---------------------------------
LICENSE AND SUPPLY AGREEMENT
by and among
FLEX PRODUCTS, INC.
and
SICPA HOLDING S.A.
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December 2, 1994
LICENSE AND SUPPLY AGREEMENT
AGREEMENT dated December 2, 1994, by and among Flex Products, Inc., a
Delaware corporation ("Flex") and SICPA HOLDING S.A., a Swiss corporation
("SICPA").
W I T N E S S E T H:
WHEREAS, Flex and SICPA are currently parties to an agreement dated as of
July l, 1993, providing for the purchase and sale of optically variable pigment
("OVP") (the "1993 Agreement"), and the 1993 Agreement will expire on June 30,
1998;
WHEREAS, Flex and SICPA wish to replace the 1993 Agreement with this
Agreement and to continue to work together for their mutual
benefit by further developing the business of supplying optically variable ink
("OVI") utilizing OVP as an anti-counterfeiting component of the world's
currency and other value-documents;
WHEREAS, the parties have entered into a Joint Venture Agreement dated
July 1, 1993 and a Memorandum of Alliance dated March 9, 1993 for the purpose of
coordinating their respective efforts to improve and enhance the existing
technologies for the utilization of OVP and OVI;
WHEREAS, pursuant to said agreements, Flex has developed valuable
proprietary information and technical know-how as generally described on Exhibit
G (the "Know-how") which have value in the manufacture, use and sale of OVP and
OVI, which are not generally known to others, and have been maintained as trade
secrets by Flex;
WHEREAS, the parties wish to continue their joint development efforts
pursuant to said agreements;
WHEREAS, the OVP and OVI are covered by one or more of the patents listed
on Exhibit H (the "Patents");
WHEREAS, the parties wish to enter into an exclusive license agreement, to
provide for the supply by Flex to SICPA of OVP and continue their joint
development efforts all of which is considered to be necessary for a technically
satisfactory exploitation of the Patents with respect to the making, using and
selling of OVI.
NOW, THEREFORE, in consideration of the mutual agreements
hereinafter set forth, the parties hereby agree as follows:
1. Patent and Know-how License.
1.1 Patent License.
1.1.1 Patent License.
1.1.1(a) Grant of Exclusive Patent License. Flex hereby grants to
SICPA, for the Term (as such term is defined in Section 13 below), an exclusive
worldwide and nontransferable right and license under the Patents to use the
products set forth in Exhibit A (the "Exclusive Products") to make, use and sell
OVI and to use OVP to make, use and sell OVI in the fields of use set forth in
Exhibit D (the "Fields"). The term "Patents" as used in this Agreement shall
consist of those Flex patents which are specifically listed in Exhibit H, and
any foreign counterparts thereof, and any additions, extensions or reissues
thereof. The term "Patents" as used in this Agreement shall include improvements
that (a) cover the Fields or (b) relate to the Exclusive Products. The term
"Patents" as used in this Agreement shall also include patents on continuations,
continuations-in-part, and divisionals of the Patents listed in Exhibit H that
(a) cover the Fields or (b) relate to the Exclusive Products. The term "Patents"
as used in this Agreement shall also include any patents which may issue in the
future that (a) cover the Fields or (b) relate to the Exclusive Products. It is
expressly understood and agreed that patent rights regarding the manufacture of
OVP are excluded from this License and
Supply Agreement.
1.1.1(b) Memorandum of Alliance and Joint Venture Agreement. The
parties agree to establish a committee (the "Committee") which shall meet at
least twice yearly to implement all of the provisions of the Memorandum of
Alliance and Joint Venture Agreement, copies of which are attached hereto and
made a part hereof as Exhibits I and J, respectively. The agenda for such
meetings shall include, but not be limited to, a review of intellectual property
positions and strategies and long-term supply and demand issues. The parties
agree that, notwithstanding the existing terms of the Memorandum of Alliance and
the Joint Venture Agreement to the contrary, the Memorandum of Alliance and the
Joint Venture Agreement shall remain in effect during the Term of this
Agreement, and the parties shall execute such amendments thereto which may be
proper to extend the length of the respective terms of the Memorandum of
Alliance and the Joint Venture Agreement to conform to length of the Term (as
such term is defined in Section 13 below).
1.1.2 Grant of Nonexclusive Patent License. Flex hereby grants to SICPA,
for the Term (as such term is defined in Section 13 below), a nonexclusive
worldwide and nontransferable right and license under the Patents to use OVP to
make, use and sell OVI in all fields of use other than those listed on Exhibit
D.
1.2.1 Grant of Exclusive Knowhow License. Flex hereby grants
to SICPA, for the Term (as such term is defined in Section 13 below), an
exclusive worldwide and nontransferable right and license to use the Knowhow to
use the Exclusive Products to make, use and sell OVI and to use OVP to make, use
and sell OVI in the Fields. It is expressly understood and agreed that knowhow
relating to the manufacture of OVP is excluded from the Knowhow and from this
License and Supply Agreement.
1.2.2 Grant of Nonexclusive Knowhow License. Flex hereby grants to SICPA,
for the Term (as such term is defined in Section 13 below), a nonexclusive
worldwide and nontransferable right and license to use the Knowhow to use OVP to
make, use and sell OVI in all fields other than those listed on Exhibit D.
1.3 Consideration. No royalties shall be payable by SICPA to Flex for the
licenses granted hereunder. The sole consideration for the grant of licenses
shall be the obligation of SICPA to purchase OVP exclusively from Flex as set
forth in this Agreement and the performance of the other obligations of SICPA
contained herein.
1.4. Claims of Infringement. If at any time after the date hereof SICPA or
Flex shall become aware of any suspected or actual infringement by a third party
of any of the Patents, or of any alleged infringement or misappropriation of the
intellectual property rights of others by SICPA's or Flex's use of the Patents,
SICPA or Flex, as the case may be, shall promptly notify the other thereof.
1.5. Defense. 1.5(a) In the event that a third party is infringing any of
the Patents, or is alleging infringement or misappropriation of its intellectual
property rights by SICPA's or Flex's use of any of the Patents, and the position
taken by such third party materially and adversely affects the rights and
obligations of both parties under this Agreement, then Flex shall initiate and
prosecute legal proceedings against, or take other appropriate action with
respect to, such third party for the purpose of terminating such infringement or
establishing that no such infringement or misappropriation exists. The costs and
expenses of such legal proceedings or other appropriate action shall be paid by
Flex.
1.5(b) For the purposes of this Section, each party shall give the
other, via the Committee as established pursuant to Section 1.1.1(b) above, at
least twenty-four hours advance notice of any proposed correspondence intended
to be delivered to a third party in relation to any claim or suspected claim
(the "Claim") relating to (i) the infringement, misappropriation, or invalidity,
either real or alleged, of one or more of the Patents or the Knowhow as they
relate to the OVP and OVI in the Exclusive Products and Fields, (ii) the use or
suspected use of OVP by a third party in violation of SICPA's rights under this
Agreement, or (iii) the alleged use of OVP by SICPA and/or Flex in violation of
the rights of a third party. Each party shall give the other forty-eight hours
advance notice of any proposed
legal action intended to be taken by such party in relation to a Claim. In
addition, each party shall, within twenty-four hours of receipt thereof, give
the other party copies of any correspondence received from any third party in
relation to a Claim. The term "correspondence" as used in this Section shall
include communications, letters, reports, memoranda, statements, notes,
facsimiles, telegrams, lawsuits, notices, and all other written documents.
1.6 Limitation of Licenses. Except as expressly set forth herein, no
license is granted, and no act or acts hereunder shall be construed to create
any licenses, expressly or by implication, estoppel or otherwise, except the
licenses herein expressly granted.
2. Obligation of Purchase and Sale. As a condition to and as consideration
for the licenses granted herein, during the Term (as such term is defined in
Section 13 below), subject to the terms and conditions set forth below, (a)
SICPA shall purchase exclusively from Flex all OVP required by SICPA for use in
the production of any and all OVI to be marketed by SICPA and any of the SICPA
Companies (as such term is defined below) anywhere in the world, and (b) Flex
shall sell (i) exclusively to SICPA the Exclusive Products; (ii) exclusively to
SICPA OVP to use in the manufacture of OVI for use in the Fields; and (iii)
nonexclusively to SICPA OVP other than the Exclusive Products that may be used
to make OVI for use other than in the Fields. If Flex desires to sell any ink
product that does not use an
Exclusive Product, under its own name or otherwise, it shall contract with SICPA
for the production of such ink product unless the terms which SICPA is willing
to provide are materially inferior to those which Flex is able to obtain from
another ink manufacturer. Flex shall be free to supply OVP other than the
Exclusive Products to third parties for all uses outside of the Fields. In order
to protect the OVI manufactured and sold by SICPA as an anticounterfeiting
device, in no event shall Flex sell OVP which meets the specifications of the
Exclusive Products to any person other than SICPA for any purpose. In addition,
Flex agrees to cooperate with SICPA and SICPA's customers, and to use its
reasonable best efforts, to investigate any instances which come to its
attention where it is reasonably believed that OVP or OVI from any source other
than SICPA has or will threaten the ability of SICPA's OVI to act as an
effective anticounterfeiting device, and to take such reasonable actions to
minimize or eliminate the threat consistent with Flex's rights and obligations
under this Agreement and Flex's contractual obligations to others. Flex will
include in its contracts with others for the sale of OVP provisions that (i)
restrict such customers from making, using and selling OVI in the Fields to the
extent allowed by applicable law, and (ii) grant Flex or its designee the right
to audit such customers in the event of a suspected or actual leakage of OVP or
the suspected or actual use of OVP in a manner that violates the rights granted
to SICPA herein.
(For purposes of this Agreement, the term "SICPA Companies" shall mean any
person or entity controlled by, controlling, or under common control with SICPA.
The term "control" of any person or entity means possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such person or entity, whether through the ownership of voting
securities or by contract or otherwise.)
3. Changes to Price and Quantity. During the period from March 1, 1999
through June 30, 1999 and the period March 1, 2004 through June 30, 2004, the
parties shall discuss what the price and quantity terms of this Agreement shall
be for the period 2000 through 2004 and 2005 through 2009 respectively. In the
event that the parties cannot agree to any other provisions, the price for OVP
shall be the price set forth in Section 4, as adjusted by Section 5.6, the
minimum and maximum quantities for the period 2000 through 2004 shall be the
same as for the year 1999, and the minimum and maximum quantities for the period
2005 through 2009 shall be the same as for the year 2004.
4. Price.
4.1 Base Price. SICPA shall pay a Base Price of US$4,850 per kilogram for
all OVP purchased pursuant to this Agreement, subject to Sections 4.2 and 5.6
below.
