Exhibit 10.26
MARKETING AND LICENSE AGREEMENT
This MARKETING AND LICENSE AGREEMENT is made and entered into as of the 1st
day of August, 1995, by and between XXXXXXXX, INC., a corporation established
and existing under the laws of the State of Minnesota having its principal place
of business at 0000 Xxxxxxxx Xxxx, Xxxxxxxxxx, XX 00000-0000, X.X.X.
("SHELDAHL"), and JIUJIANG FLEX CO., LTD., a corporation established and
existing under the laws of China having its principal place of business at 0
Xxxxxxx Xxxx (X), Xxxxxxxx Xxxxxxx Xxxxx 000000 ("SNW").
BACKGROUND:
X. XXXXXXXX is actively engaged in the business of developing,
manufacturing and marketing flexible copperclad laminates and associated
coverfilm tapes (coverlay) throughout the world.
B. SNW has been established in Jiujiang Jiangxi China to manufacture
flexible copperclad laminates and associated coverfilm tapes.
C. Both parties desire to establish a long-term business relationship
through technical assistance, sales of copperclad laminates and associated
coverfilm tapes and investment by XXXXXXXX and others in the SNW and are
entering into or have entered into the following agreements (the "Additional
Agreements") in addition to this Agreement: (i) Agreement Relating to Joint
Venture; (ii) Manufacturing Agreement; and (iii) Agreement Relating to Payments.
NOW, THEREFORE, in consideration of the mutual covenants and premises
contained herein, the parties agree as follows:
1. Definitions.
1.1 "Excluded Products" shall mean XXXXXXXX'x product offerings not listed
on Schedule A attached hereto.
1.2 "Industrial Property Rights" shall mean any and all patents and other
industrial property rights of XXXXXXXX with respect to the Licensed Products (as
defined below) and related technology thereof excluding, however, any such
rights related to Excluded Products.
1.3 "SNW Plant" shall mean the SNW's manufacturing plant in Jiujiang
Jiangxi China.
1.4 "Licensed Products" shall mean the flexible polyimide and polyester-
based laminates and associated polyester and polyimide coverfilm tapes listed on
Schedule A and any
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Improvements thereof by XXXXXXXX or SNW as defined in Section 9.2 excluding,
however, the Excluded Products. Other polyimide and polyester-based laminates
and associated coverfilm tapes of XXXXXXXX may be added as Licensed Products if
the SNW and XXXXXXXX agree and a reasonable technology transfer fee is
determined.
1.5 "Net Sales" shall mean the full amount collected on the sale of
Licensed Products after deduction of (a) any collected tax or other governmental
charge on the sale, transportation, use or delivery of the Licensed Product, (b)
any amounts repaid or credited by reason of returns or rejections, and (c) any
amount paid to the Chinese government on account of royalty payments to be made
to XXXXXXXX for such sales.
1.6 "Royalty Product" shall mean any Licensed Product sold by the SNW,
excluding Licensed Products sold to XXXXXXXX.
1.7 "Royalty Year" shall mean a period of four consecutive calendar
quarters beginning with the calendar quarter which includes the date on which
the SNW first manufactures and sells Royalty Products and each period of four
consecutive calendar quarters thereafter.
1.8 "Technical Information" shall mean all areas of technology related to
the Licensed Products, whether patentable or not, relating to the manufacture of
the Licensed Products, including without limitation manufacturing processes,
equipment specifications, product design standards, computer aided design
systems, training and education programs, and any other controls, processes,
systems, equipment and related technology which would be of assistance in
development of the Licensed Products by the SNW, excluding however any such
confidential Technical Information related to Excluded Products.
1.9 "Industrial Property Rights" and "Technical Information" as used in
this Agreement shall not include any such right or information acquired by
XXXXXXXX under agreements entered into by XXXXXXXX with unrelated third parties
or developed jointly with any such unrelated third party, unless specifically
authorized in writing by any such third party.
2. Grant of License.
2.1 XXXXXXXX hereby grants to the SNW an exclusive license under the
Technical Information and the Industrial Property Rights of XXXXXXXX to
manufacture Licensed Products in China at the SNW Plant using a roll-to-roll
process. XXXXXXXX also grants to the SNW the right to sell the Licensed
Products produced by the SNW solely under the terms of Section 4 below.
