Exhibit 10.10
OEM Agreement
between
Hewlett-Packard Company
("HP")
and
Indigo N.V.
("Indigo")
CONFIDENTIAL
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OEM AGREEMENT
THIS AGREEMENT is entered into on this 13th day of September, 2000 ("Effective Date"), by and between HEWLETT-PACKARD COMPANY, a Delaware company with its principal offices at 3000 Hanover Street, MS20-BT, Palo Alto, California, 94304 ("HP"), and INDIGO N.V., a Netherlands company with its principal offices at Limburglaan 5, 622l SH Maastricht, The Netherlands ("Indigo").
WHEREAS, HP is engaged in the development, manufacture, marketing, sale, and service of computers, printers, and other business and consumer products, and is a leading global provider of computing and imaging solutions and services for personal, office and enterprise applications, currently selling printers at prices of up to approximately $10,000; and
WHEREAS, Indigo is engaged in the development, manufacture, marketing, sale and service of Digital Offset Color/TM/ printing and imaging products that incorporate Indigo's proprietary, ink-based digital printing technology, at prices of approximately $150,000 and above, for commercial and industrial applications; and
WHEREAS, on November 17, 1998, the Parties entered into a Strategic Affiliation Agreement pursuant to which the Parties agreed, inter alia, to explore the technical and economic feasibility of developing and selling digital color printing products combining Indigo's and HP's technology and know-how for applications not presently served by either firm, to identify the key "enablers" necessary to achieve broad adoption of Indigo's technology in the corporate enterprise environment, and to form a strategic technical alliance for exploring such possible future products and applications; and
WHEREAS, the said feasibility exploration has been successfully completed, and the Parties have concluded that, in collaboration with one another, they have the opportunity to introduce products to serve production color printing and publishing applications; and
WHEREAS, in order to capitalize upon such opportunities, the Parties wish to enter into a commercial relationship to aggressively pursue the aforesaid business opportunities by (a) HP's sale of certain Indigo products on an OEM basis, on the terms and conditions set forth in this Agreement; (b) the joint development of future products, as more fully described in the Jericho Co-Development Agreement; and (c) an HP equity investment in Indigo, as more fully described in the Stock Purchase Agreement.
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NOW THEREFORE, subject to the terms and conditions set forth herein, the Parties agree as follows:
1. Definitions and Interpretation
1.1 Definitions -------------------
Capitalized terms used in this Agreement and not otherwise defined have the meanings as follows:
"Affiliate" means, with respect to a Party, any Person controlling, controlled by or under common control with such Party. For the purposes of this definition, control of a Person shall mean the ownership of 50% or more of the voting power of such Person.
"Agreement" means this agreement and any appendices to this agreement.
"HP Customers" means customers of HP to whom HP has supplied an OEM Printer.
"Insolvency Event" means the occurrence of any of the following:
(a) An involuntary proceeding is commenced or an involuntary petition shall
be filed seeking (i) liquidation, reorganization or other relief in
respect of a Party or its debts, or of a substantial part of its
assets, under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for a Party or for a substantial part
of its assets, and, in any such case, such proceeding or petition shall
continue undismissed for 120 days or an order or decree approving or
ordering any of the foregoing shall be entered.
(b) A Party shall (i) voluntarily commence any proceeding or file any
petition seeking liquidation, reorganization or other relief under any
Federal, state or foreign bankruptcy, insolvency, receivership or
similar law now or hereafter in effect, (ii) consent to the institution
of, or fail to contest in a timely (i.e., as imposed by applicable law)
and appropriate manner, any proceeding or petition described in clause
(a) above, (iii) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for a
Party or for a substantial part of its assets, (iv) file an answer
admitting the material allegations of a petition filed against it in
any such proceeding, (v) make a general assignment for the benefit of
creditors or (vi) take any action for the purpose of effecting any of
the foregoing.
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(c) A Party shall become unable, admit in writing or fail generally to pay
its debts as they become due.
"Intellectual Property" means unpatented inventions, patent applications, patents, design rights, copyrights (including, without limitation, rights in computer software), know-how and other trade secret rights-and all other rights or forms of protection of a similar nature or having equivalent or similar effect to any of these rights (but excluding trademark rights), whether or not any of these rights is registered, and including, without limitation, applications for registration of, and rights to apply for, any such rights.
"Jericho Co-Development Agreement" means the agreement of that name entered into by the Parties on the Effective Date.
"OEM Consumables" means all ink, imaging oil, image transfer blankets and photo imaging plates (photoconductors) used in connection with OEM Printers.