4.2 Base Price Adjustments. The price specified in Section 4.1
above is a base price which shall be subject to an annual adjustment, starting
in 1995, as set forth in this Section 4.2. The adjustment shall be calculated in
accordance with the percentage increase in "Average Hourly Earnings" shown in
the Establishment Data Index entitled, "Average Hours and Earnings of Production
Workers on Manufacturing Payroll in States and Selected Areas," (currently
designated Index C-8) for the area specified as Santa Xxxx-Petaluma, California
(not seasonally adjusted), as it appears in the periodical Employment and
Earnings, published by the U.S. Department of Labor, Bureau of Labor Statistics
(the "Index"), using December 1993 as the base period (the "Base Period") for
computing any required price adjustments. The base price shall be adjusted as of
December 31 of each year based on the percentage increase in the Index
calculated by comparing the Index for December 1993 and the latest version of
the Index published as of December 31 of each such adjustment year. If the Index
is not published in any of the three months preceding a December 31 adjustment,
then the parties shall agree on a substitute index that best approximates the
Index. (For reference purposes only, a copy of the current version of the Index
is attached hereto as Exhibit B.) No such annual adjustment shall be made unless
and until the Index increase over the Base Period or any subsequent annual
adjustment exceeds on a cumulative basis 3%, at which time all increases over
the Base period or any subsequent annual adjustment
shall be included. (E.g., assuming an Index increase of 2.8% as of December
1994, increasing to 5% as of December 1995 on a cumulative basis, the annual
adjustment starting in 1996 would be 5%; no further adjustment would be made
until the Index increase over the December 1995 Index exceeded 3%.) In addition,
in the event that the cost of any materials used by Flex for the manufacture of
OVP increases during the term of this Agreement by more than 20% over the
current price for such material (i.e., the price at the date of this Agreement)
adjusted for changes by the reduction of any increase in the Index over the Base
Period Index, Flex shall thereafter be allowed to pass through to SICPA the
entire amount of such adjusted increase as it may change from time to time (not
just the amount in excess of 20%) subject to SICPA's right to retain the
services of an independent auditor who shall have the right to audit Flex's
books of account for the sole purpose of verifying the accuracy of the increase.
In addition, any materials used by Flex which result in the increase shall be
purchased at or below fair market value.
4.3 Price Adjustment. The base price per kilogram set forth in Section 4.1
as adjusted pursuant to Sections 4.2 and 5.6 shall be reduced by 5% for each 500
kilograms purchased per year over 2,500 kilograms as set forth below:
Purchases per Year Base Price/Kg (before
increases pursuant to
Sections 4.2 and 5.6)
First - 2,500 kg US$4,850
2,501 - 3,000 kg US$4,608
3,001 - 3,500 kg US$4,377
3,501 - 4,000 kg US$4,158
4,001+ kg US$3,950
5. Minimum Purchase Requirements.
5.1 Minimum Annual Purchases.
5.1(a) Minimum Purchases Necessary to Maintain Exclusive License.
The parties agree that SICPA shall purchase from Flex minimum annual amounts of
OVP set forth below:
Year Minimum Maximum
1995 4,000 kg 5,000 kg
1996 5,500 kg 6,000 kg
1997 6,000 kg 7,500 kg
1998 7,000 kg 8,000 kg
1999 7,500 kg 8,500 kg
Flex may, but shall not be obligated to, supply OVP in annual quantities above
the annual maximum quantities set forth above. The annual maximum quantities set
forth above shall not constitute a limitation on SICPA's obligation to purchase
OVP from Flex. For each year after 1999, the minimum and maximum quantities
shall be determined pursuant to Section 3. (For purposes of this Agreement,
each 12-month period from January 1 through December 31 during the Term shall be
designated as a "Purchase Period.") If SICPA fails to make the minimum purchase
of OVP required in any Purchase Period, Flex shall have the following options
exercisable after 30 days written notice: (i) Flex may waive the breach; (ii)
Flex may terminate the exclusive license granted in Section 1.1; (iii) Flex may
hold SICPA liable to Flex for any damages arising from such breach (subject to
the provisions of Section 8 below); (iv) Flex may be relieved of the obligation
under Section 2 above to supply OVP to SICPA for use with respect to the
Exclusive Products on an exclusive basis in which case it shall continue to
satisfy all of SICPA's requirements for OVP on a nonexclusive basis during the
Term, and SICPA shall continue to purchase all of its requirements of OVP from
Flex for the Term; or (v) Flex may exercise its right of cancellation as
provided in paragraph 15.1 below. For purposes of this Section 5 and Sections 3
and 14, a "purchase" shall be deemed to have occurred during the Purchase Period
or portion thereof during which OVP that is ordered is to be delivered after
SICPA delivers to Flex an irrevocable order for OVP for delivery, provided that
SICPA thereafter makes timely payment therefor in accordance with Section 6
below.
5.1(b) SICPA Call on Flex Excess Capacity. The parties agree to meet
no later than December 1st in each year during the Term, and at such meeting:
(i) Flex shall advise SICPA of Flex's excess capacity for the
production of OVP, including the maintenance of any inventory reserve required
by Section 11, for the calendar year immediately following the then-current year
which Flex has not committed to other uses; and
(ii) SICPA shall have the right, exercisable no later than
December 15, to increase the minimum and maximum quantities set out in Section
5.1(a) above by an amount not to exceed the amount of such excess capacity
available in Section 5.1(b)(i) above.
5.2 Minimum Quarterly Purchases. SICPA shall purchase at least 25% of the
minimum annual purchase requirement of OVP per calendar quarter.
5.3 Production Releases. SICPA shall provide Flex with written releases
for production of the amount of OVP on or before the first-day of each quarter
to cover the quarter following the current quarter. For example, the release for
the third quarter of 1995 shall be given on or before April 1, 1995. Each such
release shall serve as authorization for commencement of production of the
released product and shall be an irrevocable order for the OVP specified in the
release. Color specifications and requested delivery dates shall be provided
throughout the quarter. A minimum of 5 kilograms shall be required for each
color included in the release.
5.4 Forecasts. Also on or before the first day of each
quarter, SICPA shall supply Flex with its forecast for the two quarters
following the quarter for which the release is being provided. For example, on
or before April 1, 1995, SICPA shall provide the release for the quarter ending
September 30, 1995, and its forecast for the quarters ending December 31, 1995,
and March 31, 1996. The forecasts shall constitute SICPA's good faith best
estimate of its requirements under this Agreement in order to assist Flex in
planning. The forecasts shall not be binding on the parties and Flex is not
authorized to commence production based on forecasts.
5.5 Shipments. Flex shall not be obligated to produce and/or ship in
excess of 25% of the maximum annual purchase amount in any calendar quarter
without its prior written consent Flex will attempt, consistent with other
commitments and available resources, to supply greater amounts requested by
SICPA to support the market.
5.6 Product Specification. The product specifications regarding
brightness, durability, color and particle size for all OVP purchased pursuant
to this Agreement shall be as set forth in Exhibit A to this Agreement. The
prices specified in this Agreement apply to Flex's current product design,
materials and colors, as set forth in Exhibit A attached hereto. The parties
acknowledge that any change in the product specification, quantities and/or
delivery schedule shall be the subject of renegotiation, and shall require the
mutual agreement of the parties with respect to any change in terms
and price.
6. Terms and Conditions of Orders. Sections 1, 2, 3, 4, 5, 6, 7, 8a, 11
(except the last sentence), 13 and 14 of Flex's Standard Terms and Conditions of
Sale, a copy of which is attached hereto as Exhibit C, shall apply to this
Agreement. Payment terms shall be net 30 days from the date of Flex's invoice.
Acceptance of OVP supplied under this Agreement for conformity with the shipping
documents shall occur within 30 days after delivery to SICPA. In the event that
SICPA fails to make payment within such 30-day period or as long as such payment
remains unpaid, Flex may in addition to any other remedies available to it, at
its option, (i) make immediately due and payable any subsequent invoices
delivered by it to SICPA; (ii) suspend all deliveries; or (iii) require that
SICPA pay Flex's finance charge at the maximum rate permissible by law not to
exceed 1% per month on the unpaid balance of SICPA's account from date of Flex's
invoice.
7. Warranty. Flex warrants for a period of 180 days from the date of
shipment that all OVP supplied by it shall be free from defects in material and
workmanship and shall conform to all specifications and other applicable
provisions of this Agreement or such other specifications and provisions as are
otherwise requested by SICPA and agreed to in writing by Flex. Should any
failure to conform to this warranty appear within 180 days of shipment of OVP,
then upon notification thereof and confirmation that the OVP has been shipped,
stored and maintained in accordance with the guidelines annexed hereto as
Exhibit A, and upon return of such OVP, Flex will, at Flex's option, either (i)
replace the nonconforming OVP within 15 days after return thereof, or (ii) in
lieu of such replacement refund any payment made by SICPA for the nonconforming
OVP and reimburse SICPA for any delivery costs directly incurred by SICPA with
respect to such OVP. THIS WARRANTY DOES NOT COVER DAMAGE OR DEFECTS CAUSED BY
SICPA'S PRODUCTION CYCLE.
THIS WARRANTY IS EXCLUSIVE AND IS IN LIEU OF ANY IMPLIED WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHER WARRANTY OF QUALITY,
WHETHER EXPRESSED OR IMPLIED, EXCEPT FOR WARRANTY OF TITLE AND WARRANTY AGAINST
PATENT INFRINGEMENT.
8. LIMITATION OF LIABILITY. SUBJECT TO LIQUIDATED DAMAGES PROVISIONS OF
SECTION 14, AND EXCEPT FOR DAMAGES PAYABLE UNDER THE INDEMNITY PROVISIONS OF
SECTION 16 AND THE CONFIDENTIALITY PROVISIONS OF SECTION 12, NEITHER FLEX ON THE
ONE HAND NOR SICPA ON THE OTHER HAND SHALL BE LIABLE TO THE OTHER, UNDER ANY
CIRCUMSTANCES, FOR SPECIAL OR CONSEQUENTIAL DAMAGES SUCH AS, BUT NOT LIMITED TO,
DAMAGE OR LOSS OF OTHER PROPERTY OR EQUIPMENT, LOSS OF PROFITS OR REVENUE,
COST OF CAPITAL, OR COST OF PURCHASED OR REPLACEMENT GOODS. THE REMEDIES OF THE
PARTIES SET FORTH HEREIN ARE EXCLUSIVE, AND THE LIABILITY OF EACH PARTY WITH
RESPECT TO ANY CONTRACT, OR ANYTHING DONE IN CONNECTION THEREWITH SUCH AS THE
PERFORMANCE OR BREACH THEREOF, OR FROM THE MANUFACTURE, SALE, DELIVERY, RESALE
OR USE OF ANY OVP FURNISHED UNDER THIS AGREEMENT, WHETHER ARISING OUT OF
CONTRACT, NEGLI GENCE, STRICT TORT OR ANY WARRANTY OR OTHERWISE, SHALL NOT,
EXCEPT AS EXPRESSLY PROVIDED HEREIN, EXCEED THE PRICE OF THE OVP UPON WHICH SUCH
LIABILITY IS BASED IN THE CASE OF FLEX OR THE DAMAGES DETERMINED UNDER AND
PURSUANT TO SECTION 14 IN THE CASE OF SICPA. ANY LIMITATION ON LIABILITY
HEREUNDER SHALL NOT LIMIT THE LIABILITY OF EITHER PARTY FOR BREACH OF SECTION 2
OR 12, NOR SHALL IT LIMIT THE LIABILITY OF SICPA UNDER SECTION 16.
