LICENSE AGREEMENT
This Agreement is effective June 1, 1996 by and between Parlex
Corporation, a Massachusetts corporation, having its principal place of
business at 145 Milk Street, Methuen, Massachusetts, 01844 (hereinafter
referred to as "Parlex"), and Polyclad Laminates, Inc., a Massachusetts
corporation having its principal place of business at 40 Industrial Park,
West Franklin, New Hampshire, 03235 (hereinafter referred to as "Polyclad").
WHEREAS Parlex has issued and pending United States and foreign
patents, which are hereinafter defined as "Licensed Patents" relating to
multi-layer circuit board construction and fabrication;
WHEREAS Polyclad desires to acquire certain license rights, as
hereinafter set forth, under the Licensed Patents, and Parlex is willing to
grant such rights on the terms set forth herein;
NOW THEREFORE in consideration of the premises and the mutual
obligations of the parties, the parties agree as follows:
1.0 DEFINITIONS
1.1 Permitted Products shall mean two dimensional, multi-layer
printed circuit boards which are not designed nor intended to be folded or
bent upon installation. Incidental flexibility of a product not to exceed
15 is permissible in an otherwise permitted product.
1.2 Excluded Products shall mean three-dimensional, multi-layer
printed circuit boards which are designed or intended to be folded or bent
upon installation, or multi-layer flexible circuit boards mountable on a
flat rigidized heat sink, and including without limitation Type 3, Type 4
and Type 5 printed circuit or printed wiring boards as defined in MIL/STD-
2118 dated 4 May 1984, a copy of which is attached hereto.
1.3 Cap Material shall mean a copper layer having a C stage adhesive
coating thereon over which a B stage adhesive coating is provided.
1.4 Licensed Patents shall mean the issued and pending United States
and foreign patents identified in Schedule A hereto, any patents resulting
from such applications, continuations, divisions, and continuations-in-part
and foreign counterparts thereof, any reissues and reexaminations of any
such patents, and any improvement in any future patents of Parlex dominated
by one or more claims of existing Licensed Patents.
2.0 LICENSE GRANT
2.1 Parlex hereby grants to Polyclad (meaning Polyclad and any entity
which now or in the future Polyclad controls, or is under common control
with, or which controls Polyclad, but only so long as such entity is
controlled by, is under common control with, or controls Polyclad), upon the
terms as set forth herein, a royalty bearing license under the Licensed
Patents solely for the purpose of providing to customers of Polyclad a label
license for use of Polyclad Cap Material in the fabrication of Permitted
Products by such customers. It is understood that the term customers
includes direct sales to third parties unrelated to Polyclad as well as to
internal sales or transfers within Polyclad. This license and the
obligation to pay royalties under Paragraph 3.1 shall extend to sales by
Polyclad of Cap Material throughout the world.
2.2 Polyclad shall sell the Cap Material with the following label
license notice relating to Permitted Products, which shall be conspicuously
provided on product packaging and literature in a manner reasonably
acceptable to the parties. The notice language and placement may be changed
only with the prior written approval of Parlex.
This Cap Material is sold only for use in fabricating two-
dimensional multi-layer printed circuit boards which are not
designed nor intended to be folded or bent upon installation.
Unauthorized use of this Cap Material may subject the user to
patent infringement liability.
2.3 It is understood that Parlex has previously granted certain
license rights in South Korea under the Licensed Patents to Samsung. *
Parlex shall notify Polyclad of the identity of any such additional parties
licensed when Parlex has entered into such license(s). *
2.4 Parlex does not intend to grant further licenses for Cap Material
under the Licensed Patents other than those previously granted; however, it
is recognized that circumstances may require one or more other subsequent
licenses to be granted under the Licensed Patents for Cap Material. In the
event that Cap Material supplied by Polyclad fails to meet customer
production volume or quality requirements at competitive prices, Parlex
shall have the right to grant a license under the Licensed Patents to only
one additional third party in the United States or Europe; however, Polyclad
shall have a sixty (60) day period within which to cure the production
and/or quality deficiency. Parlex shall have the right to grant a license
to a third party under the Licensed Patents for any country or countries
other than the United States or Europe in the event that a customer for Cap
Material desires an additional source of such Cap Material. Parlex shall
also have the right to grant a license under the Licensed Patents to a party
supplying Cap Material to Merix Corporation, but such license shall be
limited to facilities of Merix Corporation in existence as of the Effective
Date of this Agreement. Parlex shall notify Polyclad of any other such
license granted to a third party hereunder. Any dispute concerning the
right of Parlex to grant an additional license under this Agreement which is
not resolved by the parties shall be submitted to arbitration by either
party as provided in Section 6.0 of this Agreement. Unless and until the
arbitration panel has rendered a decision in Parlex's favor, Parlex shall
not grant a license to the disputed licensee.