"OEM Products" means, collectively, the OEM Printers, the OEM Consumables and the OEM Spare Parts supplied by Indigo to HP pursuant to this Agreement.
"OEM Printers" means digital printers offered for sale by Indigo for general commercial printing, which HP chooses to OEM under this Agreement.
"OEM Spare Parts" means all spare parts needed in connection with the OEM Printers and as set forth in Indigo's spare parts catalog for each OEM Printer.
"Party" means either HP or Indigo (as the case may be) and "Parties" means both HP and Indigo.
"Person" means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, sole proprietorship, joint venture, government (or any agency or political subdivision thereof) or other entity.
"Stock Purchase Agreement" means the agreement of that name entered into by the Parties on or about the Effective Date.
2. OEM Appointment
2.1 Appointment - -------------------
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Subject to the terms of conditions of this Agreement, Indigo hereby appoints HP, and HP hereby accepts such appointment, as an HP-branded OEM for the OEM Products.
2.2 Applications ---------------------
HP shall have the right, either itself or through its appointed distributors, to sell. lease, or otherwise place the OEM Products for any and all applications and in any geographical territory. Indigo warrants that this arrangement does not violate any distribution, OEM or other agreements or arrangements it has with third parties. Notwithstanding the above, it is understood that:
2.2.1 HP shall, until June 30, 2002, focus its sales and marketing
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efforts with respect to the OEM Products primarily on corporate
customers, government, certain quick-printers (i.e., chain or franchise
street-front printing establishments) although, for the avoidance of
doubt, HP shall be free to sell or lease the OEM Products to any
customer operating in any business segment or market.
2.2.2 HP's right to market and sell the OEM Products to customers in
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Japan, Australia, New Zealand, Indonesia, Thailand, Malaysia,
Singapore, Philippines, Brunei, Vietnam, Laos, Cambodia, Myanmar and
Fiji will commence only upon the expiration or termination of the
exclusive distribution rights granted by Indigo to a third party under
an agreement dated May 4, 1994 (as amended) ("Exclusive Distribution
Agreement") in respect of such countries. Indigo will not, and the
third party does not have the right to, renew, extend or modify rights
affecting exclusivity set forth in the Exclusive Distribution Agreement
(in whole or in part). Indigo shall exercise its right to terminate the
third party's exclusivity under the Exclusive Distribution Agreement
immediately after that right first arises.
2.3 Limitation on further OEM appointments by Indigo --------------------------------------------------------
In order to enable HP to achieve penetration through sales of OEM Products in the corporate enterprise ("print-for-own-use") segment, Indigo shall refrain, through December 31, 2002, from appointing additional OEMs for the same or similar products for the same applications. Such period shall be automatically extended through December 31, 2003, if HP's purchases of OEM Products from Indigo reaches $12.5 million in the fourth calendar quarter of 2002.
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2.4 Customer relationship management. ----------------------------------------
HP shall be the exclusive owner and manager of the relationship with HP Customers. To this end, if Indigo is performing Services on HP's behalf. HP shall determine the content of all interaction (if any) between Indigo and HP Customers, including without limitation the content of all help desk scripting and the representations made by Indigo personnel to HP Customers in all circumstances. Further to the above, Indigo shall not contact or respond to enquiries from any HP Customer without prior written approval of HP in each case.
3. OEM Products
3.1 Initial OEM Product Identification ------------------------------------------
Within 90 days of the Effective Date, HP shall select, in consultation with Indigo, the initial OEM Printers to be supplied to HP under this Agreement from any one or two of Indigo's range of commercial printing products. Indigo shall, at HP's cost, offer all reasonable assistance required by HP to identify such printing products.
3.2 Additional Products ---------------------------
3.2.1 Adding New Products. HP shall have the right to submit a
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Request For Quotation ("RFQ") to Indigo for inclusion of additional
current or future Indigo products (and related consumables and spare
parts) as OEM Printers. Indigo shall respond to such RFQs within 30
business days.
3.2.2 Indigo Assistance. Indigo shall, from time to time, as
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reasonably requested by HP, collaborate with and discuss opportunities
for HP to OEM further Indigo products.
3.3 Substitution of Alternate OEM Products ----------------------------------------------
HP shall, until December 3 1,2003, distribute at least one OEM Product. HP shall have the right, in its discretion, to discontinue (temporarily or permanently) the distribution of any OEM Product. If such discontinuance results in HP no longer distributing any OEM Products under this Agreement, HP shall, prior to discontinuance, substitute another OEM Product to be agreed upon. HP shall bear Indigo's reasonable costs associated with any such discontinuance which ramps down at a rate that is more precipitous than that set forth in the Forecast and ordering provisions of section 6.