9. Cure. Flex and SICPA each shall have the right to cure any default or
nonconformity under the Agreement within 15 days of receipt of written notice
from the other party specifying the default or nonconformity. In the case of
failure of delivery of OVP by Flex, or the delivery by Flex of nonconforming
OVP, Flex shall not be deemed to
have cured the non-delivery, or the nonconformity, until it shall have delivered
the conforming goods to SICPA's facilities.
10. Force Majeure. No party shall be held responsible for any delay or
failure in performance under this Agreement to the extent such delay or failure
is caused by federal, state or municipal action including a change in any
statute, ordinance or regulation; unavailability of any material required or
currently utilized by Flex for the production of OVP; environmental controls or
restrictions placed on the use or disposal of any such materials that makes the
use of such materials impracticable; strike against Flex or a third party; fire
damage, flood, explosion, war or any other cause, act of God, contingency or
circumstance within or outside the United States not subject to its control
("Force Majeure Conditions"). If any Force Majeure Condition occurs, the party
delayed or unable to perform shall as soon as reasonably practicable give notice
to the other party and any obligations that the other party has to perform shall
be suspended for the duration of such Force Majeure Condition. If any Force
Majeure Condition causes a delay in delivery by Flex of over 60 days, for as
long thereafter as such Force Majeure Condition shall continue SICPA shall have
the right to terminate this Agreement prospectively by giving written notice to
Flex effective immediately when such notice is given. Such a termination shall
in no way alter any obligation which SICPA may have under this Agreement to pay
for OVP
delivered prior to the effective date of termination.
11. Assurances Re Supply of OVP. The parties acknowledge that an assured
supply of OVP is a matter of concern to customers utilizing OVI. The parties
agree that they will endeavor to work out a mutually acceptable plan for
creating and maintaining an inventory reserve for the purpose of providing
reasonable assurances that sufficient quantities of OVP will be available to
satisfy SICPA's requirements to protect against contingencies, such as equipment
breakdowns or other casualty losses.
12. Confidentiality and Nondisclosure. All technical data, including the
Knowhow, and all information which concerns the business operations of either
Flex on the one hand or SICPA on the other hand disclosed in the course of
performing this Agreement, which data or information, at the time of its
communication to the other party, was not rightfully in the other party's
possession or in the public domain ("Confidential Matter"), shall be treated as
confidential and shall not be disclosed by the recipient to any third party. The
recipient shall use the same care to protect Confidential Matter as it uses to
preserve and protect its own information having the highest degree of
competitive significance and shall take appropriate measures to ensure that its
employees are bound to the same degree that it is bound under this Agreement,
and the recipient shall not use any Confidential Matter in its own business
operations except to the extent necessary
to implement this Agreement without the written consent of the other party. This
obligation does not apply to any Confidential Matter which (i) was in the
recipient's possession prior to its disclosure, (ii) was in the public domain
prior to its disclosure or thereafter entered the public domain through no fault
of the recipient or the recipient's employees, or (iii) is lawfully obtained by
the recipient on a non-confidential basis from a third party having an
unrestricted legal right to disclose the information to others. Notwithstanding
the foregoing, a recipient may disclose Confidential Matter if and to the extent
that a judicial or governmental authority having jurisdiction over the recipient
orders or requires disclosure, provided that the recipient, before making any
such disclosure, advises the other party (the "Disclosing Party") of the
disclosure required and cooperates with the Disclosing Party in all legitimate
efforts to avoid or limit disclosure at the Disclosing Party's expense. SICPA
agrees that its obligations under this Section 12 shall extend to the SICPA
Companies as well as to SICPA, and any breach or violation of this Section by
any SICPA Company shall be deemed to be a breach by SICPA.
13. Term of Agreement.
13.1 Term. The term of this Agreement (the "Term") shall commence on the
date of the execution hereof and shall terminate on December 31, 2009, unless
terminated earlier pursuant to the terms of
this Agreement.
13.2 Invalidity of European Patent. Upon the expiration or final judicial
determination of invalidity of European Patent No. 0 227 423 B1 (but in no event
before December 31, 1999) the provisions of Sections 2(a), 2(b)(i) and 2(b)(ii)
of this Agreement shall terminate with respect to exclusive purchases and sale
of OVP for use in OVI for sale by SICPA in the European Economic Area (the
"EEA"); provided, however, that in such an event SICPA shall continue to
purchase OVP from Flex, and Flex shall continue to sell OVP to SICPA pursuant to
this Agreement, on a nonexclusive basis for use and sale by SICPA in the EEA,
and all the terms of this Agreement, including the annual minimum purchase
obligation of Section 5.1, shall remain in effect throughout the rest of the
world.
13.3 Substitute OVP. Notwithstanding anything herein to the contrary, in
the event that during the Term of this Agreement (but in no event before
December 31, 1999) an OVI product becomes commercially and legally available on
the market from a third party, due to either a final judicial determination of
invalidity or non-infringement of any of the claims of the Patents, or due to a
non-infringement for which there has been no legal action taken challenging the
OVI product under the Patents, and such product containing substitute OVP is (i)
substantially identical in performance to that resulting from the use of one or
more of the Exclusive Products, and (ii) sold at a price
less than the price of a corresponding amount of OVP as set forth herein, then
Flex shall promptly elect to (a) reduce the price and performance of OVP sold to
SICPA hereunder to a price and performance that is equivalent to the
corresponding price and performance of substitute OVP available in the market;
(b) modify the provisions of Sections 2(a), 2(b)(i) and 2(b)(ii) of this
Agreement by deleting the word "exclusively" and replacing it with
"non-exclusively" in such sections; or (c) terminate this Agreement.
14. Liquidated Damages for Cancellation or Breach. SICPA acknowledges: (i)
that the price specified for the sale of OVP in Section 3 above is based on the
commitment of SICPA to purchase the entire minimum quantity specified hereunder;
(ii) that Flex has advised SICPA that the price specified is substantially below
the price that Flex would normally charge for the OVP and is being specially
allowed by Flex as a concession to help SICPA develop the market for its inks
using OVP; and (iii) that Flex has further advised SICPA that Flex's binding
itself to SICPA on an exclusive basis for the Exclusive Products and the Fields
during the Term will cause Flex to forego the opportunity to pursue other
business opportunities for the commercial exploitation of OVP manufactured by
it. The parties agree that if SICPA were to breach its covenant to purchase the
minimum quantity of OVP during the Term the resulting damages would be
impracticable or extremely difficult to determine, because of Flex's
inability to establish with certainty the magnitude and extent of the
opportunities lost due to its exclusive commitment to the SICPA Parties
hereunder. Because of this difficulty the parties agree that, in the event of
the termination of this Agreement because of such breach or in the event SICPA
cancels this Agreement before the Term expires or fails to purchase the minimum
amount of OVP required to be purchased during any of the five year periods
running from 1995 through 1999, 2000 through 2004 or 2005 through 2009, SICPA
shall pay damages to Flex as follows:
The "OVP Shortfall" for the five-year period shall be calculated by subtracting
the amount of OVP purchased during the five-year period from the sum of the
minimum purchase requirements for each of the five years during the five-year
period. The damages shall then be calculated from the following table:
OVP Shortfall Damages
Up to 2000 kg US$100/kg x
OVP Shortfall
2001 kg to 4000 kg US$200,000 +
US$200/kg x (OVP Shortfall - 2000 kg)
4001 kg to 6000 kg US$600,000 +
US$500/kg x (OVP Shortfall - 4000 kg)
More than 6000 kg US$1,600,000 +
US$1000/kg x (OVP Shortfall - 6000 kg)
For example, if this Agreement is terminated during the second five-year period
2000-2004 and total purchases over the second five-year
period were 3,500 kg less than the minimum (so the OVP Shortfall is 3,500 kg),
the amount of liquidated damages for the second five-year period would be
US$200,000 plus US$200 x (3,500-2,000) or US$500,000 plus liquidated damages for
the third five-year period based upon the OVP Shortfall for that five-year
period. The OVP Shortfall for the third five-year period 2005-2009 will be based
upon the minimum quantities and prices in effect for the last year of the second
five-year period. Unless the parties otherwise agree pursuant to Section 3, the
minimum quantities would be 7,500 kg per year and the OVP Shortfall for the
period would be 37,500 kg.
15. Termination.
15.1 Grounds for Termination. Flex may terminate this Agreement prior to
the stated expiration date if during the immediately preceding Purchase Period
SICPA fails to make the minimum purchases required for that Purchase Period.
Either Flex or SICPA may terminate this Agreement prior to the stated expiration
date upon (i) material breach by the other party of any of the covenants or
conditions to be performed by such party hereunder or material inaccuracy of any
of the representations and warranties of the other party set forth herein, or
(ii) the filing by or against the other party of a petition in bankruptcy or
seeking reorganization or arrangement or for the appointment of a trustee,
liquidator or receiver, or (iii) the making by the other party of an assignment
for
the benefit of creditors, the consenting by it to the appointment of a trustee,
liquidator or receiver, or the filing by it of a petition taking advantage of
any insolvency law. In each case notice of termination shall be given in writing
to the breaching party of such breach and of the intention to terminate. Such
notice of termination shall be effective 30 days following the date such notice
is given, or on such later date as may be set forth in such notice, unless the
breach shall be remedied during such 30-day period; provided, however, that any
notice of termination based on the occurrence of any event described in clauses
(ii) or (iii) of this Section 15.1 shall be effective immediately when such
notice is given. Any such termination shall be in addition to and not in lieu of
other rights and remedies at law or in equity.
15.2 Rights After Termination. Upon termination of this Agreement for any
reason, nothing herein contained shall be construed to release any party to this
Agreement from any obligation matured prior to the effective date of such
termination. All other rights and obligation provided for in this Agreement
shall terminate forthwith except the obligation of confidentiality set forth in
Section 12 and the indemnity obligation set forth in Section 16.
16. Indemnity. SICPA shall indemnify and hold harmless Flex, and Flex's
officers, directors, employees, shareholders, agents, and assigns,
("Indemnitees") from and against, on an after-tax basis, any
and all liabilities (including but not limited to liabilities arising out of the
doctrine of strict liability), losses, damages, suits, judgments and costs
(including, without limitation, legal fees and expenses and costs of
investigation) arising out of or relating to any claims by third parties
relating to or arising directly or indirectly as a result of SICPA's use of OVP
or manufacture, use and sale of OVI. This indemnity shall not apply to any claim
against an Indemnitee arising from the gross negligence or willfulness
misconduct of such Indemnitee.