XXXXXXXX has the right to grant the licenses granted in this
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Section 2. The SNW shall manufacture the Licensed Products and formulate and
mix adhesives only at the SNW Plant unless XXXXXXXX agrees otherwise. XXXXXXXX
retains all other rights under the Technical Information and Industrial Property
Rights, including the right to license such rights to third parties, other than
third parties which would manufacture the Licensed Products in mainland China,
Taiwan, Hong Kong or Macau.
2.2 In the event XXXXXXXX grants, after the date of this Agreement, to any
third party other than SNW a license under the Technical Information and the
Industrial Property Rights of XXXXXXXX to manufacture Licensed Products in any
country in Asia, XXXXXXXX agrees to purchase, in replacement of its 120,000
square meter commitment under the Manufacturing Agreement, a total of 150,000
square meters of Licensed Products which are flexible copperclad laminates each
year during the period beginning with such license grant and ending the tenth
(10th) Royalty Year. In the event XXXXXXXX desires to grant such a license, it
agrees to inform the Board of Directors of SNW six months before the license
grant and discuss and consider with the SNW Board of Directors SNW's
participation. If SNW desires to participate, XXXXXXXX shall give special
consideration to such request.
2.3 The SNW may not sublicense the rights granted hereunder except with
the prior written consent of XXXXXXXX.
3. Royalty Payment and Reporting.
3.1 In consideration of the licenses granted under Section 2, SNW shall
pay to XXXXXXXX a running royalty for each Royalty Year at the rates set forth
below of Net Sales of Royalty Products:
Royalty Rate
Aggregate Net Sales --------------
of all Royalty Products Royalty Years Royalty Years
Each Royalty Year 1-3 4-10
------------------------------- --- ----
First $2,000,000 5% 3.5%
Next $2,000,001 to $4,000,000 4% 2.5%
Next $4,000,001 to $8,000,000 3% 1.5%
In excess of $8,000,000 2% 1.0%
For example, if the SNW sells $4,000,000 of Royalty Products during the second
Royalty Year, the royalty shall equal $180,000. Sales by the SNW for currency
other than United States dollars shall be converted to dollars using an
internationally accepted exchange rate on the payment due date.
3.2 XXXXXXXX shall receive a minimum royalty of $100,000 each Royalty Year
payable within 30 days of the end of each Royalty Year. The minimum royalty
payment shall be reduced
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by amounts paid to XXXXXXXX by the SNW under Section 3.1 for the Royalty Year.
3.3 Royalties shall be paid quarterly within 30 days after the end of each
calendar quarter during the period for which any royalty shall be due, and shall
be accompanied by a written report detailing the quantity and Net Sales Price of
Royalty Products sold by SNW during the calendar quarter in which royalties are
due under Section 3 and the aggregate dollar volume of Royalty Products sold
during the Royalty Year.
3.4 No royalties shall be paid for Royalty Products sold after the tenth
(10th) Royalty Year under either Section 3.1 or 3.2 above.
3.5 SNW shall keep full and accurate books of account containing all
information necessary to compute the royalties due XXXXXXXX under this
Agreement. Such books of account shall be kept at the SNW Plant, and shall be
available upon reasonable notice for inspection and audit by financial
representatives of XXXXXXXX from time to time during regular business hours.
4. Marketing of Licensed Products.
4.1 The Licensed Products produced by the SNW may be sold only pursuant to
the terms of this Section 4.
4.2 The SNW shall be primarily responsible for managing and shall have
ultimate control over sales of Licensed Products produced at the SNW Plant in
mainland China, Hong Kong and Macau. Sales to Taiwan are governed by Section
4.4 below.
4.3 Subject to XXXXXXXX'x purchase obligations in the Manufacturing
Agreement, XXXXXXXX shall be primarily responsible for managing and shall have
ultimate control over sales of the Licensed Products produced at the SNW Plant
in all markets other than mainland China, Taiwan, Hong Kong and Macau.
4.4 Subject to XXXXXXXX'x purchase obligations in the Manufacturing
Agreement, XXXXXXXX shall be primarily responsible for managing and shall have
ultimate control over sales of the Licensed Products produced at the SNW Plant
in Taiwan until December 31, 1998. Prior to December 31, 1998, the SNW and
XXXXXXXX shall agree upon the distribution method in Taiwan. After December 31,
1998, the SNW shall be primarily responsible for managing and shall have
ultimate control over sales of the Licensed Products produced at the SNW Plant
in Taiwan under the distribution method agreed to by XXXXXXXX and the SNW.
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5. Trademark.
