SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Amendment No. 1)
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the Fiscal Year Ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
Commission File No. 0-12942
PARLEX CORPORATION
(Exact Name of Registrant As Specified in its Charter)
Massachusetts 04-2464749
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
145 Milk Street, Methuen, Massachusetts 01844
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 508-685-4341
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Name of exchange on
Title of each Class which registered
------------------- -------------------
Common Stock, ($.10 par value) NASDAQ
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
_____ _____
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. (X)
The aggregate market value of shares of the Registrant's Common stock,
par value $.10 per share, held by non-affiliates of the Registrant at
September 1, 1995 as computed by reference to the closing price of such stock
was approximately $15,926,659.
The number of shares of the Registrant's Common Stock, par value $.10 per
share, outstanding at September 1, 1995 was 2,370,159 shares.
Documents Incorporated By Reference
Portions of the definitive proxy statement to be filed with the
Commission within 120 days after the close of the fiscal year are incorporated
by reference into Part III of this report.
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this amended report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Parlex Corporation
*/S/ Herbert W. Pollack
_________________________
Herbert W. Pollack, Chairman and Chief Executive Officer
Date: November 14, 1995
________________________
Pursuant to the requirements of the Securities Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
*/S/ Steven M. Millstein
__________________________
Steven M. Millstein, Principal Accounting
and Financial Officer
Date: November 14, 1995
________________________
*/s/ Sheldon A. Buckler
_________________________
Sheldon A. Buckler, Director
*/s/ Richard W. Hale
______________________
Richard W. Hale, Director
*/s/ M. Joel Kosheff
______________________
M. Joel Kosheff, Director
*/s/ Peter J. Murphy
______________________
Peter J. Murphy, Director
*/s/ Lester Pollack
_____________________
Lester Pollack, Director
*/s/ Benjamin M. Rabinovici
_____________________________
Benjamin M. Rabinovici, Director
*/S/ Steven M. Millstein
__________________________
* by Steven M. Millstein, attorney-in-fact
Date: November 14, 1995
________________________
As of the date of submission of this filing, no annual report or proxy
material with respect to the fiscal year ended June 30, 1995 has been sent to
the security holders. Such annual report and proxy material will be submitted
to the Commission at the time it is furnished to the security holders.
EXHIBIT INDEX
Exhibit Description Page
- ------- ----------- ----
10-AH Chinese Joint Venture Contract, Articles of Association, and
Transfer of Technology Agreement dated May 29, 1995.
10-AI Development and Supply Agreement between Motorola Inc. and
Parlex Corporation dated April 13, 1993.
10-AJ Central Trust of China Agreement dated June 5, 1995.
10-AK License Agreement between Samsung Electro-Mechanics Co., Ltd.
and Parlex Corporation dated September 29, 1994.
10-AL Employment Agreement between Parlex Corporation and
Mr. Herbert W. Pollack dated July 1, 1994.
21 Subsidiaries of the Registrant
23 Independent Auditors' Consent
24 Powers of Attorney
JOINT VENTURE CONTRACT
BETWEEN
SHANGHAI 20th RADIO FACTORY
AND
PARLEX CORPORATION
MASCON, INC.
FOR THE
ESTABLISHMENT OF
PARLEX (SHANGHAI) CIRCUIT CO., LTD.