17. Notices. All notices hereunder shall be in writing and shall be deemed
to have been given either (i) when received, if delivered in person or
transmitted by tested telex or facsimile, or (ii) three business days after
having been mailed by registered or certified mail addressed as follows:
To Flex: Flex Products, Inc.
0000 Xxxxxxxxxx Xxxxxxx
Xxxxx Xxxx, Xxxxxxxxxx
00000-0000
Attn: Xxxxxxx Xxxxxxxx
FAX: (000) 000-0000
To SICPA: SICPA HOLDING S.A.
2 rue de la Paix
X.X. Xxx 0000
XX - 0000 Xxxxxxxx,
Suisse
Attn: Xxxxxxx X. Xxxx
FAX: 00-00-000-0000
or to such changed address as such party may have fixed by notice provided that
any notice of change of address shall be deemed to have
been given when received.
18. Relationship of the Parties. This Agreement shall not be construed to
create between Flex and SICPA, or their respective successors or assigns, the
relationship of principal and agent, joint venturers, co-partners, employer and
employee, master and servant or any other similar relationship, the existence of
all of which are expressly denied by the parties.
19. Binding Nature. This Agreement shall be binding on and shall inure to
the benefit of the parties hereto and their respective successors and assigns.
Neither party may assign its rights under this Agreement without the prior
written consent of the other party.
20. No Waiver. Failure on the part of either Flex on the one hand or SICPA
on the other hand to insist on strict compliance by the other with any of the
provisions of this Agreement shall not be deemed a waiver of such provision.
21. Integration Clause. This instrument is the entire agreement among the
parties and exclusively determines their rights and obligations, any prior
course of dealing, custom or usage of trade, or course of performance
notwithstanding, and may not be amended or terminated except by another
agreement in writing executed by the parties.
22. Governing Law. This contract shall be governed by and interpreted
according to California law as it applies to contracts
made and performed entirely within California by California residents. The
United Nations convention on contracts for international sale of goods shall not
apply to this Agreement.
23. Invalidation. If any of the provisions of this Agreement shall
contravene the laws of any country or other jurisdiction, it is agreed that such
invalidity or illegality shall not invalidate the whole Agreement, but this
Agreement shall be construed as if it did not contain the invalid or illegal
provision or provisions insofar as such construction does not materially affect
the substance of this Agreement, and the rights and obligations of the parties
hereto shall be construed and enforced accordingly. In the event, however, that
such invalidity or illegality shall result in a substantial alteration of the
relationship between the parties hereto having a material adverse effect on the
interest of either party, then the parties hereto shall negotiate mutually
acceptable alternative provisions as consistent as possible with the terms of
this Agreement and not conflicting with such laws.
24. Enforcement of Agreement.
24.1 United States District Court. In the event of the commencement of any
action, proceeding or litigation to enforce any provision of this Agreement or
for damages or other remedies for an alleged breach of any provision of this
Agreement ("Action"), the parties agree that such Action shall be conducted in
the United States
District Court for the Northern District of California ("District Court"). The
parties agree that the District Court shall have personal jurisdiction over the
parties and, except as provided below, shall be the exclusive forum for any
Action. The parties hereby waive their right to a trial by jury and any right
they may have to assert the doctrine of forum non conveniens or to object to
venue to the extent that any such Action is conducted in accordance with this
provision. The parties agree that they each may be served with service of
process in connection with any Action, by mailing such service of process by
registered or certified mail addressed to the parties at the addresses for
notices under this Agreement, as set forth in Section 17 hereof with a copy to
each party's counsel. The parties agree that they will not object to the method
of service pursuant to this Section, notwithstanding any provisions of United
States or Swiss law or any treaty to which the United States or Switzerland is a
signatory. For purpose of this section, until changed by notice given in the
manner set forth herein, the name and address of the parties' counsel shall be:
For Flex: Pillsbury Madison & Sutro
X.X. Xxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
For SICPA: Leonard, Ralston, Xxxxxxx & Xxxxx
0000 Xxxxxx Xxxxxxxxx Xx. XX, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
24.2 Reference Proceeding if District Court Lacks Subject Matter
Jurisdiction. In the event that the District Court lacks subject matter
jurisdiction for any Action, then said Action shall be conducted in the Superior
Court of the State of California for the City and County of San Francisco
("Superior Court") by a reference pursuant to the provisions of California Code
of Civil Procedure Sections 638 and 641 through 645.1, inclusive, according to
the following procedures:
24.2.1 The parties shall agree upon a single referee ("Referee") who
shall then try all issues, whether of fact or law, and report a statement
of decision thereon to the Superior Court. If the parties are unable to
agree upon the Referee within 10 days of a written request to do so by
either party, then either party may thereafter seek to have the Referee
appointed pursuant to California Code of Civil Procedure Section 638;
24.2.2 The parties shall promptly and diligently cooperate with one
another and the Referee, and shall perform such acts as may be necessary
to obtain a prompt and expeditious resolution of the dispute or
controversy in accordance with the terms hereof;
24.2.3 The cost of such proceeding shall initially be
borne equally by the parties. However, the prevailing party in such
proceeding shall be entitled, in addition to all other costs, to recover
its contribution for the costs of the reference.
24.2.3 The provisions of Section 21.1 hereof, concerning personal
jurisdiction, venue and service of process are applicable to any Action
which is conducted under this Section 21.2.
24.3 SICPA Consents to and Waives Objections to Enforcement of Judgment in
Switzerland. SICPA consents to, and waives all objections to, the enforcement in
Switzerland of any judgment in any Action entered in favor of Flex.
25. Headings. The headings of the various Sections and Paragraphs of this
Agreement are for convenience of reference only and shall not modify, define or
limit any of the terms or provisions hereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be duly executed, and intends this Agreement to be effective, as of the date
first set forth above.
FLEX PRODUCTS, INC., a Delaware corporation
By__________________________________________
SICPA HOLDING S.A., a Swiss corporation
By__________________________________________
Exhibit A - License and Supply Agreement
OVP SPECIFICATIONS
AND
EXCLUSIVE PRODUCTS
Exhibit B - License and Supply Agreement
EMPLOYMENT AND EARNINGS INDEX
Exhibit C - License and Supply Agreement
FLEX PRODUCTS, INC.
TERMS AND CONDITIONS OF SALE
Exhibit D - License and Supply Agreement
FIELDS
a. Currency, postage stamps, government stamps, excise stamps, banderoles,
travelers' checks and other special checks (such as cashier's checks and
specified value checks), banknotes, currency, passports, visas, lottery tickets,
credit cards, identification cards, and stocks and bonds.
b. Intaglio inks.
c. Inks, including silkscreen inks, exhibiting a color shift set forth in
specifications of Exhibit A to this Agreement.
Exhibit E - License and Supply Agreement
ASSURANCES RE SUPPLY OF OVP
1. New Production Machine. The parties acknowledge that an assured supply
of OVP is a matter of concern to customers utilizing OVIO. In order to increase
its capability for the production of OVP, and to provide a greater assurance of
uninterrupted supply, Flex intends to purchase and install a new production
machine after Flex receives all necessary approvals from its affiliate, ICI plc,
and Flex's Board of Directors ("New Production Machine"). The parties agree that
they will endeavor to work out a mutually acceptable plan for creating and
maintaining an inventory reserve for the purpose of providing reasonable
assurances that sufficient quantities of OVP will be available to satisfy
SICPA's requirements to protect against contingencies, such as equipment
breakdowns or other casualty losses.
2. OVP License.
2.1 OVP License - OCLI. In the event that during the term hereof, Flex
decides to (a) cease to do business; (b) cease its own production of OVP, other
than for Force Majeure Conditions; or (c) sell or transfer one or more of the
Patents, then it shall so notify SICPA (the "OVP License Notification Date"),
and Flex shall promptly thereafter offer to grant to Optical Coating Laboratory,
Inc., a Delaware corporation ("OCLI") (1) an exclusive license to use Flex's
patents and related technology required for the manufacture and sale of OVP to
SICPA (the "OVP License"), and (ii) an assignment of Flex's rights and
obligations under this Agreement (the "OVP License Assignment"). OCLI shall have
30 days from the date such offer is
made to decide whether to accept or reject the offer of the OVP License and the
OVP License Assignment. If OCLI shall decide to accept such offer, then it shall
(x) so notify both Flex and SICPA in writing within said 30-day period, and (y)
assume all of Flex's obligations under this Agreement accruing thereafter,
subject, however, to the following conditions:
(xx) OCLI shall have no liability or obligation with respect to this
Agreement for matters, transactions or claims arising out of or accruing
from any act, omission, event or transaction which occurred before the
date of said assumption (including without limitation any warranty claims
relating to OVP manufactured or delivered by Flex); and
(yy) OCLI shall use its best effort attempts to commence production
of OVP within 90 days after accepting the offer of the OVP License and the
OVP License Assignment so as to minimize any delay or interruption to the
production and delivery of OVP. Flex shall grant OCLI the necessary
easements and other property rights to use any manufacturing equipment and
other technology necessary for the production of OVP and OCLI shall pay
Flex reasonable fees for the use of the equipment and technology and for
any easement or other property rights.
SICPA hereby consents to the assignment and assumption of Flex's obligations
under this Agreement on the basis described above, and agrees that OCLI shall be
allowed the time necessary to accomplish the activities described in Clause (yy)
above without liability for ensuing delays in production or delivery of OVP
attributable thereto.
2.2 OVP License -- SICPA or its Third Party, Designee. If OCLI shall fail
to accept Flex's offer and to assume Flex's obligations hereunder, as described
and subject to the conditions set forth in Section 2.1 of this Exhibit E, then
SICPA shall have the right to require that the OVP License be offered to SICPA
or to a third party designated by SICPA.
2.3 Terms of OVP License. The OVP License (whether granted to OCLI, SICPA
or SICPA's third party designee) shall be granted on the terms and conditions
set forth in Exhibit F attached hereto.
2.4 Equipment and Technology Transfer. In connection with the grant of the
OVP License to SICPA or its third party designee, Flex shall also: (i) offer to
sell to the designated licensee any equipment then being utilized by Flex for
the production of OVP hereunder at its then current fair market value as
determined by its
replacement cost and offer an easement or other interest at fair market value
for use of such equipment at Flex's premises (in each case, such value or cost
to be determined by an independent appraisal if the parties shall be unable to
agree thereon); and (ii) offer to provide to the designated licensee at Flex's
facilities such engineering and other technical assistance as may be reasonably
necessary to enable such licensee to resume the production of OVP (but not to
exceed one hundred (100) man/woman hours), at rates equal to those charged for
comparable professional expertise within the industry and with all other
out-of-pocket costs associated therewith to be borne by such licensee.
2.5 Release of Flex. Following the grant of the OVP License (whether to
OCLI, SICPA or SICPA's third party designee), Flex shall be deemed released from
any further obligations under this Agreement which arise out of or accrue from
any act, omission, event or transaction which occurred after the OVP License
Notification Date.
2.6 Force Majeure Conditions. Nothing in this Exhibit E is intended to
obligate Flex either to offer or to grant the OVP License where its inability to
produce OVP is caused by Force Majeure Conditions.
