DISTRIBUTORSHIP AGREEMENT FY18 Omron Addendum A Channel Partner Requirements For OCR Partners

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ADDENDUM A.

(from Omron Distributor Agreement)

Omron Microscan (OCR)

CHANNEL DISTRIBUTION PARTNER

Authorizations, Requirements, Expectations and Incentives

OCR Tier Summary: An OCR channel partner is expected to be engaged at most every level of business and in all

authorized markets. There is a strong AE/OSR engagement, minimal line card conflict in the machine vision (MV),

bar code (ID) and verification product category (LVS), with consistent business planning activities that are

meaningful and productive. NOTE: (For FY18 (April 1, 2018 to March 31, 2019), the following addendum will serve

as a starting point during the transition and evolution of Omron’s and Microscan’s Advanced Sensing Technologies.

At this time, only products previously offered by Microscan Systems are included in the OCR addendum.)

Two levels (Elite and Select) are offered in the Microscan partner program. Each level has specific discount

(multiplier) levels listed in the table below. Qualification for each level will be monitored and adjusted yearly by

Omron Sales and Channel team based on channel partner meeting the expectations defined in this addendum.

A brief summary of the two levels and starting expectations are:

• ELITE

The core OCR lines (MV, ID and LVS) will be technically supported throughout the various stages

of the sales process including design, proof of concept, BOM development, install and post-sales

support including trouble shooting.

Demo equipment requirements as defined in this addendum will be acquired and maintained

locally.

Continued training of local personnel and customers to maintain certifications.

Will not carry defined competitive lines that directly compete with the current product offering

in MV, ID and LVS which are defined in Section 1B . For FY18, a grace period will be granted to

legacy Microscan Channel partners to take the needed actions for compliance.

• SELECT

Choice of MV or ID product authorization with the option to include LVS product.

▪ An LVS only option is also available

For the chosen technology, channel partner is expected to technically support throughout the

various stages of the sales process including design, proof of concept, BOM development, install

and post-sales support including trouble shooting.

Demo equipment requirements as defined in this addendum are expected to be achieved and

available for the defined Area of Primary Responsibility (APR)

Omron will be the #1 supplier in the specific technology chosen. For FY18, if not currently #1, a

path to attain #1 status will need to be mutually established by local Sales and Channel

leadership.

POS: Mandatory for all Distributor partners and to be sent to Budde Marketing by the 5th of every month in

accordance with Exhibit C of Omron Distribution agreement. oeipos@buddemarketing.com.

OCR Distribution Agreement Addendum – Rev 12-29-2017

2

Discount Schedule (NOTE: The table below is an approximation of what will be made available March 1,, 2018.

It is provided as a reference to better explain the proposed differences in the various Levels)

(exact discounts may be subject to change before final draft)

Partner Level

Multipliers, not Discounts per Product Line

Summary Requirements

MV (Includes all

MV H/W & S/W)

ID* (Includes

MicroHAWK AV)

LVS** (Off Line &

Optional In-Line)

Accessories

Elite Partner

BEST (.54)

BEST (.54)

BEST (.65)

BEST (.75)

Required demo gear for level****

Highest OMRON commitment / $$$

Highly trained product specialist(s)/AE(s)

Training on all lines; MV/ID lab

Select Partner

Select-MV

(.61)

(.61)

(.85) ***

(.80)

Required demo gear for level ****

Lower annual target $$

Trained product specialist/AE

Training on product lines of focus

Select-ID

(.66)

(.61)

(.85)***

(.80)

Select-LVS

(.85)

(.85)

(.65)

(.80)

*The ID line includes access to MicroHAWK smart cameras with AutoVISION s/w at the same discount levels as other ID products

**Base LVS line includes all LVS 95xx Off Line Verifiers. Optional LVS 75xx In-Line Verification systems available under special authorization

***Select-MV and Select-ID partners have access to LVS line at a transactional discount but can be fully authorized if trained and get demo gear

**** Min initial investment depends on options selected and MV/ID lab equipment already available

***** Minus (-X%) for Select partners indicates higher pricing (by X%) compared to an Elite partner’s pricing

1. Local Engagement

A. Business Planning

Note: The above will be integrated as part of requirements for current Omron Tier 1 and Tier 2 channel

partners.

