1
Exhibit 10.3
MINI-TYPE FUSE AND ATO-TYPE FUSE
CONSOLIDATED AND AMENDED AGREEMENT
This Mini-Type Fuse And ATO-Type Fuse Consolidated And
Amended Agreement is made and entered this 28th day of July,
1995, between Littelfuse, Inc., a corporation organized under
the laws of the State of Delaware (hereafter called
"Licensor"), having its principal office at 800 East Northwest
Highway, Des Plaines, Illinois 60016, U.S.A., and Pacific
Engineering Company, Ltd., a corporation organized under the
laws of Japan (hereinafter called "Licensee"), having its
principal offices at 450 Hinoki-Cho, Ogaki-shi, Gifu-ken 503,
Japan. Licensor and Licensee are referred to collectively as
"the Parties."
WHEREAS, Licensor is the owner of patents on blade fuses,
and of registered trademark(s) on a blade fuse configuration,
and has claimed ownership of certain technology (know-how) and
of certain trade dress on certain elements of a blade fuse
configuration;
WHEREAS, Licensor and Licensee entered into a "Patent
License Agreement' on December 25, 1977 ("the 1977
Agreement"), and a "Mini Fuse License Agreement" on May 22,
1990 ("the 1990 Agreement");
WHEREAS, disputes over the terms and scope of the 1977
Agreement and the 1990 Agreement have arisen and, in order to
end and resolve these disputes, the Parties entered into an
"Outline of Agreement" on August 19, 1994, and agreed to
consolidate the terms of both the 1977 Agreement and the 1990
Agreement;
NOW, THEREFORE, for good and sufficient consideration
paid, the Parties hereby agree to the terms and conditions set
forth below:
ARTICLE I
Definitions
Whenever used in this Agreement, the terms in this
Article shall have the meanings set forth in the following
paragraphs.
"ATO-Type Fuses" shall mean blade-type fuses marketed
since 1977 by Licensor, now under the "ATO" trademark, and the
similar blade-type fuses which Licensee has marketed since
1978. An example of Licensor's "ATO-Type Fuses" is attached
to this Agreement as Exhibit A. Any fuses that do not include
a metallic fusible link shall not be included in this
definition.
"Mini-Type Fuses" shall mean those blade-type fuses
substantially smaller than the ATO-Type Fuses which are
currently sold by Licensor under the "MINI" trademark, and the
similar blade-type fuses that have been sold by Licensee since
1992. An example of Licensor's "Mini-Type Fuses" is attached
to this Agreement as Exhibit B. Any fuses that
do not include a metallic fusible link shall not be
included in this definition.
"Intellectual Property" shall mean any and all patents,
trademarks, trade dress, copyrights, and all other
intellectual property rights owned by Licensor that currently
exist and can be used in the design, manufacture, sale, or use
of ATO-Type Fuses and Mini-Type Fuses, as well as any other
intellectual property rights that are added pursuant to the
terms of this Agreement.
"Net Sales Price" shall mean the price charged by
Licensee for one ATO-Type Fuse or one Mini-Type Fuse after
deduction of applicable discounts and adjustments, such as
those regarding transportation, packing charges, allowances,
installation, insurance, taxes, returns, and special service
charges. If no such price exists and the ATO-Type Fuse or
Mini-Type Fuse is not provided for promotional purposes or
supplied to an affiliate owned at least 50% by Licensee, then
the price shall be the same as the usual and customary Net
Sales Price charged Licensee's customers.
"Exclusive" shall mean that only Licensor or Licensee is
allowed to manufacture, sell and/or use the Fuses in
accordance with the provisions of the particular paragraphs in
Article II. below that use such terms, except for any rights
that may currently have been granted under existing
agreement(s) between Bussmann or its successors and Licensor.
"Non-Exclusive" shall mean that only Licensor and
Licensee are allowed to manufacture, sell and/or use the Fuses
in accordance with the provisions of the particular paragraphs
in Article II. below that use such terms, except for any
rights that may currently have been granted under existing
agreement(s) between Bussmann or its successors and Licensor.
Territory A' is identified in Appendix I of this
Agreement.
