<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 30, 1996.
REGISTRATION NO. 333-14043
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
ACCENT COLOR SCIENCES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
CONNECTICUT 3577 06-1380314
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
ORGANIZATION)
800 CONNECTICUT BOULEVARD
EAST HARTFORD, CONNECTICUT 06108
(860) 610-4000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
NORMAN L. MILLIARD
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ACCENT COLOR SCIENCES, INC.
800 CONNECTICUT BOULEVARD
EAST HARTFORD, CONNECTICUT 06108
(860) 610-4000
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
WILLARD F. PINNEY, JR., ESQ. MARK H. BURNETT, ESQ.
MURTHA, CULLINA, RICHTER AND PINNEY TESTA, HURWITZ & THIBEAULT, LLP
CITYPLACE I HIGH STREET TOWER
185 ASYLUM STREET 125 HIGH STREET
HARTFORD, CONNECTICUT 06103-3469 BOSTON, MASSACHUSSETTS 02110
(860) 240-6000 (617) 248-7000
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an Offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same Offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same Offering. [_]
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<CAPTION>
AMOUNT
----------
<S> <C>
Registration Fees--Securities and Exchange Commission............... $13,086.21
Filing Fee--National Association of Securities Dealers.............. 4,295
Transfer Agent Fees................................................. 10,000*
Cost of Printing and Engraving...................................... 150,000*
Legal Fees and Expenses............................................. 300,000*
Accounting Fees and Expenses........................................ 250,000*
Blue Sky Fees and Expenses.......................................... 30,000*
Miscellaneous....................................................... 42,618.79
----------
TOTAL............................................................. $ 800,000
==========
</TABLE>
*Estimated.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is a Connecticut corporation. Section 33-320a of the Connecticut
Stock Corporation Act ("Section 33-320a") provides that a corporation shall
indemnify any director or officer of the corporation against expenses
(including judgments, fines, penalties and amounts paid in settlement)
incurred by him in connection with any action, suit or proceeding other than
an action by or in the right of the corporation in which he is made or is
threatened to be made a party by reason of having been a director or officer
of the corporation, subject to certain limitations.
For example, the corporation shall not so indemnify any person made a party
to any proceeding by reason of the fact that he, or the person whose legal
representative he is, is or was a shareholder, director, officer, employee or
agent of the corporation, unless (1) such person, and the person whose legal
representative he is, was successful on the merits in the defense of any
proceeding referred to in Section 33-320a, or (2) it shall be concluded as
provided in subsection (d) of Section 33-320a that such person, and the person
whose legal representative he is, acted in good faith and in a manner he
reasonably believed to be in the best interests of the corporation or, in the
case of a person serving as a fiduciary of an employee benefit plan or trust,
either in the best interests of the corporation or in the best interest of the
participants and beneficiaries of such employee benefit plan or trust and
consistent with the provisions of such employee benefit plan or trust and,
with respect to any criminal action or proceeding, that he had no reasonable
cause to believe his conduct was unlawful, or (3) the court, on application as
provided in subsection (e) of Section 33-320a shall have determined that in
view of all the circumstances such person is fairly and reasonably entitled to
be indemnified and then for such amount as the court shall determine; except
that in connection with an alleged claim based upon his purchase or sale of
securities of the corporation or of another enterprise, which he serves or
served at the request of the corporation, the corporation shall only indemnify
such person after the court shall have determined on application as provided
in subsection (e) of Section 33-320a, that in view of all the circumstances
such person is fairly and reasonably entitled to be indemnified, and then for
such amount as the court shall determine. The termination of any proceeding by
judgment, order settlement, conviction or upon a plea of nolo contendere or
its equivalent shall not, of itself create a presumption that the person did
not act in good faith or in a manner which he did not reasonably believe to be
in the best interests of the corporation of the participants and beneficiaries
of such employee benefit plan or trust and consistent with the provisions of
such employee benefit plan or trust, or, with respect to any criminal action
or proceeding that he had reasonable cause to believe that this conduct was
unlawful.
Except as otherwise provided in Section 33-320a, a corporation shall
indemnify any person made a party to any proceeding, by or in the right of the
corporation, to procure a judgment in its favor by reason of the fact that he,
or the person whose legal representative he is, is or was a shareholder,
director, officer, employee or agent of the corporation, or an eligible
outside party, against reasonable expenses actually incurred by him in
connection
II-1
<PAGE>
with such proceeding in relation to matters as to which such person, or the
person whose legal representative he is, is finally adjudged not to have
breached his duty to the corporation, or where the court, on application as
provided in subsection (e) of Section 33-320a shall have determined that in
view of all the circumstances such person is fairly and reasonably entitled to
be indemnified, and that for such amounts the court shall determine. The
corporation shall not so indemnify any such person for amounts paid to the
corporation, to a plaintiff or to counsel for a plaintiff in settling or
otherwise disposing of a proceeding, with or without court approval; or for
expenses incurred in defending a proceeding which is settled or otherwise
disposed of without court approval.
The Certificate of Incorporation of the Company includes a provision
limiting the personal liability of a director to the Company or its
shareholders for monetary damages for breach of duty as a director, to an
amount equal to the amount of compensation received by the Director for
serving the Company during the calendar year in which the violation occurred,
subject to a number of exceptions, including violations involving a knowing
and culpable violation of law, a breach of duty which enables a director or an
associate to receive an improper personal gain, conduct showing a lack of good
faith and conscious disregard of duty to the Company, a sustained and
unexcused pattern of inattention, or the approval of an illegal distribution
of assets of the Company to its shareholders. An associate of a director, in
terms of improper personal gains, is defined as (A) any corporation or
organization of which a Company director is an officer or partner or is,
directly or indirectly, the beneficial owner of ten percent or more of any
class of voting stock, (B) any trust or other estate in which a Company
director has at least ten percent beneficial interest or as to which a Company
director serves as trustee or in a similar fiduciary capacity and (C) any
relative or spouse of a Company director, or any relative of such spouse who
has the same name as the Company director. In addition, the Company also
maintains a directors' and officers' insurance and reimbursement policy.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Described below is information regarding all unregistered securities of the
Company sold by the Company within the last three years.
(a) In December 1993, prior to the commencement of its operations, the
Company issued 300 shares of its original Common Stock (now 405,000 shares of
Common Stock) to three individuals who participated in the organization of the
Company for aggregate consideration of $300.
(b) In January 1994, the Company issued $200,030 of 8.00% Convertible
Subordinated Debentures (the "Series I Debentures") to five individuals, four
of whom were directors of the Company. The Series I Debentures bore an
interest rate of 8% (excluding debt discount), compounded annually, and, in
September 1994, were converted into shares of the Company's Series A
Convertible Voting Preferred Stock ("Series A Preferred Stock") at the rate of
one share of Series A Preferred Stock for each $5 principal amount of Series I
Debentures.
(c) In August 1994, the Company issued an additional $160,000 of 8.00%
Convertible Subordinated Debentures (the "Series II Debentures") to two
individuals, under the same terms as the Series I Debentures. In September
1994, all Series II Debentures were also converted into shares of Series A
Preferred Stock at the rate of one share of Series A Preferred Stock for each
$5 principal amount of Series II Debentures.
(d) In February 1995, the Company completed an offering of Series A
Preferred Stock resulting in the issuance of 250,000 shares of Series A
Preferred Stock for aggregate gross proceeds of $1,250,000 or $5 per share.
Knickerbocker Securities, Inc. served as placement agent with respect to this
offering and received commissions in the amount of $105,705 of such gross
proceeds and warrants to purchase an aggregate of 23,500 shares of Series A
Preferred Stock at an exercise price of $5.50 per share.
In connection with the offering described in the within Prospectus, all
outstanding shares of Series A Preferred Stock will be automatically converted
into shares of Common Stock at the rate of 4.2 shares of Common Stock for each
share of Series A Preferred Stock upon the effective date of this Registration
Statement and such warrants to purchase shares of Series A Preferred Stock
will become warrants to purchase an aggregate of 98,700 shares of Common Stock
at a price of $1.31 per share.
II-2
<PAGE>
(e) In October 1995, the Company completed an offering of Series III
Debentures maturing in two years with interest at the annual rate of 8.00%.
The Series III Debentures are convertible into Common Stock at the rate of
$3.67 per share, together with accrued interest thereon, and all such
Debentures and accrued interest thereon will be converted automatically into
Common Stock at such rate upon the closing of the offering described in the
within Prospectus. An aggregate of approximately $1.9 million in principal
amount of Series III Debentures were sold through Knickerbocker Securities,
Inc., as placement agent, which received commissions in the amount of $275,000
and a warrant to purchase 15,000 shares of the Company's Common Stock at a
price of $3.67 per share. Each purchaser of a Series III Debenture also
received a warrant to purchase a number of shares of Common Stock equal to the
principal amount of such Debenture divided by $3.67, subject to adjustment.
Such warrants are exercisable for a period of two years, however, in order to
induce earlier exercise, the Company offered the holders of such warrants the
opportunity to exercise their warrants at a reduced price of $2.33 per share
for a limited period in December 1995, and warrants were exercised in response
to such offer with respect to 297,840 shares of Common Stock for proceeds to
the Company in the aggregate amount of $694,960.
(f) In February 1996, the Company issued 8.00% Subordinated Debentures (the
"Series IV Debentures") to two individuals. The Series IV Debentures had a
term of six months with interest at the annual rate of 8.00% per annum
(excluding debt discount) and were repaid in August 1996. Each holder of
Series IV Debentures also received a warrant to purchase shares of Common
Stock in an amount equal to the face value of his Series IV Debenture divided
by $3.67, subject to adjustment at an exercise price per share of $3.67. The
Company received gross proceeds from the sale of Series IV Debentures in the
amount of $405,000.
(g) In March 1996, the Company entered into a loan facility with Xerox
Corporation pursuant to which Xerox may lend the Company up to $3,000,000. The
outstanding principal balance of such loan as of the date of this Registration
Statement is $2,350,000. In connection with this facility, Xerox Corporation
received a warrant to purchase 375,000 shares of Common Stock at an exercise
price of $3.67 per share, subject to adjustment, during a period of 3 years.
(h) In June 1996, the Company completed an offering of 2,625,000 shares of
Common Stock for gross proceeds of $10,500,000 or $4.00 per share.
Pennsylvania Merchant Group Ltd. served as placement agent with respect to
such offering and received commissions of $840,000. In addition, the Company
issued warrants to Pennsylvania Merchant Group Ltd. entitling it to purchase
131,250 shares of Common Stock for a period of five years at an exercise price
of $4.00 per share. The Company issued an additional warrant for 168,750
shares of its Common Stock to Pennsylvania Merchant Group Ltd. in relation to
the termination of these agreements in 1996.
(i) In October 1996, the Company completed an offering of discounted notes
in the aggregate principal amount of $3.45 million bearing interest at 8.70%
per annum (excluding debt discount) with warrants to purchase 45,000 shares of
Common Stock for gross proceeds of $3.0 million. Pennsylvania Merchant Group
Ltd., served as placement agent for this offering and received commissions of
$195,000.
(j) Pursuant to the Company's 1995 Stock Incentive Plan, options have been
issued to purchase an aggregate of 1,293,600 shares of Common Stock of the
Corporation at exercise prices ranging from $1.19 to $4.00 per share.
Exemption from registration pursuant to the registration requirements under
the Securities Act of 1933, as amended, with respect to each of the
transactions described in the preceding paragraphs is claimed pursuant to
Section 4(2) of the Securities Act of 1933, as amended and Regulation D and
Rule 701 promulgated thereunder. In addition, exemption with respect to the
offer and sale of certain Series I Debentures described in paragraph (a)
above, Series II Debentures described in paragraph (b) and Series IV
Debentures described in paragraph (f) above is claimed pursuant to Regulation
S under such Act.
II-3
<PAGE>
The Company is relying upon the following facts with respect to the
availability of such exemptions:
The transactions described in paragraphs (a) through (i) above involve the
issuance of securities to persons which the Company believed, in each case,
to be "accredited investors" as defined in Rule 501 of Regulation D under
the Securities Act of 1933, as amended. The transactions described in
paragraphs (a), (b) and (f) involved the issuance of debt securities, with
Common Stock purchase warrants, to directors of the Company and one other
person associated with one of the Company's directors. Such director and
his associate are non-US citizens, as certified to the Company and they
were the only participants in the transactions described in paragraphs (b)
and (f) above. The transactions described in paragraphs (c), (d) and (h)
above were conducted in accordance with Rule 506 of Regulation D under the
Securities Act of 1933, as amended. The transactions described in paragraph
(j) above involve full-time employees, non-employee directors and
consultants and advisors to the Company and were compensatory in nature.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The exhibits constituting part of this Registration Statement are as follows:
1* Form of Underwriting Agreement.
3.1, 4.1* Restated Certificate of Incorporation of the Company.
3.2, 4.2* Bylaws of the Company, as amended.
4.3** Specimen of Stock Certificate.
5* Opinion of Murtha, Cullina, Richter and Pinney concerning legality of
shares being registered pursuant to this Registration Statement.
10.1 Product Development and Distribution Agreement dated February 16,
1996 between the Company and Xerox Corporation.
10.2 Letter of Understanding dated July 2, 1996 between the Company and
Xerox Corporation supplementing the Product Development and
Distribution Agreement.
10.3* Amendment to Product Development and Distribution Agreement between
the Company and Xerox Corporation dated February 29, 1996.
10.4* Loan Agreement Promissory Note dated February 29, 1996 between the
Company and Xerox Corporation.
10.5 Product Purchase Agreement dated April 16, 1996 between the Company
and International Business Machines Corporation.
10.6 Letter Agreement supplementing Product Purchase Agreement between
the company and International Business Machines Corporation dated
February 23, 1996.
10.7 OEM Supply Agreement dated January 8, 1996 between the Company and
Spectra, Inc.
10.8* Amendment No. 1 to the OEM Supply Agreement dated July 12, 1996
between the Company and Spectra, Inc.
10.9* Lease Agreement dated February 16, 1996 between the Company John
Hancock Mutual Life Insurance Company.
10.10* Memorandum of Understanding dated October 10, 1996 between the
Company and Oce van der Grinten, NV.
10.11* Accent Color Sciences, Inc. 1995 Stock Incentive Plan.
10.12* Employment Agreement dated December 14, 1993 between the Company and
Norman L. Milliard.
II-4
<PAGE>
10.13* Amendment No. 1 to Employment Agreement between the Company and Norman
L. Milliard dated as of January 1, 1995.
10.14* Employment Agreement dated December 14, 1993 between the Company and
Richard J. Coburn.
10.15* Consulting Agreement dated August 2, 1994 between the Company and
Peter Teufel.
10.16* Consulting Agreement dated May 3, 1996 between the Company and Raymond
N. Smith.
10.17* Consulting Agreement Dated August 2, 1994 between the Company and
Klaus Werding.
10.18* Letter Agreement dated February 28, 1996 between the Company and
Pennsylvania Merchant Group Ltd.
10.19* Letter Agreement dated May 6, 1996 between the Company and
Pennsylvania Merchant Group Ltd.
10.20* Termination Agreement dated August 20, 1996 between the Company and
Pennsylvania Merchant Group Ltd.
10.21* Termination Agreement dated March 29, 1996 between the Company and
Knickerbocker Securities, Inc.
10.22* Form of nondisclosure agreement between the Company and its employees.
10.23* Form of Registration Rights Agreement Relating to sale of Preferred
Stock of the Company.
10.24* Form of Registration Rights Agreement Relating to sale of Series III
Debentures of the Company.
10.25* Form of registration Rights Agreement Relating to warrants issued in
connection with Series III Debentures of the Company.
10.26* Form of Registration Rights Agreement Relating to Warrants issued in
connection with Series IV Debentures of the Company.
10.27 Form of Registration Rights Agreement Relating to sale of Common Stock
of the Company.
10.28* Registration Rights Agreement Relating to Warrants issued by the
Company to Xerox Corporation.
10.29 Form of Registration Rights Agreement Relating to Warrants issued
pursuant to sale of Interim Notes.
11* Statement re: computation of per share earnings.
15* Letters re: unaudited interim financial information.
23.1* Consent of Price Waterhouse LLP.
23.2* The consent of Messrs. Murtha, Cullina, Richter and Pinney, counsel
for the Company, to the reference to their firm in the Prospectus
forming a part of this Registration Statement and to the use of their
opinion as Exhibit 5 to this Registration Statement is included in
said opinion.
24* Power of Attorney pursuant to which this Registration Statement has
been signed on behalf of certain Directors.
27* Financial Data Schedule
- --------
*Previously filed
** To be filed by amendment
ITEM 17. UNDERTAKINGS.
The Undersigned Registrant hereby undertakes to provide to the Underwriter
at the closing specified in the underwriting agreements certificates in such
denominations and registered in such names as required by the Underwriter to
permit prompt delivery to each purchaser.
II-5
<PAGE>
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to Directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a Director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such Director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-6
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 1 TO ITS REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED IN THE CITY
OF EAST HARTFORD, STATE OF CONNECTICUT ON THE 23RD DAY OF OCTOBER 1996.
Accent Color Sciences, Inc.
(Registrant)
By: /s/ Norman L. Milliard
---------------------------------
NORMAN L. MILLIARD,
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Norman L. Milliard President, Chief October 23, 1996
- ------------------------------------- Executive Officer
NORMAN L. MILLIARD (Principal
Executive Officer)
and Director
/s/ Stephen K. Henn Vice President, October 23, 1996
- ------------------------------------- Chief Financial
STEPHEN K. HENN Officer and
Treasurer
(Principal
Financial and
Accounting Officer)
* Director October 23, 1996
- -------------------------------------
RICHARD J. COBURN
* Director
- -------------------------------------
RICHARD HODGSON
* Director
- -------------------------------------
WILLARD F. PINNEY, JR.
* Director
- -------------------------------------
RAYMOND N. SMITH
* Director
- -------------------------------------
ROBERT H. STEELE
* Director
- -------------------------------------
PETER TEUFEL
*/s/ Norman L. Milliard October 23, 1996
- -------------------------------------
NORMAN L. MILLIARD, ATTORNEY-IN-FACT
</TABLE>
II-7
<PAGE>
ACCENT COLOR SCIENCES, INC.
(A DEVELOPMENT STAGE COMPANY)
CALCULATION OF PRO FORMA EARNINGS PER SHARE
<TABLE>
<CAPTION>
FOR THE
FOR THE SIX MONTH
YEAR ENDED PERIOD ENDED
DECEMBER 31, 1995 JUNE 30, 1996
----------------- -------------
<S> <C> <C>
Pro forma net loss (4)........................ $(4,083,000) $(4,977,000)
Calculation of pro forma weighted average com-
mon shares outstanding (1):
Common Stock................................ 1,813,320 2,808,144
Cheap Stock (2)............................. 2,887,722 2,281,443
Conversion of Series A Preferred Stock...... 1,362,312 1,362,312
Conversion of Series III Debentures, includ-
ing accrued interest (3)................... 564,958 586,087
----------- -----------
Total..................................... 6,628,312 7,037,986
=========== ===========
Pro forma net loss per share................ $ (.62) $ (.71)
=========== ===========
</TABLE>
- --------
(1) Common share equivalents (stock options and warrants) are excluded from
the computation as their effect is anti-dilutive, except that, pursuant to
Securities and Exchange Common Staff Accounting Bulletin No. 83, common
stock options and warrants issued and common stock and convertible debt
and convertible preferred stock sold in the twelve months preceding the
Offering date have been included in the calculation as if outstanding for
all periods presented using the treasury stock method and the assumed
public offering price of $10.00 per share.
(2) See attached calculation.
(3) Included as if the conversion of the Series III Debentures occurred at the
beginning of the period, including shares issued for settlement of accrued
interest.
(4) Adjusted to give effect to the conversion of Series III Debentures at the
beginning of the period, as if the interest, the amortization of the
discount and the amortization of other financing expenses were not
incurred.
<PAGE>
ACCENT COLOR SCIENCES, INC.
(A DEVELOPMENT STAGE COMPANY)
CALCULATION OF CHEAP STOCK
<TABLE>
<CAPTION>
SHARES PRICE TOTAL
--------- ----- -----------
<S> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1995
Common Stock purchased--private placement.......... 2,625,000 $4.00 $10,500,000
Options Issued..................................... 605,250 3.67 2,219,250
Options Issued..................................... 647,850 4.00 2,591,400
Warrants issued (net of exercised)................. 569,505 3.67 2,088,185
Warrants issued.................................... 75,000 10.00 750,000
Placement Agent Warrants Issued.................... 300,000 4.00 1,200,000
--------- -----------
Total............................................ 4,822,605 $19,348,835
========= ===========
Initial public offering price...................... $ 10
===========
Shares assumed repurchased......................... 1,934,883
Less: shares assumed issued........................ 4,822,605
-----------
Cheap stock........................................ 2,887,722
===========
SIX MONTHS ENDED JUNE 30, 1996
Common stock purchased--private placement.......... 1,911,696 $4.00 $ 7,646,784
Options issued..................................... 605,250 3.67 2,219,250
Options issued..................................... 647,850 4.00 2,591,400
Warrants issued (net of exercised)................. 287,985 3.67 1,055,945
Warrants issued.................................... 75,000 10.00 750,000
Placement Agent Warrants issued.................... 300,000 4.00 1,200,000
--------- -----------
3,827,781 $15,463,379
========= ===========
Initial public offering price...................... $ 10
-----------
Shares assumed repurchased......................... 1,546,338
Less: shares assumed issued........................ 3,827,781
-----------
Cheap stock........................................ 2,281,443
===========
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
----------- ----------- --------
<C> <S> <C>
1* Form of Underwriting Agreement.
Restated Certificate of Incorporation of the
3.1, 4.1* Registrant.
3.2, 4.2* By-laws of the Registrant, as amended.
Specimen certificates for shares of the Registrant's
4.3** Common Stock.
5* Opinion of Murtha, Cullina, Richter and Pinney.
10.1 Product Development and Distribution Agreement dated
February 16, 1996 between the Company and Xerox
Corporation.
10.2 Letter of Understanding dated July 2, 1996 between the
Company and Xerox Corporation supplementing the
Product Development and Distribution Agreement.
10.3* Amendment to Product Development and Distribution
Agreement between the Company and Xerox Corporation
dated February 29, 1996.
10.4* Loan Agreement and Promissory Note dated February 29,
1996 between the Company and Xerox Corporation.
10.5 Product Purchase Agreement dated April 16, 1996 between
the Company and International Business Machines
Corporation.
10.6 Letter Agreement supplementing Product Purchase
Agreement between the Company and International
Business Machines Corporation dated February 23, 1996.
10.7 OEM Supply Agreement dated January 8, 1996 between the
Company and Spectra, Inc.
10.8* Amendment No. 1 to the OEM Supply Agreement dated July
12, 1996 between the Company and Spectra, Inc.
10.9* Lease Agreement dated February 16, 1996 between the
Company and John Hancock Mutual Life Insurance
Company.
10.10* Memorandum of Understanding dated October 10, 1996
between the Company and Oce van der Grinten, NV.
10.11* Accent Color Sciences, Inc. 1995 Stock Incentive Plan.
10.12* Employment Agreement dated December 14, 1993 between
the Company and Norman L. Milliard.
10.13* Amendment No. 1 to Employment Agreement between the
Company and Norman L. Milliard dated as of January 1,
1995.
10.14* Employment Agreement dated December 14, 1993 between
the Company and Richard J. Coburn.
10.15* Consulting Agreement dated August 2, 1994 between the
Company and Peter Teufel.
10.16* Consulting Agreement dated May 3, 1996 between the
Company and Raymond N. Smith.
10.17* Consulting Agreement dated August 2, 1994 between the
Company and Klaus Werding.
</TABLE>
- --------
* Previously filed.
** To be filed by amendment.
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
----------- ----------- --------
<C> <S> <C>
10.18* Letter Agreement dated February 28, 1996 between the
Company and Pennsylvania Merchant Group Ltd.
10.19* Letter Agreement dated May 6, 1996 between the Company
and Pennsylvania Merchant Group Ltd.
10.20* Termination Agreement dated August 20, 1996 between the
Company and Pennsylvania Merchant Group Ltd.
10.21* Termination Agreement dated March 29, 1996 between the
Company and Knickerbocker Securities, Inc.
10.22* Form of nondisclosure agreement between the Company and
its employees.
10.23* Form of Registration Rights Agreement Relating to sale
of Preferred Stock of the Company.
10.24* Form of Registration Rights Agreement Relating to sale
of Series III Debentures of the Company.
10.25* Form of Registration Rights Agreement Relating to
warrants issued in connection with Series III
Debentures of the Company.
10.26* Form of Registration Rights Agreement Relating to
Warrants issued in connection with Series IV
Debentures of the Company.
10.27 Form of Registration Rights Agreement Relating to sale
of Common Stock of the Company.
10.28* Registration Rights Agreement Relating to Warrants
issued by the Company to Xerox Corporation.
10.29 Form of Registration Rights Agreement Relating to
Warrants issued pursuant to sale of notes.
23.1* Consent of Price Waterhouse LLP.
23.2* Consent of Murtha, Cullina, Richter and Pinney (see
Exhibit 5 above).
24* Power of Attorney pursuant to which this Registration
Statement has been signed on behalf of certain
Directors.
27* Financial Data Schedule.
</TABLE>
- --------
*Previously filed.
**To be filed by amendment.
<PAGE>
PRODUCT DEVELOPMENT AND DISTRIBUTION AGREEMENT
This Agreement is made and entered into between Accent Color Sciences Inc., a
corporation organized under the laws of the State of Connecticut, U. S. A., with
an office in East Hartford, Connecticut (hereinafter referred to as "ACS"), and
Xerox Corporation, a corporation organized under the laws of the State of New
York, U.S.A., with an office in El Segundo, California (hereinafter "Xerox") and
shall be effective as of the date the last signature is affixed hereto
("Effective Date") upon the terms and conditions set forth below.
I. DEFINITIONS
1.01 "ACS Preexisting Intellectual Property" shall mean any intellectual
property owned or licensed by ACS prior to the execution of this Agreement
which is not created or developed by ACS pursuant to this Agreement, and
which is used by ACS to create or develop, or is incorporated in or is a
part of, the Product.
1.02 "ACS 135 Spot Printer" shall mean the color spot printer which is to be
developed hereunder by ACS to be interoperable and compatible with the
Xerox 4890 and Xerox 4635 Printers, the Xerox Docutech 135 Production
Publishing System ("Docutech") and otherwise to conform to the
Specifications.
1.03 "Consumables" shall mean supplies which are consumed or used in connection
with the ACS 135 Spot Printer or other ACS Printers distributed by Xerox
hereunder.
1.04 "Day" shall mean, unless otherwise specified, a calendar day (as opposed to
a regular working day).
1.05 "Documentation" shall mean all written text including but not limited to
manuals, brochures, specifications and hardware or software descriptions,
in electronic, printed and/or camera ready form and related materials
customarily needed to use, provide service for, or otherwise support the
Products.
<PAGE>
1.06 "Mandatory Retrofit" shall mean a retrofit to the Products necessary to
restore the Products to conformity to Specifications, to render the
Products safe for use or repair, or have the Products comply with the
requirements of applicable law current as of the date the affected unit of
Products was delivered to Xerox/Xerox Affiliated Companies.
1.07 "Loan Agreement and Promissory Note" shall mean that certain agreement
between the parties hereto dated____________, 1996 and styled "Loan
Agreement and Promissory Note."
1.08 "Production Month" shall mean the calendar month in which production occurs
of the ACS 135 Spot Printer or other ACS Products subject to this
Agreement.
1.09 "Products" shall mean the ACS 135 Spot Printer and other ACS Products
subject to this Agreement which meet the Specifications, together with
Spares and Consumables therefor, and all modifications, improvements,
enhancements, additions, updates, releases and versions thereof.
1.10 "Regulatory Agency" shall mean any regulatory agency or other body,
governmental or private, including but not limited to agencies regulating
product safety, and/or electromagnetic emissions, the approval of which is
required by Xerox, the government of the United States or any political
subdivision thereof, or the European Union or any member state thereof,
prior to development, delivery or marketing of the Products in the United
States, Puerto Rico, the territories and possessions of the United States,
the EEC, and any other country fisted on Exhibit A hereto. Examples of
standards of which ACS shall be obligated to have the Products meet shall
include Underwriters Laboratory ("UL") and the Canadian Standards
Association ("CSA").
1.11 "Security Agreement" shall mean that certain agreement between the parties
dated ________, 1996 and styled the "Security Agreement"
1.12 "Specifications" shall mean the engineering, operational and/or functional
description of the Products as set forth in Exhibit A hereto, as the same
may be amended by mutual agreement of the parties.
<PAGE>
1.13 "Systemic Defect" shall mean a defect in the Products' materials and
workmanship which occurs in identical or substantially similar form or from
a substantially similar cause which occurs (i) in at least five per cent
(5%) of a field population of the ACS 135 Spot Printer or other model(s) of
ACS printers being distributed hereunder by Xerox or Xerox Affiliated
Companies provided the field population consists of at least one hundred-
fifty (150) units of the printer model at issue or (ii) in the event
subparagraph (i) of this section doesn't apply, such defect occurs in at
least seven units of the field population of the ACS 135 Spot Printer or
other model of ACS printer(s) being distributed hereunder by Xerox or Xerox
Affiliated Companies.
1.14 "Territory" shall mean the entire world.
1.15 "Xerox Affiliated Companies" shall mean Fuji Xerox Co., Ltd., Rank Xerox
Limited, Xerox Canada, Inc., any entity which is owned or controlled
jointly by Xerox Corporation and The Rank Organization PLC, and any entity
which is owned or controlled directly or indirectly, by any of the
foregoing, but shall not include Xerox.
1.16 "Agreement" shall mean this Agreement together with Exhibits A through
C which are attached hereto and made a part hereof.
II. ACS DEVELOPMENT WORK
2.01 (a) ACS shall, unless otherwise agreed in writing, at its sole expense use
all commercially reasonable efforts to develop the ACS 135 Spot Printer to
conform to the Specifications of Exhibit A and timely complete the
deliverables, and achieve the milestones and program schedule, set forth in
Exhibit B hereto. The Specifications with respect to enabling the ACS 135
Spot Printer to be interoperable and compatible with the Xerox 4635 and
4890 Printers must be finalized by February 15, 1996. The Specifications
with respect to enabling the ACS 135 Spot Printer to be interoperable and
compatible with the Docutech will be finalized as soon as practicable after
the Effective Date.
<PAGE>
(b) ACS shall provide Xerox with progress reports, in accordance with the
schedule set forth in Exhibit B hereto. Each such report shall
reflect/indicate:
i. Status of progress to current date/milestone;
ii. Short description of problems in meeting such milestones;
iii. Proposed recovery method to meet next milestone, if needed;
iv. Probability of meeting next milestone.
The parties agree to conduct regular program reviews as shown on the program
schedule to ensure their mutual satisfaction with the performance of the
development work. In addition, upon reasonable notice, the parties agree to
mutually agreeable times and locations to discuss and inspect the status of the
development work. The schedule for developing the ACS 135 Spot Printer to be
interoperable and compatible with the Docutech will be finalized as soon as
reasonably practicable after the Effective Date.
2.02 The parties will jointly develop in accordance with the milestones set
forth in Exhibit B a SCSI II interface specification which shall also form
part of the Specifications.
2.03 Xerox reserves the right to request in writing changes to the
Specifications at any time prior to delivery of the ACS 135 Spot Printer or
other Products to be developed hereunder by ACS. If ACS reasonably
determines that such changes are feasible, the parties will agree to such
changes in writing and ACS will develop the ACS 135 Spot Printer or other
products to be developed hereunder by ACS to conform to such modified
Specification and to be delivered in accordance with any modified
milestones. Xerox and ACS agree to negotiate in good faith an equitable
adjustment in Products prices or time schedule, as necessary, for all
changes to the Specification and ACS shall not be required to continue with
the development of the ACS 135 or other Products to be developed hereunder
by ACS until such adjustment is agreed to.
2.04 (a) ACS shall timely deliver to Xerox both the Alpha Software Development
units and up to ten (10) BO units for testing and acceptance by Xerox. The
Alpha Software Development unit shall be a unit sufficiently developed to
enable Xerox to ascertain if the ACS 135 Spot Printer or any other Products
to be developed hereunder win be capable of
<PAGE>
meeting the Specifications, and the manufacturing cost targets, although
such Alpha Software Development unit may not be fully functional or
manufactured with actual production tooling The BO units shall be completed
units with all required functionality and performance for final product
test purposes. ACS shall sell Xerox up to ten (10) of the initial BO units
of the ACS 135 Spot Printer or other printer to be developed hereunder by
ACS at a price of one hundred fifty thousand ($150,000) dollars per unit.
Delivery will be F.O.B. ACS' manufacturing facility. With respect to such
BO units Xerox will pay ACS fifty (50%) percent of the applicable purchase
price contemporaneously with Xerox' order for such units, fifty (50%)
percent upon delivery.