2.5 In the event that Cap Material sold by Polyclad in a country in
which no Licensed Patent has been granted, *
2.6 Each of the parties hereby warrants and represents to the other
that they have the unencumbered right to enter into this Agreement and shall
indemnify and hold harmless the other party in the event that a third party
challenges such right.
2.7 Licensor hereby releases Licensee and its customers from any and
all claims of infringement of the License Patent arising prior to the
Effective Date of the Agreement. Licensee confirms that it has not sold Cap
Material prior to the Effective Date of this Agreement.
_______________________
* Confidential information has been omitted and filed separately with the
Commission.
3.0 PAYMENT AND REPORTS
3.1 *
3.2 On or before the thirtieth (30th) day after the end of each
calendar quarter during the term of this Agreement, Polyclad shall submit to
Parlex a written report setting forth for such quarter a computation of the
royalties due under Subparagraph 3.1, including any minimum royalties.
Simultaneously with the delivery of each such report, Polyclad shall pay
Parlex the amount of the royalties due Parlex in accordance with such
report.
3.3 Polyclad shall maintain at its principal place of business
accurate records and books of account in respect of the sales of Cap
Material on which royalties are payable under this Agreement. Polyclad
agrees to make such records available for the inspection of an independent
certified public accountant (CPA) firm designated by Parlex and acceptable
to Polyclad, for the purpose of verifying, at the expense of Parlex, the
accuracy of the amount of royalty payments hereunder at reasonable times as
agreed by the parties, but no more than once each year. Such CPA firm shall
only audit records and books of account for a reporting year within twelve
(12) months after the end of that reporting year.
4.0 LITIGATION
4.1 Polyclad shall promptly notify Parlex if Polyclad learns of any
breach by customers of Polyclad of the label license restrictions of this
Agreement.
4.2 Parlex shall have the sole responsibility for enforcement of any
breach of the label license restrictions by customers of Polyclad.
4.3 In the event that any third party infringes any Licensed Patent,
or in the event any claim is made or action commenced by a third party which
alleges that a Licensed Patent is invalid, Parlex shall have the right at
its own expense, but shall not be obligated, to bring an appropriate action
against such infringer to cause such infringement to cease or negotiate
appropriate settlement with such infringer, or to defend such claim or
action by a third party. * Parlex will render reasonable
assistance to Polyclad in such litigation or other proceeding, at its own
expense. Parlex shall permit, and shall execute such documents as are
necessary to permit Polyclad to sue or defend in its own name, and shall, if
required, become a named party to such litigation or other proceeding.
During such litigation or other proceeding, Polyclad may withhold payment of
royalties and shall reimburse Parlex for withheld royalties at the
termination of such litigation or proceeding, by settlement or otherwise, to
the extent that any damages or settlement amounts plus reasonable litigation
fees and costs exceed, if so, such withheld royalties.
_______________________
* Confidential information has been omitted and filed separately with the
Commission.
5.0 CONFIDENTIALITY
5.1 The proprietary information of each party shall be maintained in
confidence in accordance with the separate confidentiality agreement entered
into by the parties and attached hereto as Appendix A.
5.2 Neither Parlex nor Polyclad shall use the name of the other for
promotional or other purposes nor disclose the terms of this Agreement
without the prior written consent of the other; however, either party may
notify others of the fact that this Agreement is in effect.