Exhibit F - License and Supply Agreement
TERMS AND CONDITIONS OF OVP MANUFACTURING LICENSE
GRANTED UNDER EXHIBIT E
The OVP License to be granted pursuant to the foregoing Agreement shall
contain the following terms and conditions:
1. Quarterly payments of earned royalties of 5% based on all sales
or uses of OVP by the licensee (or, in the event SICPA or an affiliate is
the licensee, then the presumed fair value of the OVP if SICPA were to
purchase it from a third party in an arms-length transaction);
2. Full audit rights of the licensee by Flex (limited,
however, to sales of OVP by licensee, its sublicensee and assignees);
3. No sublicenses or assignments except to "SICPA Companies" as
defined in Section 1 of the Agreement;
4. Full protection of Flex's confidential and/or proprietary
information;
5. License term not to exceed 15 years;
6. Limitations on the scope of the license exclusively to those
applications described in clauses 1. through 3. in the definition of the
Fields.
7. Royalties denominated and payable in U.S. currency;
8. No warranty of infringement;
9. Licensee to provide detailed quarterly financial reports covering
OVP sales and royalty obligations;
10. Licensee obligation to grant back innovations of licensed
technology to Flex; and
11. No territorial restrictions.
Exhibit G - License and Supply Agreement
KNOWHOW
General areas of Knowhow transferred as of the date of this Agreement:
Confidential information generated and communicated pursuant to the Joint
Venture Agreement dated July 1, 1993, as documented in the
minutes of the Flex Products Inc./SICPA Operations/ Management Committee
Meetings.
Exhibit H - License and Supply Agreement
PATENTS
Incorporated by reference to Registrant's Form 8-K
Current Report dated May 23, 1995
Exhibit I - License and Supply Agreement
MEMORANDUM OF ALLIANCE
MEMORANDUM OF ALLIANCE
BETWEEN SICPA S.A. AND FLEX PRODUCTS, INC.
1.0 PURPOSE
This memorandum confirms the intention of the parties to work together for their
mutual benefit by continuing to develop the business for optically variable ink
used as a primary anti-counterfeiting component in the world's currencies and
other value documents. This memorandum defines the respective roles and
describes the organization and working relationship of the parties. The
objective of the alliance is to create an effective, coordinated approach to
satisfying the market. Flex acknowledges the need to coordinate with SICPA its
marketing and sales activities for products outside the exclusivity field in
order to protect the usefulness and value of OVI(tm) for anti-counterfeiting
applications. SICPA and Flex recognize that their success will depend upon
building a close, cooperative, and cordial relationship.
2.0 ROLES
SICPA and Flex have primary contributions to make in the joint development of
the business for optically variable ink. However, each
is dependent on the other for the success of the business. Both parties must be
willing to freely exchange information and openly discuss needs in order to
fulfill their primary responsibilities.
2.1 FLEX PRODUCTS
The role of Flex is to develop and product pigment, develop new pigment
products (OVP) that will provide competitive advantages, identify and
assess competitive technologies and their competitive threat, and maintain
a high quality of product and on-time delivery so that SICPA can best
serve its customers. Flex will provide information and prepare SICPA to
reassure its customers regarding the reliability of the OVP supply.
2.2 SICPA
The role of SICPA will be to develop, produce and sell optically variable
ink OVI(tm) systems, be aware and responsive to market needs and keep both
parties aware of competitive threats. SICPA will continue to develop
printing processes compatible with the use of OVI(tm), maintain good
customer relations and price the product to provide profit opportunities
for both SICPA and Flex.
3.0 ORGANIZATION
The parties will manage their activities through an organizational structure
intended to provide coordinated planning and implementation of their activities.
Joint and coordinated programs presume sharing of information necessary for the
success of the joint endeavor. The organization will be comprised of two
committees each with specific areas of responsibility. These committees will
operate within an overall strategic plan approved by the respective companies
and their Board of Directors. Each committee will publish an agenda preceding
each meeting and will publish minutes as soon as possible following each
meeting.
3.1 STRATEGIC COMMITTEE
The Strategic Committee shall be made up of the following members:
SICPA
Xxxxxxx X. Xxxx, Managing Director, SICPA HOLDING S.A.
Xxxxxxxx Xxxx, Managing Director, SICPA HOLDING X.X.
Xxxx Bretler, Managing Director, SICPA HOLDING X.X.
Xxxxxxx Van Droogenbroeck, Managing Director SICPA S.A., Security Ink
Division
FLEX PRODUCTS
Xxxxxxxx Xxxxxx, President, FLEX PRODUCTS, INC.
Xxxx XxXxxxxxxx, Director, FLEX PRODUCTS, INC.
Xxx Xxxxx, Chairman of the Board, FLEX PRODUCTS, INC.
The Strategic Committee will develop the long range strategic plan for the
alliance. It will be responsible to ensure that the alliance succeeds by
providing necessary policies to support the alliance at all levels with the
respective companies. It will define the mission and responsibilities of the
Management Committee. The Strategic Committee will meet twice a year unless
otherwise decided by the members. When meetings in person are not possible,
teleconferences will be held.
3.2 MANAGEMENT/OPERATIONS COMMITTEE
The Management/Operations Committee will be composed of the following members
from each company:
SICPA
Jacques Van Droogenbroeck, Managing Director, Security Ink Division
Representative from R&D
Representative from Manufacturing
Account Executive*
FLEX PRODUCTS
Xxxxxxxx Xxxxxx, President
Marketing Director
Production Manager
R&D Director
Account Executive*
* An Account Executive will be designated by each company. The
responsibility of that person will be to coordinate meetings as needed,
assure complete and prompt response to communications, promote
understanding and communicate status of the business to his team.
The Management/Operations Committee will carry out the long range plan
established by the Strategic Committee. The Committee will develop
the operations plans for the alliance. It will set priorities and allocate
scarce resources to assure compliance with the plan and ensure success of the
alliance. It will be responsible for organizing ad hoc teams that will be
responsible for specific projects, such as new product development. It will
ensure that production schedules are met, new product development is undertaken,
new products are introduced on a timely basis, and that cost reduction programs
are implemented and meet their objectives. The Committee is also responsible to
review market needs, identify new product requirements, assess competitive
threats, develop guidelines for ownership of jointly developed technology and
analyze the economics of the business. This Committee is a working committee and
has overall responsibility for the day-to-day execution of the plans. The
Committee will meet twice each quarter, one in person and once telephonically.
The Committee will submit to the Strategic Committee quarterly reports within
twenty-one days after the quarter ends.
4.0 PROTECTION OF PROPRIETARY INFORMATION
The parties acknowledge that the protection of proprietary information is
essential. Appropriate confidentiality agreements will be entered into with
respect to any proprietary information which either party elects to disclose to
the other.
5.0 NATURE OF THE ALLIANCE
This memorandum is intended to describe the working relationship between SICPA
and Flex for matters outside the scope of the five year supply agreement to be
executed by the parties in April 1993. The memorandum is not intended to be a
legally enforceable agreement.
Lausanne, March 9, 1993
FLEX PRODUCTS, INC.
By /s/ XXXXXXXX XXXXXX
SICPA S.A.
By /s/ J. VAN DROOGENBROECK
Exhibit J - License and Supply Agreement
--------------------------------
JOINT VENTURE AGREEMENT
BETWEEN
FLEX PRODUCTS, INC.
and
SICPA INDUSTRIES OF AMERICA, INC.
FOR RESEARCH AND DEVELOPMENT VENTURE
---------------------------------
July 1, 1993
JOINT VENTURE AGREEMENT
THIS JOINT VENTURE AGREEMENT, dated as of July 1, 1993, by and between
Flex Products, Inc., a Delaware corporation ("Flex") and SICPA Industries of
America, Inc., a New Jersey corporation ("SIPCA Industries"), (collectively, the
"Venturers").
W I T N E S S E T H:
WHEREAS, Flex possesses substantial technical and proprietary technology
relating to the design and manufacture of optically
variable pigment ("OVP"); and
WHEREAS, SICPA Industries (which is a subsidiary of SICPA S.A.) and its
affiliates possess substantial technical and proprietary technology relating to
the design and manufacture of optically variable ink ("OVI");
WHEREAS, Flex and SICPA Industries' parent, SICPA S.A., executed that
certain non-binding Memorandum of Alliance dated March 9, 1993 (the "MOA"),
which set forth the basis on which the parties thereto intend to work together
for the further development and marketing of OVP and OVI; and
WHEREAS, Flex and SICPA Industries now wish to form a Joint Venture for
the purpose of coordinating their respective efforts for further research and
development related to the improvement of their respective OVP and OVI
technologies with the intent of increasing the commercialization of such
products;
NOW, THEREFORE, the parties hereby establish a joint venture to accomplish
the foregoing on the following terms and conditions:
ARTICLE I
FORMATION OF JOINT VENTURE
1.1 FORMATION AND NAME. Flex and SICPA Industries hereby form a joint
venture pursuant to the provisions of the California Uniform Partnership Act and
upon the terms and conditions set forth in this Agreement (the "Joint Venture").
The Joint Venture shall conduct its business affairs under the name of "OVI
Technology Company."
1.2 TERM. The Joint Venture's term shall continue until terminated in
accordance with Article VII.
1.3 PURPOSES AND POWERS. The purposes of the Joint Venture shall be to
coordinate the efforts of the Venturers to develop further innovations and
improvements of OVP and OVI for use on value-documents and to perform other
activities and to take other action incident thereto. The Joint Venture shall
not engage in any business or activity outside the scope of its purposes without
the consent of each Venturer.
1.4 PRINCIPAL OFFICE. The principal places of business of the Joint
Venture shall be 0000 Xxxxxxxxxx Xxxxxxx, Xxxxx Xxxx, Xxxxxxxxxx 00000-0000, and
0000 Xxxxxxxx Xxx, Xxxxxxxxxxx, Xxxxxxxx 00000.
1.5 FILINGS. Contemporaneously with the execution and delivery of this
Agreement, the Venturers shall execute and acknowledge such instruments as may
be necessary under the laws of the State of California in connection with the
formation of the Joint Venture and the commencement of its business.
1.6 REPRESENTATIONS AND WARRANTIES OF FLEX. Flex represents and warrants
to SICPA Industries that:
(a) Flex is a corporation duly organized and in good standing under
the laws of the State of Delaware, and has the corporate power and authority to
enter into and perform its obligations under this Agreement.
(b) This Agreement has been duly authorized by all requisite
corporate action on the part of Flex.
1.7 REPRESENTATIONS AND WARRANTIES OF SICPA INDUSTRIES. SICPA Industries
represents and warrants to Flex that:
(a) SICPA Industries is a corporation duly organized and in good
standing under the laws of New Jersey, and has the corporate power and authority
to enter into and perform its obligations under this Agreement.
(b) This Agreement has been authorized by all requisite action on
the part of SICPA Industries.