Planning

Expectations for Elite & Select OCR Partners

Channel

Omron

Duration

In-Person

Frequency

Participants

Who

(Est)

Or Phone

Annual Bus Plan.

(All Levels)

•Joint planning at beginning of Omron FY

•Sales Mgr

•RSM

2 Hours

In-Person

•Written plans by Market, Key/Targets & Product Categories

•Senior Mgr(s)

•ASSM

@ Channel Partner

•Key personnel identified (AE & OSRs)

•Principals*

•CDM*

•Key/Target Accounts Shared & AM Territory Maps

•Define Distributor APR, Individual Market Designations

Business

Engagement

ELITE

Quarterly

SELECT

2-3 times per

fiscal year

•Monthly Review (see below details)

•Sales Mgr

•ASSM

2 Hours

In-Person

•Marketing Update

•Senior Mgr(s)

•CDM*

@ Channel Partner

•Lead Generation

•Principals*

*OSRs*

•RSM*

•Training and other mutual activities*

•AMs*

•Co-Op incentive status

•Staffing compliance review (Self-Sufficiency section)

•Use of Omron Tools Review / Analysis

•Written recovery plan if sales < LY 3 consecutive months

•Measure monthly progress toward goals

•Sales Mgr

•ASSM

30 min

•Review POP vs POS Trend

•OSRs*

•RSMs*

•Sales Funnel Review with Actionable Items (both parties)

•Consistent follow-through of actionable items

•Funnel info updated by sales teams prior to meeting

*As appropriate.

ASSM- Advanced Sensing Sales Manager.

Sales & Funnel

Reviews

ELITE- Monthly

SELECT-bi Monthly

Conference call or

in person

OCR Distribution Agreement Addendum – Rev 12-29-2017

3

B. Linecard / Brand Loyalty Commitment

• OMRON is expected to be the partner’s #1 supplier for the product lines selected (i.e. machine vision,

autoID or verification).

• ELITE: OCR partners are expected to not carry, or have a plan on how to ultimately not carry,

directly competitive machine vision, industrial barcode reading, and barcode verification

products (i.e. Cognex, Keyence, Datalogic, Sick).

SELECT: Omron will be the #1 supplier in the specific technology chosen. For FY18, if not

currently #1, a path to attain #1 status will need to be mutually established by local Sales and

Channel leadership.

2. Self Sufficiency

A. Application Engineers (AE) Requirements

Definitions:

• Standard AE: Technical Resource (Product Champion, Product Specialist) without direct account

responsibility that provides training, pre- and post-sales efforts in support of all OCR products sold

through the distribution partner. Must fulfill all training requirements of “Trained Staff”.

• Dedicated AE: Same as above with a commitment of >50% of their efforts supporting machine vision and

bar code reading applications with a compensation incentive tied directly to Omron strategic growth.

Elite partners need to have a minimum of one Dedicated AE who is appropriately trained on the Core OCR product

lines.

Compliance of proper staffing will be monitored on a quarterly basis. The local Omron Sales Manager will have

final authority on compliance with AE staffing requirements.

Requirement Notes:

• AE staffing requirement is for EACH regional market the distributor is authorized to sell Omron OCR.

• Limitations on the max size of market that an AE supports (geography & revenues) will be set by Omron

RSM.

• In the event of AE termination, a grace period of 120 days is granted to hire a replacement & fulfill

training

• When in question, Omron reserves the right to determine appropriate designation of what qualifies as a

Standard or Dedicated AE and the proper regional market size.