5.1 SNW shall have the exclusive right to use XXXXXXXX'x trademark
"Flexbase(TM)" only on Licensed Products which meet the performance and quality
standards of such products manufactured by XXXXXXXX and only for selling
Licensed Products produced at the SNW Plant in mainland China, Taiwan, Hong Kong
and Macau under the terms of Section 4 of this Agreement; subject to XXXXXXXX'x
right to use the trademark "Flexbase(TM)" in its sales of Licensed Products
under the terms of Section 4 of this Agreement and without restriction anywhere
in the world with respect to the sale of its own products. The SNW shall
identify XXXXXXXX as the owner of the Flexbase(TM) trademark. Until such
trademarks are issued, XXXXXXXX makes no warranty as to validity or use of such
trademarks.
5.2 The SNW shall use and refer to the name of XXXXXXXX as a licensor of
the Technical Information and the Industrial Property Rights in an appropriate
manner; provided the SNW shall obtain the prior written consent of XXXXXXXX to
such use and reference.
6. Temporary Supply of Products.
6.1 Until the earlier of December 31, 1998 or the date the SNW begins
producing Licensed Products which meet the performance and quality standards of
such products manufactured by XXXXXXXX, XXXXXXXX shall sell to the SNW flexible
laminates and associated coverfilm tapes with the same specifications as the
Licensed Products solely for resale by the SNW in mainland China. During such
period, SNW shall work with XXXXXXXX in developing a marketing plan for such
products in mainland China. SNW shall update XXXXXXXX periodically with respect
to sales in China and suggest modifications to such marketing plan. After such
period, SNW shall have the rights provided in Section 4.2 above.
6.2 SNW shall use tradenames and trademarks of XXXXXXXX in the sale or
distribution of XXXXXXXX'x products in mainland China unless otherwise
authorized by XXXXXXXX from time to time.
6.3 XXXXXXXX shall provide to SNW necessary promotional materials which
are available, it being understood that such materials will be in the English
language.
7. Price and Terms of XXXXXXXX Sales.
7.1 The price of each of the products sold by XXXXXXXX to the SNW under
Section 6 above shall be equal to 80% of the price of such products to the world
high volume market as agreed
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to annually by XXXXXXXX and the Board of Directors of the SNW based on
information available to the parties.
7.2 The terms of payment for the products sold by XXXXXXXX to the SNW
under this Agreement shall be net 30 days from invoice date unless the parties
agree to other payment terms prior to product shipment.
7.3 XXXXXXXX shall deliver such products to the SNW F.O.B. XXXXXXXX plant.
7.4 Each of such products sold to the SNW shall conform with the
performance and quality specifications for such products. Replacement of
defective products will be made without charge by XXXXXXXX within thirty (30)
days of receipt by XXXXXXXX of notice that the products sold by XXXXXXXX to the
SNW are defective.
7.5 SNW shall order products from XXXXXXXX by submitting written purchase
orders to XXXXXXXX at least 30 days prior to shipment and shall specify the
quantity, price, delivery date, method of shipment and product specifications.
All sales by XXXXXXXX to the SNW shall be subject to XXXXXXXX'x general terms
and conditions of sale to the extent consistent with this Section 7.
8. Technical Assistance to SNW by XXXXXXXX.
8.1 Immediately after the execution of this Agreement, XXXXXXXX shall
provide technical assistance to SNW for the SNW Plant based on the Technical
Information of XXXXXXXX in the manner prescribed in Schedule B attached hereto.
8.2 The subjects of the technology for the technical assistance
provided for in Section 8.1 are detailed in Schedule B as "deliverables."
8.3 The technical assistance to SNW by XXXXXXXX shall be made through
technical instruction by XXXXXXXX'x personnel and technical materials to be
provided by XXXXXXXX. SNW shall provide, at its expense, technical interpreters
at XXXXXXXX'x facilities and the SNW Plant. If SNW so requests, XXXXXXXX shall
disclose and deliver such Technical Information by documentation such as
drawings, specifications, bills and materials, designs, etc., which is available
to XXXXXXXX, it being understood that such materials will be in the English
language.
8.4 The documentation delivered by XXXXXXXX under Section 8.3 of this
Agreement shall be complete and accurate in all material respects. XXXXXXXX
shall receive certain payments for its technical assistance under the terms of
the Agreement
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Relating to Payments upon completion of certain milestones set forth in that
agreement. Promptly after completion of Phase 2 as set forth in Schedule B,
XXXXXXXX'x technical group will work with the technical people from SNW to
finalize the time schedule for the technical assistance. If XXXXXXXX does not
meet its obligations under Schedule B in accordance with the agreed-upon
schedule (and such delay does not occur because of force majeure or the failure
of SNW or any third party under contract with SNW to perform its obligations),
XXXXXXXX shall pay SNW for such delay an amount equal to SNW's actual direct
expenses occasioned by such delay, less any amounts required to be paid by
equipment suppliers or vendors under contract with SNW for failure to timely
fulfill their contractual obligations to SNW.