(b) ACS shall supply Xerox preliminary data on the On Going Maintenance Rate
("OGMR") and Mean Time To Repair ("MTTR") for the ACS 135 Spot Printer or
other printers distributed hereunder by Xerox/Xerox Affiliated Companies as
soon as practical 3 in their development cycle. Final OGMR and MT-FR data
shall be provided as soon as design maturity of such printers is
demonstrated but in no case later than thirty(30) days prior to general
availability of the printers. Such OGMR data shall include failure data on
all major subassemblies of such printers. Further, should any revisions or
modifications to such printers or component parts thereof affect the OGMR
or MTTR of such printers, ACS shall supply revised OGMR and MTTR data
within thirty (30) days of such revisions or modifications.
(c) In the event that a variance should occur such that the actual OGMR is
worse than the OGMR specified in Exhibit A , ACS will implement a
corrective action program at its sole expense acceptable to Xerox to
correct such variance. If the average OGMR for the ACS 135 Spot Printer or
other printers distributed hereunder by Xerox/Xerox Affiliated Companies
nonetheless remains worse than that specified in Exhibit A after such
corrective action is implemented., ACS agrees to implement a superior
corrective action program and repair all such printers failed and affected
Spares at no cost to Xerox. Should such corrective actions taken by ACS not
result in average OGMR's in accordance with the Specifications, ACS shall
replace all such printers with a printer that meets or exceeds the
Specifications, including OGMR'S, at no cost to Xerox.
2.05 After delivery by ACS of any deliverable for which testing for compliance
with the Specifications is feasible and reasonable, Xerox will test the
same
<PAGE>
and notify ACS in writing of either its approval or reasons for its
rejection of the deliverable due to its nonconformance to the
Specifications and/or its containing program errors or otherwise not
functioning properly as soon as reasonably practicable but in no event
later than thirty (30) days after commencement of such testing.
2.06 Following receipt by ACS of Xerox' written notice of rejection under
Section 2.05 hereof, ACS will develop within [*] a mutually agreeable
corrective action plan. If ACS subsequently delivers a corrected
deliverable to Xerox within said plan corrective period, Xerox will have up
to an additional [*] from receipt to reevaluate the corrected deliverable.
2.07 If, with respect to any particular ACS deliverable, ACS is unable due to
ACS' own fault to meet the agreed-upon Specifications and/or eliminate any
program errors and/or otherwise not provide a properly functioning
deliverable within the correction period set forth in Section 2.06 above,
or fails to meet any agreed upon milestone or date for delivery of a
deliverable then, in addition to any other rights Xerox may have hereunder
or under applicable law, Xerox may:
(a) extend the correction period by an amount of time as may be determined by
Xerox; or
(b) approve the deliverable with an equitable reduction in any Products'
purchase price as mutually determined by Xerox and ACS; or
(c) elect to complete or have completed on its behalf at Xerox' expense the
nonconforming deliverable and ACS shall give Xerox and Xerox Affiliated
Companies all reasonable and necessary cooperation with respect thereto at
ACS' expense including but not limited to (i) helping Xerox and Xerox
Affiliated Companies procure consumables, parts, components, or
subassemblies from ACS' vendors, (ii) granting Xerox and Xerox Affiliated
Companies a world-wide, royalty-free, non-exclusive, irrevocable right to
use, and sublicense, any ACS intellectual property, including know-how, and
related documentation, which is necessary for Xerox/Xerox Affiliated
Companies to complete or have completed such nonconforming deliverable; and
(iii) assist Xerox and Xerox Affiliated Companies to obtain any
[*] OMITTED INFORMATION SUBJECT TO PENDING CONFIDENTIAL TREATMENT REQUEST
<PAGE>
necessary licenses from third parties necessary for the completion of such
nonconforming deliverable. Provided, however, within thirty (30) days after
Xerox elects to exercise the rights granted to it in this subparagraph, it
shall meet with ACS and discuss in good faith the possibility of ACS
reacquiring the right to complete in whole or in part the deliverables due
under this Agreement. In the event Xerox employees or contractors create or
conceive of any ideas, discoveries, innovations, and inventions
("Improvements") in the course of completing the nonconforming deliverable,
Xerox will own such Improvement and will grant ACS a world-wide , non-
exclusive, royalty-free, irrevocable right to use such Improvements in
connection with manufacturing Products hereunder solely for Xerox and Xerox
Affiliated Companies; or
(d) terminate this agreement.
2.08 (a) Number of Persons Employed on Development Activities - At all times
----------------------------------------------------
during the development activities contemplated by this Agreement ACS shall
have at least ten (10) ACS full-time employees or contract workers whose
duties will principally relate to the development efforts hereunder.
(b) Conflicts - In the event there is any conflict between ACS achieving
its development obligations under this Agreement and any development or
other obligations respecting any other person, the former will take
priority.
(c) Xerox Exclusivity - While any amount of any loans by Xerox to ACS
-----------------
remain outstanding, and unless otherwise approved in writing by Xerox'
Business Program Manager(s) appointed under this Agreement, ACS (i) may not
engage in any product (hardware or software) development work alone or in
concert with one or more other persons (natural or otherwise) nor enter
into a binding agreement relating to such product development work, other
than with or for Xerox or Xerox Affiliate Companies, relating to rendering
the ACS 135 Spot Printer or any other current or future cut-sheet ACS
products interoperable or compatible with any printer which has a rated
speed of 30 PPM or greater or copier which has a rated speed of 50 CPM or
greater and (ii) may not enter into any legally binding arrangements or
agreements with any person, including IBM and Siemens, which arrangement or
agreement directly precludes or has the effect of precluding ACS from
developing for or distributing to Xerox or Xerox Affiliated
<PAGE>
Companies for resale an ACS Spot Printer or other printer which is
interoperable and compatible with Xerox' version of a web-fed printer with
a rated speed of 30 PPM or more.
2.09 (a) Improvements - Title to any Improvements created or conceived solely by
------------
employees of Xerox or those of ACS shall be owned solely by the party whose
employees solely created or conceived such Improvements.
(b) Pre-Existing ACS Intellectual Property - At all times title to pre-existing
--------------------------------------
ACS Intellectual Property resides with ACS and, unless expressly provided
herein, no licenses with respect thereto are granted by ACS to Xerox or Xerox
Affiliated Companies.
2.10 Escrow - Promptly after each portion thereof is completed, ACS shall place
------
with the Office of the General Counsel of Xerox, 800 Long Ridge Road,
Stamford, CT 06904, one complete set of any software source code developed
hereunder, related Documentation, and all diagrams, drawings, and
schematics ("Source Material") related to the ACS 135 Spot Printer and
other printers being developed hereunder for Xerox. The foregoing shall
not be made available to anyone outside Xerox' Office of the General
Counsel unless there is a breach of this Agreement by ACS and Xerox elects
to complete or have completed the development activities contemplated by
this Agreement or to the extent allowed under applicable law in the event
of ACS' bankruptcy or insolvency. The use of such Source Materials will be
subject to the agreement between the parties styled "Confidential
Disclosure Agreement" effective (date), ("Confidentiality Agreement"). ACS
shall promptly send Xerox on a monthly basis updates of such source code,
related Documentation, and all diagrams, drawings, and schematics for the
ACS 135 Spot Printer and other printers being developed hereunder for
Xerox. In ACS' presence, Xerox may inspect, test, and review, but not
copy, the escrowed materials at the time of deposit or within a reasonable
time thereafter to verify that ACS is meeting its escrow obligations
hereunder.
2.11 Product Quality Plan - ACS will develop, implement and provide to Xerox a
--------------------
manufacturing Quality Plan for the deliverables to be delivered by ACS
hereunder in accordance with End Item Quality Provisions (Xerox
<PAGE>
document "EIQP-3105-4"). Such Quality Plan shall define the controls and
operating systems required to assure that only defect free deliverables
will be delivered to Xerox. ACS will ensure that their suppliers will meet
the Xerox quality standards as set forth in the EIQP-3105-4. Xerox'
Material Quality Assurance Group or their authorized representatives shall
source verify au deliveries until ACS achieves Xerox' certification.
Existing ACS quality procedures which totally comprehend any quality plan
elements may be used to satisfy the plan and will become the basic
operating document for assuring compliance to Xerox' quality requirements.
2.12 Program Milestone Management - The parties agree that achievement of
----------------------------
certain key milestones, as set forth in Exhibit B, must be managed actively
to assure that the ACS deliverables hereunder meet Xerox' market
requirements. Both parties agree to apply diligent efforts to assure that
the progress of the program is kept on schedule. Both parties shall
appoint Business Program and Technical Program Manager(s) with respect to
this Agreement. The Business Program Manager(s) for Xerox will be Amitabh
Saran respecting development activities relating to the Xerox 4635 and 4890
and Larry Rourke respecting the development activities relating to the
Xerox Docutech 135 Production Publisher. The Technical Program Manager(s)
win be Steve Baumann respecting development activities relating to the
Xerox 4635 and 4890 and to be identified by 3/15/96 respecting the
development activities relating to the Xerox Docutech 135 Production
Publisher. The Business Program and Technical Program Manager for ACS win
respectively be Martyn R. Jones and Robert S. Rizza. If it is determined
by either party that the progress of key program milestones is insufficient
to assure that delivery schedule of conforming deliverables is maintained,
the parties' respective Technical Program Managers shall be empowered to
schedule a milestone exception review upon written notification to the
other party. Milestone exception reviews will be held at a mutually agreed
location within ten (10) working days of such written notification and will
be attended by the program team members that Xerox and ACS respectively
each select. The parties respective Business Program Managers will review
the problems and causes for delay in achieving the key milestones and
commit the necessary resources within their company to recover or minimize
the program delay.
Ill. AGENCY APPROVAL AND SAFETY
<PAGE>
3.01 Compliance - The Products shall comply with all applicable governmental
----------
laws, regulations and other safety requirements and governmental or other
agency certifications or approvals required for marketing of the Products
which are set forth in the Specifications.
IV. PURCHASE AND SALE
4.01 Purchase and Sale - Xerox and Xerox Affiliated Companies may purchase from
-----------------
ACS and ACS shall sell to Xerox and Xerox Affiliated Companies pursuant to
this Agreement, the Products as are listed in Exhibit C for resale and
servicing by Xerox, Xerox Affiliated Companies, and/or their respective
authorized resellers in the Territory.
4.02 Prices
------
(a) Prices for the initial version of Products shall be those set forth in
Exhibit C hereto. As of the Effective Date, Exhibit C reflects only ACS'
maximum initial prices to Xerox respecting the purchase of Products.
Exhibit C will be completed no later than March 15, 1996. Prices for
Products shall include the cost of packaging and packing which conform to
the agreed packaging specifications.
(b) Xerox may ask ACS for a downward price correction whenever, in
Xerox' considered opinion, the prices of the Products are, or have become,
so high compared to similar products marketed by third party competitors or
by Xerox or Xerox Affiliated Companies, such that Xerox or Xerox Affiliated
Companies are no longer in a position to compete normally in the
marketplace. ACS agrees to negotiate any such request in good faith with
Xerox, provided that until such time as agreement on any price decrease is
reached, the prices then in effect shall prevail.
(c) If ACS' costs of materials for Products unexpectedly increase and, on
a cumulative basis, increases the materials component of Products' unit
manufacturing cost by more than ten (10%) percent in any twelve month
<PAGE>
period ACS may increase Products prices to reflect one-half of such
unexpected increased cost of materials.
(d) In addition, either party may request a change in the price of
Products hereunder based upon changes in costs or market conditions then
prevailing, and the parties agree to negotiate such requested price change
in good faith, and until such time as an agreement on any changed price is
reached, the prices then in effect shall prevail.
(e) ACS shall make all commercially reasonable efforts to reduce year
over year its costs of manufacturing, selling, and delivering the Products
to Xerox and Xerox Affiliated Companies by at least eight (8%) percent.
ACS agrees to pass along to Xerox and Xerox Affiliated Companies one-half
of such cost reductions in the form of Products prices decreases.
(f) The applicable price for Products shall be the price in effect as of
the date an order for Products is submitted to ACS.
4.03 Trademarks of Products - Xerox intends to market the ACS 135 Spot Printer
----------------------
bearing the trademarks, trades dress and logos of Xerox and Xerox
Affiliated Companies, as appropriate. However, if doing so will cause the
date of the ACS 135 Spot Printer's initial availability for customer
deliveries to be significantly negatively impacted, Xerox will agree to
initially market the ACS 135 Spot Printer bearing ACS' trademarks, trade
dress, and logos.
4.04 Most Favored Nation Pricing
---------------------------
(a) ACS represents and warrants that the prices for the Products offered to
Xerox and Xerox Affiliated Companies will be no higher than those
offered to any other reseller of the Products [*].
(b) ACS agrees that to the extent the prices offered to Xerox/Xerox
[*] OMITTED INFORMATION SUBJECT TO PENDING CONFIDENTIAL TREATMENT REQUEST
<PAGE>
Affiliated Companies for Products or any other ACS products distributed
hereunder by Xerox/Xerox Affiliated Companies are higher than those offered
by ACS to any competitor of Xerox/Xerox Affiliated Companies respecting
other ACS products, including related spares and consumables, such price
difference will merely reflect any differing methods employed by ACS in
manufacturing, selling, or delivering such products for Xerox as compared
to such other resellers. In the event ACS is in breach of the foregoing
such lower prices will apply to Xerox/Xerox Affiliated Companies purchases
of Products from the date such lower prices were offered to such other
reseller by ACS.
4.05 Payment - Xerox and Xerox Affiliated Companies shall make payment in U.S.
-------
currency for all Products within thirty (30) days after the date of the
invoice. ACS shall issue an invoice to Xerox and Xerox Affiliated
Companies for Products promptly after the Products are delivered to Xerox'
carrier. Provided, however, ACS shall take no action respecting collection
of payment, other than utilizing the informal dispute mechanisms provided
hereunder, unless it fails to receive payment within sixty (60) days after
the date of its applicable invoice.
4.06 Delivery - All Products shall be delivered FOB ACS' facility in the United
--------
States. Unless otherwise agreed in writing, Xerox or Xerox Affiliated
Companies, as the case may be, shall arrange for transportation and
insurance during transit from the named delivery point, and in all cases
Xerox or Xerox Affiliated Companies, as the case may be, shall pay for such
transportation and insurance. Xerox or Xerox Affiliated Companies shall
also be responsible for payment of all customs and other duties and taxes
(except those taxes calculated or assessed on the income of ACS) together
with any documentation costs and for obtaining any import licenses that may
be required in the Territory.
4.07 Forecasts - Xerox shall, on a quarterly basis, submit to ACS a non-binding
----------
rolling forecast of Xerox and Xerox Affiliated Companies demand for
Products that are to be delivered within the twelve (12) month period
immediately succeeding the month in which the forecast is issued.
4.08 Purchase Orders - All Purchases of Products hereunder shall be made only
---------------
upon the issuance of written purchase orders by Xerox or Xerox Affiliated
<PAGE>
Companies. The purchase orders shall contain requests for specific
delivery dates for the Products. Prior to September 30,1996 ACS agrees
that the maximum lead time for delivery of the Products shall be one
hundred eighty (180) days from the date of issuance of the respective
purchase orders unless a longer lead time is requested by Xerox or Xerox
Affiliated Companies. Thereafter, the maximum lead time for Products'
delivery will be one hundred twenty (120) days. ACS shall provide Xerox on
a monthly basis written reports reflecting open and rescheduled orders for
Products and type and amount of Products delivered during the previous 30
days. ACS shall in good faith explore the possibility of enabling Xerox or
Xerox Affiliated Companies to directly link its computer systems to those
of ACS for Product order entry purposes and if such linkup is acceptable to
ACS the parties shall work together in good faith to achieve such linkup.
4.09 Confirmation - Within ten (10) days of receipt of the purchase order ACS
------------
shall accept and confirm in writing purchase orders issued by Xerox or
Xerox Affiliated Companies hereunder or shall advise Xerox or Xerox
Affiliated Companies if, for any reason, it determines that it will be
unable to fulfill such purchase order. In such event, ACS shall advise
Xerox or Xerox Affiliated Companies of the quantities of Products it
expects to supply during the Production Month covered by such purchase
order, and such quantity shall, unless the parties otherwise agree,
constitute a revised purchase order quantity for such Production Month.
All purchases hereunder shall be governed solely by the terms and
conditions of this Agreement notwithstanding any preprinted terms and
conditions contained on any purchase orders or acknowledgments thereof
issued by Xerox or Xerox Affiliated Companies.
4.10 Improved Products - If during the term of this Agreement and any extension
-----------------
thereof, ACS develops improvements, extensions or modifications of the
Products, ACS shall offer such Products containing such improvements,
extensions or modifications for sale to Xerox and Xerox Affiliated
Companies. If the parties hereto reach an agreement for the sale of such
new or improved Products, the appropriate Exhibits and other provisions
hereof will be appropriately amended. Amendments to this Agreement
applicable to such Products win not result in a price adjustment for
Products ordered or delivered prior to the effective date of such
amendment. Prices
<PAGE>
for Products added to this Agreement by amendment will be mutually agreed
to by ACS and Xerox.
4.11 Discontinuance of Manufacturing - ACS may discontinue the manufacture of
-------------------------------
any Products hereunder, provided that ACS gives Xerox not less than
eighteen (18) months prior written notice of such Product discontinuance.
ACS will, however, fill Xerox and Xerox Affiliated Companies' then current
open orders for Products. Provided Xerox and Xerox Affiliated Companies
requested delivery times are within the normal order-delivery lead time,
ACS agrees to use all reasonable efforts to honor all Xerox and Xerox
Affiliated Companies purchase orders for such discontinued Products.
4.12 Exclusivity of Distribution - While any amount of the loans subject to the
---------------------------
Loan Agreement and Promissory Note are outstanding, Xerox and Xerox
Affiliated Companies will have the exclusive right (inclusive of ACS) to
distribute the (i) ACS 135 Spot Printer and (ii) cut-sheet ACS Spot
Printers with rated speeds of between 30 - 200 PPM. Following the
repayment in full of such loans, subject to Section 4.13 hereof, Xerox'
distribution rights with respect to the ACS 135 Spot Printer and cut-sheet
ACS Printers with rated speeds between 30 - 200 PPM shall be non-exclusive.
4.13 Reserved Government Accounts - During the term of this Agreement, Xerox
----------------------------
shall have the exclusive right (inclusive of ACS) to solicit the sale,
lease, or rental of Products and service or software support therefor with
respect to (i) any United States Government General Services Administration
Schedule contract covering any or all of the Products or service or
software support therefor and (ii) any state contract covering the sale,
lease, or rental of any or all of the Products or service of software
support therefor, where the -express intent of such contract is to give the
successful offer or a right to do business with any or all agencies or
instrumentalities of that state on a "sole source" or other statewide
basis.
V. DOCUMENTATION
5.01 Documentation - ACS shall furnish to Xerox and Xerox Affiliated Companies
-------------
on an ongoing basis during the term hereof, free of charge, all
Documentation in mutually agreeable, camera-ready electronic-file and hard
copy formats in the English language, all engineering drawings, theory of
<PAGE>
operation documents, service manuals, a Spares list, Products brochures and
such other materials as the parties mutually agree are reasonably required
by Xerox or Xerox Affiliated Companies to market and service the Products.
In the event ACS produces Documentation in languages other then English it
shall make such non-English documentation available to Xerox as per this
Section of the Agreement. ACS grants to Xerox or Xerox Affiliated
Companies, the right and license to reproduce or use all or any part of
such Documentation in connection with their sales, marketing and servicing
of the Products. Xerox or Xerox Affiliated Companies are further given the
right to modify any or all parts of the documentation to reflect either
changes made to the Products or for translation into different languages or
consistency in style with other documentation. Additional documentation as
agreed by the parties may be provided by ACS for a mutually agreed fee.
VI. DELIVERIES
6.01 Transportation And Packaging - All Products will be shipped with commercial
----------------------------
packaging suitable for shipment via land, air or sea, as applicable, in
standardized containers in accordance with Xerox standards and procedures.
If requested, ACS agrees to assist Xerox or the forwarder selected by Xerox
in arranging the most economical transportation from the ACS site from
which the Products will be shipped.
6.02 Early Delivery - Xerox shall be under no obligation to accept early
--------------
deliveries and reserves the right, at its option and without liability, to
retain any early delivered Product and hold ACS' invoice until the date it
would otherwise be due if delivery had been made on the delivery date set
forth in the purchase order.
6.03 Rescheduling - Xerox may request changes to its purchase orders for
------------
Products. Xerox may, by written notice to ACS, not less than thirty (30)
days prior to scheduled delivery change orders for Products in accordance
with the following matrix:
Percentage Reschedule of Existing Orders for Products
<PAGE>
Allowable Quantity
Days Prior to Delivery Percentage Reschedule
----------------------- ---------------------
[*] [*]
[*] [*]
[*] [*]
Periods designated as No Change in the matrix above for Products shall be
considered a period in which no alterations, modifications or cancellations can
be made to the quantity on order or new Orders placed unless mutually agreed to
in writing by ACS and Xerox.
6.04 Configuration Mix and Timing/Increasing Size of Orders - Xerox may request
------------------------------------------------------
that ACS change the configuration mix and/or size of orders, and ACS
agrees to make reasonable efforts to change the configuration mix and
timing within the Production Month of Products then on order and the number
of units to be delivered pursuant to an order. Subject to Paragraph 6.03
above, ACS agrees to make reasonable efforts to accommodate such
request(s).
6.05 Cancellation Without Cause - Xerox or Xerox Affiliated Companies may cancel
--------------------------
purchase orders or portions thereof upon written notice to ACS at any time.
ACS shall take all steps to mitigate any loss to Xerox or Xerox Affiliated
Companies arising from such cancellation and in no event shall Xerox or
Xerox Affiliated Companies' obligations to ACS as a consequence of
cancellation exceed the purchase price of the Products ordered. If ACS
claims cancellation cost resulting from Xerox or Xerox Affiliated
Companies' Purchase Order cancellation and requests Xerox or Xerox
Affiliated Companies to pay such cancellation cost, ACS shall have the
burden of proof to substantiate the cancellation cost amount claimed. If
requested by Xerox or Xerox Affiliated Companies, ACS shall agree to an
independent certified accountant (or other independent party appointed
jointly by both Parties) review within a reasonable time after cancellation
of ACS' business records for the purpose of validating ACS' cancellation
claim. Provided, however, that Xerox/Xerox Affiliated Companies may not
[*] OMITTED INFORMATION SUBJECT TO PENDING CONFIDENTIAL TREATMENT REQUEST
<PAGE>
cancel without cause orders for Products any later than thirty (30) days
prior to the scheduled delivery date. Any payments made by Xerox or Xerox
Affiliated Companies on account of an order which is later canceled without
cause shall be credited against any cancellation charges payable hereunder.
6.06 Cancellation For Cause - In the event ACS is, except for reasons beyond its
------------------------
control or as would be otherwise excused pursuant to this Agreement, [*] or
more working days delinquent in meeting the agreed upon delivery schedule
of any Products, Xerox or the ordering Xerox Affiliated Company, as the
case may be, may, by written notice to ACS, cancel without liability such
delinquent Product. In addition, if ACS is unable, for any reason
whatsoever, except reasons beyond its control or as would be otherwise
excused pursuant to this Agreement, to deliver Products in a timely fashion
ACS shall, as to such orders, grant Xerox or the affected Xerox Affiliated
Companies, as the case may be, a price discount for affected Products as
follows:
Days Late Price Discount
--------- --------------
[*] [*]
[*] [*]
[*] [*]
6.07 Disposition Of Canceled Product - In the event Xerox or Xerox Affiliated
-------------------------------
Companies cancel any purchase order or portion thereof pursuant to 6.05 or
6.06 hereof, ACS may dispose of the canceled Products, after removing all
identifying marks which identify the Products as Xerox and Xerox Affiliated
Companies Products.
6.08 Mixing Product Deliveries with Deliveries of other Products - If
-----------------------------------------------------------
commercially feasible and provided that ACS is not negatively impacted in
any way, Products may be shipped with products not subject to this
Agreement if Xerox and Xerox Affiliated Companies deem doing so a benefit
to them.
6.09 Emergency Spares Orders ACS will put into place as soon as is reasonably
-----------------------
commercially practicable a process to fill emergency Spares orders when
[*] OMITTED INFORMATION SUBJECT TO PENDING CONFIDENTIAL TREATMENT REQUEST
<PAGE>
not available through Xerox' internal distribution system. ACS may make
such emergency shipments subject to reasonable incremental charges.
6.1 Inspection/Acceptance - Xerox and Xerox Affiliated Companies may inspect
---------------------
any shipment of Products and reject such shipment, in whole or in part, for
failure to meet the Specifications or otherwise comply with this Agreement.
At the option of Xerox, such non-conforming Products may be returned to ACS
at ACS' expense for prompt replacement or repair and shipment thereof to
Xerox, at ACS' expense. The choice of repair or replacement shall be with
ACS.
6.11 Priority Deliveries - While any amounts of the loans made by Xerox to ACS
-------------------
under the Loan Agreement and Promissory Note remain outstanding, deliveries
of Products to Xerox shall take priority over deliveries of ACS products,
including the Products, to any other person.
VII. PRODUCT CHANGES
7.01 Product Changes - The Products delivered hereunder shall incorporate the
---------------
latest improvements implemented by ACS and approved by Xerox in writing ACS
shall inform Xerox, in writing, of the following in requesting such
approval:
The date of the proposed incorporation of such changes into the Products
and description of changes affecting the:
(a) form (external appearance of finished products or piece parts; or external
dimensions, dimension tolerances or shape),
(b) fit (provisions for mounting; changes to mounting holes, holes for mounting
shipping restraints, or holes or fittings for mounting accessory or optional
features; changes in the dimension or shape of internal spaces available for
customer use; or changes affecting the interchangeability of parts,
electrical or other power and environmental requirements),
(c) function (changes in the Product specification, Product performance, or any
changes affecting the Product's reliability); or
<PAGE>
(d) compatibility of the Products (changes to or which affect Products
operation, internal logic or tinting, part number or configuration dash
number of parts which can be replaced in the field, the interchangeability
of Spares, service documentation which might affect a customer's
applications for the Products).
Xerox shall respond within thirty (30) days to each request for Product changes
received from ACS indicating its acceptance or rejection of such change.
7.02 Implementation - Any changes made by ACS and accepted by Xerox pursuant to
--------------
7.01 hereof shall be implemented in accordance with the schedule indicated
by ACS in the written notification of change. Such changes shall be
incorporated into Products shipped pursuant to purchase orders received by
ACS after Xerox approved such changes. The serial number of the first such
changed Product shall be identified to Xerox and ACS agrees that all
Products with serial numbers greater than such serial number shall
incorporate such changes.
7.03 Cost Effects Of Changes - In the event that any change in the form, fit or
------------------
function (as collectively defined in 7.01) of, or Specifications for, any
Products which is necessitated by such mutually agreed change results in a
significant increase or decrease in the cost of such Products, or in the
length of time required for the manufacture or delivery thereof, equitable
adjustment to the price of such Products or agreed upon shipping date or
both shall be made by the parties pursuant to good faith negotiations.
7.04 Obsolete Inventory - In the event of changes to Products, ACS shall
------------------
repurchase from Xerox or Xerox Affiliated Companies, as applicable, for a
sum equal to the original purchase price paid therefor by Xerox or Xerox
Affiliated Companies, as applicable, all Spares and Consumables which are
in Xerox' and Xerox Affiliated Companies inventory and which have become
obsolete as a result of any change to Products, other than a Products'
change requested by Xerox.
7.05 Effect of Rejection - In the event Xerox rejects a proposed change to
-------------------
Products, ACS shall remain obligated to deliver Products conforming to the
Specifications.
<PAGE>
7.06 Interface Specification - Unless otherwise agreed by the parties in
-----------------------
writing, ACS shall not knowingly make any changes to the Products which
obsoletes the interface specification applicable to the then current
version of the Products and the then current version of the Xerox 4890 and
4635 Printers, the Docutech, or any other Xerox product which Xerox has
notified ACS in writing are being used by end-user customers in connection
with the Products.
VIII. SPARE PARTS AND CONSUMABLES
8.01 Spares Listing - ACS and Xerox shall mutually agree on a list of spares
--------------
which shall be designated as the recommended Spares. . Such list shall be
set forth in Exhibit C hereto. Exhibit C will be completed by no later
than March 15, 1996. Prices of the Spares shall be established so that the
total prices for all the Spares required to completely manufacture one
printer shall not exceed one hundred thirty percent (130%) of the price for
the applicable ACS printer listed in Exhibit C hereto.
8.02 Spares and Consumables
----------------------
(a) ACS shall make available to Xerox and Xerox Affiliated Companies, for a
period of [*] from the date the last unit of the relevant
printer model is shipped to Xerox or Xerox Affiliated Companies
hereunder Spares and Consumables in sufficient quantities for Xerox and
Xerox Affiliated Companies to meet the service and Consumables needs of
its customers for such printer(s). Xerox and Xerox Affiliated
Companies shall place its final purchase orders for such Spares and
Consumables at least six (6) months prior to the expiration of such
applicable period.
(b) Xerox agrees to purchase during the initial term of this Agreement all of
its requirements for Consumables from ACS provided Consumables price to Xerox is
no higher than the maximum prices for Consumables set forth in Exhibit C hereto
or twenty (20% ) more than the lowest price offered Xerox for a product
competitive to the Consumables, whichever is lower. Provided however, ACS shall
have up to a thirty(30) day period to meet the competitive price offered Xerox.
[*] OMITTED INFORMATION SUBJECT TO PENDING CONFIDENTIAL TREATMENT REQUEST
<PAGE>
8.03 Equivalent Spares - Xerox agrees to accept equivalent and/or
-----------------
interchangeable (form, fit and function compatible as defined in Section
7.01 hereof) Spares and Consumables during the [*] period defined in
Section 8.02(a) hereof. The determination as to whether Spares and
Consumables are equivalent and/or interchangeable shall be made by Xerox.
IX. WARRANTIES AND MANDATORY RETROFITS
9.01 Express Warranties - ACS warrants to Xerox or Xerox Affiliated Companies:
------------------
(a) that it has good and marketable title to all Products delivered to
Xerox or Xerox Affiliated Companies hereunder and that all units of
Products shall be free and clear of all hens, encumbrances, security
interests or other claims (except those arising under the Security
Agreement), and
(a) that all Products delivered to Xerox or Xerox Affiliated Companies
hereunder shall be free from defects in material and workmanship for
a period of ninety (90) days after installation.
(c) that all Products conform to the Specifications.
9.02 Warranty Obligations - With respect to any Products found to be defective,
--------------------
ACS shall, without charge (including freight) deliver to Xerox or the
applicable Xerox Affiliated Companies, as the case may be, such repair
parts as are necessary for the repair of the Products within thirty (30)
days from the time of Xerox or the applicable Xerox Affiliated Companies,
as the case may be, notification to ACS of defective Products. Xerox/Xerox
Affiliated Companies obligation shall be to repair such defective Products
and maintain adequate records regarding the causes (if known) and dates of
such failures and provide such information to ACS at ACS' request.
Xerox/Xerox Affiliated Companies shall, upon the request of ACS, return to
ACS all defective parts removed from Products under the above warranties
and return the same, all at ACS' expense, to ACS, provided that such
request shall be made within fifteen (15) days of the notification by
Xerox/Xerox Affiliated Companies to ACS of such defective Products. This
shall constitute ACS' sole obligation and Xerox/Xerox Affiliated
[*] OMITTED INFORMATION SUBJECT TO PENDING CONFIDENTIAL TREATMENT REQUEST
<PAGE>
Companies sole remedy pursuant to the warranties set forth in Section 9.01
of this Agreement (but shall not affect additional warranties of ACS set
forth elsewhere in this Agreement).
9.03 Replaced Products and Parts - AR Products replaced by ACS under this
---------------------
Article become the property of ACS provided ACS requests the return of same
to ACS and pays all costs associated with such return.
9.04 Systemic Defects - Notwithstanding the warranty requirements and conditions
----------------
of Section 9.01 hereof, ACS will undertake without undue delay to remedy
any Systemic Defect in all affected Products in inventory or in the field,
by delivering to Xerox/Xerox Affiliated Companies replacement, if
requested, of Spares or consumables if the Systemic Defect applies thereto,
or repair kit if the Systemic Defect applies to the printer, and in either
15 event reimburse Xerox/Xerox Affiliated Companies for actual parts
replacement costs incurred by them plus any associated labor. ACS shall
not be required to cure any Systemic Defect for any Products which have
been subjected to accident, negligence, misuse, alteration, modification,
tampering or causes other than ordinary use. The foregoing obligations of
the parties shall apply during the term of this Agreement.