ARTICLE II
JOINT DEVELOPMENT EFFORTS
2.1 AREAS OF COOPERATION. SICPA Industries and Flex agree to work together
on a mutually exclusive basis for the term of this Agreement for the purpose of
coordinating their respective efforts to improve and enhance the existing
technologies for the utilization of Flex's OVP and SICPA Industries' OVI for
anti-counterfeiting applications on value-documents. SICPA Industries and Flex
also agree to cooperate in good faith for the purpose of (i) coordinating the
development of new products to be used for anti-counterfeiting purposes for
value-documents, (ii) evaluating competitive technologies and products, and
(iii) evaluating market trends. To facilitate this
working arrangement, SICPA Industries and Flex shall form a team to be known as
the Management/Operations Committee (the "Committee"). The initial meeting of
the Committee will occur at a mutually convenient time within no less than 90
days after the execution of this Agreement by the parties. Thereafter, the
Committee shall meet twice each quarter, once in person and once telephonically.
2.2 DESIGNATION OF PROJECTS. Specific tasks to be undertaken by SICPA
Industries and Flex shall be determined by the unanimous vote of the Committee.
Neither SICPA Industries on the one hand nor Flex on the other hand shall have
any obligation to perform any tasks or projects except as authorized and
directed by a unanimous vote of the Committee.
2.3 DESIGNATION OF COMMITTEE MEMBERS. The Committee will be composed of
the following members from each party:
SICPA
Industries: Jacques Van Droogenbroeck,
Managing Director,Security Ink Division
Representative from R&D
Representative from Manufacturing
Account Executive*
FLEX: Xxxxxxxx Xxxxxx, President
Marketing Director
Production Manager
R&D Director
Account Executive*
* An Account Executive will be designated by each company. The responsibility of
that person will be to coordinate meetings as needed, assure complete and prompt
response to communications, promote understanding, and communicate status of the
business to his/her team.
Either Venturer shall have the right to object to any individual
designated by the other Venturer, in which event the Venturers shall meet and
confer for the purpose of agreeing on an individual acceptable to both
Venturers.
2.4 EXPENSES. Unless otherwise agreed in writing, each of the Venturers
shall bear its own expenses relating to its participation on the Committee and
the performance of any tasks or projects carried out by such Venturer pursuant
to the direction of the Committee.
2.5 EXCHANGE OF INFORMATION. Each Venturer shall disclose to the other the
results of tasks or projects undertaken pursuant to the unanimous direction of
the Committee and the Venturers will meet and confer, or otherwise communicate,
for the purpose of exchanging information concerning the status of their
respective undertakings. Each Venturer will maintain all technical information
received from the other, which such Venturer has designated in writing as
confidential information, in strict confidence and subject to the obligations of
confidentiality and nondisclosure as set out in Article III below, and subject
to the further restriction that the recipient of such information shall not use
the information or disclose it to any person or organization other than the
employees of the recipient whose job performance reasonably require a knowledge
of such information.
2.6. OWNERSHIP OF DISCOVERIES. Each Venturer shall retain the ownership of
any inventions, trade secrets and/or proprietary know-how developed by it during
the term hereof, and any patents based on such inventions, trade secrets or
know-how, whether or not pursuant to a task or project undertaken at the
direction of the Committee, and the other Venturer shall not have any license or
right to use any such discoveries except as may be expressly granted pursuant to
a written agreement duly signed by both Venturers. Only such technologies as the
Venturers agree in writing to develop jointly shall be excluded from the above
provision, and all other technology developed during the joint undertaking
contemplated by this Agreement shall be conclusively presumed to be the property
of the Venturer who developed the technology. To the extent that specific
technology is, by such written agreement, jointly developed, any resulting
inventions, trade secrets and/or proprietary know-how shall be owned by the
Joint Venture, and each of the Venturers shall be entitled to use any such
inventions, trade secrets and/or proprietary know-how on a royalty-free basis,
providing, however, that neither of the Venturers nor the Joint Venture itself
shall be entitled to grant licenses to third Venturers to use such inventions,
trade secrets and/or proprietary know-how without the prior written consent of
both Venturers. Any patentable technology developed jointly pursuant to a prior
written agreement between the Venturers, as aforesaid, shall be owned by the
Joint Venture, and any decisions to file patent applications or to grant
licenses thereunder shall require the unanimous consent of the members of the
Committee.
2.7 NO DISCLOSURE OF BACKGROUND TECHNOLOGY REQUIRED. Nothing in this
Agreement shall be construed to create any obligation on the part of either
Venturer to disclose to the other Venturer any background technology or other
technology owned by either Venturer prior to the formation of this Joint
Venture, nor shall this Agreement be construed to require either Venturer to
disclose to the other Venturer any technology developed by such Venturer,
whether or not pursuant to a task or project undertaken at the direction of the
Committee. It is the contemplation and intention of the Venturers that each of
them will remain free to continue to conduct research and development work on
OVP and OVI independent of their activities and involvement under the Joint
Venture contemplated pursuant to this Agreement.
2.8 NO PRODUCTION CONTEMPLATED. The Venturers contemplate that the Joint
Venture will engage exclusively in research and development activities, and will
not undertake any production of OVP or OVI.
ARTICLE III
CONFIDENTIALITY AND NONDISCLOSURE
All technical data and all information which concerns the business
operation of either Flex on the one hand or SICPA Industries on the other hand
disclosed in the course of the activities of the
Joint Venture, which data or information, at the time of its communication to
the other Venturer, was not rightfully in the other Venturer's possession or in
the public domain ("Confidential Matter"), shall be treated as confidential and
shall not be disclosed by the recipient to any third party. The recipient shall
use the same care to keep Confidential Matter confidential as it uses to
preserve the confidentiality of its own confidential information having a high
degree of competitive significance and shall take appropriate measures to insure
that its employees are bound to the same degree that it is bound under this
agreement. This obligation of confidentiality does not apply to any Confidential
Matter which (i) was in the recipient's possession prior to the effective date
of its disclosure, (ii) was in the public domain prior to the effective date of
its disclosure or thereafter entered the public domain through no fault of the
recipient or the recipient's employees, or (iii) is lawfully obtained by the
recipient on a non-confidential basis from a third party having an unrestricted
legal right to disclose the information to others. Notwithstanding the
foregoing, a recipient may disclose Confidential Matter if and to the extent
that a judicial or governmental authority having jurisdiction over the recipient
orders or requires disclosure, provided that the recipient, before making any
such disclosure, advises the disclosing party of the disclosure required and
cooperates with the disclosing party in all legitimate efforts to avoid or limit
disclosure at the disclosing party's expense. SICPA Industries agrees that its
obligations under this Article III shall extend to the SICPA Companies as well
as to SICPA Industries, and any breach or violation of this Section by any SICPA
Company shall be deemed to be a breach by SICPA Industries. (For purposes of
this Agreement, the term "SICPA Companies" shall mean any person or entity
controlled by, controlling, or under common control with SICPA Industries. The
term "control" of any person or entity means possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such person or entity, whether through the ownership of voting securities or by
contract or otherwise.)
ARTICLE IV
CONTRIBUTIONS TO CAPITAL
Neither of the Venturers shall be obligated to make any contributions of
capital to the Joint Venture, it being contemplated that each Venturer shall
bear its own expenses relating to its participation on the Committee, and the
performance of any tasks or projects carried out by such Venturer pursuant to
the direction of the Committee.
ARTICLE V
MANAGEMENT AND OPERATION
The Committee shall manage all affairs and business of the Joint Venture
to the best advantage of the Joint Venture. The Committee shall have all of the
powers, rights and authority necessary to
conduct such business and affairs, subject, however, to the requirement that any
decision of the Committee shall require the unanimous consent of all members of
the Committee.
ARTICLE VI
TRANSFERS OF INTERESTS IN THE JOINT VENTURE
Neither of the Venturers shall transfer its interest (or any portion
thereof) in the Joint Venture without the consent of the other Venturer, and any
transfer in violation of this Article will automatically cause the dissolution
of the Joint Venture.
ARTICLE VII
TERMINATION OF THE JOINT VENTURE
The Joint Venture shall dissolve and its affairs shall be wound up upon
the first to occur of the following:
(a) The sale or other disposition of all or substantially all of the
assets of the Joint Venture; or
(b) The delivery to the other Venturer of a written demand from
either Venturer that the Joint Venture be dissolved, in either of which events
the Joint Venture's affairs shall be wound-up and the Joint Venture terminated
as soon as practicable thereafter in accordance with applicable California law.
ARTICLE VIII
MISCELLANEOUS
8.1 RESTRICTION ON HIRING EMPLOYEES. For a period of two years following
the termination of employment of an employee of either
Venturer, the other Venturer shall be prohibited from employing such employee
without the prior written consent of the other Venturer; provided, however, that
this restriction shall terminate two years after the termination of the Joint
Venture.
8.2 INDEMNIFICATION. Each Venturer hereby indemnifies and agrees to hold
harmless the other Venturer from and against all costs, expenses, liabilities,
damages, claims, demands, actions, suits and proceedings which shall arise by
virtue of any representation or warranty of the indemnifying Venturer in this
Agreement which was incorrect in any material respect as of the date made, or
which shall arise by virtue of any act of a Venturer which was not authorized by
the Committee.
8.3 GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the laws of the State of California.
8.4 ARBITRATION. If the Venturers hereto are unable to resolve by mutual
agreement any dispute or controversy between them concerning this Agreement, the
Venturers agree that the dispute or controversy shall be finally settled by
mandatory, binding arbitration, in accordance with the rules and procedures of
the American Arbitration Association applicable to commercial transactions.
Costs of arbitration shall be borne by the Venturers in accordance with the
decision of the arbitrators. Judgment upon the award rendered shall be entered
into any court having competent jurisdiction thereof, or
application may be made to such court for a judicial acceptance of the award and
an order of enforcement as the case may be. The arbitration proceedings shall be
conducted at a reasonable location selected by the Venturer that is the
defendant in such action.
8.5 ATTORNEYS FEES. In case suit is brought or arbitration proceedings
commenced by a Venturer because of the breach of any term, covenant or condition
contained in this Agreement, the prevailing Venturer shall be entitled to
recover against the other Venturer the full amount of its costs, including
expert witness fees and reasonable attorneys fees. If neither Venturer prevails
entirely, such fees and expenses shall be prorated based upon the relative
success of each Venturer to the relief being sought.
8.6 NOTICES. All notices, approvals and other communications under this
Agreement shall be in writing and shall be given to such Venturer, addressed to
it, at its address or telecopy number set forth below or such other address or
telecopy number as such Venturer may in the future specify for such purpose by
notice to the other Venturer.
If To Flex: Flex Products, Inc.
0000 Xxxxxxxxxx Xxxxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxxxxx Xxxxxx, Chief
Executive Officer
Fax: 707/000-0000
With A Copy To: Xxxxxxxx & Xxxxxxxx
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxx X. Xxxxxxxx, Esq.