B. Outside Sales Rep (OSR) Engagement

OCR 3yr

Revenue

Average

# of

OSRs

OCR Channel Partner Expectations

Baseline

1

Elite:

• The # required OSR(s) activity is primarily centered around, or involves OMRON OCR solutions

(>50% of sales activity)

• Active communication and joint efforts with local OMRON AM and OCR Specialist are

established including monthly funnel reviews and activity planning

Select:

• The # required OSR(s) activity is met with minor exceptions and engagement with OMRON is

sufficient (>25% of sales activity)

• Joint efforts exist with local OMRON AM and OCR Specialist including quarterly reviews

>$ 500K

2

> $1.5 M

3

OCR Distribution Agreement Addendum – Rev 12-29-2017

4

NOTE: Engagement is a collective assessment by Omron and Channel personnel about Distributor’s OSRs

focus and commitment to the Omron OCR product line.

C. OCR Trained Staff

The expectations below are designed to cover the minimum OCR specific Training Requirements in a given

year. This is expected to change on an annual basis. Additional basic level courses and / or courses for new

products and technology may be added as needed throughout the year.

OCR Channel Partner Training Requirements

(The #s below represent mandatory annual quantities)

Required if LVS 75xx line is selected

Minimum OCR

Webinar

Participation

Elite/Select

OCR E-

Learning

(Options

provided at

business

planning)

Elite/Select

OCR Boot

camps

(On site at

partner)

OCR Boot

Camps

(At OMRON HQ

or POC

locations)

LVS 75xx

Hands-On

Training

(at OMRON HQ

or other regional

location TBD)

LVS 75xx

Installation

training

(at OMRON HQ

or other regional

location TBD)

Outside

Sales

2 / 1

2 / 1

Elite: 1/year

mandatory and

for all new

authorizations

Select: On

request basis

and for all new

authorizations

Available for

new hires with

approval

Hands-on

training must be

completed by at

least one sales

and one

technical

resources to

receive

authorization

Must have a technical

resource trained and

certified for LVS-75xx

installation and

support. OCR

installation personnel

will supervise first

installation.

Inside Sales

2 / 1

2 / 1

Standard AE

2 / 1

2 / 1

Dedicated

AE (Elite)

2 / -

2 / -

NOTE: The number of training opportunities available exceed the minimum requirements listed above. Training options to be

identified and expectations set during the Annual Business Planning Session and reviewed during Quarterly reviews.

D. Availability of Demo Equipment

Based on the products sold per location, OCR partners will need to minimally possess the following

maintained and up to date demonstration equipment.

Elite

Select (Requirements apply to selected lines of focus)

AutoID

MicroHAWK ID demo kit with at least one each of ID-

40, ID-30, ID-20 configurations.

At least one QX-8x0 demo unit OR MS-3 demo unit

At least one HS-360X OR HS-41X handheld

MicroHAWK ID demo kit with one each of

ID-40, ID-30 and ID-20 configurations

One QX-8x0 demo unit OR MS-3 demo unit

One HS-360X OR HS-41X handheld

Machine Vision

Dual boot licenses for all MicroHAWK ID demo units

At least one HAWK MV 4000 smart camera OR a GigE

camera and Visionscape software demo kit

Dual boot licenses for all MicroHAWK ID demo units

One HAWK MV 4000 smart camera OR a GigE camera

and Visionscape software demo kit

Verification

At least one LVS 9510 or LVS 9585 handheld

One LVS 75xx if authorized for and trained on

optional LVS 7510 in-line verification line

One LVS 9510 or LVS 9585 handheld

One LVS 75xx if authorized for and trained on optional

LVS 7510 in-line verification line

Accessories

Full MV/ID application evaluation lab required

including a good collection of NERLITE MV lights and

lenses.

Appropriate list of accessories for selected product lines

of focus

Min initial

Investment

~$15,000 depending on options selected and

machine vision lab equipment already available

~$5,000 per line depending on lines and options

selected

~$6,000 additional if OPTIONAL LVS-7510 in-line verification/Print Inspection line is selected

List of recommended demo gear bundles and corresponding part numbers is provided in Appendix B.

OCR Distribution Agreement Addendum – Rev 12-29-2017

5

E. Use of Omron Tools

▪ Use of EDI and Portal for POs on 90% of transactions

▪ For order entry and price & availability requests

▪ Proper use of Technical Support Group (TSG)

▪ Metrics to be added throughout FY18

▪ Use of MyDashboard and Onset for obtaining product and pricing information.