3.4 Product Changes -----------------------
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Indigo shall not make any material adverse change to any OEM Product without prior written consent of HP, which HP shall have the right to withhold in its reasonable discretion. A material adverse change is any change to an OEM Product which would in any way be disruptive to HP's business in selling or distributing the OEM Products or any ancillary products or services. Indigo must give HP not less than 90 days notice of any non-material adverse change to any OEM Product.
3.5 Product Enhancements ----------------------------
Indigo shall make available to HP, free of charge, all future improvements, enhancements and product fixes to the OEM Products which it generally makes available free of charge to its suppliers or customers. Such enhancements, improvements and product fixes shall be made available no later than made available to Indigo's suppliers or customers. To the extent that enhancements are offered free of charge by Indigo to its own customers solely for the purpose of providing a short-term sales incentive, Indigo shall not be obligated to offer such enhancements to HP free of charge.
3.6 Changes suggested by HP -------------------------------
HP shall have the right, from time to time, to suggest changes to the OEM Products that it wishes Indigo to incorporate. The Parties shall engage in good faith negotiations regarding any such changes.
3.7 New documentation -------------------------
If any changes are made to the OEM Products as set forth in sections 3.4-3.6, Indigo shall, as soon as possible thereafter, provide HP with appropriately modified use and marketing documentation in electronic form.
4. Performance
4.1 Commercial Efforts and Promotions -----------------------------------------
HP shall use commercially reasonable efforts to aggressively promote sales of OEM Products with a view to maximizing sales or revenue from sales of OEM Products. All marketing and promotion of the OEM Products as sold by HP shall be conducted by HP in a manner not inconsistent with the marketing and promotion of other similarly situated OEM products.
4.2 Minimum purchase commitments ------------------------------------
HP shall have no obligation to meet any minimum OEM Products sales targets.
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5. Supply of OEM Consumables and OEM Spare Parts
5.1 Supplies for OEM Products - ---------------------------------
Indigo shall provide, and HP shall acquire from Indigo, all OEM Consumables and OEM Spare Parts, and HP shall supply OEM Spare Parts and OEM Consumables only to HP Customers.
5.2 Continuous supply by Indigo - -----------------------------------
For as long as there exist any HP Customers, Indigo will continue to supply the relevant OEM Spare Parts and OEM Consumables to HP for its supply to HP Customers. Termination or substitution by HP of its supply of any particular OEM Printers under section 3.3 or termination of this Agreement shall not affect Indigo's obligations as set forth in this section 5.2. The foregoing notwithstanding, Indigo's aforesaid supply obligation, in the case of an OEM Printer the manufacture of which has been discontinued, shall expire 10 years after such discontinuance.
5.3 Indigo not to supply HP customers - -----------------------------------------
Indigo shall refrain from soliciting to supply OEM Consumables or OEM Spare Parts to HP Customers.
6. Forecasts, Purchase orders and Fulfillment
6.1 Forecasts - -----------------
6.1.1 Forecast Date. HP shall, not later than 14 days after the date on
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which HP selects the OEM Printers pursuant to section 3.1, and
thereafter not later than each quarterly anniversary of that date
("Forecast Date"), provide Indigo with a written rolling forecast
("Forecast") of its estimated demand for OEM Products for the calendar
quarter commencing one year after the Forecast Date ("Forecast
Quarter"). Subject to section 6.2, the Forecasts shall not be binding
upon HP.
6.1.2 Non-binding estimate for 2001. HP estimates that its demand for
-----------------------------------
OEM Products for calendar year 2001 will reflect estimated aggregate
sales of OEM Products of $75-$100 million. This estimate is not binding
on HP in any way unless it is formally submitted by HP as a Forecast in
which case it will be subject to sections 6.1.1 and 6.2. HP shall,
prior to December 31, 2000, provide Indigo with a written Forecast of
its estimated quarterly requirements for OEM Products for calendar year
2001 and shall, after
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consultation with Indigo regarding timing and delivery constraints,
issue purchase orders accordingly and consistent with the process set
forth in section 6.2.