Territories B' and C' are identified in Appendix I of
this Agreement.
Territory D' is Australia, New Zealand, South Korea, and
all other countries of the world that have not been
specifically identified in the categories of any of
Territories A', B' or C'.
ARTICLE II
Rights Granted
Licensor hereby grants to Licensee, and to Licensee's
present and future subsidiaries, affiliates, and other
companies in which Licensee owns at least 50% of the stock or
assets, the rights and license set forth below. (For purposes
of subparagraphs a. and d. below, the corporate headquarters
of any joint venture or otherwise affiliated company shall be
deemed to be in the country of the company owning directly or
indirectly 50% or more of the stock or assets in the joint
venture or otherwise affiliated company. Also, for purposes
of subparagraphs below, the rights extended to Licensor shall
also extend to Licensor's present and future subsidiaries,
affiliates, and other companies in which Licensor owns at
least 50% of the stock or assets.)
a. Territory A'. The exclusive non-transferable rights
and license to practice and use the Intellectual Property
in the manufacture, sale and use of ATO-Type Fuses and
Mini-Type Fuses in Territory A'. Notwithstanding this
right, however, Licensor may sell (but not manufacture)
ATO-Type and Mini-Type Fuses as replacement genuine parts
for vehicles and other equipment manufactured by
companies that (1) have their corporate headquarters in
Territory B', C' and D', and (2) have used Licensor's
fuses as original equipment in Territory A', B', C' and
D'. The importation into Territory A' of vehicles or
equipment having as original equipment the ATO-Type Fuses
or Mini-Type fuses of the Licensor shall not be deemed to
be a violation of Licensee's exclusive right and license
in Territory A'.
b. Territory B'. The exclusive non-transferable rights
and license to practice and use the Intellectual Property
in the manufacture of the Mini-Type Fuses in Territory
B'. Both Licensor and Licensee shall have non-exclusive
rights to manufacture, sell and use ATO-Type Fuses in
Territory B', and Licensor and Licensee shall both have
the right to sell and use the Mini-Type Fuses in
Territory B'.
c. Territory C'. The non-exclusive non-transferable
rights and license to sell (but not manufacture) ATO-Type
Fuses and Mini-Type Fuses in Territory C' as replacement
genuine parts for vehicles and other equipment
manufactured by companies that (1) have their corporate
headquarters in Territories A', B', or D' and (2) have
used Licensee's fuses as original equipment in
Territories A', B', C', or D'. The importation into
Territory C' of vehicles or equipment having as original
equipment ATO-Type Fuses or Mini-Type Fuses of the
Licensee shall not be deemed to be a violation of
Licensor's exclusive right and license in
Territory C'.
d. Territory D'. The non-exclusive non-transferable
rights and license to practice and use the Intellectual
Property in the manufacture, use and sale of the ATO-Type
and Mini-Type Fuses in Territory D'. As this right is
non-exclusive, Licensor shall have these same rights in
Territory D'.
The Parties recognize that, as a matter of practical
business operations and customer relations, they cannot
control the locations to which their customers resell ATO-Type
Fuses and Mini-Type Fuses. Accordingly, Licensor agrees that
any and all sales of ATO-Type Fuses and Mini-Type Fuses by
Licensee's unaffiliated customers in a manner inconsistent
with the territorial terms of this Agreement shall not be
considered a breach of this Agreement by Licensee. Similarly,
Licensee agrees that any sales of ATO-Type Fuses and Mini-Type
Fuses by Licensor's customers in a manner inconsistent with
the territorial terms of this Agreement will not be considered
a breach of this Agreement by Licensor. It is understood that
such customers are not granted any rights they do not
otherwise have under the terms of this Agreement. The Parties
shall make reasonable efforts to the extent lawfully permitted
to control resales of ATO-Type Fuses and Mini-Type Fuses in
accordance with the territorial provisions of this Agreement.
The Parties recognize that there are important customers
of Licensee and Licensor in certain countries. The Parties
also recognize that there may be a desire on the part of such
customers to have a second source of supply for ATO-Type Fuses
and Mini-Type Fuses. The Parties accordingly agree that they
will recommend each other as second source suppliers for their
customers if such second sources are required.