6.0 DISPUTES
In the event of any dispute under this Agreement, such dispute will be
resolved by final and binding arbitration held in Boston, Massachusetts
under the Commercial Arbitration Rules of the American Arbitration
Association. The arbitration panel shall be composed of three (3)
arbitrators, one of whom shall be appointed by each party and the third of
whom shall be appointed by the two party-appointed arbitrators. The
arbitration decision shall be binding and enforceable and may be entered in
any court having jurisdiction over the applicable party or parties.
7.0 TERM AND TERMINATION
7.1 This initial term of this Agreement shall remain in force and
effect until *.
7.2 This Agreement is agreed to have become effective on June 1, 1996
(the "Effective Date") and Polyclad's liability to pay royalties shall be
deemed to have commenced on that date.
7.3 In the event any royalties due from Polyclad hereunder shall
remain unpaid after the same have become due and payable, or in the event of
any other substantial breach or default hereunder by Polyclad, Parlex may
terminate this Agreement by notice to Polyclad, of the default, and this
Agreement and all licenses and rights containing herein shall terminate
thirty (30) days after such notice unless Polyclad shall have cured such
breach or default within said thirty (30) day notice period.
7.4 * Upon termination of this Agreement, Polyclad shall
discontinue the manufacture and sale of Cap Materials.
7.5 In the event either party files a petition in bankruptcy, is
adjudicated bankrupt, makes an assignment for the benefit of its creditors,
or otherwise becomes the subject of any bankruptcy, reorganization,
insolvency or similar proceedings, the other party shall have the right to
terminate this Agreement and all licenses and rights contained herein upon
ten (10) days notice thereof.
7.6 Termination of this Agreement shall not affect the obligation
under Paragraph 5.1 herein.
_______________________
* Confidential information has been omitted and filed separately with the
Commission.
8.0 NOTICES
All notices under this Agreement shall be in writing and shall be sent
by telefax (confirmed by courier or certified or registered mail), to the
receiving party at the respective addresses set forth below or such other
address as a party may specify by notice to the other:
If to Parlex: Parlex Corporation
145 Milk Street
Methuen, MA 01844 U.S.A.
Attention: Peter J. Murphy
President
If to Polyclad: Polyclad Laminates, Inc.
40 Industrial Park Drive
West Franklin, NH 03235 U.S.A.
Attention: James W. Crocker
Executive Vice President
Chief Operating Officer
9.0 GENERAL PROVISIONS
9.1 This Agreement shall be construed and enforced in accordance with
the laws of the Commonwealth of Massachusetts and applicable United States
federal law.
9.2 Nothing in this Agreement shall convey or imply any license or
right by either party other than as expressly set forth in this Agreement.
9.3 This Agreement constitute the entire understanding and agreement
of the parties with respect to the subject matter hereof, supersedes any
prior understandings or agreements, and may not be varied or modified orally
or otherwise than by an instrument in writing duly executed by all of the
parties.
9.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.5 Any headings in the sections of this Agreement are inserted for
convenience only and shall not constitute a part hereof for any purposes
whatsoever.
9.6 Parlex and Polyclad shall be deemed at all times to be
independent contractors and nothing contained herein is intended nor shall
be construed for any purpose as creating the relation of employer and
employee between Parlex and Polyclad or of designating either party as an
agent of the other.
9.7 Parlex shall have no product liability with respect to the
manufacture and sale of Cap Material by Polyclad, and nothing in this
Agreement shall be construed to provide or imply any product warranty by
Parlex to Polyclad or to customers of Polyclad.
9.8 Parlex shall notify Polyclad of the issuance of each patent
resulting from the pending patent applications of the Licensed Patents.
Parlex shall have no obligation to provide Polyclad with copies of any
unpublished patent applications.
9.9 This Agreement shall be assignable by Parlex, and shall not be
assignable by Polyclad to any party other than a successor of the business
to which this Agreement pertains without the prior written permission of
Parlex. Polyclad shall notify Parlex of any transfer within the Polyclad
group of related companies of the business applicable to this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
PARLEX CORPORATION
By ___________________________
Peter J. Murphy
President
POLYCLAD LAMINATES, INC.
By ___________________________
James W. Crocker
Executive Vice President
Chief Operating Officer