6.2 Variation of Forecast for OEM Printers - ----------------------------------------------
After the expiry of the quarter following the Forecast Date ("Subsequent Quarter"), the Forecast will become binding upon HP as a purchase order for the OEM Printers set forth in the Forecast, subject to the following:
6.2.1 First Variation. HP may, at any time during the Subsequent
---------------------
Quarter, give Indigo notice in writing that it would like to increase
or decrease the quantity of OEM Printers set forth in the Forecast by
up to 30%, and upon giving such notice, the quantity of OEM Printers
the subject of the purchase order will be deemed to be increased or
decreased (as the case may be) accordingly.
6.2.2 Second Variation. HP may, at any time during the quarter
----------------------
following the Subsequent Quarter, give Indigo notice in writing that it
would like to either increase or decrease the quantity of OEM Printers
set forth in the Forecast by a further 15%. Upon giving such notice the
amount of OEM Printers the subject of the purchase order will be deemed
to be increased or decreased (as the case may be) accordingly.
6.3 Additional Increases for Printers - -----------------------------------------
Notwithstanding section 6.2, HP may increase the quantity of OEM Printers in any purchase order by notice in writing sent to Indigo not less 90 days before the quarter in which delivery of the OEM Printers the subject of that purchase order is due to take place. Indigo shall make reasonable efforts to fulfill such demand from HP for such increased quantities. In each such case, the price for the additional OEM Printers will be the usual price charged by Indigo under this Agreement, unless there is additional cost to Indigo in fulfilling the order for the additional OEM Printers. If Indigo incurs such additional cost, HP will pay the amount of the additional cost upon Indigo providing HP with reasonable evidence of the additional cost incurred.
6.4 Forecast procedure review - ---------------------------------
Not less than once every year the Parties will jointly review, conduct good faith discussions regarding, and modify (as reasonably necessary) the provisions of sections 6.2 and 6.3 in order to ensure that those provisions simultaneously achieve the following objectives ("Objectives") of:
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6.4.1 providing HP with maximum flexibility in its ordering and
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purchasing of OEM Products from Indigo; and
6.4.2 providing Indigo with adequate time to manage supply of OEM
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Products to HP without incurring substantial additional costs as a
result of the flexibility granted to HP.
6.5 OEM Spare Parts and OEM Consumables - -------------------------------------------
The Parties will negotiate in good faith to implement, within 90 days of the Effective Date Forecast, variation procedures for OEM Spare Parts and OEM Consumables similar to those set forth in sections 6.2 and 6.3 with the goal of achieving the Objectives. Such variation procedures will be subject to review, negotiation and modification pursuant to section 6.4. Notwithstanding the foregoing, Indigo represents that it will be able to provide significantly greater flexibility to HP with respect to variations in orders for OEM Spare Parts and OEM Consumables than it is able to offer HP under sections 6.2 and 6.3, provided that such flexibility is not precluded by HP's requirement for unique branding of OEM Consumables.
6.6 Delivery and Title Transfer - -----------------------------------
Indigo shall deliver the OEM Products the subject of a purchase order in accordance with a schedule setting forth the destinations and delivery times (to be reasonably distributed throughout the quarter) to be submitted by HP to Indigo not later than 30 days before the quarter in which HP requires delivery. Such OEM Products shall be delivered, ex-works, Indigo's Israeli subsidiary's premises, whereupon risk of loss of such OEM Products and title thereto shall pass to HP.
6.7 Packing, Shipping and Insurance - ---------------------------------------
Prior to delivery of the OEM Products in accordance with the provisions of section 6.6 above, Indigo shall, at its expense, pack the relevant OEM Products in a manner suitable for shipment. Immediately following such packing, Indigo shall, should HP so request, arrange, in accordance with HP's instructions and at HP's expense, for the shipment of such OEM Products to HP (or, if so directed, to HP distributors or HP Customers) as well as for the procurement of insurance thereon.
7. Maintenance, support, delivery, installation, and training ("Services")
7.1 Implementation Plan - ---------------------------
The Parties will negotiate in good faith to enter into a binding implementation plan for the provision of the Services (and the terms and conditions (including price) for
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the provision thereof) within 90 days of the Effective Date. The implementation plan shall give effect to the Parties' intention as follows:
7.1.1 Initial provision. Indigo shall initially provide all Services
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required by HP or HP Customers commencing from not later than the
installation of the first OEM Printers but will be required to provide
Services to HP Customers only in geographic regions that would enable
Indigo to make a reasonable margin in providing the Services;
7.1.2 Training. Training services shall be provided by Indigo to "train
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the trainers" of HP;
7.1.3 Installation. Installation services shall be provided at HP's
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request.
7.1.4 Change of provider. HP may ...
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