Fax: 415/000-0000
If To SICPA
Industries: SICPA Industries of America, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxx
Fax: 212/000-0000
With A Copy To: Xxxxx X. Xxxxxxx, Esq.
SICPA Industries of America, Inc.
0000 Xxxxxx Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 000, Xxxxxxxxxx
Xxxxxxxxxx, X.X. 00000
Fax: 202/000-0000
Either Venturer may from time to time specify as its address or telecopy
number for purposes of this Agreement any other address or telecopy number upon
the giving of ten (10) days notice thereof to the other Venturer.
8.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original.
8.8 INTERPRETATION. The headings to the various subdivisions of this
Agreement are for convenience of reference only and shall not define or limit
any of the terms or provisions hereof. The language in all parts of this
Agreement will in all cases be construed as a whole and in accordance with its
fair meaning and not restricted for or against either party.
8.9 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be binding upon the Venturers and their respective
permitted successors and assigns.
8.10 BOARD APPROVAL REQUIRED. Anything herein to the contrary
notwithstanding, this Agreement shall not become effective unless and until it
is approved by the Boards of Directors of both Flex and SICPA Industries, and
each party has notified the other in writing of such approval.
IN WITNESS WHEREOF, the Venturers have executed this Agreement to be
effective as of the date first above written.
FLEX PRODUCTS, INC.
By ___________________________
SICPA INDUSTRIES OF AMERICA, INC.
By ___________________________
EXHIBIT G - FACILITIES LEASE AGREEMENT
Incorporated by reference to Exhibit (10)(p)
of Registrant's Form 10-K for the fiscal year
ended October 31, 1988.
EXHIBIT H - ASSIGNMENT OF INTELLECTUAL PROPERTY RIGHTS
Incorporated by reference to Exhibit (10)(p)
of Registrant's Form 10-K for the fiscal year
ended October 31, 1988.
EXHIBIT I - EXCLUSIVE LICENSE AGREEMENT
Incorporated by reference to Exhibit (10)(p)
of Registrant's Form 10-K for the fiscal year
ended October 31, 1988.
EXHIBIT J - RESEARCH, DEVELOPMENT AND ENGINEERING AGREEMENT
Incorporated by reference to Exhibit (10)(p)
of Registrant's Form 10-K for the fiscal year
ended October 31, 1988.
EXHIBIT K - SUPPORT AND ADMINISTRATIVE SERVICES AGREEMENT
Incorporated by reference to Exhibit (10)(p)
of Registrant's Form 10-K for the fiscal year
ended October 31, 1988.
EXHIBIT L - ASSIGNMENT AND ASSUMPTION AGREEMENT
Incorporated by reference to Exhibit (10)(p)
of Registrant's Form 10-K for the fiscal year
ended October 31, 1988.
ADDENDUM NO. 1 TO JOINT ACQUISITION AGREEMENT
DATED MAY 1, 1995
BY AND BETWEEN OCLI AND SICPA
ADDENDUM NO. 1
TO
OCLI/SICPA AGREEMENT
THIS ADDENDUM NO. 1 ("Addendum"), is made and entered into as of May 1,
1995, by and between OPTICAL COATING LABORATORY, INC., a Delaware corporation
("OCLI"), and SICPA HOLDING S.A., a Swiss corporation ("SICPA").
R E C I T A L S
A. The parties entered into an Agreement, dated December 13, 1994 (the
"Agreement"), wherein they set forth and memorialized certain terms to govern a
joint undertaking by them to purchase the shares of capital stock of FLEX
PRODUCTS, INC., a Delaware corporation ("FLEX") owned by ICI AMERICAS INC.
("ICIA") and a promissory note issued by FLEX to and owned by ICI AMERICAN
HOLDINGS INC. ("ICIAH").
B. Concurrently with the execution of this Addendum, the parties are
executing a Stock and Note Purchase Agreement (the "Purchase Agreement")
together with FLEX ICIA AND ICIAH.
C. The parties wish to memorialize in this Addendum certain additional
covenants and undertakings of one or the other, or both, of the parties, as a
supplement and amendment to the Agreement, with the intent that the terms of
this Addendum shall be integrated with and complement the Agreement, as and to
the extent set forth herein.
A D D E N D U M
NOW, THEREFORE, in consideration of the premises and the respective
covenants and undertakings of the parties contained herein, the parties hereby
agree as follows:
1. Definitions; References to Certain Agreement Terms.
a. Definitions. All capitalized terms used herein shall have the
same meanings as attributed to them in the Purchase Agreement and the Agreement,
unless expressly defined herein. In case of any conflict, the definitions in the
Purchase Agreement shall control. In addition, a "Paragraph 4(o) Indemnifiable
Event" shall mean an event set forth in paragraph 4(o) of the Disclosure
Schedule to the extent such event occurred prior to Closing and arose from
actions or omissions in violation of Applicable Law taken by FLEX. The foregoing
sentence notwithstanding, a Paragraph 4(o) Indemnifiable Event shall not include
(A) any event resulting directly or indirectly from action taken by ICIA or
ICIAH prior to Closing or by FLEX or SICPA after Closing or (B) any event the
existence or occurrence of which would constitute a breach of a representation
or warranty under the Purchase Agreement.
b. Extension of Deadline for Closing. The parties agree that
references to March 31, 1995 in Sections 0.x.xx and 11 of the Agreement shall be
amended to refer instead to May 31, 1995.
2. Governance of FLEX after Closing. Following the Closing, OCLI and SICPA
agree that the following additional terms shall apply to the governance of FLEX:
a. Reconstitution of FLEX Board. The Board of Directors of FLEX
shall be reconstituted, effective upon the Closing, such that those then in
office shall be replaced by the persons listed below:
3. Governance of Flex after Closing. Following the Closing, OCLI and SICPA
agree that the following shall apply to the governance of FLEX:
a. Reconstitution of FLEX Board. The Board of Directors of FLEX
shall be reconstituted, effective upon the Closing, such that those then in
office shall be replaced by the persons listed on Exhibit C, three of whom have
been designated by OCLI and two of whom have been designated by SICPA and the
Certificate of Incorporation or Certificate of Designations of FLEX shall be
amended if necessary to
provide that the stockholders of FLEX shall be entitled to cumulative voting in
connection with the election or removal of the Directors.
As representatives of OCLI:
XXXXXXX X. XXXXXX
XXXX XxXXXXXXXX
XXXXX X. XXXXXX
As representatives of SICPA:
XXXXXXX X. XXXX
XXXXXXX XXXXXX
b. Joint Technical Committee. The Joint Technical Committee to be
formed shall consist of the following representatives from FLEX, OCLI and SICPA.
As representatives of OCLI:
XXXXX X. XXXXXX
XXXXXX X. XXXXXX
XXXXXXX X. XXXX
As representatives of SICPA:
ANTON BLEIKOLM
XXXXXX X. XXXXXXXXX
As representatives of FLEX:
XXXXXXX XXXXXXXX
XXXXXXX XXXXXXX
XXXXX XXXXXXXX
c. Approval of Minutes. All proposed minutes of deliberations of,
and resolutions adopted and actions taken by, the Board of Directors and/or by
the stockholders of FLEX (collectively, the "Minutes") shall be deemed approved
so as to serve as an official record of such deliberations and memorialization
and expression of such resolutions and actions only after draft copies of the
Minutes have been delivered to all of the Directors and the Directors have been
given the opportunity to provide comments on them.
d. Legal Representation. Except when the Board of Directors of FLEX,
by a majority of at least four Board members, otherwise directs, FLEX shall be
represented for the purpose of legal advice and representation in connection
with any of the following matters solely by co-counsel consisting of one or more
attorneys of a firm selected by OCLI and one or more attorneys of a firm
selected by SICPA, with each of OCLI and SICPA to bear the entire costs of the
firm selected by it:
i. Any merger, consolidation or other corporate reorganization
of FLEX.
ii. The sale of all or substantially all of the assets or
business of FLEX or any of its operating divisions.
iii. The employment agreement and any incentive stock option
or bonus arrangements (other than under group plans adopted by the Board of
Directors) for any executive officer of FLEX, and the engagement agreement and
any such stock option or bonus arrangement for any consultant of FLEX whose
annual compensation from it is reasonably expected to exceed $100,000.
iv. The licensing or sale of any of FLEX's technology, other
than to OCLI or SICPA, or the licensing or purchase of any technology of any
third-parties, other than from OCLI or SICPA, where the projected consideration
payable by the licensee or acquirer during the first 36 months is expected to
exceed $500,000.
v. Any joint ventures or shared R&D Projects where the
projected budget for the first 36 months of the joint venture or project is
expected to exceed $500,000.
vi. The negotiation and execution of any sale of securities of
FLEX to any third party purchaser or purchaser, where the aggregate
consideration payable for such securities in any offering shall exceed $500,000
or where the securities to be sold (or any securities into which such securities
may be converted) represent in excess of 20% of the issued and outstanding
shares of voting stock of FLEX, calculated on a fully-diluted, fully-converted
basis.
3. Covenant Not To Compete.
a. Covenant. OCLI and SICPA each agrees that following the
disposition of its shares of the capital stock of FLEX, it shall not compete
with FLEX in the manufacture or sale of products made by
depositing one or more layers of materials onto flexible substrates by
Roll-to-Roll Coating or to manufacture or sell any product being manufactured by
FLEX by Roll-to-Roll Coating at the time of the party's sale of its capital
stock of FLEX.
b. Geographical Application of Covenant. The covenant not to compete
set forth above shall be applicable worldwide, reflective of the worldwide
market for the products manufactured and sold by FLEX.
c. Duration. The covenant not to compete set forth above shall apply
only if, at the time when the party disposes of its shares of the capital stock
of FLEX, the other party remains as a holder of no less than 50% of the issued
and outstanding shares of FLEX voting capital stock. If the foregoing condition
is satisfied, the covenant not to compete shall thereafter remain in effect for
a period of three years.
d. Definition. As used herein, "Roll-to-Roll Coating" shall mean the
serial steps of (i) the unwinding of a flexible substrate from a first roll,
(ii) the deposition of one or more layers of materials onto the flexible
substrate and (iii) the winding of the substrate onto a second roll, provided
that "Roll-to-Roll Coating" shall not include the deposition of more than one
layer of material to an area of the substrate during any period that the
substrate is motionless.
e. Breadth of Restraint. The foregoing covenant is intended to
require that the applicable party refrain from, and each party subject to the
covenant not to compete hereby agrees to refrain from, any activity described in
Paragraph 3.a above individually, or in conjunction with others, directly or
indirectly, whether as principal, partner, joint venturer, stockholder of an
affiliate or otherwise.
f. Severability. The parties intend that the covenants and
undertakings contained in this Paragraph 3 shall be construed as distinct
covenants and agreements covering competition in each of the separate
jurisdictions in which the party subject to the covenant not to compete operates
or may operate in the future. To the extent that this covenant as set forth in
this Paragraph 3 shall be deemed illegal or unenforceable in any one or more
such jurisdictions, it shall nevertheless not be affected with respect to each
other such jurisdiction.
g. Enforceability. Each party acknowledges and agrees
that any remedy at law which may be available to the other party for any breach
of this covenant by the party subject to the covenant not to compete will be
inadequate to protect the other party's interest hereunder and that the other
party (and FLEX, as a third-party beneficiary) shall be entitled to injunctive
relief in the event of such breach, in addition to any other appropriate relief
and remedy.
h. Reasonableness of Restrictions. Each party acknowledges and
agrees that the restrictions set forth in this Paragraph 3, including without
limitation the restrictions relating to duration, geographic area and breadth of
application, are reasonable in scope.
