MANUFACTURING AND SALES AGREEMENT
This Agreement is made as of September 29, 1994 by and between
Parlex Corporation
a Massachusetts corporation
145 Milk Street
Methuen, MA 01844 U.S.A. (hereinafter Parlex)
and
Samsung Electro-Mechanics Co., Ltd.
a Republic of Korea corporation
314 Maetan 3-dong, Paldalgu
Suwon, Kyunggi-do, Korea
(hereinafter Samsung)
Whereas, Parlex owns the technology and patent rights for multi-layer
circuit boards sold under the Parlex trademark PALCORE;
Whereas, Samsung desires to acquire certain rights, as set forth herein,
to manufacture and sell PALCORE products;
Whereas, Parlex is willing to grant to Samsung and Samsung is willing to
accept certain rights to manufacture and sell PALCORE products on the terms and
conditions as set forth herein;
Now, Therefore, in consideration of the mutual undertakings set forth
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
1.0 Definitions
-----------
1.1 PALCORE products shall mean multi-layer circuit boards covered by
one or more claims of the Parlex patent applications of Attachment E hereto or
resulting patents, and/or technology and know-how of Parlex for the design,
manufacture, testing and quality assurance of such boards to meet Parlex
quality standards, and meeting the specifications of Attachment C hereto.
1.2 Engineering Support shall mean reasonable engineering assistance
and consultation to be provided by Parlex by telephone and/or by facsimile, and
by such personal visits of Samsung personnel to Parlex facilities or of Parlex
personnel to Samsung facilities as may be arranged by mutual agreement of the
parties from time to time.
1.3 Technology Upgrade shall mean modifications to the PALCORE
technology to enhance the manufactureability or lower the cost of the PALCORE
products.
1.4 Sales Support shall mean efforts by Parlex in the United States to
obtain orders from those customers listed in Attachment A hereto which orders
are to be referred hereunder to Samsung.
1.5 Improvements shall mean improvements to the PALCORE products,
manufacturing processes or materials which are covered by one or more claims of
the Parlex patent applications of Attachment E or resulting patents, or which
are based on or derived from the PALCORE technology.
1.6 Attachments shall mean the following Attachments which are appended
to this Agreement and which are a part of this Agreement:
Attachment A: Parlex customers for which PALCORE orders are to be
referred to Samsung
Attachment B: Customers to whom Samsung directly deals
Attachment C: PALCORE specifications
Attachment D: Confidential Disclosure Agreement
Attachment E: Parlex PALCORE patent applications:
1.7 Effective Date shall mean the date the Agreement is approved by the
Republic of Korea Government.
2.0 Training
--------
2.1 Parlex will provide six (6) weeks of training at Parlex facility in
Methuen, Massachusetts, U.S.A. for up to eight (8) qualified Samsung employees
in the design, manufacturing and testing of PALCORE products in accordance with
Parlex standards. The specific scheduling of this training will be as
determined between the parties and is intended to commence within a reasonable
time following the effective date of this Agreement.
2.2 Samsung shall pay all travel and living expenses and salaries of
their employees during the training visit of section 2.1 above and during any
other visits by Samsung employees to Parlex facilities.
2.3 Samsung represents that it has the general knowledge and ability to
design, manufacture and test printed circuit boards, and that its employees
attending training at Parlex have sufficient understanding of written and
spoken English to facilitate such training.
2.4 Subsequent to the training at the Parlex facility set forth in
section 2.1 above, Parlex will provide at a Samsung facility in Korea, up to
four (4) man-months of training of Samsung employees, at a schedule to be
determined by the parties.
2.5 Samsung shall provide room and board, not including any salaries
and travel expenses, for the Parlex employees attending such training at
Samsung.
2.6 Parlex will provide necessary documents in English to Samsung
believed by Parlex to be appropriate as part of the training of Samsung
employees, and Parlex will provide the material required for the initial
training program of section 2.1 above.