All applicable Intellectual Property, if any, may be used
with the ATO-Type and Mini-Type Fuses conditioned upon the
Fuses having the quality which meets SAE or other quality
standards in the areas where such Fuses will be used.
Licensee shall send Licensor, and Licensor shall send
Licensee, by the end of January and July of each year samples
of each current rating of each Licensed Fuse. The parties
shall identify their ATO-Type and Mini-Type Fuses in such a
manner as to be able to identify the Licensed Fuses
manufacturer. Licensor grants to Licensee the right to use
its Mini-Fuse trademarks on the Licensed Fuses, subject to the
same quality requirements set forth in this paragraph.
Licensee shall not grant sublicenses to others. It is
recognized that this limitation shall not diminish in any way
the rights given under this Agreement.
Nothing in this Agreement shall preclude Licensee from
being able to make fuses using the Intellectual Property that
do not fall within the currently existing Mini-Type and ATO-
Type fuses if any manufacturer should request that such
differences be made. However, Licensee shall first attempt to
continue to use existing fuse configurations and
specifications for any fuses using the Intellectual Property
prior to making such a change.
ARTICLE III
Royalties
Royalties payable by Licensee to Licensor and the terms
therefor shall apply to Licensee's sale of ATO-Type Fuses or
Mini-Type Fuses as set forth below.
Licensee shall pay Licensor 1.5% of the Net Sales Price
of the ATO-Type Fuses. The minimum annual royalty on ATO-Type
Fuses shall be $25,000. These royalties shall be payable for
all ATO-Type Fuses sold by Licensee in any part of the world
through August 10, 1999. This royalty payment obligation will
cease on the earlier date when and if all patents in all
countries specified in this Agreement (whether or not used by
Licensee) and relating to the ATO-Type Fuse expire are
abandoned, or are declared invalid by final judgment of a
court of competent jurisdiction from which no appeal can be or
is taken.
Licensee shall pay Licensor 2.5% of the Net Sales Price
of the Mini-Type Fuses. The minimum annual royalty on Mini-
Type Fuses shall be $50,000. These royalties shall be payable
for all Mini-Type Fuses sold by Licensee in any part of the
world through April 16, 2006. This royalty payment obligation
will cease on the earlier date when and if all patents in all
countries specified in this Agreement (whether or not used by
Licensee) and relating to the Mini-Type Fuse expire, are
abandoned, or are declared invalid by final judgment of a
court of competent jurisdiction from which no appeal can be or
is taken.
Minimum annual royalties shall be measured from April 1
of one year to March 31 of the next year. Minimum royalties
shall be paid by Licensee each year if the royalties due on
sales do not exceed the minimum annual royalty in paragraphs
2. and 3. above. Royalties shall be paid annually for all
sales of Fuses during each annual period beginning April 1,
the payment to be made on or before the date that is sixty
(60) days following the end of each such annual period. If
the total royalties payable on the basis of actual sales for a
given year is less than the minimum royalty due for that year,
then Licensee shall pay Licensor, when the payment for each
year is due, an amount of money equal to the minimal royalty
due. If the royalty payment due on the basis of actual sales
exceeds the minimum royalties, then this amount shall be paid.
All payments shall be made in United States dollars. For
purposes of converting Yen and other sales in different
currencies, the acceptable rate of exchange to convert the Yen
into United States dollars shall be the mid-point between the
Bank of Tokyo's opening quotes on the last working day of
March of each year for: (1) the conversion of Yen into United
States dollars (Telegraphic Transfer Selling Rate), and (2)
the conversion of United States dollars into Yen (Telegraphic
Transfer Buying Rate).
If there should be any restriction imposed against the
payment of the royalty, then, to the extent permitted by law,
an account in Licensor's name shall be established in the
country involved and the royalties due paid into such account.
This account shall be maintained at Licensor's expense from
the deposited funds or otherwise. The deposit of such funds
shall satisfy Licensee's obligations hereunder.