May 29, 1995
Contents
of the
Joint Venture Contract
Chapter 1 General Provisions
Chapter 2 Parties to the Joint Venture Company
Chapter 3 Establishment of the Joint Venture Company
Chapter 4 Purpose, Scope and Scale of Production and Business
Chapter 5 Total Amount of Investment and Registered Capital
Chapter 6 Leasing of Premises and Equipment of the Joint Venture Company
Chapter 7 Licensing of Technology
Chapter 8 Sale of Products
Chapter 9 Profit Distribution
Chapter 10 Responsibilities of Each Party to the Joint Venture Company
Chapter 11 The Board of Directors
Chapter 12 Management Organization
Chapter 13 Purchase of Equipment, Raw Materials and Auxiliary Materials
Chapter 14 Labor Management
Chapter 15 Tax, Finance and Audit
Chapter 16 Foreign Exchange
Chapter 17 Duration of the Joint Venture Company
Chapter 18 Liquidation
Chapter 19 Insurance
Chapter 20 The Revision, Alteration and Termination of the Joint
Venture Contract
Chapter 21 Liabilities for Breach of Contract
Chapter 22 Resolution of Default
Chapter 23 Force Majeure
Chapter 24 Environmental Matters
Chapter 25 Applicable Law
Chapter 26 Settlement of Disputes
Chapter 27 Language
Chapter 28 Effectiveness of the Contract and Miscellaneous
Appendix 1 Registered Capital Investment Schedule of Parties B and C
Appendix 2 Registered Capital Investment Schedule of Party A
Appendix 3 Lease Agreement
Appendix 4 Equipment Leasing Agreement
Appendix 5 Articles of Association
Appendix 6 Agreement of Technology License and Technical Service
Appendix 7 Non-Disclosure Agreement
Chapter 1 General Provisions
In accordance with "The Law of the People's Republic of China on Joint
Ventures Using Chinese and Foreign Investment" and other relevant
Chinese laws and regulations, Shanghai 20th Radio Factory, the People's
Republic of China; Parlex Corporation; and Mascon, Inc. adhering to the
principle of equality and mutual benefit and through friendly
consultations, agree to jointly invest to establish a Joint Venture
Company in Shanghai, the People's Republic of China. The contract is
worked out hereunder.
Chapter 2 Parties to the Joint Venture Company
Parties to this contract are as follows:
2.1 Shanghai 20th Radio Factory, hereinafter referred to as Party A,
registered in Shanghai, the People's Republic of China.
Legal address: No. 711 Yi San Road, Shanghai, the People's
Republic of China, Post Code 200233.
Legal representative: Mr. Sui Guanliang;
Position: Manager;
Nationality: Chinese.
2.2 Parlex Corporation, hereinafter referred to as Party B, registered
in the United States of America.
Legal address: 145 Milk Street, Methuen,
Massachusetts, 01844, USA
Legal representative: Herbert W. Pollack;
Position: President;
Nationality: United States of America.
2.3 Mascon, Inc., hereinafter referred to as Party C, registered in
the United States of America
Legal address: 5 Commonwealth Avenue, Woburn,
Massachusetts 01801-1032, USA
Legal representative: James Chen;
Position: President;
Nationality: United States of America.
Chapter 3 Establishment of the Joint Venture Company
3.1 In accordance with the "Law of the People's Republic of China on
Joint Ventures Using Chinese and Foreign Investment" and other
relevant laws and regulations, the three parties agree to jointly
invest to establish a Joint Venture Company to produce and engage
in the business of printed circuits and related parts and
assembly products in the People's Republic of China.
The name of the Joint Venture Company is Parlex (Shanghai) Circuit
Co., Ltd.
The legal address of the Joint Venture Company is at No. 711
Yi San Road, Shanghai, China, Post Code 200233.
3.2 The Joint Venture Company is a Chinese legal person and is subject
to the jurisdiction and protection of Chinese law. All activities
of the Joint Venture Company shall be governed by the laws,
decrees and pertinent rules and regulations of the People's
Republic of China.
3.3 The organizational form of the Joint Venture Company is a limited
liability company. Each party to the Joint Venture Company is
liable to the Joint Venture Company within the limit of the
capital subscribed by it. The profits and losses of the Joint
Venture Company shall be shared by the parties in proportion to
their contributions of the registered capital.
Chapter 4 Purpose, Scope and Scale of Production and Business
4.1 The purpose of the parties to the Joint Venture Contract is in
conformity with the wish of enhancing the economic cooperation and
technical exchange, to import know-how and processing equipment of
manufacturing circuits and other related products, to change
obsolete processed products with new ones, upgrade quality of
products, develop marketable products, and gain competitive
position in the world market in quality and price, so as to ensure
satisfactory economic benefits for each investor.
4.2 The scope of the production and operation of the Joint Venture
Company are to manufacture and sell printed circuits and related
parts and assembly products.
4.3 It is estimated that the scale of production of the Joint Venture
Company shall reach the production plan within 4 years after
beginning its production. The estimated production plan is as
follows.