9.05 Mandatory Retrofits - ACS will, as necessary from time to time, provide to
-------------------
Xerox/Xerox Affiliated Companies Mandatory Retrofit kits for the Products
free of charge and Xerox/Xerox Affiliated Companies agree to install such
retrofits on the Products (including those Products already delivered to
Xerox/Xerox Affiliated Companies customers) within a reasonable time. ACS
will provide Xerox/Xerox Affiliated Companies with its good faith estimates
of the time it should take for a mandatory retrofit to be completed. The
cost of such installation will be borne by Xerox/Xerox Affiliated
Companies. In the event Xerox/Xerox Affiliated Companies fail to install
any such Mandatory Retrofit as herein provided, Xerox/Xerox Affiliated
Companies agree to fully and completely indemnify, defend and hold ACS
harmless from and against any claims, damages or liabilities asserted by
any third party alleging personal injury or property damage which injury or
damage would have been avoided, in whole or in part, by the prompt
installation of the Mandatory Retrofit.
<PAGE>
9.06 WARRANTY DISCLAIMER - THE EXPRESS WARRANTIES SET FORTH IN THIS ARTICLE,
-------------------
AND THE OBLIGATIONS AND LIABILITIES OF ACS HEREUNDER, ARE IN LIEU OF ALL
OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
9.07 WARRANTY LIMITATIONS - THE WARRANTIES SET FORTH IN THIS ARTICLE IX ARE
--------------------
EXPRESSLY CONDITIONED UPON THE PROPER USE OF THE PRODUCTS FOR THEIR
INTENDED PURPOSES, AND SHALL NOT APPLY TO ANY PRODUCTS WHICH HAVE BEEN
SUBJECTED TO MISUSE, ACCIDENT, OR ALTERATION OR MODIFICATION (EXCEPT AS
SPECIFICALLY AUTHORIZED BY ACS).
X. TRAINING
10.01 ACS Training of Xerox/Xerox Affiliated Companies - During the Term of
------------------------------------------------
this Agreement, ACS shall provide Xerox/Xerox Affiliated Companies, at no
additional charge, service training consisting of two (2) classes each
attended by up to five (5) Xerox employees. Such training will be
designed to have Xerox/Xerox Affiliated Companies service trainees
achieve industry standard knowledge and competency respecting the
servicing of the Products. ACS shall make available additional training
at mutually agreeable charges.
10.02 Technical Support - ACS shall provide Xerox/Xerox Affiliated Companies,
-----------------
at a mutually agreeable price, telephone technical support respecting the
Products and service and software support therefor for a period of at
least seven (7) years from the date of Xerox/Xerox Affiliated Companies
last install of an ACS 135 Spot Printer or other printers purchased from
ACS hereunder, as applicable. If a technical problem cannot be resolved
by telephone technical support, ACS shall provide on site technical
support to Xerox/Xerox Affiliated Companies at the per them rate as
specified in Exhibit C hereto.
<PAGE>
XI. TERM AND TERMINATION
11.01 Term - This Agreement shall be effective on the Effective Date and
shall continue for a period of thirty-six (36) months ("Initial Term"),
and shall be automatically renewed for successive twelve (12) month terms
unless either party gives at least six (6) months prior written notice to
the other that the notifying party does not wish this Agreement to be
renewed.
11.02 Termination for Cause
---------------------
(a) Either party may terminate this Agreement:
i. immediately upon written notice if the other party materially
breaches this Agreement and such breach is not curable or, thirty
(30) days after written notice of breach if the other party
materially breaches this Agreement and such breach is curable but
is not cured within such 30 day notice period (or such other cure
period as is provided under this Agreement) or,
ii. immediately upon written notice if the other party is subject to
a force majeure condition for more than ninety (90) consecutive
days and during such time period does not arrange for alternative,
comparable performance, or
iii. if a petition for relief under the applicable bankruptcy
regulations is filed by or against the other party, or the other
party makes an assignment for the benefit of creditors, or a
receiver is appointed, or a purchase agreement is executed for all
or substantially all of the other party's assets or of the shares
in such other party and such petition, assignment or agreement is
not dismissed or vacated within thirty (30) days. To the extent
applicable law prevents the non breaching party from terminating
this Agreement as described herein, then the parties shall have
only those rights and remedies permitted by applicable law.
Termination rights for the specified causes shall exist for a
period of ninety (90) days after the occurrence of each such
cause.
<PAGE>
(b) Xerox may terminate this Agreement immediately upon written notice if any of
the Exhibits which this Agreement provides will be completed after the
Effective Date are not completed by the date set forth herein for
completion.
11.03 Manufacturing License - In addition to any other rights arising under
---------------------
this Agreement or under applicable law which Xerox may have due to ACS'
material breach of this Agreement, Xerox may elect to manufacture or have
the Products manufactured and in such event ACS hereby grants Xerox and
Xerox Affiliated Companies the non-exclusive world-wide irrevocable right
to manufacture or have the Products manufactured and to use and sub-
license, in connection with manufacturing the Products, any ACS
intellectual property, including know-how and related Documentation,
which is necessary for the manufacture of the Products. In addition, ACS
shall assign to Xerox all agreements with ACS' vendors to the extent such
agreements are assignable by ACS and ACS shall give Xerox all reasonable
cooperation respecting Xerox being assigned the rest of ACS' agreements
with its vendors. While any amount of the principle and interest subject
to the Loan Agreement and Promissory Note are outstanding, the foregoing
license shall be royalty-free. After the aforementioned principle and
interest is completely repaid the foregoing license shall be subject to a
royalty of five percent (5%) of then applicable ACS 135 Spot Printer
price as set forth in Exhibit C. The fact that Xerox exercises the
manufacturing rights granted to it under this subparagraph shall serve to
mitigate Xerox' damages on account of ACS' breach of this Agreement to
the extent permitted by applicable law.
11.04 Effect of Breach of Loan Agreement by ACS, Effect of Breach of this
-------------------------------------------------------------------
Agreement upon Loan Agreement - A breach by ACS of the Loan Agreement and
-----------------------------
Promissory Note or the Security Agreement shall be deemed a material,
breach of this Agreement by ACS if there remains outstanding and unpaid
more than one-third of the original principal payable by ACS under the
Loan Agreement and Promissory Note. A breach by ACS of this Agreement
respecting the critical milestones identified in Exhibit B hereto shall
be deemed a material, breach of the Loan Agreement and Promissory Note
and the Security Agreement.
<PAGE>
11.05 Termination Effect - Upon termination or expiration of this Agreement for
------------------
any reason, each party shall immediately return to the other all
proprietary, confidential or private data and all copies thereof, if so
requested by the other party. Notwithstanding the above, Xerox/Xerox
Affiliated Companies will retain the necessary rights, including the
right to purchase from ACS the quantities of Spares, Consumables, and
Documentation at commercially reasonable prices, to continue servicing
its Products customer base.
XII. INDEPENDENT PRODUCT DEVELOPMENT AND RELATED
RIGHTS
12.01 Except as otherwise provided herein, this Agreement does not and shall
not be construed to limit the rights of either party to develop, market,
sell lease, service or manufacture competing products.
XIII. NOTICES
13.01 Any notice which may be or is required to be given under this Agreement
shall be in writing. AR written notices shall be sent by registered or
certified airmail, postage prepaid, return receipt requested. To the
extent this Agreement requires notice to be given to Xerox or ACS, such
notices shall be denied to have been given when received, addressed in
the manner indicated below or at such other addresses as the parties may
from time to time notify each other of:
Notices regarding 4635/4890 technical information:
XEROX: ACS:
[*] [*]
4800 Family Technical Program Manager Xerox Technical Program Manager
101 Continental Blvd. Accent Color Sciences, Inc.
El Segundo, CA 90245 Riverview Square
99 East River Drive
East Hartford, CT 06108
Notices regarding Xerox Docutech technical information:
[*] OMITTED INFORMATION SUBJECT TO PENDING CONFIDENTIAL TREATMENT REQUEST
<PAGE>
XEROX: ACS:
[*] [*]
New Business Development Xerox Technical Program Manager
Fairport, N.Y. 14450 Accent Color Sciences
Riverview Square
99 East River Drive
East Hartford, CT 06108
Notices regarding daily administrative operations:
XEROX: ACS:
[*] [*]
Manager, Color Printing Product Business Team Director of Marketing
101 Continental Blvd. Riverview Square
El Segundo, CA 90245 99 East River Drive
East Hartford, CT 06108
Notices regarding contract modifications and contract interpretation and all
other matters not enumerated above:
XEROX: ACS:
[*] [*]
Manager, Color Printing Product Business Team Chief Financial Officer
101 Continental Blvd. Accent Color Sciences, Inc.
El Segundo, CA 90245 Riverview Square
99 East River Drive
East Hartford, CT 06108
XIV. HEADINGS
14.01 The headings and titles of the Articles and Sections of this Agreement
are inserted for convenience only and shall not affect the construction
or interpretation of any provision.
XV. ASSIGNMENT
[*] OMITTED INFORMATION SUBJECT TO PENDING CONFIDENTIAL TREATMENT REQUEST
<PAGE>
15.01 Neither party shall assign this Agreement to any other party without the
prior written consent of the other party hereto, which consent shall not
be unreasonably withheld. Notwithstanding the foregoing, Xerox may
perform any of its obligations, by or through any Xerox/Xerox Affiliated
Companies.
XVI. SEVERABILITY
16.01 If any provision of this Agreement is held invalid by any law, rule,
order or regulation of any government, or by the final determination of a
court of last resort, such invalidity shall not affect (a) the other
provisions of this Agreement, (b) the application of such provision to
any other circumstance other than that with respect to which this
Agreement was found to be unenforceable, or (c) the validity or
enforceability of this Agreement as a whole.
XVII. SURVIVAL
17.01 Unless this Agreement expressly provides otherwise or by its nature a
provision cannot survive this Agreement, the provisions of this Agreement
shall survive the expiration or any termination of this Agreement.
XVIII. CONTROLLING LANGUAGE
18.01 This Agreement is in English only, which language shall be controlling in
all respects. All documents exchanged under this Agreement shall be in
English only.
XIX. INDEMNIFICATION
19.01 (a) ACS Indemnity - ACS agrees, at its expense, to defend Xerox and Xerox
-------------
Affiliated Companies from, and pay any judgment for, any suit, claim or
proceeding (hereinafter "Claim") against Xerox or Xerox Affiliated
Companies alleging that any Products either (i) violates any applicable
safety or regulatory standard in effect as of the date of Products
delivery, or (fi) has caused injury or damage to the person or property
of another arising from defects in materials, design or construction of
such Products, unless based upon the negligent conduct of Xerox, Xerox
Affiliated Companies, or
<PAGE>
any of their respective agents, representatives or employees, or (iii)
infringes any patents, utility models, copyrights, trade secrets, or any
other intellectual property rights of a third party issued in any country,
provided that ACS is promptly notified in writing of any Claim, given all
reasonable assistance required, and permitted to direct the defense. ACS
shall have no liability for settlements or costs incurred without its
consent.
(b) Xerox' Indemnity Xerox agrees, at its expense, to defend ACS from, and Pay
----------------
any judgment for, any suit, claim or proceeding (hereafter "Claim") against
Xerox alleging injury or damage to the person or property of another if such
claim arose due to the modification of Documentation by, or from the acts or
omissions of Xerox, Xerox Affiliated Companies or any of their respective
agents, representatives or employees with respect to the marketing of the
Products, provided that Xerox is promptly notified of any Claim, given all
reasonable assistance required, and permitted to direct the defense. Xerox shall
have no liability for settlement or costs incurred without its consent-
19.02 Injunction - In the event that Xerox's or Xerox Affiliated Companies' use
----------
or marketing of any of the Products is enjoined, ACS shall, at its option
and expense, either substitute fully equivalent Products not subject to
such injunction, modify the Products so that they are no longer subject to
such injunction, or obtain for Xerox and Xerox Affiliated Companies and
their respective customers the right to continue using the enjoined
Products. If none of the foregoing is feasible, and said injunction is in
effect for more than three (3) months, ACS will take back the enjoined
Products from Xerox and its customers and refund to Xerox the purchase
price paid therefor reduced by an amount which equals one-sixtieth of the
purchase price for each month which has elapsed since the Products were
delivered to Xerox /Xerox Affiliated Companies to the time such injunction
became effective, plus arrange at ACS' expense to have the Products
returned to ACS.
19.03 Limitations - ACS shall not be liable for any Claim arising solely out of
-----------
or resulting solely from: (i) its compliance with or adoption of any
specification, design, feature, mark or symbol, component parts or printed
materials or other information or materials required by Xerox or Xerox
Affiliated Companies for incorporation or use with any Products, or (ii)
any
<PAGE>
modification or reworking made by ACS to any Products upon instruction of
Xerox or Xerox Affiliated Companies.
19.04 Insurance - ACS shall procure and maintain with an insurer acceptable to
---------
Xerox insurance coverage for both bodily injury and property damage caused
by or arising out of the manufacture, delivery, use, handling, or storage
of the Products in amounts of at least One Million Dollars ($1,000,000)
per occurrence and Two Million Dollars ($2,000,000) in the aggregate.
XX. CONFIDENTIAL AND PROPRIETARY INFORMATION
20.0 In the event Xerox and ACS deem it necessary for one party to disclose to
the other confidential information the parties' respective rights and
obligations with respect to the disclosure and use of such shall be
governed by the Confidential Disclosure Agreement with an effective date of
February, 1996.
XXI. LIMITATION OF LIABILITY
21.01 (a)DISCLAIMER OF OTHER DAMAGES -NOTWITHSTANDING ANY OTHER PROVISION
CONTAINED HEREIN TO THE CONTRARY EXCEPT SECTION 19.01 OF THIS AGREEMENT WHICH
SHALL BE GOVERNED BY ITS TERMS, XEROX, XEROX AFFILIATED COMPANIES AND THEIR
RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, OR AGENTS SHALL HAVE NO LIABILITY FOR
DAMAGES OTHER THAN DIRECT DAMAGES, INCLUDING BUT NOT LIMITED TO PUNITIVE OR
EXEMPLARY DAMAGES, HOWEVER DENOMINATED, AND INDIRECT, CONSEQUENTIAL, OR
INCIDENTAL DAMAGES, WHETHER ARISING IN CONTRACT, IN TORT (INCLUDING WITHOUT
LIMITATION NEGLIGENCE), OR ANY OTHER THEORY EVEN IF INFORMED OF THE POSSIBILITY
OF SUCH DAMAGES AND EVEN IF AS A RESULT ANY REMEDY ARISING HEREUNDER OR UNDER
APPLICABLE LAW FAILS OF ITS ESSENTIAL PURPOSE.
XXII. EXPORT CONTROL
<PAGE>
22.01 ACS and Xerox shall comply with all applicable laws and regulations
respecting the export, directly or indirectly, of any technical data
acquired from the other under this Agreement or any software utilizing
any such data to any country the laws or regulations of which at the time
of export, require an export license or other government approval
including but not limited to first obtaining such license or approval.
XXIII. FORCE MAJEURE
23.01 Subject to a party's right to terminate this Agreement under Section
11.02 (b), neither ACS nor Xerox shall be liable to the other for its
failure to perform any of its obligations hereunder or under any purchase
order or acknowledgment thereof during any period in which such
performance is delayed by unforeseeable circumstances beyond its
reasonable control.
XXIV. WAIVER
24.01 Failure or delay of either party to exercise any right or remedy under
this Agreement or to require strict performance by the other party of any
provision of this Agreement shall not be construed to be a waiver of any
such right or remedy or any other right or remedy hereunder. All of the
rights of either party under this Agreement shall be cumulative and may
be exercised separately or concurrently.
XXV. ETHICAL STANDARDS
25.01 ACS agrees that, with respect to its role as supplier to Xerox including
any interaction with any employee of Xerox, ACS shall not: (1) give or
offer to give any gift or benefit to any such employee of Xerox, (2)
solicit or accept any information, data, services, equipment, or
commitment from such employee unless same is (i) required under a
contract between Xerox and ACS, or (ii) made pursuant to a written
disclosure Agreement between Xerox and ACS, or (iii) specifically
authorized in writing by Xerox' management, (3) solicit or accept
favoritism from said employee, and (4) enter into any outside business
relationship with said employee without full disclosure to, and prior
approval of, the appropriate management of Xerox. As used herein:
"employee" includes members of the employee's immediate family and
household, plus any other person who is attempting
<PAGE>
to benefit from his or her relationship to the employee. "ACS" includes
all employees and agents of ACS. "Gift or benefit" includes money, goods,
services, discounts, favors and the like in any form, but excluding
employment or offers of employment and low value advertising items such
as pens, pencils, and calendars.
XXVI. ARBITRATION
26.01 The parties shall attempt in good faith to resolve any dispute arising out
of or relating to this Agreement promptly by negotiations, as follows. Any
party may give the other party written notice of any dispute not resolved
in the normal course of business. Executives of both parties at levels one
step above the project personnel who have previously been involved in the
dispute shall meet at a mutually acceptable time and place within 10 days
after delivery of such notice, and thereafter as often as they reasonably
deem necessary, to exchange relevant information and to attempt to resolve
the dispute. All negotiations pursuant to this clause are confidential and
shall be treated as compromise and settlement negotiations for purposes of
the Federal Rules of Evidence and state rules of evidence. Each party
shall bear its own expenses.
If the parties are unable to resolve the dispute by negotiations as set forth
above and at least 60 days have elapsed since notice was given, such dispute
shall be settled by arbitration, conducted on a confidential basis, under the
then current Commercial Arbitration Rules of the American Arbitration
Association ("the Association") strictly in accordance with the terms of this
Agreement and the substantive law of the State of New York. The arbitration
shall be held at a mutually agreeable location in Stamford, Connecticut and
conducted by one arbitrator chosen from a list of attorneys who are members of
the Association's commercial arbitration panel and are knowledgeable about the
semiconductor and business equipment industries. If the parties cannot
promptly, within thirty (30) days, agree on the selection of the arbitrator, the
arbitrator will be chosen pursuant to Rules 13 of the Commercial Arbitration
Rules of the Association. The costs of the arbitration, including the fees to
be paid to the arbitrator, shall be shared equally by the parties to the
dispute. The parties to the dispute shall be limited to taking no more than
three (3) depositions each. The length of each deposition shall be limited to
one (1) day. No interrogatories shall be permitted. The arbitration shall be
completed within six (6) months from the date of the selection
<PAGE>
of the arbitrator. The scope of document production shall be governed by the
commercial Arbitration Rules of the Association and the decision of the
arbitrator with respect thereto. The Judgment upon the award rendered by the
arbitrator may be entered and enforced in any court of competent jurisdiction.
Neither party shall be precluded hereby from seeking provisional remedies in the
courts of any jurisdiction including, but not limited to, temporary restraining
orders and preliminary injunctions, to protect its rights and interest, but such
shall not be sought as a means to avoid or stay arbitration. The arbitrator is
not empowered to award any consequential, incidental, punitive, or exemplary
damages. The parties acknowledge that they have voluntarily agreed to arbitrate
their disputes in accordance with the foregoing and each party hereby
irrevocably waives any damages in excess of compensatory damages.
XXVII. NONPUBLICITY
27.1 Without the prior written consent of the other party (which shall not be
unreasonably withheld) neither party shall (a) make any news release, public
announcement, denial or confirmation of this Agreement or its subject matter,
or (b) advertise or publish any facts relating to this Agreement, unless
otherwise required to do so by law.
XXVIII. CONTROLLING LAW
28.01 This Agreement shall be governed by and construed in an respects in
accordance with the laws and regulation of the State of New York, U.S.A.
The parties specifically agree that the 1980 United Nations Convention on
Contracts for the International Sale of Goods, as such may be amended
from time to time, shall not apply to this Agreement.
28.02 ACS represents and warrants compliance with all Federal, State and local
laws, ordinances and regulations applicable to this Agreement and the
performance of Services or development work here under including, but not
limited to: (a) applicable requirements of Sections 6, 7 and 12 of the
Fair Labor Standards Act, as amended, and applicable regulations and
orders of the Administrator of the Wage and Hour Division issued under
Section 14 thereof, (b) the Toxic Substances Control Act including the
requirement that every chemical substance delivered appear on the fist of
chemical substances as compiled by the Administrator, Environmental
<PAGE>
Protection Agency or have been submitted by ACS for inclusion on such
list, (c) Executive Order 11246 including promptly supplying Xerox with
all certifications required thereunder upon request, and (d) the
applicable requirements of 38 U.S.C. 2012 of the Vietnam Era Veterans
Readjustment Assistance Act of 1974, Section 503 of the Rehabilitation
Act of 1973, and the Americans with Disabilities Act of 1990. To the
extent applicable, ACS shall comply with 15 U.S.C.A. Sec. 637(d) (3) (48
CFR 52.219-8), "Utilization of Small Business Concerns and Small
Disadvantaged Business Concerns" for all contracts exceeding $10,000 and,
in contracts exceeding $500,000, agrees to adopt a plan similar to that
required under 15 U.S.C.A. Sec. 637 (d) (4) or (5) (48 CFR 52.219-9,
"Small Business and Small Disadvantaged Business Subcontracting Plan,"
hereby expressly incorporated by reference. ACS shall accurately label,
consistent with the requirements of Section 611 of the Clean Air Act, as
amended, and all regulations promulgated pursuant thereto, any container
of a controlled substance and any product manufactured with or containing
a controlled substance that is supplied to Xerox. In addition, ACS hereby
confirms that it is in compliance with au applicable environmental,
health and safety regulations, and reiterates its commitment to provide
products and/or services which are safe for its customers and the
environment and which contain recycled materials where appropriate and
when authorized by Xerox.
XXIX. REMEDIES CUMULATIVE
29.00 Except as otherwise set forth herein, any rights of cancellation or
termination, or remedies prescribed in this Agreement are cumulative and
are not intended to be exclusive of any other remedy of which the injured
party may be entitled to herein or at law or in equity, including but not
limited to the remedy of specific performance.
XXX. PREREQUISITE LICENSES/THIRD PARTY
ENCUMBRANCES
30.01 The development activities or other rights granted or which may be
granted by ACS to Xerox or Xerox Affiliated Companies may require that
ACS obtain certain prerequisite license(s) from third party licensor(s)
or
<PAGE>
may be subject to third party encumbrances other than prerequisite
license(s) (e.g., license limitations or payment obligations). All such
currently known requirements/encumbrances will be communicated by ACS
promptly to Xerox but in any event prior to the final acceptance by Xerox
of an affected ACS deliverable. The Parties will attempt to minimize,
where possible, the necessity for such prerequisite licenses or the use
of deliverables subject to such third party encumbrances. However, where
such prerequisite licenses are necessary ACS at its cost will arrange for
Xerox and Xerox Affiliated Companies to obtain a license from the
applicable third party licensor prior to Xerox receiving the affected
deliverable. Upon request, ACS will provide written assurance to Xerox of
the existence of such license.
XXXI. INTEGRATION
31.01 This Agreement constitutes the entire agreement of the parties as to the
subject matter hereof and supersedes any and all prior oral or written
understandings and agreements as to such subject matter, including any
preprinted terms and conditions contained in any purchase orders and
acknowledgments issued hereunder.
XXXII. PRE-EXISTING TECHNOLOGY/INTELLECTUAL PROPERTY
32.01 Unless otherwise agreed in writing, nothing herein shall be deemed to
transfer any ownership of any technology or intellectual property, or
other things, tangible or intangible, created by a party, or acquired by
a party from a third party, outside the scope or term of this Agreement.
XXXIII. RELATIONSHIP OF THE PARTIES
33.01 (a) It is the intent of the parties that during the term of this
Agreement, ACS shall be an independent contractor, and nothing set forth
herein shall be deemed or construed to render the parties joint ventures,
partners or employer and employee. Neither party is authorized to make any
commitment or representation on the other's behalf.
<PAGE>
(b) During the term of this Agreement, if the term "partnership",
"partner" or "development partner" or the like is used to describe the
parties' relationship, Xerox and ACS agree to make it clear to third
parties that these terms refer only to the spirit of cooperation between
them and neither describe, nor expressly or implied create, the legal
status of partners or joint ventures.
IN WITNESS WHEREOF, authorized representatives of the parties have affixed their
signatures as of the Effective Date.
XEROX CORPORATION ACCENT COLOR SCIENCES,
INC.
By: By:
---------------------------- -------------------------------
Name Name
---------------------------- -------------------------------
Title Title
Date: Date:
-------------------------- -----------------------------
<PAGE>
CUSTOMIZED COLOR 1996 DELIVERABLES--EXHIBIT "A", PAGE 1
Revision 4 - 2/15/96, 1:09 PM
S. Sweeney/S. Palace/S. Baumann
<TABLE>
<CAPTION>
A B C
CC PRODUCT DELIVERABLE 5/96-6/96 MINIMUM 7/96-8/96 MINIMUM 9/96 MINIMUM
REQ. REF. BO #1-6 ACCEPT. BO #7-10 ACCEPT B1 ACCEPT.
PARA. NO. CRITERIA CRITERIA LEVEL CRITERIA
<S> <C> <C> <C> <C> <C> <C>
1.0 PAPER SIZES same as 4635 same as 4635 same as 4635 same as 4635 same as 4635 same as 4635
PAPER 16-110# 20-40# 16-110# 16-110# 16-110# 16-110#
WEIGHTS
2.0 PRINTHEADS 8(2.5'TOT.) 8(2.5'TOT.) 8(2.5'TOT.) 8(2.5'TOT.) 8(2.5'TOT.) 8(2.5'TOT.)
3.0 SCSI YES N/A YES N/A YES N/A
INTERFACE
4.0 IOT 4635/4890 4685/4890 4635/4890 4635/4890 4635/4890 4635/4890
INTERFACES
5.0 ACS FUNC. PARA. 5.1, N/A PARA. 5.1, N/A PARA. 5.1, N/A
5.2&5.3 5.2&5.3 5.2&5.3
6.0 SPEED 200PPM 135PPM 200PPM 135PPM 200PPM 200PPM
7.0 PRINT 300DPI 300DPI 300DPI 300DPI 300DPI 300DPI
QUALITY
8.0 SAFETY MN NOT FULLY MN MN MN MN
APPROVED APPROVED APPROVED APPROVED APPROVED APPROVED
9.0 COLORS CMYK CMYK CUSTOM 1 CUSTOM CUSTOM 3 CUSTOM
10.0 DFA 1.0 YES NO YES YES YES YES
11.0 PRINT HD. YES NO YES YES YES YES
COLOR/LOC.
12.0 DEGRADED YES NO YES YES YES YES
MODE
13.0 RELIABILITY:
13.1 OGMR LESS THAN or 6/M LESS THAN or 3/M LESS THAN or 1
EQUAL TO 4/M EQUAL TO 2/M EQUAL TO 1/M
13.2 SHTDWNS N/A N/A LESS THAN or 80/M LESS THAN or 30
EQUAL TO 60/M EQUAL TO 30
13.3 MTTR 2.5 HRS 2.5 HRS 2 HRS 2 HRS 1.7 HRS 1.7 HRS
</TABLE>
<PAGE>
14.0 SERVICE N/A N/A LESS-THAN=$300 AT $330 AT
PARTS COST 1.0M AMPV 1.0M AMPV
<PAGE>
CUSTOMIZED COLOR ACS PRODUCT REOUIREMENTS--EXHIBIT A, PAGE 2 & 3
REVISION #4 - 2/15/96
1.0 Paper Sizes & Weights
1.1 All paper types and weights supported on the 4635 will be supported
through the CC devices. This includes 7 x 10 up to II x 17. Reference
paragraph 3.3.2 & 3.3.3, 4135 SRS #S-868-1 00
2.0 Print Heads -
2.1 The first implementations on the 4890 and 4635 will support the
customers choice of four or eight print heads. Each of these heads is
capable of applying a different color on the same page. At initial launch
of the product, the heads will be 1/3". Based on eight heads this will
allow a total color print band of 2.5'. This can be applied all in one
location, or in eight different locations on the page. Following the
launch of the product, print head size will be increased to .85'. Based on
eight heads this will allow a total color print band of 6.8". Print head
location is fixed on a job basis.
3.0 SCSI Interface
3.1 The Xerox/ACS system will be a Xerox high end printer, with a
rasterization processor and an ACS marking engine/printer. The rastedzation
processor for this implementation shall be a PC connected to the system via
SCSI-2 bus interface. This interface shall meet the Protocol/Communication spec.
#XXX
4.0 IOT Interfaces
11.1 The CC device will be compatible to the 4635 & 4890 at launch; the base CC
design & interface shall not preclude its use on other Xerox print
engine/systems such as, but not limited to, DocuTech, DocuPrint, Liberator, etc.
5.0 ACS Unit Functionality
5.1 The ACS 135 printer shall meet all performance and features
detailed in the "ACS-135 Functional Specification', P/N 0130-0002 and the
"ACS-135 System Operating Specification", P/N 0130-0021.
5.2 The first implementations on the 4890 and 4635 will support the
customers choice of four or eight print heads. Each of these heads is
capable of applying a different color on the same page. At initial launch
of the product, the heads will be 1/3". Based on eight heads this will
allow a total
<PAGE>
color print band of 2.5". This can be applied all in one location, or in
eight different locations on the page. Following the launch of the
product, print head size will be increased to .85". Based on eight heads
this will allow a total color print band of 6.8". Print head location is
fixed on a job basis.
5.3 The launch version of the CC device will contain up to eight, none
color keyed, reservoirs; each with a 0.5 liter capacity.
5.4 The 4635 and 4890 both support duplex printing in their basic
capabilities. However, only simplex printing will be offered with the CC
devices. The output from the CC device can only be applied to one side of
the sheet as delivered by the IOT.
6.0 Speed
6.1 The CC device shall be capable of accepting & processing cut sheet
input up 200 pages per minute.
7.0 Print Quality -
7.1 Fonts, logos, and graphics will meet, in both appearance and
quality, the jointly concurred to "ACS-1 35 Print Quality Specification",
P/N 01 30-0020
8.0 Safety
8.1 The CC device shall meet all Safety Regulations/Specifications per
paragraph 9.3.5, 4135 SRS #S-868-1 00
9.0 Colors -
9.1 Customers can choose from the full color spectrum. In addition to
the standard ink colors of cyan, magenta, yellow and black, custom and
Pantone colors will be available by special order.
10.0 DFA
10.1 The CC device implements the DFA Level 1 Specification per
"Document Feeding & Finishing Device Interface Level 1 Generic Spec.'
XNSG-159308.
<PAGE>
11.0 Print Head Color/Location Verification Requirement
11.1 The CC device will perform integrity checks to include:
verification of each head location and colors loaded in each head and by
capable of comparing this information to the job requirements as sent from
the ESS. The CC device will provide print head color data (location and
color) for posting at the CC GUI.
12.0 Degraded Mode Operation
12.1 CC Device not Operational - In the event that the CC device is not
operational, the CC component of the document will be printed by the Xerox
IOT. The IOT will post a message to check the output, but the data will be
printed in black.
12.2 Degraded Mode Operation - In the event that the CC device can not print
but is still capable of transporting paper a operator warning shall be posted
and the operator given the option of running the job (per the above) through the
CC device and into the output/finishing device.
13.0 Reliability
13.1 OGMR: this is the sum of all service calls. It includes unscheduled
maintenance calls, and scheduled maintenance calls; no other Xerox
initiated calls are planned.
13.2 Shutdowns: A Shutdown is a system stoppage that an operator can recover
from without loss of job integrity. The overall system shutdown rate shall not
exceed the system shutdown rate indicated.
13.3 MT7R: Mean Time To Repair hardware problems in a customer
environment.
14.0 Service Parts Costs
14.1 Mature/Bl field service parts cost target is $300 per million
prints at an average CC AMPV of 1,000,000 prints
CUSTOMIZED COLOR 1996 DELIVERABLES -EXHIBIT 'A', Page 1
1.0 Paper Sizes & Weights
1.1 All paper types and weights supported on the 4635 will be supported
through the CC devices.
This includes 7 x 10 up to 11 x 17. Reference paragraph 3.3.2 & 3.3.3,
4135 SRS #S-868-1 00
<PAGE>
2.0 Print Heads -
2.1 The first implementations on the 4890 and 4635 will support the
customers choice of four or eight print heads. Each of these heads is
capable of applying a different color on the same page. At initial launch
of the product, the heads will be 1/3". Based on eight heads this v,/ill
allow a total color print band of 2.5". This can be applied all in one
location, or in eight different locations on the page. following the
launch of the product, print head size will be increased to .85'. Based on
eight heads this will allow a total color print band of 6.8". Print head
location is fixed on a job basis.
3.0 SCSI Interface
3.1 The Xerox/ACS system will be a Xerox high end printer, with a
rasterization processor and an ACS marking engine/printer. The rasterization
processor for this implementation shall be a PC connected to the system via
SCSI-2 bus interface. This interface shall meet the Protocol/Communication spec.
#XXX
4.0 IOT Interfaces
11.1 The CC device will be compatible to the 4635 & 4890 at launch; the base CC
design & interface shall not preclude its use on other Xerox print
engines/systems such as, but not limited to, DocuTech, DocuPrint, Liberator,
etc.
5.0 ACS Unit Functionality
5.1 The ACS 135 printer shall meet all performance and features
detailed in the "ACS-135 Functional Specification", P/N 0130-0002 and the
"ACS-135 System Operating Specification", P/N 0130-0021.
