions of this
Agreement, except as may be required by law or government regulation,
including, without limitation, federal securities laws, and except to a
party's accountants and attorneys without the prior written consent of
the other party. The foregoing notwithstanding, either party may
disclose that an Agreement has been signed by the parties for supply of
Products by KOFAX to FCPA on an OEM basis.
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<PAGE> 17
33. FORCE MAJEURE
Neither FCPA nor KOFAX shall be liable to the other for delays in the
performance of this Agreement if such delay is caused by strike, riots,
wars, government regulations, acts of God, fire, flood, or other causes
beyond its control; provided, however, if any such delay by KOFAX
continues thirty (30) days or more, then FCPA shall have the option,
exercisable by written notice to cancel all or any portion of Orders
placed hereunder and to cancel this Agreement without charge or
liability.
34. GOVERNING LAW
This Agreement shall be governed by and interpreted in accordance with
the laws of the State of California.
35. NOTICES
Written notices are to be sent to FCPA at
Fujitsu Computer Products of America, Inc.
2904 Orchard Parkway
San Jose, CA 95134
Attn: Manager, Contracts Administration
Written notices are to be sent to the KOFAX at:
3 Jenner
Irvine, CA 92618
Attn: Manager, Contracts Administration
36. ASSIGNMENT
Neither this Agreement nor any of the rights and obligations arising
from it may be assigned or transferred in whole or in part to any third
party without the prior written consent of the other party and any
attempted assignment in violation of this Section shall be void.
Notwithstanding the aforementioned, FCPA may assign this Agreement to
its subsidiary or parent companies without prior notice to KOFAX and
either party may assign this Agreement in connection with the sale of
the business to which this Agreement relates. However, FCPA shall
provide notice of such assignment to KOFAX within thirty (30) days after
assignment.
37. RELATIONSHIP
This Agreement does not make either party the employee, agent, joint
venture, partner or legal representative of the other for any purpose
whatsoever. In fulfilling its obligations under this Agreement, each
party shall be deemed to be an independent contractor.
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38. WAIVER
No failure by either party to assert any right hereunder shall be deemed
to be a waiver of such right in the event of the continuation or
repetition of the circumstances giving rise to such right. The exercise
of any right or remedy by either party shall not be deemed a waiver of
any other right or remedy granted under this Agreement or available at
law.
39. AMENDMENT
This Agreement may not be amended, except by written agreement signed by
both parties.
40. SURVIVAL
(a) Even when this Agreement is terminated, cancelled or expires,
any individual contract according to this Agreement of which the
fulfillment date is beyond the termination, cancellation or
expiration date shall survive this Agreement until the date of
its final fulfillment.
(b) The rights and obligations of the parties hereto accrued at the
time of termination, cancellation or expiration of this
Agreement and under Sections 12, 14, 15, 18, 20, 23, 24, 25, 26,
27, 30, 34, 41, 42 and 43 shall survive any termination,
cancellation or expiration of this Agreement.
41. RIGHTS UPON TERMINATION OF AGREEMENT
The parties recognize that termination of this Agreement in accordance
with its terms or its failure to be renewed or extended may result in
loss or damage to either party but hereby expressly agree that neither
party shall be liable to the other by reason of any loss of damage
resulting from such termination of this Agreement by the other or the
failure of the Agreement to be renewed or extended (including, without
limitation, any loss of prospective profits or any damage occasioned by
loss of goodwill) or by reason of any expenditures, investments, leases
or commitments made in anticipation of the continuance of this
Agreement. The foregoing, however, shall not in any way relieve either
party from liability to the other for damages arising out of any
violation or breach of this Agreement.
42. LIMITATION OF LIABILITY
EXCEPT AS STATED HEREIN, KOFAX DISCLAIMS ALL OTHER WARRANTIES, EXPRESS
OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE. KOFAX SHALL NOT BE LIABLE FOR
INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES RESULTING FROM ANY USE,
LEASE OR SALE OF THE PRODUCTS BY FCPA.
EXCEPT AS EXPRESSLY PROVIDED HEREIN, IN NO EVENT SHALL EITHER PARTY BE
LIABLE FOR INDIRECT, INCIDENTAL, PUNITIVE, SPECIAL OR
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<PAGE> 19
CONSEQUENTIAL DAMAGES ARISING IN CONNECTION WITH THIS AGREEMENT, ITS
NEGOTIATION, FORMATION, BREACH, EXPIRATION OR TERMINATION.
43. DISPUTE RESOLUTION
Any controversy arising out of or relating to this Agreement, any
modifications or extension hereof, or any Order, sale or performance
hereunder, including any claim for damages or rescission, or both, shall
be settled, by three arbitrators in Santa Clara County, California, if
instituted by KOFAX, or Orange County, California if initiated by FCPA
in accordance with the Commercial Rules then obtaining of the American
Arbitration Association. Judgment on the award may be entered in any
Court of competent jurisdiction. The parties consent that any process or
notice of motion or other application to either of said courts, and any
paper in connection with arbitration, may be served by certified mail,
return receipt requested, or by personal service or in such other manner
as may be permissible under the rules of the applicable court or
arbitration tribunal, provided a reasonable time for appearance is
allowed. The parties further agree that arbitration proceedings must be
instituted within eighteen (18) months after the claimed breach
occurred, and that the failure to institute arbitration proceedings
within such period shall constitute an absolute bar to the institution
of any proceedings and a waiver of all such claims. The prevailing party
in any arbitration or other legal proceedings shall be entitled, in
addition to any other rights or remedies it may have, to reimbursement
for its expenses incurred thereby and in any subsequent enforcement of a
judgment including court and arbitration costs, reasonable attorneys'
fees, arbitrator's fees, and witness fees including those of expert
witnesses.
44. ENTIRE AGREEMENT
This Agreement, including the attachments, constitutes the entire
agreement of the parties with respect to the subject matter hereof, and
supersedes all previous agreements by and between the parties, as well
as all proposals, oral or written, and all negotiations, conversation,
and understandings heretofore had between the parties related to the
subject matter of the Agreement. This Agreement supersedes any terms and
conditions stated in any Order, acceptance or confirmation of Order to
the extent they are inconsistent with this Agreement or purport to
create obligations or rights additional to those set forth in this
Agreement.
45. HEADING
Headings used in this Agreement are for convenience only and shall not
be used in interpreting the provisions of this Agreement.
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<PAGE> 20
IN WITNESS WHEREOF, this Agreement has been executed by duly authorized
representatives of both parties hereto as of the date first written above.
KOFAX IMAGE PRODUCTS, INC. FUJITSU COMPUTER PRODUCTS OF AMERICA, INC.
Signature: /s/ RICHARD M. MURPHY Signature: /s/ K. T. PARKER
------------------------ -----------------------------
Name: Richard M. Murphy Name: KEVIN T. PARKER
----------------------------- ----------------------------------
Title: V.P. SALES Title: V.P. FINANCE AND ADMINISTRATION
-------------------------- ---------------------------------
Date: 2/5/99 Date: 2/1/99
----------------------------- -----------------------------------
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