*
* Confidential information has been omitted and filed separately with the
Commission.
4.4 Contract Products refer to the flexible single-sided, double-
sided, multilayer and rigid-flexible circuits as well as related
parts and assembly products.
Chapter 5 Total Amount of Investment and Registered Capital
5.1 The total amount of investment of the Joint Venture Company (the
"Total Investment") is USD 4.5 million, of which the registered
capital is USD 3 million. The difference between the total amount
of investment and the registered capital shall be borrowed from
the bank by the Joint Venture Company.
5.2 The registered capital contributed by the parties will be as
follows:
*
5.3 The value of all the equipment and real materials contributed by
Party A shall be converted into US Dollars at the middle value of
the exchange rate quoted by the People's Bank of China on the date
this contract is signed and shall not be affected by later changes
of the exchange rate.
5.4 All the equipment and attached installations contributed by Party
A shall be examined and approved through the Shanghai State-owned
Asset Administration. The value of which shall be accorded with
what the Shanghai State-Owned Asset Administration shall examine
and approve, and determined prior to the signing of the Joint
Venture Contract.
5.5 The initial registered capital investment of Party A, Party B and
Party C is set forth in Appendix 1 and Appendix 2. * of the
registered capital investment shall be paid within the first three
months after the date the business license is issued. The balance
of the registered capital investment shall be paid in over the
subsequent * according to the schedule in Appendix 1
and Appendix 2.
5.6 The working capital needed by the Joint Venture Company may be
borrowed from a bank. The interest on loans shall be recognized
as an expense and borne by the Joint Venture Company.
5.7 Any party delaying the payment of their investment in whole or in
part shall pay the Joint Venture Company interest on the unpaid
balance to the Joint Venture Company as per Chapter 21 of this
Joint Venture Contract.
5.8 After the investment subscribed is paid by the parties to the
Joint Venture Company, a Chinese registered public accountant
shall verify it and provide a certificate of verification, in
accordance with which the Joint Venture Company shall issue
investment certificates which include the following items: name
of the Joint Venture Company; date of establishment; the
investment contribution; and date, and month and year of issuance
of investment certificate.
* Confidential information has been omitted and filed separately with the
Commission.
5.9 The Joint Venture Company shall not reduce its registered capital
during the life of the Joint Venture Company.
5.10 In the event that one of the parties (the "Seller") intends to
sell all or part of their interest in the Joint Venture Company,
the other two parties have a preemptive right to purchase it in
accordance with the following provisions:
5.10.1 The Seller shall first obtain a bona fide offer from a
third party (the "Third Party") to purchase such interest
in the Joint Venture Company (the "Offered Interest").
The Seller shall first offer the Offered Interest for
purchase by the other parties (the "Other Parties") at
the same price and upon the same terms and conditions
offered by the Third Party. The Other Parties shall have
the right, for a period of sixty days after the receipt
of such offer, to purchase all but not less than all of
the Offered Interest at the price and on the terms and
conditions offered by the Third Party. Such right shall
be allocated among the Other Parties in proportion to
their shares in the registered capital of the Joint
Venture Company, provided that if one of the Other
Parties elects to purchase less than its full share, the
balance shall be distributed proportionally among the
others. If the Other Parties exercise their right to
purchase the Offered Interest, they shall give written
notice of exercise within 60 days after their receipt of
the offer from the Seller, and the Seller and the Other
Parties shall complete the purchase and sale of the
Offered Interest within 30 days after the expiration of
such 60-period. In the event that all of the Offered
Interest is not purchased pursuant to the above
provisions (whether or not one or more parties have given
notice of election to purchase a part, but not all, of
the Offered Interest), the Seller may sell such Offered
Interest to the Third Party at the same price and upon
the same terms and conditions offered by the Seller to
the other parties, provided that (i) the Third Party
agrees in writing to be bound by the terms and conditions
of this Joint Venture Contract and executes copies of
such other documents required hereunder; (ii) the payment
for and transfer of the Offered Interest by and to the
Third Party is effected no later than ninety (90) days
after the expiration of all periods during which the
other parties have the right to give notice of their
election to purchase the Offered Interest; and (iii) such
transfer is approved by the Board of Directors under
Chapter 5.12. To the extent that the Offered Interest is
not purchased pursuant to the above provisions, then the
Seller shall not sell, transfer or dispose of such
Offered Interest without again complying with the
provisions of this Chapter 5.10.1.