5.2 The first implementations on the 4890 and 4635 will support the
customers choice of four or eight print heads. Each of these heads is
capable of applying a different color on the same page. At initial launch
of the product, the heads will be 1/3". Based on eight heads this will
allow a total color print band of 2.5". This can be applied all in one
location, or in eight different locations on the page. Following the
launch of the product, print head size will be increased to .85". Based on
eight heads this will allow a total color print band of 6.8". Print head
location is fixed on a job basis.
5.3 The launch version of the CC device will contain up to eight, none color
keyed, reservoirs; each with a 0.5 liter capacity.
5.4 The 4635 and 4890 both support duplex printing in their basic
capabilities. However, only simplex printing will be offered with the CC
devices. The output from the CC device can only be applied to one side of the
sheet as delivered by the IOT.
<PAGE>
6.0 Speed
6.1 The CC device shall be capable of accepting & processing cut sheet
input up 200 pages per minute.
7.0 Print Quality -
7.1 Fonts, logos, and graphics will meet, in both appearance and quality,
the jointly concurred to "ACS-1 35 Print Quality Specification",
P/N 01 30-0020
8.0 Safety
8.1 The CC device shall meet all Safety Regulations/Specifications per
paragraph 9.3.5, 4135 SRS #S-868-1 00
9.0 Colors -
9.1 Customers can choose from the full color spectrum. In addition to the
standard ink colors of cyan, magenta, yellow and black, custom and Pantone
colors will be available by special order.
10.0 DFA
10.1 The CC device implements the DFA Level 1 Specification per "Document
Feeding & Finishing Device Interface Level 1 Generic Spec." XNSG-1 59308.
11.0 Print Head Color/Location Verification Requirement
11.1 The CC device will perform integrity checks to include: verification
of each head location and colors loaded in each head and by capable of
comparing this information to the job requirements as sent from the ESS.
The CC device will provide print head color data (location and color) for
posting at the CC GUI.
12.0 Degraded Mode Operation
12.1 CC Device not Operational - In the event that the CC device is not
operational, the CC component of the document will be printed by the Xerox
IOT. The IOT will post a message to check the output, but the data will be
printed in black.
<PAGE>
12.2 Degraded Mode Operation - In the event that the CC device can not print
but is still capable of transporting paper a operator warning shall be posted
and the operator given the option of running the job (per the above) through the
CC device and into the out-put finishing device.
13.0 Reliability
13.1 OGMR: this is the sum of all service calls. It includes unscheduled
maintenance calls, and scheduled maintenance calls; no other Xerox
initiated calls are planned.
13.2 Shutdowns: A Shutdown is a system stoppage that an operator can recover
from without loss of job integrity. The overall system shutdown rate shall not
exceed the system shutdown rate indicated.
13.3 MTTR: Mean Time To Repair hardware problems in a customer environment.
14.0 Service Parts Costs
14.1 Mature/Bl field service parts cost target is $300 per million prints at
an average CC AMPV of 1,000,000 prints
<PAGE>
EXHIBIT B SUBJECT TO PENDING
----------------------------
CONFIDENTIAL TREATMENT REQUEST
------------------------------
<PAGE>
EXHIBIT C SUBJECT TO PENDING
----------------------------
CONFIDENTIAL TREATMENT REQUEST
------------------------------
<PAGE>
EXHIBIT 10.2
2 July, 1996
Mr. Norman L. Milliard
President and Chief Operating Officer
Accent Color Sciences
800 Connecticut Blvd.
East Hartford, CT 06108
Letter of Understanding
-----------------------
Dear Norman:
This letter agreement is an amendment to that certain agreement between the
parties effective February 16, 1996 styled a Product Development and
Distribution Agreement ("Agreement") and relates to ACS performing certain
additional development and testing work as more specifically described herein
and shall be effective on the date the last party hereto countersigns this
letter below (the "Effective Date").
1.WORK TO BE PERFORMED BY ACS. ACS will use its best efforts and at no
---------------------------
charge to Xerox or Colorbus to (a) deliver to Colorbus no later than July 1,
1996 an interface specification (including updates) which enables a digital
front end to be developed by Colorbus for Xerox under separate agreement by and
between Colorbus and Xerox to be interoperable and compatible with the ACS 135
Spot Printer; (b) software, together with appropriate documentation respecting
the integration logic to the ACS 135 Spot Printer which software has features
and functionality and in a format permitting the aforesaid digital front end
development, and (c) promptly after alpha and beta test units of such digital
front end are delivered to it by Colorbus or Xerox, test such Colorbus digital
front end for interoperability and compatibility with the ACS 135 Spot Printer.
2.AVAILABILITY OF ACS TECHNICAL SUPPORT. ACS will provide to Xerox and
-------------------------------------
Colorbus the following technical support: (a) ACS 135 Spot Printer installation,
(b) ACS 135 Spot Printer operator training, (c) ACS 135 Spot Printer service
at least in the United States and (d) on-site and telephone technical
consultation, as required to support the identified BO installations. In
addition, ACS will provide technical support services as described in paragraph
10.02 of the "Agreement".
<PAGE>
3.CONFIDENTIALITY. In the event one of the parties must disclose to the
---------------
other confidential information for the purpose of enabling either party to
perform its obligations thereunder, the disclosure and use of such information
shall be governed by that certain agreement between the parties styled a
"Confidential Disclosure Agreement" and signed by a representative of Xerox on
February 15, 1996.
4.PUBLICITY. Except as required by law, no party hereto will issue any
---------
public statement concerning this letter agreement, or otherwise make this
letter agreement public without the prior written consent of the other party.
5. EXPENSES. Each party will bear its own expenses in connection with the
--------
development and other work to be performed thereunder.
6.FORECASTS. Xerox shall provide to ACS forecasts per paragraph 4.07 of
---------
the Agreement. The first forecast for ACS units to be used in conjunction with
DocuTech is to be provided on or before September 1, 1996.
7.ENTIRE AGREEMENT. This letter agreement, its attached exhibits (Exhibit
----------------
"A" entitled "The Toucan Systems Requirements Overview", Exhibit "B" entitled
"Key Mileposts for Product Delivery From Accent Color Sciences to Xerox", and
Exhibit "C", entitled "Transfer Costs from Accent Color Sciences to Xerox") and
the Agreement contain the entire understandings of the parties with respect to
the subject matter hereof and supersedes any prior or contemporaneous written
instruments or oral agreements and may only be amended by a written instrument
signed by representatives of both parties. In the event of any inconsistency
between the terms contained in this letter agreement and those contained in the
Agreement, the former shall control.
<PAGE>
If the foregoing accurately sets forth our understanding with respect to
the subject matter hereof, kindly countersign this letter agreement where
indicated below and return such executed copy to the undersigned.
Very truly yours,
By:
--------------------
James A. Contino
Strategic Alliance Manager
Xerox Production Systems Group
AGREED AND ACCEPTED AS
OF THE DATE FIRST WRITTEN
ABOVE:
ACCENT COLOR SCIENCES
By:
------------------------------
Mr. Norman L. Milliard
President and Chief Operating Officer
Accent Color Sciences
------------------------------
Date
XEROX CORPORATION
By: ------------------------------
Steve Graham
Vice President and General Manager
Xerox Production Publishing Solutions
------------------------------
<PAGE>
EXHIBIT B SUBJECT TO PENDING
----------------------------
CONFIDENTIALITY REQUEST
-----------------------
<PAGE>
EXHIBIT C SUBJECT TO PENDING
----------------------------
CONFIDENTIALITY REQUEST
-----------------------
<PAGE>
IBM Printing Systems Company
Product Purchase Agreement
<PAGE>
Index
-----
1.0 Definitions ..............................................................6
1.1 Customer ........................................................6
1.2 Custom Material .................................................6
1.3 Defect ..........................................................6
1.4 End User ........................................................6
1.5 End User Documentation ..........................................6
1.6 Engineering Change ..............................................6
1.7 Epidemic Failure ................................................6
1.8 General Availability ............................................7
1.9 Invention .......................................................7
1.10 Options & Features ..............................................7
1.11 Printer Engines .................................................7
1.12 Product or Products .............................................7
1.13 Printer Specifications ..........................................7
1.14 Requisite Documentation .........................................7
1.15 Service Documentation ...........................................7
1.16 Spare Part or Spare Parts .......................................8
1.17 Supply or Supplies ..............................................8
2.0 Agreement Period .........................................................8
2.1 Term .............................................................8
2.2 Agreement Extensions .............................................8
3.0 Prices....................................................................8
3.1 Competitive Prices ...............................................8
3.2 Pricing Assumptions ..............................................8
3.3 Printers, Options and Features ...................................9
3.4 Spare Parts ......................................................9
3.5 Supplies .........................................................9
3.6 Taxes ...........................................................10
3.7 Most Favored Customer ...........................................10
4.0 Order Logistics..........................................................10
4.1 Forecasts .......................................................10
4.2 Orders ..........................................................11
4.3 Order Acceptance ................................................11
4.4 Order Changes ...................................................12
4.5 Cancellation ....................................................13
5.0 Packaging, Shipment and Delivery ........................................13
<PAGE>
5.1 Packaging .......................................................13
5.2 Delivery ........................................................13
5.3 Title and Risk of Loss ..........................................13
5.4 Liens, Claims and Encumbrances ..................................13
5.5 Transportation ..................................................13
6.0 Inspection and Acceptance ...............................................14
6.1 Inspection ......................................................14
6.2 Rejection of Non-Conforming Products ............................14
6.3 Effect or Rejection .............................................14
6.4 Effect of Payment ...............................................14
7.0 Payment..................................................................14
7.1 Invoicing Procedures ............................................14
7.2 Terms of Payment ................................................14
8.0 Product Changes .........................................................15
8.1 Seller Initiated Changes ........................................15
8.2 Buyer Initiated Changes .........................................15
8.3 Mandatory Changes ...............................................15
8.4 Product Enhancements ............................................16
8.5 New Products ....................................................16
9.0 Quality Assurance........................................................16
9.1 Quality Process .................................................16
9.2 ISO 9002 ........................................................16
10.0 Warranty and Representations ...........................................16
10.1 Product Warranty ...............................................16
10.2 Harmful Code Warranty ..........................................17
10.3 Claim Warranty .................................................17
10.4 License Warranty ...............................................17
10.5 Remedies for Breach of Warranty ................................17
10.6 Epidemic Failures ..............................................18
10.7 Limitation of Liability ........................................18
11.0 Indemnification ........................................................18
11.1 Patent, Copyright, Mask Work, and Trademark Indemnification ....18
11.2 Seller's Product and Other Indemnification .....................19
11.3 Buyer's Indemnification ........................................19
12.0 Product Support ........................................................19
12.1 End User Documentation and Service Documentation ...............19
<PAGE>
12.2 Training .......................................................20
12.3 Technical Support ..............................................20
13.0 Continuity of Supply ...................................................20
13.1 Current Products, Spare Parts and Supplies .....................20
13.2 Provision For Spare Parts and Supplies After Termination .......21
13.3 Force Majeure ..................................................21
14.0 Intellectual Property...................................................21
14.1 License of Software and Internal Code ..........................21
14.2 License of Patents and Appearance Designs ......................21
14.3 Ownership of Appearance Designs ................................22
14.4 Rights in Data .................................................22
14.5 Trademarks .....................................................22
14.6 Invention Disclosure ...........................................23
14.7 Invention Rights ...............................................23
14.8 Patent and Copyright Clearance Investigatio.....................23
15.0 Confidential Information ...............................................24
15.1 Handling of Confidential Information ...........................24
16.0 Termination.............................................................24
16.1 Material Breach ................................................24
16.2 Insolvency .....................................................24
17.0 General.................................................................25
17.1 Authority......................................................25
17.2 Compliance with Laws...........................................25
17.3 Limitation of Actions .........................................25
17.4 Waiver ........................................................25
17.5 Assignment ....................................................25
17.6 Entire Agreement ..............................................25
17.7 Independent Contractors .......................................25
17.8 Lost Profits/Consequential Damages ............................25
17.9 Notices .......................................................26
17.10 Modifications .................................................27
17.11 Severability ..................................................27
17.12 Controlling Law ...............................................27
17.13 Forum .........................................................27
17.14 Waiver of Jury Trial ..........................................27
17.15 Survival ......................................................27
17.16 Order of Precedence ...........................................27
17.17 Headings ......................................................27
17.18 Publicity .....................................................27
17.19 No Minimum Commitment .........................................28
<PAGE>
AGREEMENT
---------
This Agreement ("Agreement") is entered into this (date) day of (month), (year)
---- ----- ----
("Commencement Date") between International Business Machines Corporation, a New
York corporation with its principal office at Old Orchard Road, Armonk, New York
10504 ("Buyer") and Accent Color Sciences, Inc., a Connecticut corporation,
having an office at 99 East River Drive, East Hartford, Connecticut 06108
("Seller").
Buyer agrees to purchase from Seller and Seller agrees to sell to Buyer the
Products in accordance with the terms and conditions of this Agreement,
including its Attachments.
1.0 DEFINITIONS
1.1 "Customer" shall mean a person or other entity that acquires Products from
Buyer for resale to End Users.
1.2 "Custom Material" shall mean any software, firmware, hardware or document-
ation modifications or enhancements made by Seller in response to Buyer
initiated Engineering Changes.
1.3 "Defect" shall mean a condition that prevents a Product form operating in
accordance with its specification.
1.4 "End User" shall mean a person or other entity that acquires Products from
Buyer or its resellers for its own use.
1.5 "End User Documentation" shall mean the manuals, literature, or documents
and any updates thereto used by the End User in the operation of the
Product. The End User Documentation subject to this Agreement is
specified in Attachment 5.
1.6 "Engineering Change" shall mean any mechanical, electrical, electro-
mechanical, chemical, microcode, material, process, specification or
documentation change which, if made to the Products to be delivered
hereunder, would affect the performance, function, reliability,
availability,
<PAGE>
serviceability, appearance, manufacturability, dimensions, tolerances,
safety, testing or price of the Products.
1.7 Epidemic Failure" shall mean [*]
1.8 "General Availability" shall mean the date following announcement on which
printing systems which contain a Printer Engine are available for shipment
to End Users.
1.9 "Invention" shall mean any idea, design, concept, technique, invention,
discovery or improvement, whether or not patentable, that is (a)
incorporated in the Custom Materials, whether or not made solely by Seller
or one or more Seller employees or made jointly by Seller and/or Seller's
employees with Buyer or one or more employees of Buyer or (b) not
incorporated in the Custom Materials, but made jointly by Seller and/or
Seller's employees with one or more employees of Buyer, during the term in
the performance of this Agreement.
1.10 "Options and Features" shall mean incremental items not generally included
in the base configuration. The Options and Features subject to this
Agreement are listed in Attachment 1.
1.11 "Printer Engines" shall mean the printing systems to which Buyer's
controllers and other items are added to derive a full system printer. The
Printer Engines subject to this Agreement are listed in Attachment 1.
1.12 "Product" or "Products" shall mean all items acquired by Buyer from Seller
under this Agreement.
[*] OMITTED INFORMATION SUBJECT TO PENDING CONFIDENTIAL TREATMENT REQUEST
<PAGE>
1.13 "Printer Specifications" shall mean the specifications set forth in
Attachment 3.
1.14 "Requisite Documentation" shall mean [*].
1.15 "Service Documentation" shall mean the manuals, literature, hard and
softcopy documentation used to maintain the Products and any updates
thereto. The Service Documentation subject to this Agreement is listed in
Attachment 5.
1.16 "Spare Part" or "Spare Parts" shall mean any repair or replacement parts
used in the maintenance of Products. Spare Parts subject to this Agreement
are listed in Attachment 8.
1.17 "Supply" or "Supplies" shall mean any customer replaceable items consumed
during the operation of the Product. Supplies subject to this Agreement
are listed in Attachment I.
2.0 AGREEMENT PERIOD
2.1 TERM. This Agreement shall begin on the Commencement Date and shall
continue in effect for three (3) years.
2.2 AGREEMENT EXTENSIONS. Buyer will have the option to renew this Agreement
for two (2) additional one (1) year terms, Thereafter, this
[*] OMITTED INFORMATION SUBJECT TO PENDING CONFIDENTIAL TREATMENT REQUEST
<PAGE>
Agreement can be extended for additional one (1) year terms, only by mutual
written consent of the parties.
3.0 PRICES
3.1 COMPETITIVE PRICES. [*]
3.2 PRICING ASSUMPTIONS. Unless otherwise noted, prices shall include the
costs associated with packaging the Products in accordance with the
packaging specifications set forth in Attachment 2. Except as provided in
Sections 3.5 and 3.8, all prices shall remain firm for the term of this
Agreement.
3.3 PRINTER ENGINES, OPTIONS & FEATURES. Prices for the Printer Engines,
Options and Features are set forth in Attachment 1.
3.4 SPARE PARTS. Prices for the Spare Parts are set forth in Attachment 8.
[*] OMITTED INFORMATION SUBJECT TO PENDING CONFIDENTIAL TREATMENT REQUEST
<PAGE>
[*]
3.5 SUPPLIES. [*]
Buyer agrees to purchase its Supply needs from Seller for one year from the date
of General Availability of a Product and for as long thereafter as Seller's
prices for the Supplies in question remains competitive. [*]
[*] OMMITTED INFORMATION SUBJECT TO PENDING CONFIDENTIAL TREATMENT REQUEST.
<PAGE>
[*]
3.6 TAXES. All prices for Products, Spare Parts, and Supplies are exclusive of
federal, state and local excise, sales, value added, use and similar taxes.
Buyer shall be responsible for the payment of all such taxes, except those
taxes imposed on the Products prior to delivery to the carrier and taxes
based on Seller's net income. Buyer hereby certifies that it holds a valid
Reseller's exemption certificate in each applicable taxing jurisdiction for
Products purchased for resale. Seller shall, where the law permits, treat
Buyer as exempt from state and/or local sales tax for Products purchased
hereunder. Where required by state or local law, Buyer shall provide
Seller with a valid reseller's exemption certificate for each taxing
jurisdiction to which Seller will ship Products.
3.7 MOST FAVORED CUSTOMER. [*]
[*] OMITTED INFORMATION SUBJECT TO PENDING CONFIDENTIAL TREATMENT REQUEST
<PAGE>
[*]
4.0 ORDER LOGISTICS
4.1 FORECASTS. Prior to the twenty fifth (25th) calendar day of each month, for
the term of this Agreement and for the terms of all extensions thereof,
Buyer shall supply to Seller a forecast of its anticipated requirements for
Products to be delivered in the next twelve (12) consecutive months. For
those months for which a purchase order has been submitted, a forecast is
not required. Only designated Spare Parts will require a forecast. Those
Spare
Parts requiring a forecast will be designated in Attachment 8. Such
forecasts shall be used by Seller for planning purposes only and shall not
be construed as a purchase commitment.
4.2 ORDERS. Purchase orders shall serve as Buyer's only commitment to
purchase. All purchase orders shall reference this Agreement, and include
the following:
a) the Products being purchased,
b) the quantity requested,
c) the price,
d) the delivery location(s),
e) the requested delivery dates, and
f) the carrier and mode of transportation.
[*] OMITTED INFORMATION SUBJECT TO PENDING CONFIDENTIAL TREATMENT REQUEST.
<PAGE>
Purchase orders shall be submitted by the twenty fifth (25/th/) calendar day of
each month. The lead time period shall be the period of time between submission
of a purchase order for the delivery of finished units is described in the Table
I below:
Printer Engine Lead Time - Table I
----------------------------------
Lead Time Period Time Period
---------------- -----------
6 months 2/l/96 to 9/30/96
4 months 10/l/96 and beyond
The lead time period for purchase of Spare Parts will be three (3) months. The
lead time period for purchase of Supplies will be three (3) months for standard
ink colors. For special or other non-standard colors, the lead time period will
be targeted at three (3) months and Seller will use its best efforts to reach a
three (3) month lead time for special, non-standard ink colors. The parties
will meet in 1997 to finalize a plan to reach the three (3) month lead time for
special, non-standard ink colors and also address reducing the lead times for
Printer Engines and standard ink colors.
All purchase orders hereunder shall be issued solely pursuant to the terms and
conditions of this Agreement, notwithstanding any preprinted terms and
conditions on an order or terms and conditions attached to order acceptance.
4.3 ORDER ACCEPTANCE. Seller shall provide Buyer with a written or electronic
notice of acceptance or rejection of a purchase order no later than seven
(7) calendar days after receipt of the order. Any purchase order to which
Seller fails to respond within such seven (7) calendar days shall be deemed
to have been accepted by Seller. Any rejection shall include the reasons
for rejection. Seller may reject a purchase order only if it fails to
comply with the forecast, except as permitted herein, and other terms and
conditions of this Agreement.
4.4 ORDER CHANGES. Buyer may make quantity adjustments to purchase orders
in accordance with Table II below:
Finished Units Quantity Change - Table III
------------------------------------------
Lead Time Period Days prior to delivery Quantity Change
---------------- ---------------------- ---------------
<PAGE>
[*]
[*]
For those Spare Parts requiring a forecast, a quantity change can be made in
accordance with Table III below:
Spare Parts Quantity Change - Table III
---------------------------------------
Lead Time Period Days prior to delivery Quantity Change
---------------- ---------------------- ---------------
[*]
For supplies, a quantity change can be made in accordance with Table IV. below:
Supplies Quantity Changes - Table IV
------------------------------------
Lead Time Period Days prior to deliver Quantity Change
---------------- --------------------- ---------------
[*]
[*] OMITTED INFORMATION SUBJECT TO PENDING CONFIDENTIAL TREATMENT REQUEST.
<PAGE>
Seller will give Buyer the option to change high voltage print engines to low
voltage print engines and low voltage print engines to high voltage print
engines during the Seller's manufacturing process. The specific process for
accomplishing these changes in print engine voltage capability shall be mutually
agreed to by Buyer and Seller.
4.5 CANCELLATION. IBM may cancel purchase orders or portions thereof upon
written notice to ACS at any time. ACS shall take all steps to mitigate any
loss to IBM arising from such cancellation and in no event shall IBM's
obligations to ACS as a consequence of cancellation exceed the purchase
price of the Products ordered. Further, IBM shall not be liable to ACS for
any ACS lost profits. If ACS claims cancellation cost resulting from IBM's
Purchase Order cancellation and requests IBM to pay such cancellation cost,
AC S shall have the burden of proof to substantiate the cancellation cost
amount claimed. If requested by IBM, ACS shall agree to an independent
certified accountant (or other independent party appointed jointly by both
parties) review within a reasonable time after cancellation of ACS' business
records for the purpose of validating ACS' cancellation claim. Provided,
however, that IBM may not cancel any orders for Products without cause later
than thirty (30) days prior to the scheduled delivery date. Any payments
made by IBM by down payment or on account of an of an order which is later
canceled without cause shall be credited against any cancellation charges
payable by IBM hereunder.
5.0 PACKAGING, SHIPMENT AND DELIVERY
5.1 PACKAGING. Seller shall, at its expense, package Products for shipment in
accordance with the packaging specifications set forth in Attachment 2.
5.2 DELIVERY. Delivery of Products shall be F.O.B. Seller's location at
99 East River Drive, East Hartford, Connecticut.
5.3 TITLE AND RISK OF LOSS. Title to Products and all risk of loss shall pass
to Buyer upon delivery.
5.4 LIENS, CLAIMS AND ENCUMBRANCES. All Products shall be free and clear of
all liens, claims and encumbrances.
<PAGE>
5.5 TRANSPORTATION. The carrier and mode of transportation shall be selected
by the Buyer.
6.0 INSPECTION AND ACCEPTANCE
6.1 INSPECTION. Products delivered by Seller shall be subject to inspection by
Buyer at any time prior to acceptance to an End User to determine whether
such Products are in compliance with the Specifications and free from
defects in material or workmanship.
6.2 REJECTION OF NON-CONFORMING PRODUCTS. Buyer, in writing, may reject any
Product that is. not in compliance with the Product Specifications or that
is not free from defects in material or workmanship.
6.3 EFFECT OF REJECTION. Any nonconforming Product that has been rejected by
Buyer can, at Buyer's option after consultation with Seller:
a) be returned to Seller for repair, replacement or a refund of the
original purchase price, freight collect, or
b) be repaired by Seller at Buyer's designated facility, or
c) be repaired by Buyer at Seller's expense.
6.4 EFFECT OF PAYMENT. Payment by Buyer shall not constitute acceptance of the
Products or impair Buyer's remedies for non-conformance.
7.0 PAYMENT
7.1 INVOICING PROCEDURES. Seller shall issue individual invoices to Buyer for
each shipment no earlier than the delivery date of the Products.
<PAGE>
7.2 TERMS OF PAYMENT. Buyer shall pay Seller in full in U.S. dollars for
Products it purchases within thirty (30) days of receipt of Seller's
invoice therefor.
[*]
8.0 PRODUCT CHANGES
8.1 SELLER INITIATED CHANGES. Seller shall provide Buyer with the earliest
possible notice and a written evaluation of the anticipated effect of any
Seller initiated Engineering Change. Seller shall not make an Engineering
Change to the Products without Buyer's prior written consent. Buyer's
consent alone to a Seller initiated change will not convert any such change
into Custom Materials. A Seller initiated change may require that the
Product Specifications be updated.
8.2 BUYER INITIATED CHANGES. Buyer may propose Engineering Changes to the
Products by providing Seller with written notification. Seller agrees to
respond to Buyer's request in writing within thirty (30) days of receipt of
such notification. Seller's response ("Response") shall include an
evaluation of the impact of the proposed Engineering Changes on the price,
Specification and delivery schedule of the Products. Seller's Response
shall further include any one-time costs associated with the proposed
Engineering Changes, and revised Specifications for the affected Products
reflecting changes in its or their performance, failure rates, maintenance
requirements and useful life. If Buyer makes a written acceptance of
Seller's Response for implementing the proposed Engineering Changes, Seller
shall incorporate
[*] OMITTED INFORMATION SUBJECT TO PENDING CONFIDENTIAL TREATMENT REQUEST
<PAGE>
them into the Products upon the terms set forth in Seller's Response. In
this event, the Specifications shall be deemed amended by the Specification
changes included with Seller's Response.
If Buyer makes a counter proposal to Seller's Response instead of accepting it
as written, Seller agrees to respond thereto in writing within thirty (30) days
after receipt of such counter proposal. Seller's Response to Buyer's counter
proposal and Buyer's acceptance thereof shall be made in accordance with the
preceding paragraph as though they were, respectively, an initial Response and
acceptance thereof.
8.3 MANDATORY CHANGES. In the event an Engineering Change is required in order
for the Products to satisfy governmental standards, including safety and
environmental laws and regulations, avoid intellectual property infringement
or comply with the Specifications, Seller shall issue a mandatory
Engineering Change upon reasonable written notification to Buyer. Seller
shall also provide the required parts, materials, documentation, detailed
installation instructions and any special tools, equipment, or media to
Buyer at no charge and shall reimburse Buyer for the expenses it incurs in
implementing the mandatory Engineering Change. A mandatory change may
require that the Product Specifications be updated to refer to the new
governmental standards.
In the event that a mandatory change under this Section 8.3 is made retroactive,
the parties shall negotiate the extent to which each of them bears the cost of
field replacement or retrofit to meet the new or modified standard.
8.4 PRODUCT ENHANCEMENTS. If during the term of this Agreement Seller offers
any improvement, additional function, or other enhancement to any Product to
another party, Seller shall offer such improvement, additional function or
other enhancement to Buyer under substantially the same terms and
conditions, including price.
8.5 NEW PRODUCTS. If during the term of this Agreement Seller develops any new
or successor product which may reasonably be considered as a functional
replacement for the Products, such new or successor products shall be
included in this Agreement at a mutually agreed upon price and shall be
considered "Products" for the purposes of this Agreement.
<PAGE>
9.0 QUALITY ASSURANCE
9.1 QUALITY PROCESS. Seller shall maintain a quality assurance program and
adhere to the quality inspection and acceptance testing procedures
described in Attachment 4.
Seller shall subject all Products to the quality inspection testing procedures
prior to delivery to Buyer.
Buyer shall have the right to make periodic on-site audits to ensure Seller's
compliance with its quality assurance program and quality inspection procedures.
Seller shall provide Buyer with access to its quality inspection testing results
upon request.
9.2 ISO 9002. Seller shall diligently pursue ISO 9002 certification and
maintain such certification, if it is acquired during the term of this
Agreement or any extensions thereof, for the duration of this Agreement and
any extensions thereof
10.0 WARRANTIES AND REPRESENTATIONS
10.1 PRODUCT WARRANTY. Seller warrants that title to all Products delivered to
Buyer under this Agreement will be free and clear of all liens,
encumbrances, security interests or other claims. Seller also warrants
that the Products will be free of defects in design, material and
workmanship and, if operated in accordance with the applicable
Specifications, will conform to the Product Specifications for ninety (90)
days following installation of the Products at an End User's location. The
warranty with respect to Spare Parts and Supplies shall be the lesser of
ninety (90) days following installation thereof or [*] following delivery
from Seller. Buyer's inspection or acceptance of, or payment for, any
Products shall not constitute a waiver of any breach of warranty. The
procedure to be followed by Buyer and Seller in the event Buyer needs to
[*] OMITTED INFORMATION SUBJECT TO PENDING CONFIDENTIAL TREATMENT REQUEST
<PAGE>
return Products under this warranty is set forth in Attachment II of this
Agreement.
10.2 HARMFUL CODE WARRANTY. In the event that any of the Products are software
or include software of any type, Seller represents and warrants that each
such Product does not contain any code, programming instruction or set of
instructions that is intentionally constructed to damage, interfere with or
otherwise adversely affect operation of that Product or other computer
programming code, data files, or hardware without the consent and intent of
the Product user. Seller shall establish and enforce procedures, which
shall be reviewed with Buyer, and at Buyer's request, to prevent any such
code, programming instruction or set of instructions from being
incorporated into a Product and shall promptly notify Buyer of any
knowledge or suspicion that any such harmful code, programming instruction
or set of instructions has been incorporated into a Product.
10.3 CLAIM WARRANTY. Seller hereby represents and warrants that it has not
received and knows of no claim made or proceeding brought by a third party
on the basis that any Product, End User Documentation or Service
Documentation infringes or utilizes a patent, copyright, mask work, trade
secret or trademark of a third party and that no patent, copyright, mask
work, trade secret or trademark of a third party has been used without
permission to manufacture or complete such Product, End User Documentation
or Service Documentation or has been incorporated therein without
permission.
10.4 LICENSE WARRANTY. Seller hereby represents and warrants that it has the
full power and right to grant to Buyer each of the licenses set forth in
Section 14 of this Agreement.
10.5 REMEDUES FOR BREACH OF WARRANTY. In the event of a breach of the warranty
set forth in Section IO. 1, the nonconforming Products shall be remedied in
accordance with any of the following options as mutually agreed upon by
Buyer and Seller:
<PAGE>
a) the nonconforming Products or any parts thereof shall be returned to
Seller for repair, replacement, or a refund or credit in the amount of the
original purchase price, freight collect;
b) Seller shall make the necessary repairs at Buyer's designated
facility,
c) Buyer shall make the necessary repairs, with Seller furnishing the
necessary parts and reimbursing Buyer for its cost of labor at Buyer's then
current labor rates, or
d) Seller shall refund the Spare Parts or Supplies equivalent price to
the Buyer for all parts replaced during the warranty period and Buyer shall
scrap the replaced parts.
In the event of a breach of the warranties set forth in Section 10.2, the
Buyer's remedies shall be as follows:
e) Seller shall repair or correct by substitution of code and media at
Seller's expense all copies of code included in Products received by
Buyer and in Buyer's possession which have been adversely affected by
harmful code;
f) Seller shall repair or correct by substitution of code and media at
Seller's expense all copies of code included in Products received by Buyer
and in the possession of Buyer's Customers or End Users, which Products
have been adversely affected by harmful code; and
g) Subject to the limitations of Section 17.8, Seller shall, at its own
expense, indemnify, defend and hold harmless Buyer, its Subsidiaries, its
and their successors and assigns, officers, employees, agents, End Users
and resellers from and against all damages, costs or expenses incurred as a
result of any claim that a Product, Spare Part and/or Supply, including
harmful code set forth in Section 10.2 hereof Buyer shall promptly notify
Seller of any such claim and cooperate fully with Seller. Seller shall
have control of the defense against such claim, except that Buyer shall
have the right to retain counsel for purposes of bringing a claim under
this Agreement or to
<PAGE>
participate in the defense or settlement thereof if such claim is brought
by a third party.
If a claim is made under Section 10.2 for damages arising from harmful software
code, Seller shall not be obligated to perform any of the remedies listed above
if the claim resulted, directly or indirectly, from a modification of or
addition to the code by someone other than ACS' employees or agents.
10.6 EPIDEMIC FAILURES. In the event of an Epidemic Failure, Seller shall at
its expense repair the defective Products, replace the defective Products
or reimburse Buyer for the costs it incurs correcting the defect. Any
Products returned to Seller shall be returned freight collect.