4. Amended Certificate of Incorporation. OCLI and SICPA agree that
promptly following the Closing, they shall vote their shares, and direct their
respective representatives on the FLEX Board of Directors to vote, so as to
amend the Certificate of Incorporation of FLEX in its entirety and replace it
with the Amended and Restated Certificate of Incorporation attached as Exhibit A
to this Addendum.
5. Representations, Warranties and Undertakings by OCLI.
a. Representations and Warranties. To induce SICPA to enter into the
Stock and Note Purchase Agreement with ICIA and ICIAH (the "SPA"), and to
purchase a portion of the ICIA Shares and a portion of the FLEX Note as called
for under the SPA, OCLI represents and warrants to SICPA that as of the date of
this Addendum, FLEX is in default in the payment when and as due of certain
research and development payments from it to OCLI, which breach OCLI shall waive
at the Closing in favor of an obligation on the part of FLEX to make payment of
its research and development payments to OCLI on an as-expended basis. As of the
date of this Addendum, and as of the Closing under the SPA, FLEX and OCLI are
each in full compliance with each of the agreements referenced in Paragraph
7.a.v of the Agreement, and all other agreements and contracts between them, and
all such agreements and contracts are valid and binding, and OCLI knows of no
act or failure to act on the part of FLEX or any third parties which
constitutes, or would with the passage of time or the giving of notice or both
constitute, an act of breach or default by FLEX thereunder.
b. Patent Assignments. OCLI agrees, prior to or promptly following
the Closing under the Purchase Agreement and at OCLI's expense, to execute and
cause to be filed with the appropriate government patent offices (including the
U.S. Patent Office and corresponding foreign offices) all assignments and other
forms which are necessary to record the assignment from it to FLEX of all
patents
which it has heretofore conveyed to FLEX and corrective filings where needed to
correct clerical errors and mistaken references in previously recorded
assignments.
6. Environmental Indemnification.
a. Definitions.
i. "Indemnified Parties" shall mean any or all of the
following: (1) SICPA; (2) FLEX; and/or (3) the subsidiaries, affiliates,
officers, Directors, stockholders, agents, attorneys, employees, heirs,
successors and assigns of SICPA and/or FLEX.
ii. "Environmental Laws" shall mean all local, state and
federal environmental laws or regulations relating to operations or businesses
or properties or assets of OCLI (including the assets and operations of FLEX
during the time while FLEX was a division of OCLI), including all environmental
requirements imposed by any law, rule, regulation or order of any federal, state
or local judicial, regulatory or administrative agency, board or authority
(including laws relating thereto which may be asserted in common law or under
statute and regardless of form including strict liability and negligence),
existing at the date of this Addendum or hereafter enacted or created, which
relate to (1) noise; (2) pollution or protection of the air, surface water,
ground water or land; (3) solid, gaseous or liquid waste generation, handling,
treatment, storage, disposal or transportation; or (4) manufacturing,
processing, distribution, use, storage, handling or exposure to hazardous or
toxic substances or materials. The Environmental Laws shall include, but shall
not be limited to, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended; the Hazardous Materials Transportation Act,
as amended; the Resource Conservation and Recovery Act, as amended; the
California Health and Safety Code, as amended; the California Water Code, as
amended; California Code of Regulations Titles 22, 23, and 26; the Toxic
Substances Control Act, 15 U.S.C. Sec. 2601 et seq.; and all other federal,
state and local laws regulating hazardous or toxic wastes and materials
(collectively, "Hazardous Materials"), underground tanks and safety in
connection therewith, water quality, air quality or other environmental matters.
b. OCLI's Liability and Indemnity.
i. OCLI shall retain liability for, and shall indemnify the
Indemnified Parties from and against, all fines, penalties, costs, liabilities,
expenses, damages and losses of any nature whatsoever, including, but not
limited to, remedial, removal,
response, abatement, clean-up, investigative and monitoring costs and any other
related costs and expenses, including reasonable attorneys' and experts' fees
(collectively, the "Environmental Liabilities") arising from or relating to (1)
OCLI's violation of any environmental Law; or (2) the release by OCLI or OCLI's
predecessors-in-interest of any Hazardous Materials into the environment,
including, without limitation, a release of Hazardous Materials, at, under or
adjacent to any real property owned or occupied by OCLI or FLEX.
ii. Without limiting the foregoing, OCLI shall retain
liabilities for, and shall indemnify the Indemnified Parties from and against,
all Environmental Liabilities arising from or relating to the contamination
caused by OCLI or OCLI's predecessors-in-interest of surface water, ground water
or land which is currently the subject of investigation and inquiry by OCLI
pursuant to any clean-up and abatement or similar order issued by the California
Regional Water Quality Control Board or any government agency with relevant
jurisdiction.
iii. Notwithstanding the foregoing, and except as and to the
extent set forth in the following Paragraph 6.b.iv, OCLI shall not be so liable
to the extent that such violation, act, omission, occurrence or failure is
attributable to FLEX's violation of any Environmental Law or FLEX's release of
Hazardous Materials into the environment.
iv. Notwithstanding anything to the contrary in Paragraph
6.b.iii, OCLI shall indemnify SICPA for response costs, less response costs for
which SICPA is entitled to indemnification pursuant to the Indemnification
Agreement between SICPA and ICIA dated May 1, 1995, arising out of a Paragraph
4(o) Indemnifiable Event, if and to the extent that FLEX is unable to pay or
otherwise respond to the Paragraph 4(o) Indemnifiable Event; provided, however,
that OCLI's obligations under this subparagraph 6.b.iv shall be limited to 40%
of the total of the response costs in respect of the Paragraph 4(o)
Indemnifiable Event. "Response" and "respond" shall have the meanings given to
those terms as set forth in 42 U.S.C. Section 9601(25).
c. Notice and Opportunity to Defend.
i. Upon receiving notice or obtaining information of an
occurrence or event that may give rise to an Environmental Liability, OCLI or
the Indemnified Parties, as the case may be, to the extent permitted by law and
confidentiality agreements, shall promptly provide written notice thereof to all
of the other parties.
ii. If such event involves a legal action or administrative
proceeding, OCLI shall thereafter assume in writing liability under this
indemnity and shall control the defense of such action or proceeding, at its own
expense and with its own environmental and other experts and its own counsel,
who shall be reasonably satisfactory to the Indemnified Parties. Prior to OCLI's
assuming and controlling such action or proceeding, the Indemnified Parties
shall not take any action in respect of such action or proceeding unless the
Indemnified Parties determine in good faith that such action is required by
emergency conditions.
iii. Where OCLI assumes and controls such action or
proceeding, (1) the Indemnified Parties at their own cost and expense may
participate in the conduct of such action or proceeding, and (2) OCLI shall
promptly inform the Indemnified Parties of all material developments and events
relating to such action or proceeding.
iv. OCLI shall conduct all activities pursuant to this
Paragraph 6.c in a fashion so as to minimize the interruption of, or
interference with, the conduct of the business of FLEX.
v. Prior to commencing or implementing any action to remedy or
mitigate a condition giving rise to any action that may result in an
Environmental Liability for which OCLI may be liable pursuant to this Paragraph
6., OCLI shall provide written notice to the Indemnified Parties of the nature
and extent of the action proposed. Within 20 business days after receipt of such
notice, the Indemnified Parties shall notify OCLI of any objection they may have
to the reasonableness of the proposed action to remedy or mitigate the
condition, and the reasons therefor. In the event OCLI is notified of such an
objection, the parties hereto shall negotiate in good faith to resolve the
objection and to develop a mutually agreeable plan for action.
vi. Notwithstanding any of the foregoing, in the event that
the Indemnified Parties or either of them at any time determines, in their
reasonable business judgment, that such action or proceeding reasonably may be
anticipated to adversely impact the business or operations of FLEX or an
Indemnified Party and retain environmental and other experts and counsel who
shall be reasonably satisfactory to the other Indemnified Parties and to OCLI,
at OCLI's sole expense.
d. Cooperation. With respect to any potential OCLI liability to
third parties or government agencies arising from an action or proceeding or
Environmental Law pursuant to this Paragraph 6, the Indemnified Parties will
cooperate with OCLI in any reasonable
manner to satisfy such liability provided that OCLI honors its indemnification
obligations hereunder. Such cooperation shall be at OCLI's sole expense.
e. Reasonable Access. The parties shall allow necessary, reasonable
and uncompensated access to each other's files, data, information, property and
personnel in order that each party may fully protect and satisfy its legal
interest in connection with any pending or future action or proceeding or
Environmental Law. OCLI shall deliver to the Indemnified Parties copies of all
information, including without limitation, analytical results, consultants' data
and evaluations and correspondence relating to any Environmental Liabilities for
which OCLI may be liable pursuant to this Paragraph 6.
f. Confidentiality of Information Concerning Environmental
Liabilities. Notwithstanding anything herein to the contrary, each party to this
Addendum will hold and will cause its employees, consultants and advisors to
hold in strict confidence, unless compelled to disclose such documents or
information by judicial or administrative process or, in the opinion of its
counsel, by other requirements of law, all documents and information concerning
the other parties to this Addendum furnished to it pursuant to the provisions of
this Paragraph 4, and in any such instance where disclosure appears to be
compelled by law, will notify all other parties so that such other parties may
avail themselves of such measures as may be available for protecting the
confidentiality of such information.
7. Counterparts. This Addendum may be executed in any number of
counterparts, each of which may be executed by one or both of the parties, each
of which shall be enforceable against the party or parties actually executing
such counterparts, and all of which together shall constitute one instrument.
8. Integration. This Addendum is intended to and shall be integrated with
and into the Agreement, and shall be entitled to the benefit of all provisions
thereof. In the event of any conflict between the provisions of this Addendum
and the Agreement, the provisions of this Addendum shall prevail. Subject to the
terms hereof, the Agreement is hereby ratified and continued in full force and
effect by the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Addendum as of the date
first set forth above.
SICPA HOLDING S.A. OPTICAL COATING LABORATORY, INC.
By /s/Xxxxxxx Xxxxxx By /s/Xxxxxxx X. Xxxxxx, Xx.
XXXXXXX XXXXXX, XXXXXXX X. XXXXXX, XX.
Authorized Signatory President
By /s/Xxxxxxx X. Xxxxxxx
XXXXXXX X. XXXXXXX,
Authorized Signatory