▪ Metrics to be developed throughout FY18

3. OCR Channel Partner Additional Programs

A. Special Price Requests

▪ Available for defined Key and Target accounts

▪ Dependent on level of detail provided and local market conditions.

▪ Beginning April 1, 2018, all business transactions will be conducted per standard Omron Customer Care

and via the Omron portal.

B. Marketing

▪ Support of local efforts to create awareness of OCR capabilities with partner’s end customers.

o Must perform outbound commercial marketing activities.

▪ Top priority for leads generated in local market

o Must report information on the status and quality of qualified leads provided on a quarterly

basis.

▪ Omron Website listings

o OMRON Microscan products on partner’s website(s) and/or manufacturer line cards.

▪ OCR focused customer facing event(s) per year with support of Omron

o ELITE – two

o SELECT- one

C. Stock Rotations

▪ Stocking requirements and stock rotation options to be established during fiscal 2018. Currently,

Microscan product will NOT be available for stock a rotation, which is consistent with the previous

Microscan program.

OCR Distribution Agreement Addendum – Rev 12-29-2017

6

4. Incentive Programs

OMRON offers several incentives for maintaining Partner Level requirements, which include a Co-op program.

Our goal is to provide incentives in multiple business areas of our mutual engagement to increase the value

our channel partners realize in being an authorized Omron distributor. Below is an update of the

incentives being offered for maintaining the ELITE or SELECT Partner Level requirements for FY18.

A. Co-op Growth Target Attainment

Local promotion is vital for mutual growth. To help fund initiatives to grow Omron’s business, Co-op funds will

be offered to ELITE & SELECT OCR channel partners. We believe the availability of these funds will create

additional visibility within your organization for the value of working with Omron and reinvestment in the

relationship.

To ensure a fair and accurate program for FY18, the % of funds will be calculated on actual shipments

throughout the year. Standard program practice is to pay based on Year over Year growth.

Program key components:

• A step function % of OCR purchases based on the chart below.

Microscan purchases from April 1, 2017 to March 31, 2018

From To % Max Payout Level

1$ 250,000$ 0.50% 1,250$ Elite / Select

251,000$ 500,000$ 0.75% 3,750$ Elite / Select

501,000$ 750,000$ 1.00% 7,500$ Elite / Select

751,000$ 1,000,000$ 1.25% 12,500$ Elite Only

• Changes in the % will revert to dollar one (Payout example shown below).

Example Co-

op Payouts

Cumlative

Purchases

Co-op % Co-op Earned

Net Co-op

paid in the

Quarter

Q1 $125,500 0.50% 628$ 628$

Q2 $230,000 0.50% 1,150$ 523$

Q3 $410,800 0.75% 3,081$ 1,931$

Q4 Finish $610,600 1.00% 6,106$ 3,025$

• Payouts for both levels will be made available on a quarterly basis in FY18.

o For current Omron distributors, earnings will be added to their overall co-op ledger and are not

restricted solely to OCR initiatives.

o All Co-op funds will be issued as a credit to the Distributor’s account.

• Time Frame

o Funds earned through Q3 need to be spent by March 31, 2019

o Funds earned in Q4 need to be spent by June 30, 2019

OCR Distribution Agreement Addendum – Rev 12-29-2017

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General Guidelines for Co-op Funds:

• Omron desires to have a flexible Co-op program that our channel partners value. Earnings can be

used to purchase Omron Demo Equipment, fund customer trainings, develop marketing campaigns,

create joint branded merchandise, and similar business development activities. In addition, with

approval from the Omron VP of Sales, jointly funded personnel will be considered as an option for use

of funds.

• Based on feedback from partners and sales leaders, below are areas we have added additional

structure and clarification. For FY18, activities not covered below will be reimbursed from 50% to

100% depending on the type activity and the total amount of funds to be used. Final decision for any

discrepancies will be made by the Omron Director of Channel.