3.0 Payment
-------
3.1 Samsung shall pay to Parlex * as consideration for
the rights granted under this Agreement by Parlex to Samsung. Such payment
shall be the complete and final payment to cover the cost for training to be
provided by Parlex to Samsung employees in the U.S. and in Korea under sections
2.1 and 2.4 above, the supply of raw materials for such training, Engineering
Support, technology Upgrade, Sales Support by Parlex, the exclusive
manufacturing right in Korea and right to use the PALCore trademark on PALCore
products, and appropriate taxes.
3.2 Samsung shall either deduct or withhold tax within the Republic of
Korea from the * that is to be paid by Samsung to
Parlex pursuant to Paragraph 3.1 above. After deduction or withholding of the
tax, Samsung shall pay Parlex the remaining sum no later than November 29,
1994. Samsung shall thereafter provide Parlex with a receipt evidencing
payment of such tax.
4.0 Manufacturing Rights
--------------------
4.1 Parlex hereby grants to Samsung the exclusive right to manufacture
PALCORE products in Korea.
4.2 Nothing in this Agreement shall limit the right of Parlex to
authorize others to manufacture PALCORE products in any country outside of
Korea, or limit the right of Parlex to sell PALCORE products in any country
outside of Korea. Parlex shall offer Samsung the license rights granted herein
in the most favored terms that it offers such to any other licensee. Parlex
shall notify Samsung prior to granting license rights to the PALCORE products
to any other party, and Samsung will be given an opportunity to match the offer
of such license rights on the same terms as offered to the third party. It is
recognized that circumstances including customer preference may dictate the
choice of another licensee and that Parlex shall have the sole right to select
the licensee.
* Confidential information has been omitted and filed separately with the
Commission.
4.3 Samsung shall sell PALCORE products only to Parlex or to customers
designated or to be designated by Parlex, which customers are identified in
Attachment A hereto, or to pre-existing Samsung customers as identified in
Attachment B hereto.
4.4 Parlex will provide technical assistance to insure Samsung clearly
understands product and quality standards established by Parlex.All PALCORE
products manufactured hereunder by Samsung shall meet the product and quality
standards established by Parlex including the specifications of Attachment C
hereto.
4.5 At the request of Samsung, Parlex shall take reasonable measures,
including but not limited to, negotiation on behalf of Samsung to obtain supply
of base materials at a fair price which is as favorable to Samsung as prices
charged to Parlex for such material. Samsung will only use the base material
approved by Parlex in its manufacture of PALCORE products. Approval of such
materials shall not be unreasonably withheld.
4.6 Both parties will be given the opportunity to negotiate the price,
shipping and other applicable terms of purchase orders placed with Samsung.
Parlex will issue purchase orders with these terms to Samsung for particular
PALCORE products to be made hereunder by Samsung.
4.7 For sales by Samsung of PALCORE products to customers except Parlex
and Samsung Group, Samsung shall pay a sales commission to Parlex of * of
such sales. Such payments shall be based on sales F.O.B. Korea and shall be
payable quarterly within thirty (30) days following the end of each calendar
quarter.
4.8 Samsung will allocate 50% of its PALCORE capacity to the customers
listed in Attachment A hereto.
4.9 Samsung shall respond in timely manner and give the highest
priority to each request for quotation (RFQ) issued by Parlex.
* Confidential information has been omitted and filed separately with the
Commission.
4.10 Parlex shall not assert any patent rights against Samsung's
manufacture, use or sale of PALCORE products made under this Agreement,
including Samsung's use of technology relating to PALCORE products acquired
from other legitimate sources.
4.11 Parlex represents that it is the owner of the PALCORE technology
and has the authority to grant the rights under this Agreement.
4.12 Parlex represents that the PALCORE technology when appropriately
implemented will produce PALCORE products meeting the specifications of
Attachment C hereto.
4.13 Except for product liability arising as a result of Parlex design
defects, Samsung shall be solely liable for any product liability arising from
defective PALCORE products built and sold by Samsung.
4.14 Parlex warrants that, upon the Effective Date of the Agreement, (a)
it has the right to disclose confidential information associated with PALCORE
products to Samsung, and (b) it has the right to transfer said confidential
information to Samsung.
5.0 Marketing and Sales
-------------------
5.1 Parlex and Samsung shall cooperate in marketing and sales efforts
to develop and expand the market for PALCORE products.