10.7 LIMITATION OF WARRANTIES.
THE FOREGOING WARRANTIES ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
11.0 INDEMNIFICATION
11.1 PATENT, COPYRIGHT, MASK WORK, AND TRADEMARK INDEMNIFICATION. Seller
shall, at its own expense, indemnify, defend and hold harmless Buyer, its
subsidiaries, its and their successors and assigns, officers, employees, agents,
End Users and resellers from and against all damages, costs or expenses incurred
as a result of any claim that a Products provided hereunder infringes a patent,
copyright, mask work, or trademark. Buyer shall promptly notify Seller of any
such claim, and cooperate fully with Seller. Seller shall have control of the
defense against such claim, except that Buyer shall have the right to retain
counsel and participate in the defense or settlement.
In the event that an injunction is obtained against the use or sale of a
Product, Seller shall, at its own expense, either:
a) [*]
[*] OMITTED INFORMATION SUBJECT TO PENDING CONFIDENTIAL TREATMENT REQUEST
<PAGE>
b) [*]
c) [*]
Notwithstanding the foregoing, Seller shall not be obligated to indemnify Buyer
if the infringement is caused by Buyer's modification of the Product after
delivery by Seller and such infringement would not have occurred but for such
Buyer modification.
11.2 SELLER'S PRODUCT AND OTHER INDEMNIFICATION. Seller shall indemnify and
hold Buyer, its subsidiaries, its and their successors and assigns,
officers, employees and agents harmless from any claims for personal injury
or property damage caused by any defect in design or manufacture of the
Products or by Seller's negligent act, omission or willful misconduct.
11.3 BUYER'S INDEMNIFICATION. Buyer shall indemnify and hold Seller, its
subsidiaries, its and their successors and assigns, officers, employees and
agents harmless from any claims for personal injury or property damage
caused by any defect in design or manufacture of the Buyer's products or by
Buyer's negligent act, omission or willful misconduct.
12.0 PRODUCT SUPPORT
12.1 END USER DOCUMENTATION AND SERVICE DOCUMENTATION. Seller shall furnish to
Buyer two (2) English language copies of the End User Documentation and
Service Documentation at no charge, and a camera ready copy and electronic
equivalent of the End User and Service Documentation at the prices, if any,
set forth in Attachment 5. Seller shall also furnish Buyer with updates to
the End User Documentation and Service Documentation within thirty (30)
days of their internal availability. Seller hereby grants Buyer a
worldwide, non-exclusive, non-transferable royalty-free license to
duplicate and redistribute all or any part of the End User Documentation
and Service Documentation and to make, have made and distribute derivative
works based on such End User Documentation and Service Documentation for
use
[*] OMITTED INFORMATION SUBJECT TO PENDING CONFIDENTIAL TREATMENT REQUEST
<PAGE>
in connection with the sale, use, installation, repair and maintenance
of the Products.
12.2 TRAINING. Seller shall provide Buyer with one (1) training class in the
United States at Buyer's Boulder, Colorado location in March 1996 and one
(1) training class in Europe for up to twenty (20) students per class at a
date to be determined, both classes at no charge to Buyer. Additional
training classes shall be furnished by the Seller at a mutually agreed upon
price per session. The classes will be held at mutually agreed upon times
at the same locations as the original training classes. The Buyer shall be
responsible for the travel and living expenses of its employees. In the
event Buyer requests that a training class be held at a location other than
specified above, Buyer will reimburse Seller for the reasonable travel and
living expenses incurred by Seller's training personnel. Training classes
may be videotaped by Buyer and any training materials may be copied for
future training use by Buyer.
12.3 TECHNICAL SUPPORT. Seller shall provide Buyer with telephone technical
support during the term of this Agreement at no charge to Buyer. Such
support shall be provided as set forth in Attachment 6. If a technical
problem cannot be resolved by telephone technical support, Seller shall
provide on site technical support to Buyer at the rates specified in
Attachment 6 provided, however, that Buyer shall not be required to make
any payments to Seller for on site technical support if the technical
problem is due to a defect in design, resulting in a failure of the
Products to conform to the Product Specifications.
13.0 CONTINUITY OF SUPPLY
13.1 CURRENT PRODUCTS, SPARE PARTS, AND SUPPLIES. In the event that Seller
shall fail or be unable for any reason to provide Products, Spare Parts,
and/or Supplies within [*] following receipt of written notice of default
from Buyer, Seller shall, at Buyer's request and without charge to Buyer,
provide for an experienced manufacturer to supply the Products, Spare
Parts, or Supplies to Buyer at the prices and under the terms and
conditions set forth in this Agreement, or shall within [*] of such notice
provide Buyer with the Requisite Documentation and promptly license Buyer,
or a party designated by Buyer, at no cost to manufacture and/or assemble
or have manufactured and/or assembled on
[*] OMITTED INFORMATION SUBJECT TO PENDING CONFIDETIAL TREATMENT REQUEST
<PAGE>
Buyer's behalf the Products, Spare Parts or Supplies that Seller is unable
to supply. Such license shall be non-exclusive, and shall be limited to the
manufacture and assembly of Products, Spare Parts or Supplies for Buyer's
use or for sale to Buyer's Customers or End Users and shall continue in
effect for as long a Seller is unable to deliver Products pursuant to this
Agreement. Seller shall also provide technical assistance to Buyer or to a
party designated by Buyer to support the manufacture of the Products and
Spare Parts. Any such assistance shall be provided at prices that do not
exceed Seller's then current charges for technical services.
13.2 PROVISION FOR SPARE PARTS AND SUPPLIES AFTER TERMINATION. In the event
either party terminates this Agreement or any Printer Engine is
discontinued, whichever occurs first, Seller agrees to allow Buyer to
purchase Spare Parts and Supplies at the then current prices, that is, the
price at the time each order is submitted by Buyer to Seller, for a period
of up to [*] from the date the last Printer Engine is delivered under this
Agreement. In addition, if Seller elects to discontinue providing Spare
Parts and/or Supplies for such Printer Engine after such [*] period, Seller
shall offer Buyer a last-time buy in quantities sufficient to satisfy the
requirements of Buyer's End Users.
[*]
[*] OMITTED INFORMATION SUBJECT TO PENDING CONFIDENTIAL TREATMENT REQUEST
<PAGE>
13.3 FORCE MAJEURE. Neither party shall be responsible for failure to fulfill
its obligations under this Agreement due to causes beyond its control
including, but not limited to, accidents, labor disputes, military
conflicts, insurrections, riots, explosions, lightning, earthquakes, fires,
storms and floods.
14.0 INTELLECTUAL PROPERTY
14.1 LICENSE OF SOFTWARE AND INTERNAL CODE. Seller hereby grants to Buyer a
worldwide, non-exclusive, non-transferable, royalty-free license to use, to
sublicense to End Users to use, and to sublicense authorized agents,
resellers, and distributors to use and sublicense to End Users to use, the
software and internal code listed in Attachment 7 in connection with the
Products.
14.2 LICENSE OF PATENTS AND APPEARANCE DESIGNS. Seller hereby grants to Buyer
worldwide, non-exclusive non-transferable, royalty-free patent and
appearance design patent license to all patents owned or licensable by
Seller that cover or relate to use of (a) the software or internal code
listed in Attachment 7 and (b) the Products listed in Attachment 1. Seller
also grants Buyer the right to sublicense its End Users to use, and to
sublicense its subsidiaries and its and their authorized agents, resellers,
and distributors to use and sublicense to End Users to use, such software,
internal code and/or Products.
14.3 OWNERSHIP OF APPEARANCE DESIGNS. To the extent that Buyer uses its own
design appearance for a Product, that design appearance shall remain the
exclusive property of Buyer and Seller may not and agrees not to utilize
such design appearance for its own products. To the extent that Buyer
requests Seller to incorporate appearance design changes in a Product that
Buyer is purchasing under this Agreement as Custom Materials hereunder,
Seller agrees that such changes in appearance design shall be the exclusive
property of Buyer and Seller may not and agrees not to utilize such changes
in appearance design for its own products. The parties agree that Buyer is
licensed, as per subsection 14.2 above, to use portions or all of Seller's
appearance designs should Buyer have no desire to use its own or a modified
appearance design for a Product.
<PAGE>
14.4 RIGHTS IN DATA. All of the Custom Material prepared specifically for Buyer
under this Agreement shall belong exclusively to Buyer and shall be deemed
to be works made for hire. To the extent that any of the items may not, by
operation of law, be works made for hire, Seller hereby assigns to Buyer
the ownership of copyright in such Custom Material and Buyer shall have the
right to obtain and hold in its own name copyrights, registrations and
similar protection which may be available in such Custom Material. Seller
agrees to give buyer all assistance reasonably required to perfect such
rights. To the extent that any of Seller's preexisting materials are
contained in such Custom Material, Seller grants to Buyer an irrevocable,
non-exclusive, worldwide, royalty-free license to:
a) use, execute, reproduce, display, perform, distribute (internally or
externally) copies of, and prepare derivative works based upon, such pre-
existing materials and derivative works thereof, and
b) license, sublicense and authorize others to do any, some or all of the
foregoing.
No license or right is granted to Seller, either expressly or by implication,
estoppel or otherwise to use, execute, reproduce, display, perform, distribute
copies of, or prepare derivative works based upon, any of such Custom Material
either during or after the term of this Agreement, except that Seller is free to
use its pre-existing materials in any manner, without restriction or any
obligation to Buyer.
14.5 TRADEMARKS. Except as permitted by local law, neither party shall have the
right to use the trademarks, trade names or logos of the other party in
connection with any product, promotion or publication without the prior
written approval of the other party.
14.6 INVENTION DISCLOSURE. Seller shall promptly make a complete written
disclosure to Buyer of each Invention arising out of Custom Material work,
and Buyer and Seller shall each promptly make a complete written disclosure
to the other of each joint Invention, in any case, specifically pointing
out the features or concepts which Seller or Buyer believes to be new or
different.
<PAGE>
14.7 INVENTION RIGHTS. Seller hereby assigns to Buyer, its successors and
assigns, every sole and joint Invention made by Seller arising out of the
creation of Custom Materials under this Agreement, for which Buyer has
paid, together with the right to seek protection by obtaining patent rights
therefor and to claim all rights of priority thereunder, and the same shall
become and remain Buyer's property whether or not such protection is
sought.
Buyer will grant Seller a non-exclusive license to any Invention that has been
created as or grows out of Custom Materials for which Buyer has paid, provided
that Seller gives Buyer a lead time of at least [*], during which time only
Buyer's Products may be marketed with such Inventions incorporated therein,
provided, however, that Seller may not incorporate such an Invention in the
products of any other of its buyers who declines to permit Seller made
improvements to be incorporated in Buyer's Products .
Seller shall, upon Buyer's request and at Buyer's expense, cause patent
applications to be filed thereon through solicitors designated by Buyer, and
forthwith assign all such applications to Buyer, its successors and assigns.
Seller shall give Buyer and its solicitors all reasonable assistance in
connection with the preparation and prosecution of any such patent applications
and shall cause to be executed all such assignments and other instruments and
documents as Buyer shall consider necessary or appropriate to carry out the
intent of this Section 14 and its Subsections.
Each joint Invention made by Seller and Buyer not arising out of the creation of
Custom Materials under this Agreement shall be owned jointly by the parties and
Buyer and Seller shall be entitled to deal with each such joint Invention as
though it were a sole invention with no obligation to account to the other with
respect to any such joint Invention.
14.8 PATENT AND COPYRIGHT CLEARANCE INVESTIGATION. Seller will disclose to
Buyer in writing, within [*] of Buyer's request thereof,
sufficient technical information necessary to enable Buyer to conduct a
patent clearance investigation with respect to Products to be delivered
hereunder. Seller shall also promptly notify Buyer in writing of any
patents of third parties which pertain to the Products, and of any suits or
[*] OMITTED INFORMATION SUBJECT TO PENDING CONFIDENTIAL TREATEMENT REQUEST
<PAGE>
claims of patent infringement which have made with respect to the Products.
15.0 CONFIDENTIAL INFORMATION.
15.1 HANDLING OF CONFIDENTIAL INFORMATION. All disclosures of confidential
information shall be made pursuant to the terms and conditions of the
Confidential Disclosure Agreement ("CDA") between the parties, which is
incorporated herein by reference as Attachment 9, or another written,
confidential disclosure agreement that is mutually agreed to by the
parties.
16.0 TERMINATION
16.1 MATERIAL BREACH. Either party may terminate this Agreement or any purchase
order issued hereunder effective immediately upon written notice of
termination to the other party in the event the other party materially
breaches this Agreement and such breach is not cured within thirty (30)
days after receipt of the written notice of breach from the terminating
party. If this Agreement is terminated by Seller due to Buyer's breach,
Buyer's sole obligation to Seller for such breach shall be the payment to
Seller for (1) all Products shipped to and accepted by Buyer prior to the
effective date of such termination, and (2) all costs incurred by Seller in
the production of any unfinished Products, including but not limited to
Seller's costs associated with the acquisition of raw materials and/or
component parts and the costs of terminating contracts with its vendors;
provided, however, that Seller shall make a commercially prudent effort in
such event to mitigate Buyer's damages.
16.2 INSOLVENCY. Buyer may terminate this Agreement if, more than [*] after the
Commencement Date hereof:
a) Seller becomes insolvent or unable to meet its obligations as they
become due,
b) a petition or proceeding, voluntary or involuntary, for relief under
bankruptcy, insolvency, reorganization, dissolution, winding-up,
receivership, liquidation or similar law is filed or commenced by or
against Seller, or
[*] OMITTED INFORMATION SUBJECT TO PENDING CONFIDENTIAL TREATMENT REQUEST
<PAGE>
c) a trustee, custodian, receiver or similar officer is appointed to take
charge of all or part of Seller's business.
During the [*] period after the Commencement Date of this Agreement, Buyer may
twice, without cause, request Seller to give Buyer written assurance of Seller's
general financial condition. These requests may be made upon the [*] and
[*]anniversaries of the Commencement Date. Buyer may also request written
reassurance from Seller as to Seller's financial status during the term of this
Agreement and any extensions thereof provided that Buyer states specific
appropriate reasons therefor and, if Buyer so states its reasons, Seller shall
be obligated to reply to Buyer within thirty (30) business days of receipt of
Buyer's request.
In the event of termination for insolvency, Seller shall provide to Buyer any
and all Requisite Documentation.
17.0 GENERAL
17.1 AUTHORITY. Each party represents that it has the authority to enter into
and perform all of the obligations set forth in this Agreement.
17.2 COMPLIANCE WITH LAWS. Each party shall comply with all applicable federal,
state and local laws, regulations and ordinances including, but not limited
to, the regulations of the United States Department of Commerce relating to
the export of products or technical data.
17.3 LIMITATION OF ACTIONS. Neither party may bring an action, regardless of
form, arising out of this Agreement, more than two years after the cause of
action has arisen.
17.4 WAIVER. Failure of either party to enforce any provision of this Agreement
shall not be deemed a waiver of future enforcement of that or any other
provision.
[*] OMITTED INFORMATION SUBJECT TO PENDING CONFIDENTIAL TREATMENT REQUEST
<PAGE>
17.5 ASSIGNMENT. Neither party can assign its rights or delegate its
obligations under this Agreement without the prior written consent of the
other party.
17.6 ENTIRE AGREEMENT. This Agreement is the complete and exclusive statement
of the agreement between the parties and supersedes any and all prior oral
or written communications between the parties relating to the subject
matter hereof [*]
17.7 INDEPENDENT CONTRACTORS. Both parties are independent contractors.
Nothing in this Agreement shall be deemed to create an agency, partnership,
joint venture, or employer/employee relationship.
17.8 LOST PROFITS/CONSEQUENTIAL DAMAGES. In no event shall either party be
liable for any lost profits or consequential damages arising out of, or
relating to this Agreement.
17.9 NOTICES Any notice which may be or is required to be given under this
Agreement shall be in writing, and shall be deemed to have been received:
a) when delivered personally,
b) when sent by confirmed facsimile,
c) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or
d) one (1) day after deposit with a commercial oven-tight carrier with written
verification of receipt.
All notices shall be sent to the addresses set forth below:
Notices regarding technical information:
[*] OMITTED INFORMATION SUBJECT TO PENDING CONFIDENTIAL TREATMENT REQUEST
<PAGE>
BUYER: SELLER:
[*] [*]
----------- -------------
(Name) (Name)
Senior Engineer Product Manager
--------------- ---------------
(Title) (Title)
6300 Diagonal Highway 99 East River Drive
Boulder, CO 80301 East Hartford, CT 06108
----------------- -----------------------
(Address) (Address)
Notices regarding contract administration, daily operations and updates and
modifications to the contract attachments:
BUYER: SELLER:
[*] [*]
------------------- ------------
(Name) (Name)
Contract Administrator/Engineer Director of Marketing
------------------------------- ---------------------
(Title) (Title)
1701 North Street 99 East River Drive
Endicott, NY 13760 East Hartford, CT 06108
------------------ -----------------------
(Address) (Address)
Notices regarding contract modifications and contract interpretation:
BUYER: SELLER:
[*] [*]
------------------- ------------------
(Name) (Name)
Director, Business Alliances Vice President
---------------------------- --------------
(Title) (Title)
150 Kettleton Road 99 East River Drive
Southbury, CT 06488 East Hartford, CT 06108
------------------- -----------------------
(Address) (Address)
[*] OMITTED INFORMATION SUBJECT TO PENDING CONFIDENTIAL TREATMENT REQUEST
<PAGE>
17.10 MODEFICATIONS. This Agreement can be modified only by a written
amendment signed by the authorized representatives of the parties.
17.11 SEVERABILITY. If any provision of this Agreement or the application
thereof is held by any court of competent jurisdiction to be invalid,
illegal or unenforceable, such invalidity shall not affect the other
provisions of this Agreement, the enforceability of this Agreement as a
whole or the enforceability of such provision in other jurisdictions to
the extent permitted by law.
17.12 CONTROLLING LAW. This agreement shall be governed and construed in all
respects in accordance with the laws and regulations of the State of New
York, without reference to choice of law principles.
17.13 FORUM. Any action or proceeding brought to enforce or resolve disputes
relating to this Agreement shall be brought before a court of competent
jurisdiction by Seller in the State of Connecticut, including a Federal
District Court sitting within such state, or by Buyer before a court of
competent jurisdiction in the State of Colorado, including a Federal
District Court sitting within such state. Neither party shall attest that
such court lacks jurisdiction over such party or the subject matter hereof
17.14 WAIVER OF JURY TRIAL. The parties expressly waive any right they may have
to a jury trial.
17.15 SURVIVAL. All provisions which by their nature extend beyond the
termination or expiration of this Agreement shall remain in effect beyond
any termination or expiration.
17.16 ORDER OF PRECEDENCE. To the extent any terms and conditions of this
Agreement conflict with the terms and conditions of any invoice, purchase
order or purchase order acknowledgment, the terms and conditions of this
Agreement shall control.
17.17 HEADINGS. The headings and titles of the provisions of this Agreement are
inserted for convenience only and shall not affect the construction or
interpretation of any provision.
<PAGE>
17.18 PUBLICITY Neither party shall publicly disclose the existence of this
Agreement, any information concerning this Agreement or the terms and
conditions of this Agreement, except as required by law, without the prior
written consent of the other party.
17.19 NO MINIMUM COMMITMENT. Both Buyer and Seller understand and agree that
the Agreement does not obligate Buyer to purchase a minimum amount of
Products.
IN WITNESS WHEREOF, both Buyer and Seller have executed this Agreement by their
respective authorized representatives.
INTERNATIONAL BUSINESS ACCENT COLOR SCIENCES, INC.
MACHINES CORPORATION
By: By:
-------------------------- ------------------------
(Signature) (Signature)
Name: Richard T. Myers, Jr. Name: Richard J. Coburn
-------------------- -----------------
Title: Vice-President Development Title: President
--------------------------- ---------
Date: April 11, 1996 Date: April 16, 1996
-------------- --------------
<PAGE>
ATTACHMENT 1 SUBJECT TO PENDING
-------------------------------------
CONFIDENTIAL TREATMENT REQUEST
------------------------------------
<PAGE>
ATTACHMENT 2: PACKAGING SPECIFICATIONS
All product(s) which buyer purchases from seller shall adhere to IBM packaging
specifications. These requirements are specified in the document "packaging and
materials handling/supplier and interplant requirements". The document number
is GA21-9261-9, a copy of which has been given to Seller by Buyer and which
Seller acknowledges receipt of.
<PAGE>
ATTACHMENT 3 SUBJECT TO PENDING
------------------------------------
CONFIDENTIAL TREATMENT REQUEST
------------------------------------
<PAGE>
Attachment 4: Quality Assurance and Testing Procedures
1.0 ACS QUALITY SYSTEM
ACS is committed to quality and excellence in achieving the goals for total
customer satisfaction and to deliver quality and cost competitive Product and
Spare Parts on time while continuously seeking to improve all work processes.
2.0 QUALITY LEVELS
The acceptable incoming quality level goal from ACS to IBM is defect free
Product and Spare Parts conforming to the Product and Spare Parts Specification
referenced in Attachment 3. ACS is required to make every effort to produce
Product and Spare Parts meeting this goal. A continuous Product and Spare Parts
and process improvement program shall be maintained by ACS to help in achieving
this goal.
3.0 QUALITY PLAN
ACS shall provide to IBM thirty (30) days prior to IBM's Product Commercial
Limited or General Availability, a documented Manufacturing, Quality & Test Plan
which specifies ACS's Manufacturing, Quality & Test processes designed to meet
the Product and Spare Parts Specification. This plan shall include, but not be
limited to procedures which define the following-.
. Receiving inspection of subcontract or purchased units/ components
. Control procedures for nonconforming material.
. Tool, gauges and test equipment certification and calibration program
. Manufacturing flow diagrams which identified the flow of the Product and
Spare Parts from receiving of detail or component parts through the assembly,
inspection test, packaging and shipping operations.
. Inspection records for in-process, final inspection and test
. Acceptance test procedures for subassemblies and final assemblies
. Engineering change control procedures
. Packaging stocking and shipping of acceptable assemblies
. Defect data collections and process reporting
. Plan for inspection, test, and packaging of those parts identified as
maintenance Spare Parts
Definition of good workmanship
. Procedure for qualifying parts/processes from subcontractors
IBM/ACS Product Purchase Agreement Page 137 April 11, 1996
<PAGE>
The manufacturing/quality/test processes must be described to the extent
necessary to assure that defects are detected and removed at the earliest
practical point.
4.0 DEFECTIVE PRODUCTS OR SPARE PARTS
When IBM notifies ACS of defective Product and Spare Parts it has received from
ACS, ACS shall perform a defect analysis and define appropriate corrective
action and communicate it to IBM within four (4) working days. IBM will be
required to accept or reject the submitted corrective action within four (4)
working days of the receiving the plan. If IBM has not accepted or rejected the
plan within the four (4) day period, the corrective action shall be considered
accepted.
5.0 DATA RECORDS
ACS is responsible for collection of data and summary reports as mutually agreed
to by ACS and IBM. ACS's quality data shall be kept for a minimum of three (3)
years. IBM shall have the opportunity to review quality data upon request. IBM
reserves the right to ask ACS what kinds of failure analysis and/or corrective
actions are being taken to improve the Product and Spare Parts or processes
and/or eliminate defects.
6.0 HARDWARE ERRORS
IBM defines a hardware Error as any nonconformity that would prompt a service
call being reported by IBM and/or End User. The following nonexclusive list
serves as examples of hardware defects:
. Product and Spare Parts not built and/or shipped to IBM's order
. Product and Spare Parts having a visual/ mechanical/ functional defect
. Missing/incorrect Product and Spare Parts features
. Product and Spare Parts shipping damage (handling forces typical industry
standard)
The following non-inclusive list serves as examples of defects that IBM will not
hold ACS responsible for:
. Product and Spare Parts ordered incorrectly by IBM's marketing force
. Product and Spare Parts shipping damage (handling forces positively exceeded
industry standard)
. Product and Spare Parts improperly installed or End User improperly trained
. User complaints due to documentation modified by IBM
7.0 AUDIT INSPECTIONS
7.1 Location of Audits
IBM/ACS Product Purchase Agreement Page 137 April 11, 1996
<PAGE>
IBM reserves the right to audit Product and Spare Parts from a
manufacturing/quality/reliability standpoint. The audit inspection may be
performed at any one of the two (2) following locations:
a) At ACS's point of manufacture: This would be done with prior agreement
with ACS so as to keep the disruption of the manufacturing line to a
minimum. ACS will provide the appropriate space, tools, equipment and
personnel to aid IBM in the audit. Each party will be responsible for its
own expenses.
b) At IBM's distribution center(s): IBM reserves the right to audit the
Product and Spare Parts at IBM's distribution center(s). ACS will provide
the necessary drawings required by an IBM quality inspector to enable this
inspector to determine the quality level of Products or Spare Parts.
7.2 Audit Findings
After completion of the audit, IBM and the ACS will jointly agree to the
disposition of the Product and Spare Parts based on the findings of the audit.
7.3 Corrective Action
If defects are found in the quality audit, ACS agrees to perform failure and
process analysis and initiate positive corrective action. ACS will provide the
necessary parts, documentation and labor to correct the defects on the audited
Product and Spare Parts prior to shipment of such Product and Spare Parts to the
end user.
7.4 IBM Responsibilities
IBM quality assurance audit activities will be in progress throughout the term
of this Agreement. These activities in no way replace ACS's quality assurance
efforts.
8.0 SUPPLIER EVALUATION
8.1 Supplier Audits
IBM reserves the fight to conduct preliminary and periodic audits to assure that
ACS's and/or ACS's subcontractors facilities, manufacturing and quality
assurance programs are adequate for production of the Product and Spare Parts to
meet the Product and Spare Parts Specifications. Audits of ACS suppliers by IBM
must be agreed to and coordinated by ACS to ensure minimal interruption to ACS
suppliers.
8.2 Audit Personnel
IBM/ACS Product Purchase Agreement Page 138 April 11, 1996
<PAGE>
IBM may assign a resident representative to ACS's facility to perform source
audits. Appropriate notification will be given to ACS of this intent.
9.0 Product and Spare Parts PERFORMANCE
9.1 General
IBM will periodically provide ACS with summary defect data. The period the data
will cover will be established by the parties, as needed, to ensure defect free
Product and Spare Parts. The data provided will be the combined results of
incoming quality audits, any defect discovered during prove integration into IBM
process and field repair audits.
The parties shall meet at least one (1) time each calendar quarter to review
this data, defect trends and any corrective actions that were implemented or
need to be implemented to eliminate defects.
9.2 Installation
IBM expects that Product and Spare Parts will be installed by IBM's Customer
Engineering force in the field defect free. The goal for the three (3) month
rolling average for install will be at least 97% defect free.
9.3 Early Life
IBM expects that the Product and Spare Parts will perform in the field (at the
End User location) without failure. The goal for the three month rolling
average for early life failures will be jointly determined by IBM and ACS.
9.4 Full Field
IBM expects that the Product and Spare Parts will perform in the field (at the
End User location) without failure. The goal for the three month rolling
average for full field defects will be jointly determined by IBM and ACS.
9.5 Remedies
If the Product and Spare Part fails to meet the above quality/reliability
requirements for the install, early life or full field, IBM and ACS agree to
perform failure/process analysis and provide positive corrective actions. Such
corrective actions may require actions by IBM, ACS, or both parties. If it is
determined that ACS is the cause of the failure to meet the above
quality/reliability requirements, ACS shall issue Engineering Changes as defined
in Section 8 "PRODUCT CHANGES" of this Agreement, to remedy the cause of the
failure. Other actions may be required to remedy such failures and will be
negotiated on an event by event basis and mutually agreed to by the parties.
<PAGE>
IBM/ACS Product Purchase Agreement
Page 139
April 11, 1996
<PAGE>
10.0 SPARE PART PERFORMANCE
10.1 Criteria
IBM expects Spare Parts supplied by ACS to be defect free. The new defective
("new D") goal for Spare Parts supplied by ACS to IBM shall be 3% or less. The
"new D" rate will be reported by IBM's quality engineer to ACS on a monthly
basis.
10.2 Defective Spare Parts Return
IBM agrees to have defective or rejected Spare Parts returned from IBM's
Customer Engineering Force in the field. IBM will then return these parts to
ACS for failure analysis and corrective action when agreed upon by IBM and ACS.
10.3 Remedies
If ACS fails to meet the above quality/reliability requirement for Spare Parts,
ACS agrees to perform failure/process analysis and provide positive corrective
action. Upon mutual agreement, ACS will provide the necessary parts,
documentation and labor to correct the problem at ACS's repair facility or
reimburse IBM for the same. IBM reserves the fight to return all suspect Spare
Parts from IBM's Spare Parts distribution network for repair/replacement by ACS.
11.0 NONCONFORMING MATERIAL
11.1 Acceptance
Product and Spare Parts not conforming to the specifications required by this
agreement are not acceptable for shipment to IBM except when an off-
specification (off-spec) request has been made by ACS and approved by IBM's
manufacturing or quality engineer. Off-specs will not be considered for safety
or functional defects.
11.2 Disposal
Procedures are required by ACS to identify, evaluate, control and dispose of
non-conforming material. Such material must be segregated to prevent
contamination of production lots.
IBM/ACS Product Purchase Agreement
Page 140
April 11, 1996
<PAGE>
Attachment 5: Documentation
- ---------------------------
Below is a list of the documentation requirements:
ACS DELIVERABLES-
1. Customer Information Units:
- Operator's Guide
- Program Integrated Information (PII) - messages, screen text, help
2. Service Information Units:
- Maintenance Information
3. Early source graphic and .pcx file to be provided to IBM for format
verification.
4. The above information units should follow the IBM Information Development
Guidelines and pass reviews provided by IBM. Reviews are to be scheduled early
in the development of the documentation to ensure we are heading in the right
direction, another review toward the middle of the documentation development
cycle and a final review prior to the transferring of the data sets. These
reviews are a minimum, but should be sufficient if finished sections are
delivered for ongoing review and comment. Finished non language translated
documentation must be delivered 45 days prior to general availability.
Documentation which requires language translation will be delivered at least 12
weeks prior to general availability.
5. The final deliverables will include complete and accurate FrameMaker source
files and hardcopy.
The following are requirements for items I & 2 above.
* Tools Requirements
- FrameMaker 4.0 or later
- Graphics tool used must be compatible with FrameMaker 4.0
* Text File Requirements
- Naming conventions for text files-.
- filename.mkr for chapter files (file naming conventions TBD)
- PC directory structure for text files:
- c:\3991\text\main\filename.mkr - Maintenance Information files
- c:\3991\text\oper\filename.mkr - Operator's Guide files
- Use BMSTYL3.MKR template for all customer documentation
- File size: Maintenance Information files should be 10 pages or less
<PAGE>
IBM/ACS Product Purchase Agreement
Page 141
April 11, 1996
<PAGE>
Graphics Requirements
- Naming conventions for graphics files (using C6PaOnnn prefix):
- C6POOnnn.pcx - graphic files in Operator's Guide
- C6PMOnnn.pcx - graphic files in Maintenance Information
- C6PPOnnn.pcx - graphic files in Part's Catalog
- PC directory structure for graphics files:
- c:\3991\art\main\filename.pcx
- c:\3991\art\oper\filename.pcx
- Create source art as vector graphics (not bit map) at 300 dpi
- File format for source art must be either CGM, CDR, Al, or DXF
- Size the source art (rather than when importing into Frame)
- Create PCX files from source graphic using HiJack, if necessary
- Import all graphics by reference at 300 dpi into the text files
- Graphic label Requirements-.
- For Maintenance Information, use callouts (reverse type) in graphics
rather than text labels.
- For customer documents, create graphics without labels and add labels to
the graphic after the graphic is imported.
- Place filename for graphic (outside graphic, rotated, 6 point)
The content outline for the Operator's Guide list in item #1 above, will be
similar to the IBM 3900 printing system as approved by both ACS and IBM.
The following are requirements for the Maintenance Information in item #2 above:
Maintenance documentation package is to contain the following tabbed sections:
- Safety
- Locations
- Wiring diagrams
- PM, (Preventive Maintenance)
- Diagnostics
- Parts catalog
- MAPs (Maintenance Analyst Procedures)
FrameMaker does not support MAPs format to be used in the documentation. A list
of all the possible items that could cause a particular problem will be
sufficient. For instance, the drive motor does not run because; motor is
defective, wiring is open, (list all possible open wires), circuit breaker is
open, bind in the driven mechanism, etc.
A list of helpful diagnostics should also be included. For instance, driver
routine that runs the drive motor, driver for routine for motor rotation sensor.
A small wiring diagram should also be included for the circuitry that may be
involved in the failure. See 3900 MAPS for examples.
<PAGE>
IBM/ACS Product Purchase Agreement
Page 142
April 11, 1996
<PAGE>
IBM will create this section of the Maintenance documentation based on the above
information from ACS.