OCR Demo Equipment (exact discounts may be subject to change before final draft)

o (Note: Co-op funds may NOT be used to purchase Omron Product for immediate resale, but

may be used to purchase product for permanent displays.

(exact discounts may be subject to change before final draft)

OCR Level Equipment

Accessories

used for

Demo

purposes.

Nerlite and

Handhelds

Barcode

Verification

Kits (with

Vision

HAWK)

LVS-95XX

Barcode

Verifiers

HAWK MV-

4000

Cameras

HAWK MV

4000

Accessories

ELITE 25% 15% 10% 20% 20% 20% 15%

SELECT* 25% 10% 10% 20% 20% 20% 10%

* Resctricted to specific technology authorized for (MV, ID or LVS).

Example: Select Partner demo purchase:

Part# Desc List Price

Select Level

Multiplier

Demo

Discount

Demo

Multiplier

Demo Cost

SLN-000036 ID/MV-30 $3,168 0.61 25% 0.4575 $1,449.36

Exceptions to Equipment Demo Discount

Discount from Standard Multiplier for Demo Purposes

o NOTE: Prior to reimbursement, the distributor must first purchase the parts via the Omron

Portal. Once the invoice is received, send it with the Approval Form to the email address

specified in the Approval form.

Joint branded marketing promotions and apparel

• Omron guidelines must be followed when displaying the Omron logo

• Design must be submitted for compliance before being approved.

• Promotions reimbursed up to 100% depending on number of other vendors promoted.

• Apparel reimbursed up to 50% assuming Omron is only vendor promoted.

• For items purchased from the Omron Promotions Store- store.omron247.com , the

maximum percent to be reimbursed is 50% .

OCR Distribution Agreement Addendum – Rev 12-29-2017

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PROCESS OVERVIEW

1. A Co-op Approval form is to be completed emailed to the local Omron Channel Development

Manager (CDM) prior to the occurrence of the activity or purchase for approval. Sixty (60)

days advanced notice of any events or purchase is preferred.

2. When the expense has been incurred, proof of the expenditure and the approval form are

to be sent to the email on the approval form

3. A request for credit will be issued within 5 business days barring any issues with proper

documentation.

.

B. Marketing Support

i. Preferential positioning in Distributor Locator on Omron’s Website.

ii. Discretionary leads from initiatives from Omron’s Sales Development Group (SDG)

iii. Preferential consideration in Omron’s continual Direct to Distribution conversions.

iv. First consideration for Joint Marketing programs offered throughout the year.

OCR Distribution Agreement Addendum – Rev 12-29-2017

9

Acknowledgement of Omron Channel Partner OCR Platinum requirements with intent to comply.

OCR Product Line

Elite

All OCR core product

lines required for AVP

partners (MV, AID, and

LVS off-line)

Select

One of the three OCR

core product lines must

be selected by SVP

partners as PRIMARY

Machine Vision

Required

YES

Optional

YES/NO __________

Auto ID

Required

YES

Optional

YES/NO __________

LVS 95xx Off Line Verification

Required

YES

Optional

YES/NO __________

LVS 75xx In-Line Verification

Optional

YES/NO ___________

Optional

YES/NO ___________

*Partner level designation is determined by OEI and is re-evaluated annually.

***For Select partners, partner has to select at least one OCR core product line (MV, AutoID or LVS Verification).

***Elite and Select authorized for the basic LVS off-line verification (LVS 95xx) product line, may request

authorization to add the optional in-line verification (LVS 75xx) product line. Additional training and demo gear

requirements apply to the LVS 7510 in-line verification.

DISTRIBUTOR:

By: ______________________________________

Name:

Title:

DATE:

SUPPLIER:

OMRON ELECTRONICS LLC

2895 Greenspoint Pkwy, Ste 100

Hoffman Estates, IL 60169

By: _______________________________________

Name: Mark Binder

Title: Director of Channel Relations

DATE:

OCR Distribution Agreement Addendum – Rev 12-29-2017

10

Appendix A

Business Plan Template

Target completion date: June 2, 2018 or 60 days after execution of Addendum.