5.2 Samsung shall support the marketing and sales efforts by providing
brochures, facilities descriptions and other documents showing Samsung's
capability to manufacture PALCORE products.
5.3 Samsung shall use the PALCORE trademark on all advertisements and
other promotional and product literature in a manner specified by Parlex, and
shall identify Parlex as the trademark owner and as the originator of the
PALCORE technology in all such literature. All advertisements and other
literature for PALCORE products shall be based upon mutually agreed upon
promotional guidelines. In order to permit Samsung to legitimately utilize the
PALCORE trademark, Parlex shall register Samsung as an authorized user of such
trademark in Korea.
5.4 Parlex will support Samsung in obtaining product approval for the
initial PALCORE order. For the first twelve (12) months of this Agreement,
Parlex will place high volume PALCORE orders with Samsung if their quotations
are competitive.
5.5 Parlex will provide front end engineering as set forth and at the
compensation provided in a customer purchase order accepted by Parlex.
5.6 Customers identified in Attachment A hereto may be removed and
additional customers added by mutual written Agreement of the parties. Any
changes to customers identified in Attachment B requested by Samsung may be
made after approval by Parlex, which approval shall not unreasonably be
withheld.
6.0 Term
----
6.1 This Agreement shall remain in force and effect until the fifth
(5th) anniversary of the Effective Date of this Agreement.
6.2 If at the end of the initial five-year term of the Agreement,
Samsung is selling PALCORE products to Attachment A and Attachment B customers
at an annual rate of at least * of which Attachment A customers amount to at
least fifty percent (50%) of such sales this Agreement shall be renewed for an
additional five-year term. At such renewal, the annual minimum sales rate for
the second five-year term shall be established by the parties which if met will
permit renewal for another five-year term. Five-year renewals shall continue
in similar manner with a new minimum annual sales level being established for
each new renewal term.
* Confidential information has been omitted and filed separately with the
Commission.
6.3 In any renewal of this Agreement, there shall be no additional fee
under section 3.1 hereof, but the sales commissions called for under section
4.7 of this Agreement shall remain applicable.
7.0 Termination
-----------
7.1 Parlex shall have the right to terminate this Agreement
(a) upon failure by Samsung to develop the manufacturing capability for
producing PALCORE products meeting Parlex' quality standards in commercially
reasonable quantities within one (1) year of the effective date;
(b) upon failure by Samsung to maintain acceptable Parlex standards for
PALCORE products;
(c) upon breach or default by Samsung of any obligation under this
Agreement.
7.2 Samsung shall have the right to terminate this Agreement in the
event Samsung determines that it cannot manufacture the PALCORE products to
acceptable Parlex standards. If termination under this section 7.2 is
effective within six (6) months following the effective date, Parlex shall
refund one-half (1/2) of the initial payment set forth in section 3.1 above.
If termination under this section 7.2 is effective six (6) months or later
following the effective date, there shall be no refund of the initial payment.
7.3 All notices of termination shall be in writing and shall be
effective sixty (60) days following receipt of the notice unless the breach or
default can be cured within the sixty (60) day notice period.
7.4 Upon termination or expiration of this Agreement, Samsung shall
have the right to complete orders booked prior to the effective termination
date so long as the scheduled delivery is not longer than six (6) months
following such date of termination and so long as PALCORE products meeting
Parlex standards can be shipped.
7.5 After termination or expiration of this Agreement, Samsung shall
have no right to use the PALCORE technology, patents or trademark, or the right
to make or sell PALCORE products or to represent to others that it has such
right.
8.0 Improvements to PALCORE
-----------------------
8.1 Any Improvements to the PALCORE products, manufacturing processes
or materials made by Parlex, or by Samsung, shall be owned by the party
originating the same. Any Improvements to the PALCORE products, manufacturing
processes or materials made jointly by Parlex and Samsung shall be jointly
owned in equal shares by Parlex and Samsung. The originating party shall have
the right to seek patent protection for such Improvements at its own expense.
The parties will mutually determine the manner of seeking patent protection on
such joint Improvements.
