EXHIBIT 10.1
COOPERATION AGREEMENT
November 21, 1997
Objective
---------
Quintek Electronics, Inc. (QEI) and a new corporation referred to as Quintek
AB (QAB) (pending registration) will make a cooperation agreement with Bofors
AB, Missiles Production (Bofors) in order to manufacture the Quintek 4305
unit.
QAB will be considered a separate corporate entity with its own goals,
objectives, Board of Directors and executive management staff.
QEI, Bofors and QAB will work together as a team to manufacture and distribute
the 4300 system on a worldwide scale. The following defines the roles of the
three companies:
Bofors ....... 4305 engineering, development and manufacturing
QAB .. ....... 4300 exclusive distribution in the Nordic countries, 4300
dealer support in Europe, and a vehicle for QEI/Bofors
transactions
QEI ........... 4300 engineering, development, distribution and dealer support
in all countries except Europe.
QEI will provide QAB with manufacturing rights. QAB will in their turn
subcontract the manufacturing rights to Bofors to produce the 4305 Aperture
Card Plotter at their facilities in Karlskoga, Sweden. QEI will provide
documentation and tooling required to facilitate production of the 4305 in a
"build-to-print" fashion. Additional principals on roles and cashflow are
provided in Attachment 1.
Cooperation relationships
-------------------------
Build Documentation
A full set of documentation will be provided from QEI to QAB in order to allow
Bofors to establish a 4305 production capability. This documentation will
include, but not necessarily be limited to:
- Mechanical Drawings
- Schematics
- Bill of Materials
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- Assembly Instructions
- Vendor Listing
- Test Procedures
Technology Transfer
QEI, QAB and Bofors will provide engineering and production staff to jointly
execute a 4305 Technology Transfer from QEI to Bofors. The activities
associated with this effort include, but are not limited to:
- Documentation Audit and Validation
- Training in the design concepts, technologies and manufacturing "Lessons
Learned".
- Formal Transfer of Design Cognizance
- Vendor Evaluation and Selection
- Line Setup
- Pilot Build (Unit and Piece Parts)
- Configuration Management and Quality Control Considerations.
QAB will reimburse QEI for expenses incurred by QEI during the transfer of
technology. The scope of activities will be defined in a special agreement.
Product Enhancements
Future enhancements may be developed by QEI, QAB or Bofors. Enhancements
developed by QEI will be performed at the expense of QEI and submitted to QAB
which in their turn submit to Bofors for introduction into the production
line. Enhancements developed by QAB or Bofors will be handled in the following
way:
1) QEI will submit a proposed product enhancement to QAB and Bofors
2) QEI, Bofors and QAB will mutually agree to proceeding with the enhancement
3) QAB will seek government funding for subsidizing development of the
enhancement
4) QEI and QAB will share all non-subsidized development cost as mutually
agreed
Product Modernization
In some cases it may be necessary to redesign 4305 subassemblies in order to
replace obsolete components (e.g. IC chips which are no longer available).
Bofors will perform these tasks and expend up to $10K per year in support of
modernization. Modernization efforts exceeding $10K per year will be addressed
on a case by case basis. All modernization efforts will be approved by QEI,
Bofors and QAB prior to expending funds.
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Term Considerations
-------------------
Use of Trade Mark
Bofors will apply their Logos, Trademarks and Service Marks on all production
units and major modules fabricated by Bofors. The Bofors marks will be placed
on a tag (located on the back of the 4305 unit) which designates the
manufacturing source and location. The exact wording to be agreed upon.
Product Liability
The following parties will be responsible for the associated liabilities:
Workmanship ............................... Bofors
Design .................................... QEI
Functionality ............................. QEI
Customer liability . ...................... Selling Agent
Product Certification
QEI/QAB will be responsible for all certifications required by authorities in
respective countries where marketing will be performed.
Warranty
Bofors, as subcontractor, will give a [Build To Print] warranty for 12 months
for workmanship and components purchased from companies other than QEI. QEI
will provide a 12 month warranty on components provided to Bofors.
Retention of Rights
QEI reserves the right to access and maintain all current and future
documentation used to manufacture and maintain the 4305 unit. In addition, QEI
reserves the right to fabricate the complete 4305 unit until such time as QAB
at Bofors has a subcontracted production line and has successfully delivered
five (5) 4305 units and five (5) recommended spare kits. Thereafter, QEI
reserves the right to perform final assembly of the 4305 unit, using major
modules fabricated at Bofors, for sale to US Companies and the US Government
as "Assembled In America" or when otherwise required.
Milestones
Program milestones will be established to coordinate all aspects of the 4300
program, including: 1) a timely transfer of technology, 2) a pilot production
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run, 3) full scale manufacturing infrastructure, 4) production schedule, and
5) sales and marketing efforts related to launching the new 4300 system. Prime
importance will be placed on matching production output with sales
projections.