- CARR, (Check Adjust Remove Replace)
- Tools, (Special tools for Twilight)
- Theory of Operation
- Installation/Discontinuance/Relocation
All portions of the documentation with the exception of the MAPs should be
complete and usable by the field. The procedures must be complete and contain
all required art. Individual sections should be provided when they are complete
to allow for comments prior to reviews.
IBM DELIVERABLES:
1. Guidelines for technical illustrations and wiring diagrams (TBD)
2. FrameMaker templates for customer documents (BMSTYL3.NfKR) and Maintenance
Information (TBD)
3. Boilerplate document sections (notices, trademarks, communication
statements, safety notices, and safety information)
4. Complete and timely reviews
5. Information Development Guidelines:
- Style
- Information Development Guidelines
- Task-Oriented Information
- Vocabularies for Customer and Service Information (CE Limited Vocabulary)
- IBM Dictionary of Printing
6. After delivery of what is considered to be finished maintenance
documentation, IBM will test and enhance that documentation. If changes to the
machine require documentation changes ACS must provide all updates to the
documentation with change bars to identify the changed portions of the
documentation.
7. IBM is responsible for the development of the Introduction and Planning
Guide.
Page 143
<PAGE>
Attachment 6: Technical Support
- -------------------------------
Level of Support
- ----------------
Seller technical support to Buyer shall be limited to Product malfunction,
performance deficiencies, and other Seller technical obligations identified in
this Agreement, i.e. change request coordination, technical information flow
with Buyer, unresolved technical field problems and service bulletins.
Technical Support
- -----------------
Seller technical support to Buyer technical requests to Seller will be through a
single point of contact.
Technical support to Buyer is intended to address Product malfunction and
performance deficiencies experienced by the Buyer that the Buyer cannot resolve
through its normal problem escalation process. After good faith efforts to
resolve the problems internally, Buyer, through its own point contact, may
contact Seller by phone during normal business hours for assistance in problem
resolution. Seller technical support contact will assist Buyer in resolving
problems. Seller technical support contact will coordinate other Seller
resources necessary to assist Buyer in problem resolution.
Buyer and Seller change request processes will be initiated and coordinated
through their single point respective single point contacts. All technical
information and updates regarding Sellers' Products identified in this Agreement
will be provided to the Buyer through the Seller's technical support contact.
Technical support outside of normal business hours will only be requested after
Buyer has exhausted all other technical support channels. These include an on
site customer engineer (CE), a district customer engineer (CE), Boulder level 2
support and Boulder engineering support. Seller will provide a telephone number
and fax number which will be available twenty four (24) hours per day and seven
(7) days per week.
Business Hours
- --------------
Normal business hours are from 7-.30 AM to 4:00 PM Mountain Standard Time
weekdays. (Monday through Friday)
IBM/ACS Product Purchase Agreement
Page 144
April 11, 1996
<PAGE>
On Site Support
- ---------------
Seller will provide onsite technical support as required by Buyer. On site
support will be charged to Buyer according to Seller's standard per them rates
in effect at the time support is provided. Per them charges will include, but
not be limited to, the following- travel expense (all actual and reasonable
travel, including meals and lodging), labor hours, parts, materials and supplies
used.
Page 145
<PAGE>
Attachment 7: Software Licenses
- -------------------------------
<TABLE>
<CAPTION>
Number/System
Name of Software Vendor/Manufacturer Number/System
- ------------------ ------------------- -------------
<S> <C> <C>
Windows 95 Microsoft 1
DOS 6.1 Microsoft 2
DOS 4GfW Pro Tenberry,lnc 1
</TABLE>
Seller shall have necessary license agreements in place to allow Buyer to
purchase hard drives with previously loaded software. These hard drives will be
used by the Buyer as a Spare Part.
Page 146
<PAGE>
ATTACHMENT 8 SUBJECT TO PENDING
---------------------------------------------
CONFIDENTIAL TREATMENT REQUEST
---------------------------------------------
<PAGE>
April 11, 1996
Attachment 9: Confidential Disclosure Agreement
- -----------------------------------------------
This Attachment 9 constitutes pages 152 through 158 of the IBM/ACS Product
Purchase Agreement.
Page 152
<PAGE>
April 11, 1996
CONFIDENTIAL DISCLOSURE AGREEMENT
This is a Confidential Disclosure Agreement ("Agreement") between International
Business Machines Corporation, located at 6300 Diagonal Highway, Boulder, CO
80301 ("IBM") and Accent Color Sciences, Inc., with a principal place of
business at 101 East River Drive, East Hartford, CT 06108 ("ACS").
WHEREAS, IBM and ACS are exploring the possibility of evaluating and entering
into a contemplated development and procurement relationship; and
WHEREAS, the disclosure of certain information that is confidential to both IBM
and ACS is required in order to further evaluate the feasibility of such a
contemplated development and procurement relationship; and
NOW THEREFORE, both IBM and ACS agree to the following terms and conditions:
1. For purposes of this Agreement, "Information" shall mean that
nonconfidential or confidential information pertaining to the possible
development and/or procurement of a high speed, spot color printer for
attachment to the IBM 3900 family of printers.
2. For purposes of this Agreement, "Discloser" shall mean the party to this
Agreement who is disclosing Information in confidence to the other party to
this Agreement, in accordance with the terms and conditions of this
Agreement.
3. For purposes of this Agreement, "Recipient" shall mean the party to this
Agreement who is receiving Information in confidence from the other party
to this Agreement, in accordance with the terms and conditions of this
Agreement.
4. For purposes of this Agreement, "Subsidiary" shall mean a corporation,
company or other entity more than fifty percent (50%) of whose outstanding
shares or securities (representing the right other than as affected by
events or default, to vote for the election of directors or other managing
authority) are, now or hereafter, owned or controlled, directly or
indirectly, by a party hereto, but such corporation, company or other
entity shall be deemed to be a Subsidiary only as long as such ownership or
control exists.
5. Both IBM and ACS understand and agree that in the event that additional
Information or information of a more highly sensitive or confidential
nature needs to be exchanged, a mutually agreed upon amendment to this
Agreement which governs both the exchange and use of such Information or
information of a more highly sensitive or confidential nature, will be
executed by the parties.
6. All disclosures of Information by Discloser to Recipient pursuant to this
Agreement shall be made by or under the supervision of a Technical
Coordinator for Discloser to a Technical Coordinator for Recipient or their
respective designees, if any, who shall be
<PAGE>
identified in an express writing. Such Technical Coordinators are
identified in Paragraph 12 hereof. All disclosures of Information will be
deemed to be nonconfidential unless specifically designated at the time of
disclosure (in the manner described in Paragraph 7 hereof) as including
confidential Information. With respect to all such Information disclosed
by Discloser to Recipient, except such Information as is so designated as
the confidential Information of Discloser, Discloser grants to Recipient,
to the extent, if any, of its interest therein, a nonexclusive, royalty
free, irrevocable, unrestricted, and worldwide license to use, have used,
disclose to others, make copies in the case of documents, and dispose of,
all without limitation, such nonconfidential Information in any manner
Recipient determines, including the development, manufacture, marketing,
and maintenance of products and services incorporating such nonconfidential
Information.
7. With respect to such Information of Discloser, when it is disclosed in
writing (including such Information recorded in a medium such as a tape or
disk), the writing will state the date of disclosure, that the Information
contained therein is confidential and that it is being disclosed pursuant
to this Agreement, and will contain an appropriate legend, such as "IBM
Confidential Information" or "ACS Confidential Information." If such
disclosure is orally and/or visually made after the date of execution of
this Agreement, then the confidential nature of the Information so
disclosed shall be confirmed in a written resume within twenty (20) days
following such disclosure. If such disclosure was orally and/or visually
made prior to the date of execution of this Agreement, then the
confidential nature of the Information so disclosed shall be confirmed in a
written resume within twenty (20) days following execution of this
Agreement. The resume will specifically identify that Information which is
confidential. Such resume will have such Information which is confidential
identified as "IBM Confidential Information" or "ACS Confidential
Information.
8. Subject to the provisions of Paragraphs 9 and 10 hereof, for a period of
three (3) years from the date of disclosure, the period of confidentiality,
Recipient agrees to use the same care and discretion to limit disclosure of
such received confidential Information of Discloser to only those of its
employees who have a need to know it and to avoid disclosure, publication
or dissemination of the Information by those Recipient employees, using at
least the same degree of care as Recipient employs with similar information
of its own which it does not desire to publish, disclose or disseminate.
Recipient may use any writings or resumes containing any such confidential
Information provided by Discloser for any purpose, subject to the obligation of
confidentiality in the above paragraph. Recipient shall be free to use the
residuals of such confidential Information of Discloser for any purpose
including use in the development, manufacture, marketing and maintenance of its
products and services. However, Recipient may not overtly utilize Discloser's
confidential Information or the residuals thereof to develop products similar to
the products developed and/or marketed by Discloser. Otherwise, any permitted
use hereunder with respect to the residuals of such confidential Information
shall be subject only to the obligations with respect to disclosure of such
confidential Information during such foregoing specified period of
confidentiality. Recipient may make a reasonable number of
<PAGE>
copies of any writings or resumes containing Discloser confidential Information
received from Discloser pursuant to this Agreement.
The term "residuals", as used in this Agreement, shall mean that Information in
non-tangible form which may be retained by those employees of Recipient who have
had access to the confidential Information of Discloser during the term of this
Agreement. It is understood that receipt of Discloser's confidential
Information under this Agreement shall not create any obligation in any way
limiting or restricting the assignment and/or reassignment of Recipient
employees within Recipient. The obligations respecting the confidentiality of
shall not, however, be affected or changed as a result of any such assignment
and/or reassignment of Recipient employees.
Following the period of confidentiality, no obligation of any kind is assumed
by, or is to implied against, Recipient with respect to any Discloser
confidential Information, and Recipient shall be free to disclose, publish or
disseminate such confidential Information to others without limitation and shall
have all the rights relative to such Information as are set forth in Paragraph 6
hereof as if such confidential Information had been transferred as
nonconfidential Information under said Paragraph.
9. Disclosure of such confidential Information of Discloser shall not be
precluded if such disclosure is:
a) In response to a valid order of a court or other governmental body of
the United states or any political subdivision thereof; provided,
however, that Recipient shall first have given notice to Discloser and
made a reasonable effort to obtain a protective order requiring that
the Information and/or documents so disclosed be used only for the
purposes for which the order was issued; or
b) otherwise required by law; or
c) necessary to establish rights under this Agreement.
10. Notwithstanding any other provisions of this Agreement, the obligations
specified in Paragraph 8 hereof will not apply to any Information that:
a) is already in the possession of Recipient or any of its Subsidiaries
without obligation of confidence;
b) is independently developed by Recipient or any of its Subsidiaries;
c) is or becomes publicly available without breach of this Agreement;
d) is rightfully received by Recipient from a third party;
e) is released for disclosure by Discloser with its written consent; or
is inherently disclosed in the use, lease, sale or other distribution
of, or publicly available supporting documentation for, any present or
future product or service by or for Recipient or any of its
Subsidiaries.
<PAGE>
11. The term of this Agreement during which Information may be disclosed by
Discloser to Recipient, and not the period of confidentiality, shall be
from September 16, 1995 through December 31, 1995 and may be extended by
the written of the parties. Either party may terminate this Agreement
prior to that time, with or without cause, upon ten (10) days written
notice to the other.
12. The Technical Coordinator for the parties are:
For IBM:
--------
Gary Corner
IBM Corporation
6300 Diagonal Highway
Boulder, CO 80301
For ACS:
--------
Norman Milliard
Accent Color Sciences, Inc.
101 East River Drive
East Hartford, CT 06108
Each party may change its Technical Coordinator or indicate a designee for their
Technical Coordinator at any time and from time to time during the term of this
Agreement by notifying the Technical Coordinator for the other party in writing
at the designated address set forth above.
13. IBM and ACS also agree that they will not disclose the terms and
conditions and subject matter of this Agreement without the written
consent of the other, or, except as provided in Paragraph 9 hereof.
14. Notice shall be deemed given under this Agreement when received as United
States Certified Mail, postage paid by the depositing party, in a United
States Post Office or branch.
15. No license or immunity is granted by this Agreement by either party to
the other, either directly or indirectly by implication, estoppel, or
otherwise, under any patents. None of the Information which may be
disclosed hereunder shall constitute any representation, warranty,
assurance or guarantee by Discloser to Recipient with respect to the
infringement of patents or other rights of others.
16. Except for the foregoing restraints on the use of confidential Infor-
mation, nothing in this Agreement shall be construed as impairing the
right of either party to develop, design, make, use, procure and/or market
products or services, during the term of this
<PAGE>
Agreement or in the future, which may be similar to and/or competitive
with those offered by the other party.
17. The rights and obligations of Paragraphs 6, 8, 13, 16, 17 and 20 of this
Agreement shall survive and continue after any expiration or termination
of this Agreement and shall bind the parties and their successors and
assigns.
18. Each party agrees to comply, and do all things necessary for the other
party to comply, with all applicable federal, state and local laws,
regulations and ordinances, including but not limited to the regulations
of the United States Department of Commerce relating to the export of
technical data, insofar as they relate to the activities to be performed
under this Agreement. Recipient agrees to obtain the required government
documents and approvals prior to the export of any technical data
disclosed to it or of the direct product related thereto.
19. Nothing contained in this Agreement shall be construed as conferring any
rights to use in advertising, publicity or other marketing activities any
name, trade name, trademark or other designation of either party hereto,
including any contraction, abbreviation or simulation of any of the
foregoing, and each party hereto agrees not to use the existence of this
Agreement in any promotional activity without the express written approval
of the other party.
20. This Agreement shall be construed in accordance with the substantive laws
of the State of New York, not including the choice of law provisions
thereof. Any action or proceeding to enforce or resolve disputes relating
to this Agreement shall be brought before a court of competent
jurisdiction in the State of New York, including a Federal District Court
sitting within such a state. Neither party shall attest that such court
lacks jurisdiction over such party or the subject matter hereof.
21. This Agreement may be executed in one or more counterparts, all of which
will be considered one and the same Agreement. Any amendment or
modification of this Agreement shall be in writing and shall be signed by
both of the parties.
22. Failure or delay on the part of either party to exercise any right, power,
privilege or remedy hereunder shall not constitute a waiver thereof. A
waiver of default shall not operate as a waiver of any other default or of
the same type of default on a future occasion.
23. This Agreement is intended as the complete and exclusive statement of the
agreement between IBM and ACS relative to the subject matter hereof and
supersedes all prior agreements and negotiations relating to the subject
matter hereof.
IBM and ACS each represent that the individual signing this Agreement on their
respective behalf has the power and authority to enter into this Agreement and
that this Agreement constitutes a valid and binding obligation of each party.
<PAGE>
IN WITNESS WHEREOF, both IBM and ACS have executed this Agreement by their
respective authorized representatives.
INTERNATIONAL BUSINESS ACCENT COLOR SCIENCES,
MACHINES CORPORATION INC.
By: /s/ Richard T. Myers By: /s/ Richard J. Coburn
Name: Richard T. Myers Name: Richard J. Coburn
Title: Director of Hardware Title: President
Development Date: January 12, 1995
Date: January 12, 1995
<PAGE>
ATTACHMENT 10 SUBJECT TO PENDING
-------------------------------------------
CONFIDENTIAL TREATMENT REQUEST
------------------------------------------
<PAGE>
April 11, 1996
- --------------
Attachment 11: Warranty Procedures
- ----------------------------------
Article 10.5 of the Agreement contains several alternatives for handling breach
of warranty, however, in most cases the warranty claim will be handled via an
exchange of parts, When the Buyer discovers a Product which is a candidate for a
warranty claim the Buyer shall fill out appropriate forms and return the Product
to the Seller. The Seller will in turn replace or repair the Product and return
to the Buyer.
The parties agree to put a detailed set of operating procedures in place to
handle warranty claims.
Page 162
<PAGE>
Exhibit 10.6
LETTER AGREEMENT
----------------
1. This Letter Agreement is intended to supplement the Product Purchase
Agreement between Accent Color Sciences, Inc. ("ACS") and International Business
Machines Corporation ("IBM") which is expected to be signed by the parties
within twenty (20) days hereof.
2. The parties by signing this Letter Agreement wish to confirm and commit,
as stated hereinafter, to the various obligations that are set forth herein as
inducements to enter into the Product Purchase Agreement.
3. ACS wishes to confirm to IBM its understanding and intention to make
production units of its web, color printing systems; designed for use in
combination with the IBM 3900 printing system and improved 3900 printing
systems, available to IBM in accordance with the terms of the Product Purchase
Agreement in time for commercial sale by IBM during the third calendar quarter
of 1996.
4. ACS confirms its intention to make ACS production units, which may be used
in combination with other, non-IBM web printing systems available for commercial
sale starting June 1, 1997. ACS further confirms that if the first commercial
sales by IBM of ACS' web, color printing systems designed for use in combination
with the IBM 3900 printing system and improved 3900 printing systems are delayed
through the fault of ACS, including the fault of ACS' vendors and suppliers, ACS
confirms that the availability of other, non-IBM web printing systems will be
delayed in equal measure.
5. ACS is also planning to have units with enhanced printheads available in
limited quantities by October of 1996. First priority for the installation of
these printheads will be given to units with the earliest contract dates;
specifically the True Color 390 printer for IBM and the True Color 135 printer
(cut sheet) for others, in equal volumes. ACS additionally confirms its
commitment to provide a web, color printing system having enhanced printheads to
IBM for use in combination with a current IBM 3900 model or an improved 3900
model in time for demonstration at the 1996 Xplor International Printing
Convention to be held during the fourth quarter of 1996. It is IBM's
responsibility to insure that the specific 3900 printing system used at the
Xplor Convention will work satisfactorily with ACS' web, color printing system
having enhanced printheads.
- --------------------------------------------------------------------------------
IBM/ACS Letter Agreement Page 1
<PAGE>
6. In the event that ACS cannot fulfill its commitment to provide a web,
color printing system having enhanced printheads to IBM for use in combination
with the IBM 3900 or a then current, improved 3900 printing system in time for
demonstration at the 1996 Xplor International Printing Convention, then ACS
agrees to make a fifteen percent (15%) reduction in the price of all production
units of the then current ACS web, color printing system ordered or accepted by
IBM up through the fourth quarter of 1996, up to, but not exceeding the larger
of (a) an aggregate dollar amount of price reduction of two hundred fifty
thousand dollars ($250,000) or (b) the total amount of advance deposits received
in 1996 by ACS, as of the initial date of Xplor, from IBM against orders of
production units of the ACS True Color web printer.
7. ACS further confirms and commits that it will not make web, color
printing systems having enhanced printheads available for use or demonstration
in combination with other, non-IBM web, printing systems until after the 1996
Xplor Convention is completed.
8. These production introduction schedules are a function of ACS' best
estimates of the time required for it to meet general availability schedules,
recognizing that the ACS web color printing system for combination with IBM 3900
products will be available for general market introduction well in advance of
any other ACS web system combination in view of the substantial IBM lead time
associated with this effort and the priority which ACS efforts on behalf of IBM
and IBM efforts on behalf of ACS have been given. Based on a continuation of the
excellent working relationship and effort being made by both IBM and ACS on this
project, ACS is committed to maintaining these delivery schedules in accordance
with the foregoing commitments.
9. This Letter Agreement shall become null and void and have no further
force and effect on the parties if:
a. the Product Purchase Agreement is not signed by April 15, 1996; or
b. IBM terminates the Product Purchase Agreement prior to June 1, 1997;
or
c. IBM markets an alternative to the ACS web, color printing system
designed for use in combination with the IBM 3900 printing system and
its enhancements prior to June 1, 1997.
- --------------------------------------------------------------------------------
IBM/ACS Letter Agreement Page 2
<PAGE>
10. This Letter Agreement shall not be used for promotional purposes or
discussed with any other party except by the mutual written agreement of the
parties; provided, however, that either of the parties may disclose or discuss
this Letter Agreement and its terms pursuant to a court or government agency
order or requirement or as otherwise may be required by law or by one of the
parties hereto to assert its rights hereunder.
ACCENT COLOR SCIENCES, INC. INTERNATIONAL BUSINESS MACHINES
CORPORATION
By: /s/ Richard J. Coburn By: /s/ Gregory F. Flemming
----------------------------------- -----------------------------------
Name: Richard J. Coburn Name: Gregory F. Flemming
--------------------------------- ---------------------------------
Title: President and CEO Title: Director of Business Alliances
-------------------------------- --------------------------------
Date: February 23, 1996 Date: February 23, 1996
--------------------------------- ---------------------------------
- --------------------------------------------------------------------------------
IBM/ACS Letter Agreement Page 3
<PAGE>
EXHIBIT 10.7
SPECTRA, INC.
ACCENT COLOR SCIENCES INC.
OEM SUPPLY AGREEMENT
IN THIS AGREEMENT, dated as of January 8, 1996, SPECTRA, INC. ("SPECTRA") and
ACCENT COLOR SCIENCES INC. ("Customer"), collectively the "Parties", agree as
follows:
DEFINITIONS
I. DEFINITIONS
-----------
1. 1. "Affiliate" means any corporation, partnership, association, or
other entity with respect to which a party, directly or indirectly through a
subsidiary, has not less than a majority beneficial ownership, but only if that
corporation, partnership, association, or other entity expressly agrees in
writing to be bound by this Agreement, and only while that ownership
relationship exists.
1.2. "Agreement" means this Supply Agreement between Spectra and Customer.
1.3. "Ancillary Hardware" means any hardware, other than Printheads, that
is part of a Print Engine, including but not limited to ink reservoirs, pressure
regulators, head drive electronics, ink supply tubing, etc.
1.4. "Customer's Field" and "Customer's Exclusive Field" shall be defined
in accordance with Sections 9.1.1 and 9.2.1 below, respectively.
1.5. "Customer Product" shall mean a digital printer, printing system or
printing subsystem, including a Mechanism and a Printhead, designed,
manufactured or marketed by or on behalf of Customer, on a retail, distribution
or OEM sales basis, the Printhead(s) in which have been purchased from Spectra.
1.6 "Customer Program Technology" shall mean any Technology developed or
acquired by Customer in the course of developing Customer Products, whether
patented or unpatented including any know-how for practicing such Technology,
which relates directly to the operation of and the interface to Spectra
Printheads, Inks or Hardware incorporating Spectra System Technology.
<PAGE>
1.7. "Effective Date" means [date of agreement].
1.8. "Hardware means Print Engines, Printheads and Ancillary Hardware
supplied by Spectra to Customer.
1.9. "Ink" means printing inks and other materials used in printing
processes which are used in Printheads.
1.10. "Packaged Spectra Ink" means Spectra Ink of formulations currently
referred to as "Launch" and "Sable" packaged in accordance with the Ink
Specifications attached as Exhibit 1.
1.11. "Print Engine" shall mean a device comprised of (i) components for
moving and controlling the movement of the Printhead and print media, paper
path, and ink supply components (collectively, the "Mechanism"), (ii) a
Printhead, and (iii) optionally a power supply and covers.
1.12. "Printhead" shall mean a piezoelectric device with multiple jets that
eject droplets of Ink on demand.
1.13. "Purchase Order" means any purchase order that Customer issues to
order Products from Spectra in accordance with this Agreement.
1.14. "Products" means Hardware and Spectra Ink supplied by Spectra to
Customer.
1.15. "Purchase Year" shall mean a twelve month period beginning on April
1, of each year and ending on March 31 of the following year, except that the
first Purchase Year shall begin on the date hereof and end on March 31, 1996.
1.16. "Reserved Markets" shall mean those markets and applications which
Spectra has granted exclusive and/or non-exclusive rights to other Spectra
customers, as more specifically defined in Schedule 3.
<PAGE>
1.17. "Spectra Ink" shall mean Ink manufactured by or on behalf of Spectra.
1.18. "Spectra System Technology" shall mean System Technology that Spectra
owns or has the right to sublicense to Customer, except for patents licensed to
Spectra from Xerox Corporation, on the Effective Date.
1.19. "System Technology" shall mean Technology for the manufacture and use
of Print Engines, including but not limited to transparency enhancement, heated
platen print zone, offhead ink supply, and machine control electronics, but
specifically excluding any Technology related to the manufacture of Printheads,
or Inks.
1.20. "Spectra Future Systems Technology" shall mean System Technology that
Spectra develops or acquires after the Effective Date, or as to which Spectra
acquires after the Effective Date the right to sublicense to Customer, except
for patents licenses to Spectra from Xerox Corporation.
1.21. "Technology" shall mean inventions, works of authorship, know-how,
trade secrets, manufacturing processes, designs, and specifications, and shall
include patents, patent applications and copyrights.
1.22. "Specifications" means the specifications for Spectra Products
attached in Exhibit 1, including all changes made in accordance with this
Agreement.
1.23. "Term" means the period beginning on the Effective Date and ending on
the date on which this Agreement terminates under Section 12.
1.24. "Total Requirements" shall mean the aggregate of all Ink used by
Customer or sold by Customer for use with Spectra Printheads.
GENERAL TERMS FOR SPECTRA PRODUCTS
2. FORECASTS: PURCHASE ORDER
-------------------------
<PAGE>
2.1. Customer will order Spectra Products through the issuance of purchase
orders at least ninety (90) days in advance of the requested delivery dates. All
preprinted terms and conditions on purchase orders are superseded entirely by
the terms and conditions of this Agreement. Each purchase order will adequately
identify the Spectra Product ordered by use of Spectra's product code, set forth
the requested quantity, and specify the requested delivery method and date.
Purchase orders must be in writing and may be sent via facsimile to Spectra's
then current facsimile number.
2.2 Upon receipt of any purchase order submitted in accordance with this
Agreement, Spectra will either: (i) accept the order, which will establish the
delivery date; or (ii) notify Customer of Spectra's inability to deliver Spectra
Product at the time or times requested. If Spectra cannot fulfill Customer's
purchase orders as requested due to a shortage of any Spectra Product, Spectra
shall use its reasonable efforts to satisfy Customer's purchase requirements as
closely as possible. If Spectra ships an order, Spectra will have been deemed to
have accepted it.
2.3 Spectra Products will be delivered to Customer in packaging reasonably
acceptable to Customer, given shipment, warehousing and storage requirements.
(Customer will advise Spectra in writing of any special packaging or labeling
requirements at the time in placing an order.) Delivery will be made FOB
Spectra's manufacturing, warehousing or transshipment facility.
2.4. Customer will provide Spectra with a non-binding, rolling six (6)
month forecast of Spectra Product requirements; provided, however, that orders
placed under Section 2.1 hereunder are noncancellable and non-deferrable
beginning ninety (90) days prior to scheduled delivery date. In general, Spectra
requires up to six (6) months advance notice to add significant additional
manufacturing capacity, and may not be able to meet orders as a result of
changes in or requirements in excess of those set forth in six-month rolling
forecasts.
HARDWARE PURCHASE TERMS
3. HARDWARE PRICES AND TERMS
-------------------------
<PAGE>
3.1. Customer shall pay Spectra the amounts specified in Schedule I,
subject to the terms and provisions thereof, for each Spectra Hardware Product
which Customer orders from Spectra under Section 2.
3.2. Customer will pay Spectra for each Spectra Hardware Product as
follows: (i) twenty-five percent (25%) no later than sixty (60) days prior to
the requested delivery date, (ii) twenty-five percent (25%) no later than thirty
(30) days prior to the requested delivery date, and (iii) the balance within
thirty (30) days after delivery to Customer by Spectra. All past due amounts
shall accrue delinquency charges at the rate of one percent (I%) per month.
4. HARDWARE WARRANTIES AND REPAIRS
-------------------------------
4.1. Spectra warrants to Customer that:
4.1.1. Each Spectra Hardware Product shall conform to the
Specifications and be free from defects in materials and workmanship for the
lesser of 180 days after the Hardware Product is delivered to Customer's
customer or 270 days after title to that Spectra product passes to Customer
under this Agreement;
4.1.2. Each Spectra Hardware Product shall comply with the applicable
rules and regulations of agencies defined in the Specifications.
4.2. THE WARRANTIES IN SECTION 4.1 ARE IN LIEU OF ALL OTHER SPECTRA
HARDWARE PRODUCT WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION
THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
4.3. If, within the warranty period specified in Section 4.1.1, a Spectra
Hardware Product does not comply with any warranty in Section 4.1 and Customer
notifies Spectra of such noncompliance prior to 30 days after the end of s u c h
period, Customer may ship such product back to Spectra at Customer's expense.
Spectra shall at its option promptly repair or replace that Spectra Product.
Spectra shall pay the costs of any such repair or replacement, including
transportation costs incurred returning repaired or replaced products to
Customer unless (i) the Spectra Product is not defective, in which case Customer
shall pay
<PAGE>
Spectra's reasonable costs of inspection and all transportation charges, or (ii)
the Spectra product is defective due to Customer's or any third party's damage,
misuse, abuse, or failure to use ink equivalent to the Spectra Ink, in which
case Customer shall pay all costs of repair or replacement and transportation.
Customer must mark each package it returns to Spectra under this Section 4.3
with a Returned Materials Authorization ("RMA") number, which Spectra shall
furnish to Customer on request, and shall include with each returned Spectra
Product a writing which specifies the reasons why Customer rejected that Spectra
Hardware Product.
4.4. Non-Warranty Hardware Repairs. Whenever practical, Spectra will
provide depot repair services on Hardware for repairs not covered by the
foregoing warranty. Upon authorized return to Spectra's designated facility
under an RMA, Spectra shall repair Hardware at Customer's expense, on a time and
materials basis, at Spectra's then current prices for parts and rates for
service. In cases where Hardware cannot be successfully repaired, Customer, at
its option, may either replace the returned Hardware by purchasing a new unit
from Spectra at then current prices or reimburse Spectra for its valid repair
efforts and costs on the returned unit. Repairs are warranted by Spectra for the
remainder of the original warranty period or ninety (90) days, whichever is
longer.
INK PURCHASE TERMS
5. INK PURCHASE OBLIGATIONS
------------------------
5.1. Customer will purchase its Total Requirements of Ink from Spectra,
provided that Customer may seek and utilize alternative or supplemental sources
of Ink to the extent and for the period Spectra is unable to fulfill Customer's
requirements. In the event Customer identifies a lower priced supplier of Ink
that is the same quality and meets the functional Specification of Spectra Ink,
Customer may present Spectra with bona fide evidence of such lower price, and
documentation that the competitive ink meets the Ink Specifications. Spectra
shall have the right to meet such price. In the event Spectra meets such price,
Customer shall continue its purchases from Spectra. In the event Spectra elects
not to meet such competitive price, Customer may purchase Ink for use i n
conjunction with Printheads from such alternative supplier. Any Inks purchased
by Customer from a third party must be qualified within a reasonable timeframe
by Spectra to
<PAGE>
Spectra's functional Specification at Customer's expense in order for Spectra
to maintain existing warranty coverage on Hardware used with such third party
Inks.
6. INK PRICES
----------
6.1. Prices for Packaged Spectra Ink shall be determined as set forth
Schedule 1.
6.2. Customer shall pay Spectra for Ink as follows: (i) twenty-five percent
(25%) no later than sixty (60) days prior to the requested delivery date, (ii)
twenty-five percent (25%) no later than thirty (30) days prior to the requested
delivery date, and (iii) the balance within thirty (30) days after delivery by
Spectra. All past due amounts shall accrue delinquency charges at the rate of
one percent (I%) per month.
7. SPECTRA INK WARRANTIES
----------------------
7.1. Spectra warrants to Customer that:
7.1.1. Each unit of Spectra Ink shall conform to the applicable
Spectra Ink Specifications for the lesser of 180 days after the Ink is
delivered to Customer's customer or 270 days after title to that Spectra
Ink passes to Customer under this Agreement;
7.1.2. Each unit of Packaged Spectra Ink shall comply with t h e
appropriate Ink specifications.
7.2 THE WARRANTIES IN SECTION 7.1 ARE IN LIEU OF ALL OTHER SPECTRA INK
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
7.3. If, within the warranty period specified in Section 7.1.1 a
Spectra Ink Product does not comply with any warranty in Section 7.1 and
Customer notifies Spectra of such noncompliance prior to 30 days after the end
of such period, Spectra shall promptly replace that unit. Spectra shall pay the
costs of any such replacement, including transportation charges, unless (i) the
unit is not defective, in which case Customer shall pay all transportation
charges and, if
<PAGE>
Customer's determination that the unit was defective was not in good faith,
Spectra's reasonable costs of inspection, or (ii) the unit is defective due to
Customer's or any third party's damage, misuse, or abuse in which case Customer
shall pay all costs of repair or replacement and transportation. Customer must
mark each package it returns to Spectra under this Section 7.3 with a Returned
Materials Authorization number, which Spectra shall furnish to Customer on
request, and shall include with each returned unit (or with a returned lot or
batch, if the same defect occurs in more than one unit) a writing which
specifies the reasons why Customer rejected that unit, lot, or batch.