8.2 Parlex grants to Samsung a royalty-free right to practice all
Improvements made hereunder by Parlex in connection with the PALCORE products
and for so long as Samsung has rights under this Agreement. Samsung grants to
Parlex a royalty-free right to practice all Improvements made hereunder by
Samsung in connection with PALCORE products and for so long as Parlex has
rights to the PALCORE technology. Neither party shall grant to any other party
any rights to joint Improvements made under this Agreement without the prior
written permission of the other.
8.3 Each party shall promptly notify the other of each such Improvement
and keep the other party informed of all patent applications and resulting
patents in Korea for such Improvements.
8.4 Each party shall maintain the confidentiality of the Improvements
in accordance with a Confidential Disclosure Agreement executed by both parties
in the form and content as set forth in Attachment D hereto.
9.0 Export Control
--------------
9.1 Parlex will be responsible for obtaining any export control
licenses and permits required by United States laws and regulations. Samsung
shall be responsible for obtaining any export or import licenses and permits
required by Republic of Korea laws and regulations.
10.0 Infringement
------------
10.1 Samsung will notify Parlex if Samsung learns of any infringement
by others of any patents or other rights of Parlex relating to PALCORE.
10.2 The parties will cooperate in determining an appropriate course of
action to redress any infringement of the PALCORE rights.
10.3 Parlex represents that the patent applications relating to PALCORE
are as set forth in Attachment E hereto. Parlex further represents that it has
no knowledge of any prior patents or other information which adversely affects
the validity of such patent applications or resulting patents, and no knowledge
of any rights of others that would be infringed by practice of the PALCORE
technology. In the event that PALCORE products manufactured by Samsung are
held to constitute an infringement of another's U. S. or Korean patent, and its
manufacture and sale are enjoined as a result of any such proceeding, Parlex
shall at its sole option, either (1) procure for Samsung the right to continue
using the patent, or (2) modify such PALCORE products so that it becomes non-
infringing, or (3) refund the sum of *.
11.0 Disputes
--------
11.1 Any dispute arising out of or related to this Agreement shall be
finally settled by arbitration in accordance with the Rules on Conciliation and
Arbitration of the International Chamber of Commerce. In event of any conflict
between these Rules and this Article, the provisions of this Article shall
govern. This arbitration shall take place in New York City, U.S.A.
11.2 Each of the parties shall appoint one arbitrator and the two so
nominated shall in turn choose a third arbitrator. If the arbitrators chosen
by the parties cannot agree on the choice of the third arbitrator within a
period of thirty (30) days after their nomination, then the third arbitrator
shall be appointed by the Court of Arbitration of the International Chamber of
Commerce.
11.3 The arbitration shall be conducted in the English language.
Relevant documents in other languages shall be translated into English if the
arbitrators so direct. In arriving at their award, the arbitrators shall make
every effort to find a solution to the provisions of the Agreement and give
full effect to all parts thereof. However, if a solution cannot be found in
the provisions of the Agreement, the Arbitrators will apply the domestic law of
the State of New York, U.S.A.
11.4 The arbitrators shall state the reasons upon which the award is
based. The award of the arbitrators shall be final and binding upon the
parties. Judgment upon the award may be entered in any court having
jurisdiction.
12.0 Business Meeting
----------------
12.1 Parlex and Samsung will hold a business meeting twice a year
alternating sites between Parlex and Samsung. Parlex will host a meeting in
April and Samsung will host a meeting in October. The first business meeting
will be in April, 1995.
12.2 The business meeting will consist of a manufacturing capacity,
marketing and technology review.
12.3 Parlex will provide Samsung with a two year estimate of
required capacity for planning purposes.
13.0 Modifications to the Agreement
------------------------------
13.1 Parlex and Samsung shall endeavor to negotiate changes or
modifications to this Agreement to suit particular customer demands or
circumstances or to suit other particular circumstances, and all such changes
or modifications shall be set forth in an amendment to this Agreement signed by
both parties.
14.0 General Provisions
------------------
14.1 Parlex and Samsung shall have the right to verify compliance with
the provisions of this Agreement in accordance with standard business
practices.
14.2 This Agreement shall be assignable by Parlex upon thirty (30) days
notification by Parlex to Samsung, and shall not be assignable by Samsung to
any other party including any related company of Samsung without the prior
written permission of Parlex, which permission shall not unreasonably be
withheld.