8.5 XXXXXXXX shall provide SNW technical assistance under Section 8.1
by accepting SNW's engineers at its plants, and by dispatching its engineers to
the SNW Plant as detailed in Schedule B. SNW shall bear all travel, living and
other expenses of SNW's engineers and personnel for such technical assistance.
XXXXXXXX shall bear all travel and living expenses of XXXXXXXX'x engineers and
personnel for the time periods detailed in Schedule B. If additional engineer
and personnel time of XXXXXXXX is necessary for training (Phase 4), equipment
installation (Phase 6) or start-up (Phase 7), SNW shall pay XXXXXXXX an agreed
per diem rate, plus all additional travel and living expenses.
9. Joint Technical Advisory Board; Improvements.
9.1 Subject to the provisions of this Agreement, to assure a
continuous and free interchange of Technical Information and technology
developments between the SNW and XXXXXXXX, the parties hereby establish a Joint
Technical Advisory Board made up of at least two technically trained and
experienced employees from each party. The Joint Technical Advisory Board shall
meet at such times as may be agreed by the parties. Subject to the provisions
of this Agreement, at those meetings the parties shall advise each other
thoroughly of the Technical Information relating to all technical developments
and technology improvements related to the Licensed Products since the time of
the last meeting. Travel, living and salary expenses of the representatives of
the parties who serve on the Joint Technology Advisory Board shall be paid by
the SNW.
9.2 In the event the SNW or XXXXXXXX should develop any enhancement,
modification, design, concept or technique related to any of the Licensed
Products or the Technical Information licensed under this Agreement
("Improvements"), the other party shall be granted a non-exclusive right and
license to use such Improvement. Any such Improvement by SNW or XXXXXXXX shall
be included in the license granted hereunder and shall be subject to all of the
terms and conditions of this Agreement
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related to such license. Any license granted to XXXXXXXX under this Section 9.2
shall be royalty free.
10. Patent.
10.1 Any rights to apply for patent in any country in the world with
respect to Improvements conceived by XXXXXXXX shall belong to XXXXXXXX; provided
that in the event XXXXXXXX determines not to apply for a patent within China,
SNW may apply for such patent with respect to such Improvement in China after a
full consultation with XXXXXXXX.
10.2 Any rights to apply for patent in any country in the world with
respect to Improvements conceived by SNW shall belong to SNW; provided that in
the event SNW determines not to apply for a patent within the U.S.A., XXXXXXXX
may apply for such patent with respect to such Improvement in the U.S.A. after a
full consultation with SNW.
11. Confidentiality.
11.1 Each of the parties hereto agrees to keep strictly secret and
confidential any and all Technical Information and other confidential
information acquired from the other party hereunder and not to disclose it to
any third persons or use it except as permitted by this Agreement.
11.2 The obligation imposed by this Section 11 shall not apply to any
information:
(a) which at the time of disclosure is in the public domain; or
(b) which after disclosure becomes part of the public domain, by
publication or otherwise, through no fault of the recipient party; or
(c) which at the time of disclosure is already in the recipient
party's possession, and such possession can be properly demonstrated by it;
or
(d) which is rightfully made available to one party from sources
independent of the other party, or
(e) the disclosure of which is agreed in writing by the other party.
The obligations of this Section 11 shall survive for a period of five
(5) years after the termination of this Agreement for any reason.
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12. Term and Termination.
12.1 The initial term of this Agreement shall begin the date the
government of China approves this Agreement and the Additional Agreements and
end after the tenth (10th) Royalty Year; provided that if a written notice of
termination shall not be received by either party from the other party at least
six months prior to the expiration of the initial Term or any renewal Term, the
Term of this Agreement shall be automatically renewed for successive two year
Terms beyond the initial Term until such written notice of termination is timely
received.
12.2 If either party defaults on or breaches a material provision of
this Agreement or any Additional Agreement, the party not in default or breach
shall have the right to cancel this Agreement upon sixty (60) days' written
notice; provided, however, that if the defaulting party corrects the default or
breach within the sixty (60) day period, this Agreement shall continue in full
force and effect.