GENERAL
8. LICENSES AND ROYALTIES
----------------------
8.1. Subject to the terms of this Agreement, (i) Spectra hereby grants to
Customer a worldwide right and license, with rights to sublicense only in
connection with Customer Products, under the Spectra System Technology to make,
have made, use and sell Customer Products in Customer's Field an d Customer's
Exclusive Field, and (ii) Customer hereby grants to Spectra a worldwide right
and license, with rights to sublicense only in connection with Spectra products,
under Customer Program Technology to make, have made, use and sell Spectra
Products for resale outside of Customer's Exclusive Field. Except as set forth
in Section 8.5 and 8.6, the license granted Customer herein expressly excludes
the right to manufacture Printheads or Inks.
8.2 Spectra agrees to indemnify, defend and hold Customer and its
customers harmless from and against any claim against them by Howtek, Hitachi
Koki and Dataproducts, Inc., their affiliates, successors or assigns, that a n y
Customer Print Engine that includes a Spectra Printhead infringes any patents o
f such parties described in Schedule 2. This indemnity will apply only to those
Customer Print Engines including Spectra Printheads purchased from Spectra while
Customer is in good standing with respect to the payment of license fees and
royalties provided for in this Section 8.
8.3. Customer will pay to Spectra those royalties and license fees set
forth in Schedule 2, "Royalties and License Fees", in connection with purchases
of Hardware in which Customer uses phase change Ink, subject to the terms and
conditions thereof. Customer shall not be obligated to pay royalties or fees
set
<PAGE>
forth in Part I of Schedule 2 to Spectra in excess of those due from Spectra to
t h e third parties defined in Schedule 2 with respect to Customer's purchases
from Spectra. In the event of a reduction in royalties payable by Spectra to
such third parties, Customer's royalties shall be reduced accordingly. The
royalties set forth in Part 11 of Schedule 2 shall be suspended for so long as
Customer shall be purchasing its requirements of Ink from Spectra.
8.4. Customer will provide Spectra with a written report, no later than
thirty (30) days following the end of each calendar quarter, describing for such
calendar quarter the number and type of Customer Product and Ink sold, leased or
otherwise disposed of, together with a detailed royalty calculation sufficient
to establish a statement of royalties due under Spectra's agreements with
parties identified in Schedule 2. Customer will pay any royalties due together
with such report.
8.5 Coverage for Spectra supply risk: Within 60 days of the execution of
this Agreement, Spectra will place in escrow, with a mutually agreed escrow
agent (the charges of such agent to be borne by Customer), full details, to the
extent known to Spectra and promptly updated for material changes by Spectra
from time to time, of the compositions and methods of manufacture of the
Hardware Products and Inks to be supplied by Spectra to Customer. Customer may
inspect such materials prior to placement in escrow by Spectra. The escrow
agreement shall provide that the material to be placed in escrow shall be
available to Customer in the event that:
a. a Supply Failure (as defined in this paragraph) shall have occurred.
In the event that Spectra shall be unable to fill an order for a particular
Hardware Product or Ink that Spectra is obligated to fill under Section 2.1
hereunder, Spectra shall so advise Customer as soon as practicable, and
shall advise Customer of the remedial action that it intends to take. If
such failure shall continue until twenty (20) days following the agreed
shipment date, Customer may send personnel to Spectra to observe the
progress toward correcting such failure to supply and to assist in
resolving the situation. In the event that such failure shall continue for
an additional 40 days, then a Supply failure shall be deemed to have
occurred; or
<PAGE>
b. Customer acquires and exercises rights under United States Code, Title
11, Section 365(n)(1)(B) (option for licensee, whose license has been
rejected by trustee in bankruptcy, to retain rights under the license).
8.6 In connection with Section 8.5:
8.6.1 It is understood and agreed that if the Supply Failure relates
only to Hardware Products or Inks, but not both, the information to be
released from escrow will be only that related to Hardware Products or
Inks, as appropriate.
8.6.2 Customer may use escrowed information only to produce or have
produced those Hardware Products and Inks being supplied by Spectra to Customer
immediately prior to the occurrence of the condition giving rise to the release
of escrowed information, as such Hardware Products and Inks existed at the time
of the occurrence of the condition. In the event that a Supply Failure relates
to fewer than all of the models of Hardware Products being supplied by Spectra,
Customer may only manufacture or have manufactured those models of Hardware
Products Spectra failed to supply. Upon the occurrence of the condition in 8.5.a
above with respect to Inks, Spectra shall arrange for supply of Inks to Customer
by a third party at the request of Customer, at the same prices and terms at
which Spectra supplies Customer. Upon the occurrence of the condition in 8.5.b
above with respect to Inks, Customer shall be free to negotiate with Coates
Reprographics, Inc. for the supply of ink directly from Coates to Customer,
notwithstanding any previous agreement involving Spectra, Customer o r Coates
which would otherwise bar the supply of ink directly from Coates to Customer.
Any manufacture by or for Customer of Hardware Products o r Inks, or acquisition
of Inks from Coates, shall be subject to a royalty to Spectra of 10% of the
resale price by Customer of such Hardware Products or Inks.
8.6.3 It is understood and agreed that Spectra does not have the right to
grant sublicenses for the manufacture of Printheads under its license with
Dataproducts and Hitachi-Koki and, accordingly, any exercise by or for Customer
of the above rights in the event of Supply Failure will require Customer to
obtain a license from them.
<PAGE>
9. DISTRIBUTION RIGHTS AND EXCLUSIVITY
-----------------------------------
9.1 Non-Exclusive Distribution Rights: Customer may sell, lease and u se
Customer Products and components for Customer Products bearing Customer's or its
Affiliates' marks, including without limitation worldwide marketing to any en d
user or remarketer, and use by Customer for the benefit of others; provided
however, that (i) Customer's distribution rights are limited to Customer's
Field, (ii) Customer may only resell Printheads as integral components of
Customer Products, or as spare parts for Customer Products, and (iii) Customer
may not knowingly sell Spectra Ink for use other than in conjunction with
Customer Products.
9.1.1 For the purposes of this Agreement and subject to the Reserved
Market rights of other Spectra customers, Customer's Field shall be defined
as the worldwide market for equipment, systems, services and supplies for
full color printing for commercial printing applications.
9.2 Exclusive Distribution Rights: Subject to Customer meeting its
obligations under this Agreement (and specifically the provisions of Section
9.2.1), and subject to the previously reserved market rights of other Spectra
customers defined in Schedule 3, Spectra hereby grants to Customer the exclusive
right to supply Customer Products into Customer's Exclusive Field.
9.2.1 For the purposes of this Agreement and subject to the Reserved
Market rights of other Spectra customers, Customer's Exclusive Field shall be
defined as the worldwide market for equipment, systems, services and supplies
for add-on modules or subsystems for adding color to the fiber based, paper, and
paper-like output of the following production xerographic and electrographic
printing systems: IBM (3900), Xerox (4135, 4635, 4800, Docutek 135/90), Siemens
(2240), and substantially similar equipment of Delphax and Fujitsu (collectively
"the Exclusive OEM's"). Customer's Exclusive Field shall be effective during the
Exclusive Period which is defined as beginning on the Effective Date and ending
o n December 31, 2002, unless ending earlier in accordance with Section 9.2.2.
Customer's Exclusive Field shall extend (i) to the successors and assigns, if
any, of the Exclusive OEM'S, (ii) to products of the Exclusive OEM's which are
extensions of or replacement models to the models listed in this Section 9.2.1.,
and (iii) to new models of production xerographic and electrographic printing
systems of the Exclusive OEM'S, subject to Spectra's prior
<PAGE>
written approval, which approval shall not be unreasonably withheld.
Accordingly, Spectra shall not knowingly supply Printheads, Print Engines or
Inks to parties other than Customer in Customer's Exclusive Field during the
Exclusive Period.
9.2.2 To maintain the exclusive rights under this Section 9.2,
Customer must (i) make the following scheduled payments, (ii) continue to
purchase Customer's requirements of Ink from Spectra, and (iii) purchase the
following amounts of Printheads and Inks at contract prices during the calendar
years:
<TABLE>
<CAPTION>
Scheduled Payments:
- ------------------------
<S> <C>
January 8, 1996
February 15, 1996
April 1, 1996
July 1, 1996 Information Subject
October 1, 1996 to Pending Confidential
January 1, 1997 Treatment Request
April 1, 1997
July 1, 1997
October 1, 1997
</TABLE>
<TABLE>
<CAPTION>
Minimum Volumes Printheads: Inks (Kilograms)
- ---------------- ----------- ---------------
<S> <C> <C>
1996
1997
1998 Information Subject Information Subject
1999 to Pending Confidential to Pending Confidential
2000 Treatment Request Treatment Request
2001
2002
</TABLE>
Customer shall have a cure period of 45 days after any calendar year-end to
make up any purchase deficiencies hereunder and a cure period of 15 days to make
up any payment deficiency hereunder. In the event Customer fails to make a
<PAGE>
payment or payment, under Section 9.2.2, Spectra may terminate the exclusive
rights provided under Section 9.2.1 on forty-five days prior written notice if
Customer shall fail to cure such nonpayment within such forty-five day period:
but in the event of such termination, all other rights and obligations of the
parties under this Agreement shall remain unchanged.
9.2.3. With respect to any payments received under this section 9.2, Spectra
agrees to use fifty percent (50%) of the such funds for development activities
on Spectra Products for use in Customer Products. It is understood that during
1995 and 1996, such activities shall be focused on modular carbon printhead
development (i.e. the 256 jet printhead family demonstrated to Customer
personnel); the development activities for 1997 shall be as mutually agreed upon
by the Parties.
9.3 For so long as Customer makes the scheduled payments set forth in
Section 9.2.2. above and all royalty payments required under this Agreement,
Customer shall have the right, to the fullest extent within Spectra's rights,
(I) to purchase from Spectra ink jet products developed, manufactured and sold
by Spectra in the future, provided, however, that Customer may use such products
in Reserved Markets: and (ii) to the license granted Customer in Section 8.1
which shall include a license to Spectra Future System Technology, on the same
terms and subject to all of the conditions of the license set forth in Section
8.1, developed during the period Customer makes such payments. Thereafter
through the initial Term of this Agreement, Customer shall continue to have
rights to subsequent new products and the license in Section 8.1 shall continue
to include Spectra Future System Technology so long as Customer pays to Spectra
a fee of $250,000 at the beginning of each calendar quarter and is current in
all royalties due under this Agreement. In the event that Customer fails to make
a quarterly $250,000 payment after 1998 in accordance with this Section 9.3,
Customer's rights to participate in Spectra Future Systems Technology may be
terminated by Spectra on forty-five days prior written notice, subject to
Customer's right to cure such nonpayment within such forty-five day period; but
in the event of such termination, all other rights and obligations of the
parties under this Agreement shall remain unchanged, including but not limited
to the right to purchase Spectra Products other than those embodying Spectra
Future Systems Technology.
9.4 To the extent Customer may directly or indirectly market Customer
Products, Spectra Products, or other items under this Agreement, Customer may do
so under any present or future Customer or Affiliate trademark or product
<PAGE>
designation. Customer shall refer to any product so designated, in all Customer
sales proposals, advertising literature, and otherwise, as a Customer or
Affiliate product. Customer may ship those products in containers bearing the
Customer or Affiliate logo, class and serial number of the product, and all
other information or markings desired by Customer or required by law.
10. CONFIDENTIALITY
---------------
10.1 "Confidential Information" means all information which one
party ("Discloser") discloses to the other party ("Recipient") during the term
of this Agreement: (I) in documents or other tangible materials clearly marked
"CONFIDENTIAL", or (ii) orally, or in any other intangible form, when first
disclosed to the Recipient, if at that time the Discloser tells the Recipient
that the information is confidential and if the Discloser describes the
information in writing or other tangible materials clearly marked "CONFIDENTIAL"
and delivers them to the Recipient within 10 calendar days after the information
is first disclosed to the Recipient. "Confidential Information" does not include
any information which the Recipient can show: (a) the Recipient knew at the time
o f disclosure, (b) the public knows or which is or becomes readily
ascertainable by the public, and through no wrongful act of the Recipient, (c)
the Recipient receives from a third party without breaching an obligation owed
to the Discloser, if the third party does not restrict the Recipient from
disclosing that information, (d) is independently developed by or for the
Recipient, the Discloser discloses to a third party without similar restrictions
on disclosure, or (e) is required to be disclosed by law, provided, however,
that in the event Recipient is ordered to disclose the Discloser's Confidential
Information pursuant to a judicial or governmental request, requirement or
order, Recipient shall immediately, and in any event prior to complying
therewith, notify the Discloser and take reasonable steps to assist Discloser in
contesting such request, requirement or order o r otherwise protecting
Discloser's rights, and Recipient may not disclose any Discloser Confidential
Information in response to any law, rule or regulation, including disclosure
rules of the Securities and Exchange Commission, without the Discloser's written
consent in each case, which consent shall not be unreasonably withheld or
delayed.
10.2. During the Term and for three years after the Term, the Recipient
shall use reasonable efforts to prevent the disclosure of any Confidential
Information to any other person, subject to Section 10.1. All materials
containing Confidential Information delivered by the Discloser under this
Agreement are and shall remain the property of the Discloser. At the
Discloser's written request upon termination of the Recipient's right to possess
the Discloser's Confidential Information, the Recipient shall promptly return to
the Discloser, or destroy and
<PAGE>
certify the destruction of, all those materials and any copies.
10.3. Except as this Agreement expressly provides, this Agreement does
not: (i) restrict either party from developing new products, improving existing
products, or marketing any new, improved, or existing products; or (ii) commit
either party to disclose any particular information or to develop, make, use,
buy, sell, or otherwise dispose of any existing or future product, or to favor
or recommend any product or service of the other party.
10.4. This Agreement does not enlarge, diminish, or affect the rights and
obligations that either party may have or come to have under any other written
agreement they both sign, or, except as this Agreement expressly provides, with
respect to any patent or copyright of either party. Except as this Agreement
or such other written agreement specifically provides, there shall be no
restrictions on the use or disclosure of any information the parties exchange at
any time, in the past or in the future, other than restrictions that either
party may independently have a right to assert under the patent, copyright, or
mask work laws.
II. INFRINGEMENT
------------
11.1. Spectra shall promptly investigate and defend at its expense all
claims that the manufacture, use, maintenance, sale or other disposition of any
Spectra Product infringes, induces the infringement of, or otherwise violates
any patent, copyright, mask work, trademark, trade secret, or proprietary or
other information of any third party, and Spectra shall pay and discharge all
judgments or decrees against Customer which result from those claims. Spectra
may, with Customer's consent (which Customer shall not unreasonably withhold),
settle any such claim on terms of Spectra's choosing, if those terms do not
conflict with this Agreement; provided, however, that Spectra shall not be
obligated under this Section 11.1 to the extent (i) Customer fails to give
Spectra prompt notice of the claim, appropriate authority to settle or defend
it, or the information and assistance necessary to conduct the defense, or (ii)
the claims of infringement arise from or are based upon (A) Customer's or any
third party's enhancements, modifications, alteration or implementation of a
Spectra Product, or (B) the combination of a Spectra Product with any device
Spectra did not directly furnish to Customer.
<PAGE>
11.2. If (i) a court, agency, or arbitrator having jurisdiction holds
that, or Spectra agrees in writing with any third party that, any Spectra
Product infringes a patent, copyright, mask work, or trademark or involves an
unlawful use of a third party's proprietary or other information, (ii) an
injunction issues against Customer's manufacturing, use, or marketing of a
Spectra Product, or (iii) in Spectra's opinion that Spectra Product is likely to
become the subject of an infringement claim, then Spectra shall at its expense
use reasonable efforts to: (x) obtain for Customer rights sufficient in scope to
allow Customer to continue to make, use, sell, and market that Spectra Product,
or (y) replace or modify that Spectra Product so that it becomes noninfringing.
11.3. Spectra shall not be liable under this Section 11 for any claim, and
Customer's rights under Section 11.2 shall not attach to a claim, to the extent
that claim is based on information, devices, or processed furnished by someone
other than Spectra.
12. TERM AND TERMINATION: BANKRUPTCY
--------------------------------
12.1. This Agreement is effective on and after the Effective Date and
shall expire seven years after the Effective Date, unless earlier terminated
pursuant to Section 12.2 below. Customer shall have the right to renew this
Agreement for an additional period of seven years. If Customer wishes to
exercise such right, it shall provide Spectra with written notice of such
exercise at least one year prior to the end of the initial term.
12.2. This Agreement may be terminated prior to its expiration if any of
the following occur:
12.2.1. Spectra and Customer may at any time agree in writing
to terminate this Agreement.
12.2.2. If Customer fails without cause to pay Spectra any
amount due Spectra, Spectra may terminate this Agreement if Customer does not
cure that failure within 45 days after Customer receives a written notice from
Spectra stating the facts on which Spectra based its determination that such a
failure occurred.
12.2.3. If either party breaches a material obligation of this
<PAGE>
Agreement, and such breach is not cured within 90 days after receipt of the
notice from the non-breaching party, the non-breaching party may terminate this
Agreement.
12.3. All financial obligations which had accrued but which were unpaid as
of the effective date of termination shall survive termination. All financial
obligations which would have accrued after the effective date of termination
shall terminate. All then-outstanding forecasts and Purchase Orders shall
terminate without liability or consequence to either party as of the effective
date of termination. All licenses granted to Customer hereunder shall terminate.
The license granted to Spectra in Section 8.1 shall survive termination.
13. DISPUTES
--------
13.1. Except for disputes concerning Spectra's obligations under Section
11.1, and except as otherwise provided in this Agreement, Customer and Spectra
shall settle by arbitration any controversy or claim between them arising
directly or indirectly under this Agreement, whether based on contract, tort,
fraud, misrepresentation, or other legal theory. The arbitration shall occur in
Massachusetts, under the then current rules and supervision of the American
Arbitration Association. If the dispute involves a claim for money in the amount
of $1,000,000 or less and does not involve any claims relating to ownership,
use, or disclosure of intellectual property (other than a claim of unlawful
ownership, use or disclosure of intellectual property arising solely from a
failure to pay a license fee or royalty), the arbitration shall be before a
single arbitrator whom Customer and Spectra shall select from a panel of persons
knowledgeable in business information and data processing systems; otherwise,
the arbitration shall b e before three arbitrators, one selected by Customer,
one selected by Spectra, and the third selected by the two arbitrators to
selected. The arbitrator or arbitrators shall not have the power to award
punitive or exemplary damages. The decision and award of the arbitrator or
arbitrators shall be final and binding and the award rendered may be entered in
any court having jurisdiction. Customer and Spectra shall each pay its own
attorney's fees associated with the arbitration, and shall pay the other costs
and expenses of the arbitration as the rules of t h e American Arbitration
Association provide.
13.2. Spectra and Customer may each petition a court of law for injunctive
relief to protect its respective intellectual property.
<PAGE>
13.3. Connecticut law shall govern the interpretation and enforcement of
this Agreement, except that the Federal Arbitration Act shall govern the
interpretation and enforcement of Section 13.1. If one party files a court
action alleging claims subject to binding arbitration under Section 13.1, and
the other party successfully stays the court action or compels arbitration of
the claims, or both, the party filing the court action shall pay the other
party's costs and expenses, including attorneys' fees, of obtaining such stay or
compulsion.
13.4. Neither Customer nor Spectra may bring any action, regardless of
form, related to this Agreement, more than two years after the cause of action
accrues.
13.5. The duty to arbitrate under Section 13.1 extends to any director,
officer, employee, agent, subsidiary, or Affiliate making or defending any claim
which would otherwise be arbitrable.
13.6. Each part of this Section 13 is severable. A holding that any part
of this Section is unenforceable shall not affect the duty to arbitrate under
Section 13.1 or any other part of this section.
14. MISCELLANEOUS
-------------
14.1. EXCEPT TO THE EXTENT OF SPECTRA'S OBLIGATIONS UNDER SECTION 11 OF
THIS AGREEMENT, NEITHER SPECTRA NOR CUSTOMER SHALL BE LIABLE TO THE OTHER FOR
ANY SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES (INCLUDING WITHOUT LIMITATION
LOST PROFITS) UNDER THIS AGREEMENT.
14.2. Spectra and Customer are contractors independent of one another.
Nothing in this Agreement is intended to or shall constitute either party as a n
agent, legal representative, partner, joint venture, franchisee, employee, or
servant of the other for any purpose. Neither party shall make any contract,
agreement, warranty, or representation on behalf of the other party, or incur
any debt or other obligation in the other party's name, or act in any manner
which has the effect of making that party the apparent agent of the other; and
neither party shall assume liability for, or be deemed liable as a result of,
any such action by the other party. Neither party shall be liable by reason of
any act or omission of the other party in the conduct of its business or for any
resulting claim or judgment, including
<PAGE>
without limitation those arising from oral or written statements the other party
makes in connection with its marketing efforts (other than statements made in
reliance on written information which the first party furnishes to the other
party).
14.3. Neither Spectra nor Customer may assign this Agreement or any of
their respective rights and obligations under this Agreement without the express
written consent of the other party before that assignment, except that either
party may without the other's prior consent assign this Agreement to a successor
in ownership of all or substantially all of its assets or the product line that
includes the Customer Products. Any assignment under this Section 14.3 will not
relieve the assigning party of its outstanding financial obligations, if any,
incurred before the assignment. This Agreement shall be finding upon and inure
to the benefit of the parties and their respective successors and permitted
assigns.
14.4. A waiver of a default of any term of this Agreement shall not be
construed as a waiver of any later default of that provision or as a waiver of
the provision itself. A party's performance after the other party's default
shall not be construed as a waiver of that default.
14.5. Each term of this Agreement is severable. If a court, agency, or
arbitrator having jurisdiction determines that any term is invalid or
unenforceable under applicable law, that determination shall not affect the
other terms of this Agreement, which other terms shall continue to be enforced
as if the invalid or unenforceable provisions were omitted.
14.6. Except as this Agreement otherwise provides, no amendment to this
Agreement shall be binding unless agreed to in writing executed by Spectra and
Customer, and no approval, consent, or waiver shall be enforceable unless signed
by the granting party. The pre-printed terms of any order (including without
limitation a Purchase Order), acknowledgment, or other form do not amend this
Agreement. No document shall be deemed to amend this Agreement by implication.
14.7. This Agreement (including the attached Exhibits) states the complete
agreement between Spectra and Customer concerning this subject, and supersedes
all earlier oral and written communications between Spectra and Customer
concerning this subject.
<PAGE>
14.8. All notices required or permitted under this Agreement and all
requests for approvals, consents, and waivers must be in writing and must be
delivered by a method providing for proof of delivery to the addresses listed
below:
In the case of Customer:
Chief Executive Officer
Accent Color Sciences, Inc.
Riverview Square
99 East River Drive
East Hartford, CT 06108
Fax Number: 860-290-4858
with a copy to:
Willard F. Pinney, Jr.
Murtha, Cullina, Richter and Pinney
CityPlace I - 185 Asylum Street
Hartford, CT 06103-3469
Fax Number: 860-240-6150
In the case of Spectra:
Chief Executive Officer
Spectra, Inc.
Etna Road
PO Box 68C
Hanover, NH 03755
facsimile: (603) 643-5430
with a copy to:
Gregory E. Moore, Esq.
Ropes & Gray
One International Place
Boston, MA 02110-2624
<PAGE>
facsimile: (617) 951-7050
Any notice or request shall be deemed to have been given on the date of receipt.
Either party may change its address for the purposes of this Agreement by giving
the other party written notice of its new address.
14.9. All rights granted to Customer under this Agreement may exercised by any
Affiliate of Customer agreeing to be bound by this Agreement.
ACCEPTED BY:
SPECTRA, INC. ACCENT COLOR SCIENCES, INC.
By: By:
Printed: Printed:
Title: Title:
Date: Date:
<PAGE>
Exhibit A
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made this _________ day
of _________________ 1996, by ACCENT COLOR SCIENCES, INC., a Connecticut
corporation (the "Company") for the benefit of each Purchaser (individually a
"Purchaser' and collectively, the "Purchasers") entering into a Common Stock
------
Purchase Agreement (the "Purchase Agreement") with the Company of even date
herewith.
BACKGROUND
- ----------
Pursuant to the Common Stock Purchase Agreement, the Company has offered for
sale up to 250,000 shares of the Company's Common Stock (the "Shares"). In
order to induce the Purchasers to purchase the Shares, the Company has agreed to
provide the registration rights set forth in this Agreement.
1. Securities Laws Representations and Covenants of Purchaser.
----------------------------------------------------------
This Agreement is made for the benefit of the Purchasers in reliance upon each
Purchaser's representations to the Company, contained in Section 4 of the Common
Stock Purchase Agreement.
2. Registration Rights.
-------------------
2.1 Certain Definitions. As used in Us Agreement, the following
-------------------
terms shall have the following respective meanings:
(a) "Commission" shall mean the Securities and Exchange
----------
Commission or any other federal agency at the time
administering the Securities Act.
(b) "Common Stock" shall mean the common stock, no par value, of
------------
the Company.
(c) "Form S-I, Form SB-I, Form S-2, Form SB-2 and Form S-3"
-----------------------------------------------------
shall mean Form S-1, Form SB-1, Form S-2, Form SB-2 or Form
S-3, respectively, promulgated by the Commission or any
substantially similar form then in effect.
(d) The terms "Register", "Registered" and "Registration" refer
-------- ---------- ------------
to a registration effected by preparing and filing a
Registration Statement in compliance with the Securities
Act, and the declaration or ordering of the effectiveness of
such Registration Statement.
<PAGE>
(e) "Registrable Securities" shall mean the Shares so long as
----------------------
such shares are ineligible for sale under subparagraph (k)
of Rule 144.
(f) "Registration Expenses" shall mean all expenses incurred by
---------------------
the Company in complying with Section 2, including, without
limitation, all federal and state registration,
qualification and filing fees, printing expenses, fees and
disbursements of counsel for the Company, blue sky fees and
expenses, the expense of any special audits incident to or
required by any such Registration and the reasonable fees
and disbursements of counsel for the Selling Shareholders,
as selling shareholders.
(g) "Registration Statement" shall mean Form S-1, Form SB-1,
----------------------
Form S-2, Form SB-2 or Form S-3, whichever is applicable.
(h) "Registration Termination Date" shall mean, with respect to
-----------------------------
any Registrable Securities the earliest of (i) the date that
such Registrable Securities shall have been Registered and
sold or otherwise disposed of in accordance with the
intended method of distribution by the seller or sellers
thereof set forth in the Registration Statement covering
such securities or transferred in compliance with Rule 144,
and (ii) the date that an opinion of counsel to the Company
containing reasonable assumptions (which opinion shall be
subject to the reasonable approval of counsel to any
affected purchaser) shall have been rendered to the effect
that the legend referred to in Section 4.3(b) of the Common
Stock Purchase Agreement can be properly removed and such
legend shall have been removed.
(i) "Rule 144" shall mean Rule 144 promulgated by the Commission
--------
pursuant to the Securities Act.
(j) "Purchasers" shall mean, collectively, the Purchasers,
----------
their assignees and transferees, and individually, a
Purchaser and any transferee or assignee of such Purchaser.
(k) "Securities Act" shall mean the Securities Act of 1933,
--------------
as amended.
(l) "Selling Expenses" shall mean all underwriting discounts
----------------
and selling commissions applicable to the sale of
Registrable Securities pursuant to this Agreement.
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<PAGE>
(m) "Selling Shareholders" shall mean a holder of Registrable
--------------------
Securities who requests Registration under Section 2
herein.
(n) "Shares" shall mean the Common Stock issued to the
------
Purchasers pursuant to various Common Stock Purchase
Agreements and warrant purchase agreements.
Capitalized terms used but not defined herein shall have the meanings ascribed
to such terms in the Common Stock Purchase Agreement.
2.2. [Intentionally Omitted]
---------------------
2.3 Required Registration. If the Company shall be requested by
---------------------
holders of at least a majority of the outstanding Shares (other
than Shares which have been previously sold in a public offering)
to effect the Registration of Registrable Securities, then the
Company shall promptly give written notice of such proposed
Registration to all holders of such Shares, and thereupon the
Company shall promptly use its best efforts to effect the
Registration of the Registrable Securities that the Company has
been requested to Register for disposition as described in the
request of such holders of Shares within ten (10) days or such
longer period as shall be set forth in the notice, after the
giving of the written notice by the Company; provided, however,
that the Company shall not be obligated to effect any
Registration except in accordance with the following provisions:
(a) The Company shall not be obligated to file and cause to
become effective more than two (2) registration statements
in which Registrable Securities are Registered pursuant to
this Section 2.3.
(b) Any offering of Registrable Securities in accordance with a
Registration pursuant to this Section 2.3 shall be an
underwritten offering through one or more underwriters
acceptable to the holders of Registrable Securities
requesting such Registration and the Company. The
underwriter or managing underwriter of such Registration
shall be authorized to determine the maximum amount of
Registrable Securities which in the judgment of such
underwriter may be sold at or about the then current market
value of the Common Stock of the Company and such
underwriter shall be empowered to reduce the number of
Registrable Securities which may be sold pursuant to such
Registration if in its judgment such reduction is necessary
in order not to materially and adversely affect the then
prevailing market price of the Common Stock. Any such
reduction shall be applied pro rata to those holders of
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<PAGE>
Registrable Securities requesting such Registration.
(c) In the event that the managing underwriter determines that
under then prevailing market conditions more shares of
Common Stock may be sold pursuant to such Registration than
the number of Registrable Securities requested to be
included therein, the Company may include in each such
Registration requested pursuant to this Section 2.3 any
authorized but unissued shares of Common Stock (or
authorized treasury shares) for sale by the Company or any
issued and outstanding shares of Common Stock for sale by
others, provided, however, that, if the number of shares of
Common Stock so included pursuant to this clause (b) exceeds
the number of Registrable Securities requested by the
holders of Shares requesting such Registration, then such
Registration shall be deemed to be a Registration in
accordance with and pursuant to Section 2.4; and provided
further, however, that the inclusion of such previously
authorized but unissued shares of Common Stock by others in
such Registration shall not prevent the holders of Shares
requesting such Registration from registering the entire
number of Registrable Securities requested by them.
(d) The Company shall not be required to file a registration
statement pursuant to this Section 2: (i) within six (6)
months after any other registration by the Company (other
than under "Excluded Forms," as defined in Section 2.4(a)
below) or (ii) for six (6) months after the request for
registration under this Section 2.3 if the Company is then
engaged in negotiations regarding a material transaction
which has not otherwise been publicly disclosed, or such
shorter period ending on the date, whichever first occurs,
that such transaction is publicly disclosed, abandoned or
consummated.
(e) The registration rights granted pursuant to this section
shall have no force or effect until the earlier of the
Company has completed a public offering under the Securities
Act or otherwise become obligated to file periodic or other
reports pursuant to Section 13 of the 1934 Act."
-4-
<PAGE>
2.4 Piggyback Registration
----------------------
(a) Each time that the Company proposes to Register a public
offering solely of its Common Stock (not including an
offering of Common stock issuable upon conversion or
exercise of other securities), other than pursuant to a
Registration Statement on Form S-4 or Form S-8 or similar or
successor forms (collectively, "Excluded Forms"), the
Company shall promptly give written notice of such proposed
Registration to all holders of Shares, which shall offer
such holders the right to request inclusion of any
Registrable Securities in the proposed Registration.
(b) Each holder of Shares shall have ten (10) days or such
longer period as shall be set forth in the notice from the
receipt of such notice to deliver to the Company a written
request specifying the number of shares of Registrable
Securities such holder intends to sell and the holder's
intended plan of disposition.
(c) In the event that the proposed Registration by the Company
is, in whole or in part, an underwritten public offering of
securities of the Company, any request under Section 2.4(b)
may specify that the Registrable Securities be included in
the underwriting on the same terms and conditions as the
shares of Common Stock, if any, otherwise being sold through
underwriters under such Registration.
(d) Upon receipt of a written request pursuant to Section
2.4(b), the Company shall promptly use its best efforts to
cause all such Registrable Securities to be Registered, to
the extent required to permit sale or disposition as set
forth in the written request.
(e) Notwithstanding the foregoing, if the managing underwriter
of an underwritten public offering, determines and advises
in writing that the inclusion of all Registrable Securities
proposed to be included in the underwritten public offering,
together with any other issued and outstanding shares of
Common Stock proposed to be included therein by holders
other than the holders of Registrable Securities (such other
shares hereinafter collectively referred to as the "Other
Shares"), would interfere with the successful marketing of
the securities proposed to be included in the underwritten
public offering, then the number of such shares to be
included in such underwritten public offering shall be
reduced, and shares shall be excluded from such underwritten
public offering in a number deemed necessary by such
managing underwriter, first by excluding shares held by the
directors, officers, employees and
-5-
<PAGE>
founders of the Company, and then, to the extent necessary
by excluding Registrable Securities participating in such
underwritten public offering, pro rata, based on the number
of shares of Registrable Securities each such holder
proposed to include.
(f) All Shares that are not included in the underwritten public
offering shall be withheld from the market by the holders
thereof for a period, not to exceed 6 months following a
public offering, that the managing underwriter reasonably
determines as necessary in order to effect the underwritten
public offering. The holders of such Shares shall execute
such documentation as the managing underwriter reasonably
requests to evidence this lock-up.