Licensee shall maintain complete, clear and accurate
records in sufficient detail to permit the determination of
the royalties due under this Agreement. At Licensor's
request, Licensee shall cause its outside accountant to
provide Licensor with an annual audited report of the royalty
computation required under this Agreement. Such report shall
be maintained in confidence, and shall not be disclosed to
anyone in the absence of court order which shall be opposed by
Licensor until all reasonable means of opposition have been
exhausted. A protective order acceptable to Licensee shall be
sought from any court requiring such production. Any
underpayment by Licensee that exceeds 10% shall be subject to
prime rate interest on such excess.
The Parties agree that only one royalty payment shall be
due for each Mini-Type Fuse or ATO-Type Fuse.
Licensor shall provide Licensee with notice of any new
Intellectual Property for ATO-Type Fuses and/or Mini-Type
Fuses developed by Licensor that would fall under this
Agreement. If Licensee in its sole option determines it
wishes to include the new Intellectual Property under this
Agreement for its use in connection with ATO-Type Fuses and/or
Mini-Type Fuses, and so advises Licensor of this desire in
writing, then such Intellectual Property shall be covered by
this Agreement. The period for royalty payments under this
Agreement shall then be extended to the date on which any new
patent added to this Agreement is abandoned, expires or is
declared invalid. Nothing herein shall require the payment of
any additional royalty payments except for payments of the
royalties provided for hereunder for any extension of the
period for royalty payments for the ATO-Type Fuse and Mini-
Type Fuse caused by the addition of new patents in accordance
with this paragraph.
When Licensee is no longer obligated to make royalty
payments under this Article for ATO-Type Fuses, then Licensee
shall be considered to have perpetual royalty-free licenses
for the ATO-Type Fuses. When Licensee is no longer obligated
to make royalty payments under this Article for Mini-Type
Fuses, then Licensee shall be considered to have perpetual
royalty-free licenses for the Mini-Type Fuses. Licensee
agrees that it will execute documents necessary to protect any
trademark or trade dress rights that Licensor might have on
the configuration of ATO-Type Fuses and Mini-Type Fuses when
Licensee no longer has any royalty obligations under this
Agreement for those ATO-Type Fuses and Mini-Type Fuses.
Licensor and Licensee also agree that, to the extent lawfully
permissible, they will retain the territorial limitations
imposed in this Agreement on each party's manufacture, sale
and/or use of ATO-Type Fuses and Mini-Type Fuses; provided,
however, that if it is determined that the same limitations
cannot legally be enforced, then no such limitations shall be
applied.
ARTICLE IV
Representations and Warranties
Licensor represents and warrants that: (a) it is a
corporation duly organized and existing in good standing under
the laws of the State of Illinois and the United States; (b)
it is duly authorized and has full corporate power under its
Certificate of Incorporation and under applicable laws to
operate its properties and engage in the business carried on
by it; (c) the execution, delivery and performance of this
Agreement by it has been duly authorized by all proper
corporate action; (d) it has all necessary corporate power and
authority to enter into this Agreement and to consummate the
transactions herein contemplated; and, (e) it is the owner of
the Intellectual Property covered by this Agreement.
Licensee represents and warrants that: (a) it is a
corporation duly organized and existing in good standing under
the laws of Japan; (b) it is duly authorized and has full
corporate power under its Certificate of Incorporation and
under applicable laws to operate its properties and engage in
the business carried on by it; (c) the execution, delivery and
performance of this Agreement by it has been duly authorized
by all proper corporate action, and, (d) it has all necessary
corporate power and authority to enter into this Agreement and
to consummate the transactions herein contemplated.
Licensor makes no representations, extends no warranties,
express or implied, and assumes no responsibilities
whatsoever, with respect to the performance, merchantability
or fitness for a particular purpose of ATO-Type Fuses and Mini-
Type Fuses, to Licensee, its vendees or other transferees.
ARTICLE V
Effect On Prior Agreements
Upon execution by both Parties of the present "Mini-Type
Fuse and ATO-Type Fuse Consolidated and Amended Agreement,"
the Parties mutually agree that the present Agreement shall
consolidate, replace and supersede all terms of the 1977
Agreement, the 1990 Agreement, and the "Outline of Agreement"
dated August 19, 1994.