Cost-of-Goods
Cost-of-Goods pricing to QAB will be placed in a separate addendum to this
agreement and constituting an integral part of this agreement. This addendum
will be reviewed every six months starting six months from the date of this
agreement.
Unit Acceptance
As an integral part of the quality control program, unit and piece-part test
procedures will be mutually established for production acceptance testing.
Patent Protection
For mutual protection, QAB will obtain technology protection, equivalent to US
patent protection, via the European patent office. Copies of existing 4305
patents will be provided by QEI for reference. QEI and QAB will jointly apply
for patents related to 4300 technology developed by either or both companies.
Rights and other details relating to patented technology will be defined in a
special agreement.
Duration
The Agreement will be in effect for three (3) years. Thereafter, the agreement
will be automatically renewed annually, if not terminated by either party 3
months in advance of the respective year, under the same terms and conditions,
upon mutual agreement by both parties.
Unit Commitments
To start, QEI will place a block order for five (5) 4305 punch units with QAB.
QAB will commit to manufacture five (5) units using piece-part components
purchased from QEI/MTC (or other suppliers for parts not readily available
from QEI) and in turn transfer this commitment to Bofors. QEI/QAB will take
delivery on the units and pay for the units within six (6) months after
receipt of order.
Thereafter, units will be ordered on an "as required" basis and delivered
within 45 days after receipt of order. Upon shipment, QAB will be invoiced
under NET 45 day terms.
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QEI will have the "first right of refusal" to sell component parts to Bofors
for the 4305 unit. The number of units and delivery schedule will be defined
by mutual agreement between QEI, QAB and Bofors.
Support
QEI will provide or arrange all sales support (e.g. dealer motivation, dealer
sales training, dealer maintenance training, system installation, operator
training, documentation, system integration, software support, warranty
support, extended maintenance support, etc.) in the United States and Canada.
QAB will provide or arrange for all sales support in Europe with assistance
from QEI.
Marketing and Sales Distribution
--------------------------------
Marketing and Sales Rights
Under this agreement with QEI, QAB shall receive exclusive rights to
distribute the 4300 system in the Nordic Countries. QEI shall retain rights to
distribute the 4300 system in all other countries.
Market Pricing
The units fabricated by Bofors will be marketed and sold by QEI and QAB
through their distribution channels. The selling price will be established by
QEI and QAB.
Trademarks
Bofors will provide QAB with the rights to identify the Bofors manufactured
units and spare kits as "Bofors" made.
Honoring of Purchase Orders
All purchase orders to QAB subsequently transferred to Bofors will be placed
by: 1) QEI or, 2) Users/dealers within the Nordic countries.
Signatures
This is a formal agreement to be used for planning the cooperation and
establishing additional detailed agreements. The undersigned agree to the
terms and conditions listed.
DATE: November 21, 1997 PLACE: Karlskoga, Sweden
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______________________________________________________
Gerhard Svensson
Bofors AB, Missiles Production
______________________________________________________
Christer Karstrom
Quintek AB (pending registration)
_______________________________________________________
Thomas W. Sims
Quintek Electronics, Inc.
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ATTACHMENT 1
ESTIMATED CASH FLOW SCENARIOS
ASSUMPTIONS
-----------
- COST OF GOODS (COG) HAS BEEN SET AT $13K (ACTUAL COG MAY VARY
IN ACCORDANCE WITH COST OF MATERIALS AND OTHER FACTORS)
- RETAIL PRICE FOR BASIC 4305 IN USA = $45K
- RETAIL PRICE FOR BASIC 4305 IN EUROPE = $50K
- DEALER DISCOUNTS = 40% (THIS IS ONLY AN EXAMPLE, DEALER
DISCOUNTS MAY VARY FROM 25% - 40%)
DIRECT SALE (NORDIC COUNTRIES)
------------------------------
USER >$50> QAB >$13K> BOFORS
QAB >$5K> QEI> $3K> MTC
DEALER SALE (NORDIC COUNTRIES)
------------------------------
USER >$50> DEALER >$30> QAB >$13K> BOFORS
QAB >$5K> QEI >$3K> MTC
QAB SERVICE BUREAU (SPECIAL HIGH SPEED EQUIPMENT)
-------------------------------------------------
QAB >$30K> QEI >$1.8K> MTC
DEALER SALE (EUROPE)
--------------------
USER >$50K> DEALER >$30K> QEI >$15K> QAB >$13K> BOFORS
QEI >$1.8K> MTC
DEALER SALE (USA)
-----------------
USER >$45K> DEALER >$27K> QEI >$15K> QAB >$13K> BOFORS
QEI >$1.7K> MTC
DIRECT SALE (USA)
-----------------
USER >$45K> QEI >$15K> QAB >$13K> BOFORS
QEI >$2.7K> MTC
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