2.5 Preparation and Filing. If and whenever the Company is under an
----------------------
obligation pursuant to the provisions of this Section 2 to use
its best efforts to effect the Registration of any Registrable
Securities, the Company shall, as expeditiously as practicable:
(a) prepare and file with the Commission a Registration
Statement with respect to such Registrable Securities and
use its best efforts to cause such Registration Statement to
become and remain effective in accordance with Section
2.5(b) hereof, keeping each Selling Shareholder advised as
to the initiation, progress and completion of the
Registration;
(b) prepare and file with the Commission such amendments and
supplements to such Registration Statements and the
prospectus used in connection therewith as may be necessary
to keep such Registration Statement effective for nine
months and to comply with the provisions of the Securities
Act with respect to the sale or other disposition of all
Registrable Securities covered by such registration
statement;
(c) furnish to each Selling Shareholder such number of copies of
any summary prospectus or other prospectus, including a
preliminary prospectus, in conformity with the requirements
of the Securities Act, and such other documents as such
Selling Shareholder may reasonably request in order to
facilitate the public sale or other disposition of such
Registrable Securities;
(d) use its best efforts to register or qualify the Registrable
Securities covered by such registration statement under the
securities or blue sky laws of such jurisdictions as each
Selling Shareholder shall reasonably request and do any and
all other acts or things which
-6-
<PAGE>
may be necessary or advisable to enable such holder to
consummate the public sale or other disposition in such
jurisdictions of such Registrable Securities; provided,
however, that the Company shall not be required to consent
to general service of process, qualify to do business as a
foreign corporation where it would not be otherwise required
to qualify or submit to liability for state or local taxes
where it is not liable for such taxes; and
(e) at any time when a prospectus covered by such Registration
Statement is required to be delivered under the Securities
Act within the appropriate period mentioned in Section
2.4(b) hereof, notify each Selling Shareholder of the
happening of any event as a result of which the prospectus
included in such Registration, as then in effect, includes
an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of
the circumstances then existing and, at the request of such
seller, prepare, file and furnish to such seller a
reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such shares, such
prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to
be stated therein or necessary to make the statement therein
not misleading in the light of the circumstances then
existing.
2.5 Expenses. The Company shall pay all Registration Expenses
--------
incurred by the Company in complying with this Section 2;
provided, however, that all underwriting discounts and selling
commissions applicable to the Registrable Securities covered by
registrations effected pursuant to section 2.3 hereof shall be
borne by the seller or sellers thereof, in proportion to the
number of Registrable Securities sold by such seller or sellers.
2.6 Information Furnished by Purchaser. It shall be a condition
----------------------------------
precedent to the Company's obligations under this Agreement as to
any Selling Shareholder that each Selling Shareholder furnish to
the Company in writing such information regarding such Selling
Shareholder and the distribution proposed by such Selling
Shareholder as the Company may reasonably request.
-7-
<PAGE>
2.7 Indemnification.
---------------
2.7.1 Company's Indemnification of Purchasers. The Company
---------------------------------------
shall indemnify each Selling Shareholder, each of its
officers, directors and constituent partners, and each
person controlling such Selling Shareholder, and each
underwriter thereof, if any, and each of its officers,
directors, constituent partners, and each person who
controls such underwriter, against all claims, losses,
damages or liabilities (or actions in respect thereof)
suffered or incurred by any of them to the extent such
claims, losses, damages or liabilities arise out of or are
based upon any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus or
any related Registration Statement incident to any such
Registration, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or
any violation by the Company of any rule or regulation
promulgated under the Securities Act applicable to the
Company and relating to actions or inaction required of the
Company in connection with any such Registration; and the
Company will reimburse each such Selling Shareholder, each
such underwriter, each of their officers, directors and
constituent partners and each person who controls any such
Selling Shareholder or underwriter, for any legal and any
other expenses as reasonably incurred in connection with
investigating or defending any such claim, loss, damage,
liability or action; provided however, that the indemnity
contained in this Section 2.7.1 shall not apply to amounts
paid in settlement of any such claim, loss, damage,
liability or action if settlement is effected without the
consent of the Company (which consent shall not unreasonably
be withheld); and provided, however, that the Company will
not be liable in any such case to the extent that any such
claim, loss, damage, liability or expense arises out of or
is based upon any untrue statement or omission based upon
written information furnished to the Company by such Selling
Shareholder, underwriter, controlling person or other
indemnified person and stated to be for use in connection
with the offering of securities of the Company.
2.7.2 Selling Indemnification of Company. Each Selling
----------------------------------
Shareholder shall indemnify the Company, each of its
directors and officers, each underwriter, if any, of the
Company's Registrable Securities covered by a Registration
Statement, each person who controls the Company or such
underwriter within the meaning of the Securities Act, and
each other Selling Shareholder, each of its officers,
-8-
<PAGE>
directors and constituent partners and each person
controlling such other Selling Shareholder, against all
claims, losses, damages and liabilities (or actions in
respect thereof) suffered or incurred by any of them and
arising out of or based upon any untrue statement (or
alleged untrue statement) of a material fact contained in
such Registration Statement or related prospectus, or any
omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, or any violation by such
Selling Shareholder of any rule or regulation promulgated
under the Securities Act applicable to such Selling
Shareholder and relating to actions or inactions required of
such Selling Shareholder in connection with the Registration
of the Registrable Securities pursuant to such Registration
Statement; and will reimburse the Company, such other
Selling Shareholders, such directors, officers, partners,
persons, underwriters and controlling persons for any legal
and any other expenses reasonably incurred in connection
with investigating or defending any such claim, loss,
damage, liability or action; such indemnification and
reimbursement shall be to the extent, but only to the
extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such
Registration Statement or prospectus in reliance upon and in
conformity with written information furnished to the Company
by such Selling Shareholder and stated to be specifically
for use in connection with the offering of Registrable
Securities.
2.7.3 Indemnification Procedure. Promptly after receipt by an
-------------------------
indemnified party under this Section 2.7 of notice of the
commencement of any action which may give rise to a claim
for indemnification hereunder, such indemnified party will,
if a claim in respect thereof is to be made against an
indemnifying party under this Section 2.7, notify the
indemnifying party in writing of the commencement thereof
and generally summarize such action. The indemnifying party
shall have the right to participate in and to assume the
defense of such claim, and shall be entitled to select
counsel for the defense of such claim with the approval of
any parties entitled to indemnification, which approval
shall not be unreasonably withheld. Notwithstanding the
foregoing, the parties entitled to indemnification shall
have the right to employ separate counsel (reasonably
satisfactory to the indemnifying party) to participate in
the defense thereof but the fees and expenses of such
counsel shall be at the expense of such indemnified parties
unless the named parties to such action or proceedings
include both the indemnifying party and the indemnified
parties and the
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<PAGE>
indemnifying party or such indemnified parties shall have
been advised by counsel that there are one or more legal
defenses available to the indemnified parties which are
different from or additional to those available to the
indemnifying party (in which case, if the indemnified
parties notify the indemnifying party in writing that they
elect to employ separate counsel at the reasonable expense
of the indemnifying party, the indemnifying party shall not
have the right to assume the defense of such action or
proceeding on behalf of the indemnified parties, it being
understood, however, that the indemnifying party shall not,
in connection with any such action or proceeding or separate
or substantially similar or related action or proceeding in
the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate counsel at any
time for all indemnified parties, which counsel shall be
designated in writing by the Purchasers of a majority of the
Registrable Securities).
2.7.4 Contribution. If the indemnification provided for in this
------------
Section 2.7 from an indemnifying party is unavailable to an
indemnified party hereunder in respect to any losses,
claims, damages, liabilities or expenses referred to herein,
then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such
losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault
of the Indemnifying party and indemnified party in
connection with the statements or omissions which result in
such losses, claims, damages, liabilities or expenses, as
well as any other relevant equitable considerations. The
relative fault of such indemnifying party and indemnified
party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a
material fact relates to information supplied by such
indemnifying party or indemnified party and the parties'
relative intent, knowledge, access to information supplied
by such indemnifying party or indemnified party and
opportunity to correct or prevent such statement or
omission. The amount paid or payable by a party as a result
of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include any legal or
other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action, suit,
proceeding or claim.
-10-
<PAGE>
3. Covenants of the Company.
------------------------
The Company agrees to:
(a) Notify the holders of Registrable Securities included in a
Registration Statement of the issuance by the Commission of any
stop order suspending the effectiveness of such Registration
Statement or the initiation of any proceedings for that purpose.
The Company will make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to
obtain the lifting thereof at the earliest possible time.
(b) If the Common Stock is then listed on a national securities
exchange, use its best efforts to cause the Registrable
Securities to be listed on such exchange. If the Common Stock is
not then listed on a national securities exchange, use its best
efforts to facilitate the reporting of the Registrable Securities
on NASDAQ.
(c) Take all other reasonable actions necessary to expedite and
facilitate disposition of the Registrable Securities by the
holders thereof pursuant to the Registration Statement.
(d) With a view to making available to the holders of Registrable
Securities the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the Commission
that may at any time permit the Purchasers to sell securities of
the Company to the public without registration, the Company,
after it has become obligated to file periodic or other reports
pursuant to Section 13 of the 1934 Act agrees to:
(i) make and keep public information available, as those terms
are understood and defined in Rule 144, at all times after
90 days after the effective date of the first Registration
Statement filed by the Company for the offering of its
securities to the general public;
(ii) file with the Commission in a timely manner all reports and
other documents required of the Company under the
Securities Act and the Securities and Exchange Act of 1934
(the "1934 Act"); and
(iii) furnish to each holder of Shares, so long as such holder of
Shares owns any Shares, forthwith upon written request (a)
a written statement by the Company that it has complied
with the reporting requirements of Rule 144 (at any time
after 90 days after the effective date of the first
registration statement filed by the Company), the
Securities Act and the 1934 Act (at any time after it has
become subject to such reporting requirements), (b) a copy
of
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<PAGE>
the most recent annual or quarterly report of the Company
and such other reports and documents so filed by the
Company and (c) such other information as may be reasonably
requested and as is publicly available in availing the
holders of Shares of any rule or regulation of the
Commission which permits the selling of any such securities
without registration.
(e) Prior to the filing of the Registration Statement or any
amendment thereto (whether pre-effective or post-effective), and
prior to the filing of any prospectus or prospectus supplement
related thereto, the Company will provide each Selling
Shareholder with copies of all pages thereto, if any, which
reference such Selling Shareholder.
4. Miscellaneous.
-------------
(a) Notices required or permitted to be given hereunder shall be in
writing and shall be deemed to be sufficiently given when
personally delivered or sent by registered mail, return receipt
requested, addressed (i) if to the Company, at Accent Color
Sciences, Inc., 800 Connecticut Boulevard, East Hartford, CT
-------------------------
06108 and (ii) if to a Purchaser, at the address set forth in his
Subscription Agreement, or at such other address as each such
party furnishes by notice given in accordance with this Section
4(a);
(b) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such
right or remedy, will not operate as a waiver thereof. No waiver
will be effective unless and until it is in writing and signed by
the party giving the waiver;
(c) This Agreement shall be enforced, governed and construed in all
respects in accordance with the laws of the State of Connecticut,
as such laws are applied by Connecticut courts to agreements
entered into and to be performed in Connecticut by and between
residents of Connecticut. In the event that any provision of
this Agreement is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of
law. Any provision hereof which may prove invalid or
unenforceable under any law shall not affect the validity or
enforceability of any other provision hereof,
(d) This Agreement may not be assigned by the Purchaser other than to
the purchaser or transferee of more than 50% of the Purchaser's
Shares;
(e) This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and may
be amended only by a
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<PAGE>
writing executed by the Company and the holders of a majority in
interest of the Registrable Securities; and
(f) This Agreement may be executed in two or more counterparts, each
of which when so executed and delivered shall be deemed to be an
original and all of which together shall be deemed to be one and
the same Agreement.
IN WITNESS WHEREOF, the Company has executed this Agreement for the benefit of
the Purchasers by its duly authorized officer as of the date first above
written.
ACCENT COLOR SCIENCES, INC.
By:
---------------------------------
Richard J. Coburn, President
and Chief Executive Officer
Agreed and Accepted this
day of ,1996
By:
---------------------------------
Name:
Title:
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<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made this 11th day of
October, 1996, by ACCENT COLOR SCIENCES, INC., a Connecticut corporation (the
"Company") for the benefit of each Purchaser (individually a "Purchaser" and
collectively, the "Purchasers") entering into a Common Stock Purchase Agreement
(the "Purchase Agreement") with the Company of even date herewith.
BACKGROUND
- ----------
Pursuant to the Note Purchase Agreement, the Company has offered for sale
$3,450,000 Discounted Notes (the "Notes') with 15,000 Warrants to purchase
Common Stock (the "Warrants"). In order to induce the Purchasers to purchase the
Notes, the Company has agreed to provide the registration rights set forth in
this Agreement.
1. Securities Laws Representations and Covenants of Purchaser.
----------------------------------------------------------
This Agreement is made for the benefit of the Purchasers in reliance upon each
Purchaser's representations to the Company, contained in Section 4 of the Common
Stock Purchase Agreement.
2. Registration Rights.
-------------------
2.1 Certain Definitions. As used in this Agreement, the following
-------------------
terms shall have the following respective meanings:
(a) "Commission" shall mean the Securities and Exchange
------------
Commission or any other federal agency at the time
administering the Securities Act.
(b) "Common Stock" shall mean the common stock, no par value, of
--------------
the Company.
(c) "Form S-1, Form SB-I, Form S-2, Form SB-2 and Form S-3"
-----------------------------------------------------
shall mean Form S-1, Form SB-1, Form S-2, Form SB-2 or Form
S-3, respectively, promulgated by the Commission or any
substantially similar form then in effect.
(d) The terms "Register", "Registered" and "Registration" refer
-------- ---------- ------------
to a registration effected by preparing and filing a
Registration Statement in compliance with the Securities
Act, and the declaration or ordering of the effectiveness of
such Registration Statement.
(e) "Registrable Securities" shall mean the Shares so long as
----------------------
such shares are ineligible for sale under subparagraph (k)
of Rule 144.
<PAGE>
(f) "Registration Expenses" shall mean all expenses incurred by
---------------------
the Company in complying with Section 2, including, without
limitation, all federal and state registration,
qualification and filing fees, printing expenses, fees and
disbursements of counsel for the Company, blue sky fees and
expenses, the expense of any special audits incident to or
required by any such Registration and the reasonable fees
and disbursements of counsel for the Selling Shareholders,
as selling shareholders.
(g) "Registration Statement" shall mean Form S-1, Form SB-1,
----------------------
Form S-2, Form SB-2 or Form S-3, whichever is applicable.
(h) "Restriction Termination Date" shall mean, with respect to
----------------------------
any Registrable Securities, the earliest of (i) the date
that such Registrable Securities shall have been Registered
and sold or otherwise disposed of in accordance with the
intended method of distribution by the seller or sellers
thereof set forth in the Registration Statement covering
such securities or transferred in compliance with Rule 144,
and (ii) the date that an opinion of counsel to the Company
containing reasonable assumptions (which opinion shall be
subject to the reasonable approval of counsel to any
affected Purchaser) shall have been rendered to the effect
that the legend referred to in Section 4.3(b) of the Common
Stock Purchase Agreement can be properly removed and such
legend shall have been removed.
(i) "Rule 144" shall mean Rule 144 promulgated by the Commission
--------
pursuant to the Securities Act.
(j) "Purchasers" shall mean, collectively, the Purchasers, their
----------
assignees and transferees, and individually, a Purchaser and
any transferee or assignee of such Purchaser.
(k) "Securities Act" shall mean the Securities Act of 1933, as
--------------
amended.
(l) "Selling Expenses" shall mean all underwriting discounts and
----------------
selling commissions applicable to the sale of Registrable
Securities pursuant to this Agreement.
(m) "Selling Shareholders" shall mean a holder of Registrable
--------------------
Securities who requests Registration under Section 2 herein.
(n) "Shares" shall mean the Common Stock issuable to the
------
Purchasers pursuant to the Warrants.
-2-
<PAGE>
Capitalized terms used but not defined herein shall have the meanings ascribed
to such terms in the Common Stock Purchase Agreement.
2.2 Required Registration. If the Company shall be requested by
---------------------
holders of at least a majority of the Outstanding Shares to
effect the Registration of Registrable Securities, then the
Company shall promptly give written notice of such proposed
Registration to all holders of Shares, and thereupon the Company
shall promptly use its best efforts to effect the Registration of
the Registrable Securities that the Company has been requested to
Register for disposition as described in the request of such
holders of Shares and in any response received from any of the
holders of Shares within ten (10) days or such longer period as
shall be set forth in the notice, after the giving of the written
notice by the Company; provided, however, that the Company shall
not be obligated to effect any Registration except in accordance
with the following provisions:
(a) The Company shall not be obligated to file and cause to
become effective more than one (1) registration statement in
which Registrable Securities are Registered pursuant to this
Section 2.2.
(b) Notwithstanding the foregoing, the Company may include in
each such Registration requested pursuant to this Section
2.2 any authorized but unissued shares of Common Stock (or
authorized treasury shares) for sale by the Company or any
issued and outstanding shares of Common Stock for sale by
others, provided, however, that, if the number of shares of
Common Stock so included pursuant to this clause (b) exceeds
the number of Registrable Securities requested by the
holders of Shares requesting such Registration, then such
Registration shall be deemed to be a Registration in
accordance,with and pursuant to Section 2.3; and provided
further, however, that the inclusion of such previously
authorized but unissued shares of Common Stock by the
Company or issued and outstanding shares of Common Stock by
others in such Registration shall not prevent the holders of
Shares requesting such Registration from registering the
entire number of Registrable Securities requested by them.
(c) The Company shall not be required to file a registration
statement pursuant to this Section 2: (i) within twelve
months after October 11, 1996, (ii) within six (6) months
after any other registration by the Company (other than
under "Excluded Forms," as defined in Section 2.3 (a) below)
or (iii) for six (6) months after the request for
registration under this Section 2.2 if the Company is then
engaged in negotiations regarding a material transaction
which has not otherwise been publicly disclosed, or such
shorter period ending on the date,
-3-
<PAGE>
whichever first occurs, that such transaction is publicly
disclosed, abandoned or consummated.
(d) The registration rights granted pursuant to this section
shall have no force or effect until the earlier of the
Company has completed its initial public offering (the
"IPO") under the Securities Act or otherwise become
obligated to file periodic or other reports pursuant to
Section 13 of the 1934 Act.
2.3 Piggyback Registration
----------------------
(a) Each time that the Company proposes to Register a public
offering solely of its Common Stock, other than pursuant to
a Registration Statement on Form S-4 or Form S-8 or similar
or successor forms (collectively, "Excluded Forms"), the
Company shall promptly give written notice of such proposed
Registration to all holders of Shares, which shall offer
such holders the right to request inclusion of any
Registrable Securities in the proposed Registration,
provided that such right shall not be exercisable in
connection with the IPO, or prior to the earlier of (i)
October 11, 1997 or six (6) months following the IPO.
(b) Each holder of Shares shall have ten (10) days or such
longer period as shall be set forth in the notice from the
receipt of such notice to deliver to the Company a written
request specifying the number of shares of Registrable
Securities such holder intends to sell and the holder's
intended plan of disposition.
(c) In the event that the proposed Registration by the Company
is, in whole or in part, an underwritten public offering of
securities of the Company, any request under Section 2.3(b)
may specify that the Registrable Securities be included in
the underwriting on the same terms and conditions as the
shares of Common Stock, if any, otherwise being sold through
underwriters under such Registration.
(d) Upon receipt of a written request pursuant to Section
2.3(b), the Company shall promptly use its best efforts to
cause all such Registrable Securities to be Registered, to
the extent required to permit sale or disposition as set
forth in the written request.
(e) Notwithstanding the foregoing, if the managing underwriter
of an underwritten public offering, determines and advises
in writing that the inclusion of all Registrable Securities
proposed to be included in the underwritten public offering,
together with any other issued and
-4-
<PAGE>
outstanding shares of Common Stock proposed to be included
therein by holders other than the holders of Registrable
Securities (such other shares hereinafter collectively
referred to as the "Other Shares"), would interfere with the
successful marketing of the securities proposed to be
included in the underwritten public offering, then the
number of such shares to be included in such underwritten
public offering shall be reduced, and shares shall be
excluded from such underwritten public offering in a number
deemed necessary by such managing underwriter, first by
excluding shares held by the directors, officers, employees
and founders of the Company, and then, to the extent
necessary, by excluding Registrable Securities participating
in such underwritten public offering, pro rata, based on the
number of shares of Registrable Securities each such holder
proposed to include.
(f) All Shares that are not included in the underwritten public
offering shall be withheld from the market by the holders
thereof for a period, not to exceed 6 months following a
public offering, that the managing underwriter reasonably
determines as necessary in order to effect the underwritten
public offering. The holders of such Shares shall execute
such documentation as the managing underwriter reasonably
requests to evidence this lock-up.
2.4 Preparation and Filing. If and whenever the Company is under an
----------------------
obligation pursuant to the provisions of this Section 2 to use its
best efforts to effect the Registration of any Registrable Securities,
the Company shall, as expeditiously as practicable:
(a) prepare and file with the Commission a Registration
Statement with respect to such Registrable Securities and
use its best efforts to cause such Registration Statement to
become and remain effective in accordance with Section
2.4(b) hereof, keeping each Selling Shareholder advised as
to the initiation, progress and completion of the
Registration;
(b) prepare and file with the Commission such amendments and
supplements to such Registration Statements and the
prospectus used in connection therewith as may be necessary
to keep such Registration Statement effective for nine
months and to comply with the provisions of the Securities
Act with respect to the sale or other disposition of all
Registrable Securities covered by such registration
statement;
(c) furnish to each Selling Shareholder such number of copies of
any summary prospectus or other prospectus, including a
preliminary prospectus, in conformity with the requirements
of the Securities Act,
-5-
<PAGE>
and such other documents as such Selling Shareholder may
reasonably request in order to facilitate the public sale or
other disposition of such Registrable Securities;
(d) use its best efforts to register or qualify the Registrable
Securities covered by such registration statement under the
securities or blue sky laws of such jurisdictions as each
Selling Shareholder shall reasonably request and do any and
all other acts or things which may be necessary or advisable
to enable such holder to consummate the public sale or other
disposition in such jurisdictions of such Registrable
Securities; provided, however, that the Company shall not be
required to consent to general service of process, qualify
to do business as a foreign corporation where it would not
be otherwise required to qualify or submit to liability for
state or local taxes where it is not liable for such taxes;
and
(e) at any time when a prospectus covered by such Registration
Statement is required to be delivered under the Securities
Act within the appropriate period mentioned in Section
2.3(b) hereof, notify each Selling Shareholder of the
happening of any event as a result of which the prospectus
included in such Registration, as then in effect, includes
an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of
the circumstances then existing and, at the request of such
seller, prepare, file and furnish to such seller a
reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such shares, such
prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to
be stated therein or necessary to make the statement therein
not misleading in the light of the circumstances then
existing.
2.5 Expenses. The Company shall pay all Registration Expenses incurred by
--------
the Company in complying with this Section 2; provided, however, that
all underwriting discounts and selling commissions applicable to the
Registrable Securities covered by registrations effected pursuant to
Section 2.2 hereof shall be borne by the seller or sellers thereof, in
proportion to the number of Registrable Securities sold by such seller
or sellers.
2.6 Information Furnished by Purchaser. It shall be a condition precedent
----------------------------------
to the Company's obligations under this Agreement as to any Selling
Shareholder that each Selling Shareholder furnish to the Company in
writing such information regarding such Selling Shareholder and the
distribution proposed by such Selling Shareholder
-6-
<PAGE>
as the Company may reasonably request.
2.7 Indemnification.
---------------
2.7.1 Company's Indemnification of Purchasers. The Company shall
---------------------------------------
indemnify each Selling Shareholder, each of its officers,
directors and constituent partners, and each person controlling
such Selling Shareholder, and each underwriter thereof, if any,
and each of its officers, directors, constituent partners, and
each person who controls such underwriter, against all claims,
losses, damages or liabilities (or actions in respect thereof)
suffered or incurred by any of them, to the extent such claims,
losses, damages or liabilities arise out of or are based upon
any untrue statement (or alleged untrue statement) of a
material fact contained in any prospectus or any related
Registration Statement incident to any such Registration, or
any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, or any violation by the
Company of any rule or regulation promulgated under the
Securities Act applicable to the Company and relating to
actions or inaction required of the Company in connection with
any such Registration; and the Company will reimburse each such
Selling Shareholder, each such underwriter, each of their
officers, directors and constituent partners and each person
who controls any such Selling Shareholder or underwriter, for
any legal and any other expenses as reasonably incurred in
connection with investigating or defending any such claim,
loss, damage, liability or action; provided, however, that the
indemnity contained in this Section 2.7.1 shall not apply to
amounts paid in settlement of any such claim, loss, damage,
liability or action if settlement is effected without the
consent of the Company (such consent shall not unreasonably be
withheld); and provided, however, that the Company will not be
liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based
upon any untrue statement or omission based upon written
information furnished to the Company by such Selling
Shareholder, underwriter, controlling person or other
indemnified person and stated to be for use in connection with
the offering of securities of the Company.
2.7.2 Selling Shareholder's Indemnification of Company. Each Selling
------------------------------------------------
Shareholder shall indemnify the Company, each of its directors
and officers, each underwriter, if any, of the Company's
Registrable Securities covered by a Registration Statement each
person who controls the Company or such underwriter within the
meaning of the Securities Act and each other Selling
Shareholder, each of its officers, directors and constituent
partners and each person controlling such other Selling
Shareholder, against all claims, losses, damages and
liabilities (or actions in respect thereof) suffered or
incurred by any of them and arising out of or based upon any
untrue statement (or alleged untrue statement) of a material
fact contained in such Registration Statement
-7-
<PAGE>
or related prospectus, or any omission (or alleged omission) to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any
violation by such Selling Shareholder of any rule or regulation
promulgated under the Securities Act applicable to such Selling
Shareholder and relating to actions or inaction required of
such Selling Shareholder in connection with the Registration of
the Registrable Securities pursuant to such Registration
Statement; and will reimburse the Company, such other Selling
Shareholders, such directors, officers, partners, persons,
underwriters and controlling persons for any legal and any
other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage,
liability or action; such indemnification and reimbursement
shall be to the extent, but only to the extent, that such
untrue statement (or alleged untrue statement) or omission (or
alleged omission) is made in such Registration Statement or
prospectus in reliance upon and in conformity with written
information furnished to the Company by such Selling
Shareholder and stated to be specifically for use in connection
with the offering of Registrable Securities.
2.7.3 Indemnification Procedure. Promptly after receipt by an
--------------------------
indemnified party under this Section 2.7 of notice of the
commencement of any action which may give rise to a claim for
indemnification hereunder, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying
party under this Section 2.7, notify the indemnifying party in
writing of the commencement thereof and generally summarize
such action. The indemnifying party shall have the right to
participate in and to assume the defense of such claim, and
shall be entitled to select counsel for the defense of such
claim with the approval of any parties entitled to
indemnification, which approval shall not be unreasonably
withheld. Notwithstanding the foregoing, the parties entitled
to indemnification shall have the right to employ separate
counsel (reasonably satisfactory to the indemnifying party) to
participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such indemnified
parties unless the named parties to such action or proceedings
'include both the indemnifying party and the indemnified
parties and the indemnifying party or such indemnified parties
shall have been advised by counsel that there are one or more
legal defenses available to the indemnified parties which are
different from or additional to those available to the
indemnifying party (in which case, if the indemnified parties
notify the indemnifying party in writing that they elect to
employ separate counsel at the reasonable expense of the
indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action or proceeding on
behalf of the indemnified parties, it being understood,
however, that the indemnifying party shall not, in connection
with any such action or proceeding or separate or substantially
similar or related action or proceeding in the same
jurisdiction arising out of the same general allegations
-8-
<PAGE>
or circumstances, be liable for the reasonable fees and
expenses of more than one separate counsel at any time for
all indemnified parties, which counsel shall be designated
in writing by the Purchasers of a majority of the
Registrable Securities).
2.7.4 Contribution. If the indemnification provided for in this
------------
Section 2.7 from an indemnifying party is unavailable to an
indemnified party hereunder in respect to any losses,
claims, damages, liabilities or expenses referred to herein,
then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such
losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault
of the Indemnifying party and indemnified party in
connection with the statements or omissions which result in
such losses, claims, damages, liabilities or expenses, as
well as any other relevant equitable considerations. The
relative fault of such indemnifying party and indemnified
party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a
material fact relates to information supplied by such
indemnifying party or indemnified party and the parties'
relative intent, knowledge, access to information supplied
by such indemnifying party or indemnified party and
opportunity to correct or prevent such statement or
omission. The amount paid or payable by a party as a result
of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include any legal or
other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action, suit,
proceeding or claim.
3. Covenants of the Company.
------------------------
The Company agrees to:
(a) Notify the holders of Registrable Securities included in a
Registration Statement of the issuance by the Commission of
any stop order suspending the effectiveness of such
Registration Statement or the initiation of any proceedings
for that purpose. The Company will make every reasonable
effort to prevent the issuance of any stop order and, if any
stop order is issued, to obtain the lifting thereof at the
earliest possible time.
(b) If the Common Stock is then listed on a national securities
exchange, use its best efforts to cause the Registrable
Securities to be listed on such exchange. If the Common Stock
is not then listed on a national securities exchange, use its
best efforts to facilitate the reporting of the Registrable
Securities on NASDAQ.
-9-
<PAGE>
(c) Take all other reasonable actions necessary to expedite and
facilitate disposition of the Registrable Securities by the
holders thereof pursuant to the Registration Statement.
(d) With a view to making available to the holders of Registrable
Securities the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the Commission
that may at any time permit the Purchasers to sell securities of
the Company to the public without registration, the Company,
after it has become obligated to file periodic or other reports
pursuant to Section 13 of the 1934 Act agrees to:
(i) make and keep public information available, as those
terms are understood and defined in Rule 144, at all
times after 90 days after the effective date of the first
Registration Statement filed by the Company for the
offering of its securities to the general public;
(ii) file with the Commission in a timely manner all reports
and other documents required of the Company under the
Securities Act and the Securities and Exchange Act of
1934 (the "1934 Act"); and
(iii) furnish to each holder of Shares, so long as such holder
of Shares owns any Shares, forthwith upon written request
(a) a written statement by the Company that it has
complied with the reporting requirements of Rule 144 (at
any time after 90 days after the effective date of the
first registration statement filed by the Company), the
Securities Act and the 1934 Act (at any time after it has
become subject to such reporting requirements), (b) a
copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by
the Company and (c) such other information as may be
reasonably requested and as is publicly available in
availing the holders of Shares of any rule or regulation
of the Commission which permits the selling of any such
securities without registration.
(e) Prior to the filing of the Registration Statement or any
amendment thereto (whether pre-effective or post-effective), and
prior to the filing of any prospectus or prospectus supplement
related thereto, the Company will provide each Selling
Shareholder with copies of all pages thereto, if any, which
reference such Selling Shareholder.
4. Miscellaneous.
-------------
(a) Notices required or permitted to be given hereunder shall be in
writing and shall be deemed to be sufficiently given when
personally delivered or sent by registered mail, return receipt
requested, addressed (i) if to the Company, at
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<PAGE>
Accent Color Sciences, Inc., 800 Connecticut Drive, East
Hartford, CT 06108 and (ii) if to a Purchaser, at the address set
forth in his Subscription Agreement, or at such other address as
each such party furnishes by notice given in accordance with this
Section 4(a);
(b) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such
right or remedy, will not operate as a waiver thereof. No waiver
will be effective unless and until it is in writing and signed by
the party giving the waiver;
(c) This Agreement shall be enforced, governed and construed in all
respects in accordance with the laws of the State of Connecticut
as such laws are applied by Connecticut courts to agreements
entered into and to be performed in Connecticut by and between
residents of Connecticut. In the event that any provision of
this Agreement is invalid or unenforceable under any applicable
or rule of law, then such provision shall be deemed inoperative
to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any
provision hereof which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any
other provision hereof,
(d) This Agreement may not be assigned by the Purchaser other than to
the purchaser or transferee of more than 50% of the Purchaser's
Shares;
(e) This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and may
be amended only by a writing executed by the Company and the
holders of a majority in interest of the Registrable Securities;
and
(f) This Agreement may be executed in two or more counterparts, each
of which when so executed and delivered shall be deemed to be an
original and all of which together shall be deemed to be one and
the same Agreement.
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<PAGE>
IN WITNESS WHEREOF, the Company has executed this Agreement for the
benefit of the Purchasers by its duly authorized officer as of the date first
above written.
ACCENT COLOR SCIENCES, INC.
By:
-----------------------------
Norman L. Milliard, President
and Chief Executive Officer
Agreed and Accepted this
day of 1996
By:
--------------------------
Name:
Title:
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