Exhibit 10.18
MEMORANDUM OF UNDERSTANDING DATED OCTOBER 23, 1997
BETWEEN THE COMPANY AND XXXXXXX
MANUFACTURING, INC.
[INFORMATION PLACED IN BRACKETS [ ] HAS BEEN
OMITTED IN ACCORDANCE WITH A CONFIDENTIAL
TREATMENT REQUEST PURSUANT TO RULE 406 AND
HAS BEEN FILED SEPARATELY WITH THE COMMISSION
Memorandum of Understanding
between
Xxxxxx Technologies, Inc.
and
Xxxxxxx Manufacturing, Inc.
October 23, 1997
Whereas, Xxxxxxx Manufacturing, Inc. (hereinafter "LMI") is an exclusive
manufacturer of ComforTemp(TM) LX, one type of Xxxxxx'x patented ComforTemp(TM)
product line of foams. ComforTemp(TM) LX is a series of foams that contain LMI's
proprietary hydrophilic pre-polymer, PrePol, in combination with Xxxxxx'x
proprietary thermal additive, Thermasorb(TM). The Parties hereto agree to
establish a License Agreement in order to provide LMI with certain rights to
develop and sell selected products that incorporate Xxxxxx'x patented
COMFORTEMPTM LX hydrophilic open cell polyurethane foams subject to the
provisions and understandings which follow:
1. Scope of License - Effective January 1, 1998, Xxxxxx grants LMI a three (3)
year exclusive license, with two additional option years, to make, use, and sell
clinical and institutional mattresses, consumer mattresses and wheelchair lumbar
and seat wedge cushions containing either (a) a Visco-elastic ComforTemp(TM)
Lxfoam or (b) a Visco-elastic foam laminated to ComforTemp(TM) LXfoam into the
worldwide marketplace (hereinafter referred to collectively as the "Licensed
Products"). If, during the first two years of the Agreement, LMI has met all of
its obligations for maintaining an exclusive license as outlined in paragraphs 2
through 7 below, then LMI may, during the third year of the Agreement, but no
later than 6 months prior to termination, exercise the option for the following
year.
2. License Fee - In return for the exclusive License granted above and in lieu
of an up-front License fee, LMI agrees to perform each of the following actions:
1. Introduce at least one style of Licensed Product incorporating COMFORTEMP(TM)
LX for inclusion in the 1998 product line launch,
2. Aggressively promote the sale of these Licensed Products by, at a minimum:
prominently displaying the Licensed Products at applicable trade shows;
o prominently featuring the COMFORTEMPTM logo in all advertising, brochures and
promotional literature that includes the Licensed product at an advertising
level of not less than $50,000 US;
o prominently displaying the COMFORTEMP(TM) hangtag (provided by Xxxxxx), or an
equivalent permanent label, on all Licensed Products.
3. Royalties - In addition to the above, LMI agrees to pay Xxxxxx [This
information has been omitted in accordance with a Confidential Treatment Request
and has been filed separately with the Commission.] The royalties are to be paid
to Xxxxxx within thirty days following the end of each calendar quarter.
4. Sole Source Supply - The Parties hereto agree that Xxxxxx will be sole source
of supply for all THERMASORB(TM) additives that may be required by LMI, their
subcontractors and/or affiliates to support product development efforts and
production requirements. Xxxxxx will provide these materials in accordance with
the price list in effect at the time of purchase order placement.
5. Purchase Requirements - Prior to signing the License, both Parties agree to
establish mutually agreeable minimum annual Thermasorb(TM) purchase requirements
for use in the manufacture of the Licensed Products for each year of the
agreement, including the option years. LMI will be required to meet these
minimum annual purchase levels from sales orders of the Licensed Products each
calendar year of the Agreement in order to maintain their exclusive rights for
the following year. If the minimum volume is not purchased, then LMI's rights
will automatically revert to non-exclusive rights for the following calendar
year.
6. Delivery Of Product - In order to protect production lead times and customer
requirements, LMI shall maintain an adequate inventory of Thermasorb(TM) on hand
to support all orders due within ninety (90) days. All POs will be issued to
Xxxxxx by LMI not less than ninety (90) days preceding LMI's on-dock need dates.
7. Intellectual Property - All intellectual property associated with Xxxxxx'x
microencapsulated phase change material technology, including, but not limited
to, ComforTemp foam and Thermasorb microcapsules, remains the exclusive
intellectual property of Xxxxxx. All intellectual property associated with LMI's
hydrophilic foam production technology, including, but not limited to, PrePol
pre-polymers, remains the exclusive intellectual property of LMI. Jointly
developed intellectual property will be treated in accordance with the duly
signed Exclusive Purchase and Supply Agreement dated _______.
8. Best Effort Support - Both Parties hereto agree to support new product
development, new product introduction, promotion and sales of all licensed
products incorporating the Technology with the best efforts of the Parties. This
will include the active introduction of new products containing the Technology
by LMI and the reasonable support by Xxxxxx of LMI products containing the
Technology. Xxxxxx agrees to support
LMI at a reasonable number of sales presentations and trade shows in order to
answer any technical questions that potential customers may have.
XXXXXX TECHNOLOGIES, INC. XXXXXXX MANUFACTURING, INC.
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxxxxx Xxxxxxxx
--------------------------------------- ---------------------------------
Xxxx Xxxxxx, Chief Executive Officer Xxxxxxx Xxxxxxxx, President