Licensee and Licensor shall, as of the date of execution
of this Agreement, waive all rights and causes of action
either may have had against the other prior to the execution
of the agreement.
Notwithstanding the provisions of paragraphs 1. and 2. of
this Article, Licensee shall pay to Licensor (1) the
accumulated royalties owed under the 1977 and 1990 Agreements
up to August 31, 1994, and (2) the amount owed under this
Agreement from that date until March 31, 1995, within sixty
(60) days after April 1, 1995. For purposes of simplifying
calculations in this paragraph and in Article III., paragraphs
2. and 3., the last date for applying the royalty rates in the
1977 and 1990 Agreements shall be August 31, 1994.
ARTICLE VI
Liability
The Parties agree to indemnify and to hold each other
harmless against any and all costs, claims, damages and
expenses (including reasonable attorneys' fees) arising out of
their own manufacture, sale or use of ATO-Type Fuses and Mini-
Type Fuses.
Neither party shall be in default of this Agreement or
liable to the other party for any delay or default in
performance where occasioned by any cause of any kind or
extent beyond its control, including but not limited to:
armed conflict or economic dislocation therefrom; embargoes or
shortages of labor, raw materials, fuel, energy, production
facilities or transportation; labor difficulties; civil
disorders of any kind; action of any civil or military
authorities (including priorities and allocations); fires;
floods; accidents; other natural or man-made disasters or
problems.
Each party will protect and hold the other harmless from
and against any costs, damages or expenses incurred as a
result of its breach of any of its representations, agreements
or warranties made herein.
Should any claim of invalidity regarding any Intellectual
Property covered by this Agreement be made by any person or
entity, notice thereof shall be provided to the other party as
soon as one of the Parties is informed about the claim.
Notice shall also be provided to the other party should a
party learn of any claim of infringement made by any person or
entity regarding any of the Intellectual Property covered by
this Agreement. Licensor shall be charged with the
enforcement and protection of those rights.
ARTICLE VII
Infringement and Invalidity
Infringement Prosecution. Either Licensor or Licensee
may initiate the prosecution of any infringer in Territory A'
through an infringement suit or other proceeding designed to
stop a substantial infringement by a material competitor. If
at any time Licensor determines that it does not want the
infringement action to proceed, then it shall inform Licensee
of this fact and such action shall be stopped. Any normal,
reasonable expenses incurred by Licensee as a result of such a
stopped infringement action shall be returned by Licensor to
Licensee within sixty days of receipt of a statement of
expenses certified by Licensee's certified public accountant.
Further, Licensee shall no longer need to pay royalty for the
use of any patents involved in the stopped infringement action
until such competition ceases, and for such period as such
competition persists.
Infringement Actions. Should an infringement action be
commenced by one party, the other party shall be entitled to
join that action if it agrees to pay one half of the legal
fees and expenses required to prosecute the case. The party
initiating the action shall be entitled to hire the
attorney(s) required. However, this selection must be
approved by Licensor who agrees not to unreasonably withhold
such approval. In any event, the party which chooses not to
participate shall be obligated to execute all papers and to
provide such other assistance as is reasonably required to
prosecute all at the other party's expense.
ARTICLE VIII
General Provisions
Governing Law. This Agreement shall be governed by and
interpreted solely in accordance with the laws of the State of
Illinois, U.S.A. The terms of all international conventions
and treaties, unless mandatory, including those dealing with
the international sales of goods, shall not apply with respect
to the interpretation of this Agreement, and, as between
solely the Parties to this Agreement, with respect to any
matter specifically covered by this Agreement or the laws of
the State of Illinois.