OCR Distribution Agreement Addendum – Rev 12-29-2017

11

Appendix B

Recommended Demo Equipment Bundles

Product Line

Part Number

Description

AutoID

Industrial laser

scanner &

accessories

FIS-0830-1004G

QX-830, Industrial Barcode Reader, Raster Line, Low Density, Serial+Ethernet

97-000012-01

Power Supply, 100-240VAC, +24VDC, M12 12-Pin Socket

61-000163-03

QX Cordset, Host, Ethernet, M12 8-Pin Plug (Screw-On)-to-RJ45, 3 m.

AutoID

DPM handheld.

Select one

HS-360X (TBD)

New Generation industrially hardened handheld DPM reader – Wired (USB)

HS-360X (TBD)

New Generation industrially hardened handheld DPM reader – Wireless

(Bluetooth)

FIS-HS41X-0001G

HS-41X Handheld DPM Reader USB 6 ft. Straight Cable

FIS-HS51X-0002G

HS-51X Wireless Handheld Reader with Battery Bluetooth Charging Base USB Cable

AutoID

MicroHAWK

Demo kit

98-9000039-03

MicroHAWK demo kit.

Contains mounting blocks, power supplies, cables, test cards, Demo Kit Setup

Guide, and demo kit carrying case. MicroHAWK units below sold separately.

7211-1102-0000

MICROHAWK,ID-20,WVGA,SD,102MM,RED

AutoID

Select these if

signing up for

AutoID ONLY

7312-2000-1005

ID/MV-30, SXGA, HD, Autofocus, Red LEDs, X-Mode

7412-2000-1005

ID/MV-40, SXGA, HD, Autofocus, Red LEDs, X-Mode

AutoID/MV

Select these if

signing up for

both ID & MV

SLN-0000036

ID/MV-30, SXGA, HD, Autofocus, White LEDs, Full ID/MV License Set, Cable/Mount,

Dual Boot

SLN-0000037

ID/MV-40, SXGA, HD, Autofocus, White LEDs, Full ID/MV License Set,

Cable/PS/Mount, Dual Boot

Machine Vision

HAWK 4000

demo kit

8113-1160-0104

HAWK MV-4000-20 Kit, AV+VS+VERIF/OCV, 16MM STANDARD LENS, IP COVER,

UNIVERSAL MOUNT. 2MP.

Machine Vision

GigE cameras &

Visionscape S/W

option

98-000222-01

VS GigE Camera, 5 MP Mono, CMGC50, 2592x1944 Pixels, CMOS

98-000138-01

VS GigE Camera Power Supply, 24V, U.S./Euro/UK

GMV-VGL0-1DD1

VS GigE License Key with Intellifind & DIVs

98-000258-01

Lens 16 mm F/1.4-16, Front Thread 27 mm P 0.5 mm, 2/3 in. C-Mount

98-000140-01

Single Port GigE Network Interface Card PCIe

Machine Vision

Sample NERLITE

lighting options

NER-011660211G

Smart Series MAX Wide, 100 mm, White, M12 Connector

98-000228-01

Smart Series Pharmalite, 60°, Dark Field, White, M12 Connector

NER-011660610G

Smart Series DOAL, 75 mm, White, M12 Connector

NER-011660910G

Smart Series Ring, 70 mm, White, M12 Connector

NER-011659510G

NERLITE 100x100 mm, White, Backlight, 24V Continuous, 150 mm, Cable M12

NER-011600041

NERLITE DF-150-1, White, Diffuse, Dark Field, 24V Continuous, Open-End Cable

97-000006-01

DSP100, 24VDC, 4.2A DIN Mount Power Supply (NERLITE power supply)

Verification

(Off Line)

Select one

9585-DPM

LVS-9585 Handheld 1D 2D & DPM Barcode Verification

9510-5-4.5

LVS-9510 off-line tabletop Verifier 4.5 FOV

Verification (In-

Line) Optional –

Required if

authorized

7510P-5-ZT610-

300DPI*

LVS-7510-5-ZT610-300DPI, INTEGRATED W/Zebra ZT610 300 DPI PRINTER