14.3 The proprietary information of each party shall be maintained in
confidence in accordance with the Confidential Disclosure Agreement of
Attachment D, and the provisions of this Agreement shall not be disclosed
without the authorization of both parties.
14.4 All payments made under this Agreement shall be in United States
currency. Conversion of any payments resulting from Samsung direct sales
(Attachment B) in a currency other than United States dollars shall be at the
exchange rate as quoted in the United States edition of the Wall Street Journal
on the last business day of the month for which payments accrued.
14.5 This Agreement shall be governed and construed in the English
language text, and may be executed in two or more counterparts.
14.6 All notices under this Agreement shall be in writing and shall
be transmitted to the other party by facsimile, and confirmed by
international courier delivery at the addresses indicated herein.
PARLEX CORPORATION SAMSUNG ELECTRO-MECHANICS CO., LTD.
By /s/ HERBERT W. POLLACK By /s/ SANG-JIN KIM
------------------------------ -------------------------------------
Title President Title Senior Executive Managing Director
---------------------------- -----------------------------------
Date September 29, 1994 Date September 29, 1994
----------------------------- ------------------------------------
52931
Rev. 10/11/94
Attachment A:
Parlex customers for which PALCORE orders
are to be referred to Samsung
*
* Confidential information has been omitted and filed separately with the
Commission.
Attachment B:
Customers to whom Samsung directly deals
*
* Confidential information has been omitted and filed separately with the
Commission.
Attachment C:
PALCORE specifications
*
* Confidential information has been omitted and filed separately with the
Commission.
Attachment D:
C D A
ATTACHMENT D:
CONFIDENTIAL DISCLOSURE AGREEMENT
---------------------------------
This agreement is effective September 29, 1994 between Parlex
Corporation and Samsung Electro-Mechanics Co., Ltd.
Parlex and Samsung have entered into a Manufacturing and Sales
Agreement contemporaneously with this agreement under which each party will
have access to the proprietary facilities and proprietary and confidential
information of the other party and under which the parties will engage in
the exchange of proprietary and confidential information for the purposes of
their activities under the Manufacturing and Sales Agreement.
All such proprietary and confidential information whether disclosed
orally, visually or in writing shall be deemed Confidential Information
under this agreement.
Each party agrees to use the Confidential Information disclosed
hereunder only for purposes of the Manufacturing and Sales Agreement, and
not to otherwise use or disclose to others any such information.
The Confidential Information disclosed hereunder shall be held in
confidence by the receiving party for a period of five (5) years from the
date of disclosure unless and to the extent that:
1. Such information can be demonstrated to be already known to
the receiving party prior to disclosure by the submitting
party;
2. Such information at the time of disclosure is available to
the public or which after such disclosure becomes available
to the public through no fault of the receiving party;
3. Such information was acquired by the receiving party from a
third party without restriction on disclosure or use;
4. Such information was disclosed to a third party by the
submitting party without restriction on disclosure or use;
5. Such information is independently developed by the
receiving party without use of the Confidential
Information;
6. Such information is approved for use or disclosure by
written authorization by the submitting party.
SAMSUNG ELECTRO-MECHANICS CO., LTD. PARLEX CORPORATION
By /s/ SANG-JIN KIM By /s/ HERBERT W. POLLACK
-------------------------------------- ------------------------------
Title Senior Executive Managing Director Title President
----------------------------------- ---------------------------
Date September 29, 1994 Date September 29, 1994
------------------------------------ ----------------------------
Attachment E:
Parlex PALCORE patent applications:
Attorney File Number Country Title
- -------------------- ------- -----
PAR-108XX United States MULTIPLE LAYER PRINTED CIRCUIT
BOARDS AND METHOD OF MANUFACTURE
PAR-108Xq999 PCT (South Korea, China MULTIPLE LAYER PRINTED CIRCUIT
Japan, Canada, Europe (EPO)) CIRCUIT BOARDS AND METHOD OF MANUFACTURE
PAR-108AX United States PRINTED CIRCUIT HAVING VIA HOLES
AND MANUFACTURE THEREOF