Arbitration. Controversies of any kind relating to this
Agreement shall first be negotiated among the Parties or the
Parties' representatives over a period of no less than thirty
days. Failure to achieve agreement during this time period
shall permit one of the Parties to seek resolution of the
controversy through its reference to arbitration under the
rules of the American Arbitration Association. The Parties
shall be required to choose a single arbitrator within thirty
days or to have the American Arbitration Association choose
such an arbitrator within two weeks thereafter. The
arbitrator shall not be either a United States or Japanese
citizen. The place of the arbitration shall be Honolulu,
Hawaii, if brought initially by Licensor and Los Angeles,
California, if initially brought by Licensee. The Parties
shall be bound by the decision of the arbitrator, whose
decision shall be final. At any time before or after the
arbitrator's decision, the Parties may settle the controversy
through other means. The arbitration shall be subject to the
Commercial Arbitration Rules of the American Arbitration
Association ("AAA") then in effect.
Entire Agreement. This Agreement represents the entire
understanding of the Parties hereto with respect to the
subject matter hereof, supersedes all prior written or oral
agreements and shall not be modified except by subsequent
written agreement duly executed by or on behalf of the Parties
by authorized officers. If any of the provisions of this
Agreement shall be held void or unenforceable, the other
provisions shall survive and remain in full force and effect.
Successors and Assigns. This Agreement shall inure to
the benefit of the Parties hereto and their successors and
assigns; provided, however, that the rights of Licensee
hereunder may not be assigned nor its duties hereunder
delegated to a third party unless 100% of Licensee's assets
are sold to such third party.
Execution in Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be
deemed an original agreement but all of which shall be
considered one and the same instrument.
Titles and Headings. Titles and headings to paragraphs
and subparagraphs herein are inserted for the convenience of
reference only and are not intended to affect the
interpretation or construction of this Agreement.
Independent Contractors. The Parties recognize and agree
that neither is a co-venturer, partner, or franchisee of the
other.
Validity and Enforceability. The Parties agree that the
validity and enforceability of this Agreement shall not be
affected by the finding that one or more parts or provisions
of the Agreement cannot be enforced for any reason, including
the finding that they are in conflict with the laws of any
jurisdiction, or any treaty or convention.
Export Controls. The Intellectual Property or ATO-Type
Fuses and Mini-Type Fuses themselves may be subject to the
export controls of Japan, the United States or other
countries. The Parties agree that they will undertake all
necessary actions to follow existing and any future
requirements of such countries, including specifically the
requirements of COCOM and the U.S. Department of Commerce
relating to the export of the ATO-Type Fuses and Mini-Type
Fuses and technical information directly or indirectly to
certain countries. Any such existing and future requirements
shall be identified in writing by Licensor to Licensee.
Government Approvals. This Agreement shall be finally
effective upon the approval or validation thereof of
appropriate Japanese authorities, if such approval or
validation is required before the Agreement can be effective
in Japan.
Notices. All notices required herein shall be
transmitted by telefax and by courier to the following
addresses and numbers:
President
Littelfuse, Inc.
800 East Northwest Highway
Des Plaines, Illinois 60016
Fax Number: 1-847-824-3864
President
Pacific Engineering Co., Ltd.
450 Hinoki-cho
Ogaki-shi
Gifu-Ken, Japan
Fax Number: 1-81-584-94-6102
IN WITNESS WHEREOF, the Parties have caused this Agreement to
be executed in duplicate originals by their duly authorized
officers on this 28th day of July 1995.
LITTELFUSE, INC. PACIFIC ENGINEERING CO., LTD.
___________________ _____________________________
Howard B. Witt Hirohisa Ogawa
President President
APPENDIX I
Country in Territory A'
Japan
Countries in Territory B' Countries in Territory C'
Afghanistan Norway
Bangladesh Sweden
Bhutan Finland
Myanmar Denmark
Cambodia United Kingdom
Hong Kong Netherlands
India Belgium
Indonesia Luxembourg
Iran Germany
Laos France
North Korea Spain
Malaysia Portugal
Mongolia Switzerland
Nepal Austria
Pakistan Italy
People's Republic of China Ireland
Singapore Czech Republic
Sri Lanka Slovak Republic
Taiwan Hungary
Thailand Turkey
Vietnam Greece
Philippines All republics formerly
comprising Yugoslavia
Romania
All republics formerly comprising the
USSR
United States
Canada
Mexico
Poland
Countries in Territory D'
Australia, New Zealand, South Korea, and all other countries
not listed under Territories A', B', and C'.