Exhibit 10-AN
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License Agreement Between Parlex Corporation
and Polyclad Laminates, Inc.
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
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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 150 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
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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. Polyclad shall have
the right to sell Cap Material to Samsung and to any other party licensed by
Parlex under this Agreement, for their use in manufacturing Permitted Products
and/or Excluded Products. Parlex shall notify Polyclad of the identity of any
such additional parties licensed when Parlex has entered into such license(s).
Polyclad shall also have the right to sell Excluded and Permitted Products to
Parlex.
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, is at a competitive disadvantage by
reason of the unauthorized manufacture or sale of such material by a third party
in that country, Polyclad shall notify Parlex of such situation and the parties
will promptly confer in an effort to negotiate a plan by which Polyclad's sales
of Cap Materials in that country can be more competitive, such as, without
limitation, a reduction or elimination of royalties paid under this Agreement.
Any failure of the parties to arrive at a satisfactory resolution of the
competitive situation in a particular country shall be subject to arbitration
under Section 6.0 hereof.
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.
3.0 PAYMENT AND REPORTS
3.1 Polyclad shall pay to Parlex a royalty of ten percent (10%) of the
Net Sales Price of Cap Material sold by Polyclad to third party customers. No
royalties are payable on sales of Cap Material by Polyclad to Parlex. Net sales
price shall mean the invoice price (however expressed) to Polyclad's customers,
less quantity and cash discounts actually allowed, less returns, less sales and
other taxes and any transportation and delivery charges borne by Polyclad. For
internal sales of Cap Material within Polyclad for use in Mass Laminated
Materials, Polyclad shall pay to Parlex a royalty of three cents (3(cent)) per
square foot, or equivalent price per square meter, of Cap Material so sold by
Polyclad. No further royalty will be paid for subsequent sales outside of
Polyclad of Cap Material for which a royalty has been paid.
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. In the event Parlex shall fail so to do, after thirty (30) days notice by
Polyclad to Parlex, Polyclad shall have the right to: (a) discontinue payment of
royalties hereunder until such time as Parlex institutes action against the
infringer or otherwise causes the infringement to cease or undertake the defense
of such action by a third party as the situation may be; (b) terminate the
present Agreement upon ten (10) days notice to Parlex; or (c) commence
litigation or other proceeding on its own behalf and at Polyclad's sole expense.
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.
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 the third anniversary of the Effective Date. If at the end of the initial
three (3) year term Polyclad is not in breach of any material provision hereof,
this Agreement shall continue in effect until the last to expire of the Licensed
Patents.
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 Polyclad may terminate this Agreement at any time upon giving thirty
(30) days prior written notice to Parlex. Polyclad shall fill customer orders
for Licensed Products where the manufacture of same has been substantially
completed prior to termination. 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.
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