12.3 Either party may terminate this Agreement in the event that
proceedings for reorganization, liquidation, bankruptcy or receivership are
filed or instituted against or by the other party.
12.4 This Agreement shall terminate in the event the Agreement
Relating to Joint Venture is terminated under Section 15.2(e) or the Closing
under that agreement does not occur.
13. Perpetual Right.
SNW shall have the perpetual non-exclusive right to make, have made,
use and sell the Licensed Products only in mainland China, Taiwan, Hong Kong and
Macau under the Industrial Property Rights or the Technical Information of
XXXXXXXX after any termination of this Agreement; provided that in case of the
termination by reason of the SNW's breach or default or a termination under
Section 12.4, the SNW shall have no further rights under this Agreement.
14. Payments.
All payments to be made under this Agreement shall be in United States
dollars.
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15. Arbitration.
Any dispute between the parties arising out of or concerning the
subject matter of, or the respective rights and obligations of the parties
under, this Agreement shall be submitted to arbitration if it cannot be resolved
by the parties. If arbitration is requested by XXXXXXXX, the arbitration
proceeding shall be conducted in Jiujiang, Jiangxi China in accordance with the
rules of the Commercial Arbitration Association then in effect in China; if
arbitration is requested by SNW, the arbitration proceeding shall be conducted
in Minneapolis, Minnesota, U.S.A. in accordance with the rules of the American
Arbitration Association then in effect.
16. Governing Law.
This Agreement and the rights and obligations of the parties hereunder
shall be construed and interpreted in accordance with the laws of China.
17. Force Majeure.
Both parties to this Agreement shall be excused from the performance
of their obligations hereunder, and shall be excused for so long as such
condition continues, if such performance is prevented by conditions beyond the
control of the parties, such as acts of God, voluntary or involuntary compliance
with any regulation, law or order of any government, war, civil commotion,
strike, epidemic, failure or default of public utilities or common carriers,
destruction of production facilities or materials by fire, earthquake, storm or
like catastrophe. This Section 17 shall not apply to either party's obligations
to make payment for products sold and delivered under this Agreement or to make
royalty payments for Licensed Products sold by SNW. This Section 17 also does
not apply to the SNW's inability to get exchange of currency to fulfill its
payment obligations under this Agreement. If exchange of currency is blocked
for more than one year, XXXXXXXX may terminate this Agreement or request payment
in other currency.
18. Notice Provisions.
Any notice required or permitted to be given hereunder shall be in
writing and any notice shall be deemed to have been given when delivered in
person or seven (7) days after the date upon which it was mailed, postage
prepaid, by certified or registered air mail properly addressed to the addresses
written on the first page of this Agreement; provided, however, that the
presumption of actual receipt shall be subject to rebuttal by
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probative evidence showing that such notice was not actually received.
19. Assignment.
Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the prior written consent of the other party.
Notwithstanding the foregoing, XXXXXXXX may assign all of its rights and
obligations under this Agreement to any entity which acquires XXXXXXXX by
merger, consolidation or purchase of substantially all of the assets or business
of XXXXXXXX related to the Licensed Products.
20. Entire Agreement.
This Agreement and the Additional Agreements shall constitute the
entire agreement of the parties with respect to the subject matter of this
Agreement and this Agreement shall be attached to the Joint Venture Contract and
Articles of Association.
21. Translation.
The parties acknowledge that a Chinese translation of this Agreement
is being executed by the parties on the date hereof. In interpreting this
Agreement, the English version and the Chinese version shall be given equal
weight. There shall be signed four (4) copies of this Agreement in Chinese and
four (4) copies in English. Each party to the Agreement Relating to Joint
Venture, including the SNW, shall receive one copy in English and one copy in
Chinese.
22. Government Approvals.
This Agreement shall be effective only upon approval by the Chinese
Government Agency of the terms of this Agreement and the Additional Agreements,
to the extent such approval is required.
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IN WITNESS WHEREOF, the parties have caused their respective
representatives to sign and execute this Agreement in counterpart and each party
holds one copy.
JIUJIANG FLEX CO., LTD.
By /s/ Xxxxxx Xxxxxxxxx
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Its Vice Chairman
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By /s/ Xxxx-Xxxxx Xxx
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By /s/ Xxxxxxx C.H. Ma
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XXXXXXXX, INC.
By /s/ Xxxxxx Xxxxxxxxx
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Its V.P./Sales & Marketing
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