5.10.2 Each party shall have the right to transfer all or part
of its respective rights and interests in the Joint
Venture Company to one or several of its affiliated
companies without following the procedure set forth in
Chapter 5.10.1 above. Each party hereby consents to any
such transfer by another party to an affiliated company
and waives any preemptive rights in respect of such
transfer. For this purpose, an "affiliated company" of a
party is a company which controls, is controlled by, or
is under common control with such party.
5.11 In the event that one of the parties merges with or is acquired by
another company, all rights and privileges of this contract shall
be transferred to the resulting or acquiring company without
penalty.
5.12 Any increase or assignment of the registered capital or Total
Investment, other than as stipulated or excepted in Chapter 5.11,
shall be unanimously approved at a meeting of the Board of
Directors and submitted to the original examination and approval
authority for approval. In the case of a transfer effected in
compliance with Chapter 5.10.1 or Chapter 5.10.2, each Party
agrees to instruct its representatives on the Board of Directors
to vote to approve the resulting assignment of the transferring
party's registered capital and total investment. Registration
procedures for change shall be dealt with at the original
registration and administration office.
Chapter 6 Leasing of Premises and Equipment of the Joint Venture Company
6.1 Party A, Party B and Party C understand clearly and agree that the
Joint Venture Company shall lease premises from Party A. The
rental shall be stipulated in the leasing agreement which the
Joint Venture Company shall conclude with Party A. For details,
see Appendix 3 of the contract.
6.2 Party A, Party B and Party C understand clearly and agree that the
Joint Venture Company shall lease or purchase part of the
equipment from Party A. The details of the leased equipment are
in Appendix 4.
Chapter 7 Licensing of Technology
7.1 The Joint Venture Company will be licensed by Party B to use the
technology of Party B (the "Licensed Technology") described in an
Agreement of Technology License and Technical Service to be
entered into between the Joint Venture Company and Party B, the
specific contents, scope and requirements of which are set forth
in Appendix 6. The license to use the Licensed Technology shall
be contributed as part of Party B's investment in the Joint
Venture Company.
7.2 Party B shall ensure that the Licensed Technology represents, as
of the date of execution of this Joint Venture Contract, all of
the technology utilized by Party B in manufacturing in its own
facilities the same type of products to be manufactured by the
Joint Venture Company, except for the PAL Flex[Registration Mark]
manufacturing technology; provided, however, that it is understood
that the quality and performance of products to be manufactured by
the Joint Venture Company using the Licensed Technology will be
dependent upon the Joint Venture Company's ability to execute the
manufacturing processes and procure suitable raw materials and
components, and, accordingly, Party B cannot represent or warrant
that the products manufactured by the Joint Venture Company will
be of the same quality as products manufactured by Party B.
7.3 In consideration of Party B's license of technology and Technical
Service under the Agreement of Technology License and Technical
Services, the three investing parties of the Joint Venture Company
agree the value of technology is:
*
The parties agree that the value for the above mentioned items B
and C include all expenses incurred in the implementation during
the first year;
The cost for the technology license shall be borne only once. The
technology and information provided to the Joint Venture Company
by Party B as required by the Agreement of Technology License and
Technical Service will subsequently be free of charge. The
technology and information provided to Party B by the Joint
Venture Company as required by the Agreement of Technology License
and Technical Services will subsequently be free of charge;
The value of the Technology License will be used by Party B as
investment in the Joint Venture Company;
The value of the Technical Training will be used by Party B as
investment in the Joint Venture Company;
The value of the Technical Support will be used by Party B as
investment in the Joint Venture Company.
Chapter 8 Sale of Products
8.1 The Joint Venture Company shall be responsible for the marketing
and sales of its products inside and outside the People's Republic
of China. A pricing policy will be proposed by the General
Manager, and approved by the Board of Directors, designed to
achieve pricing, on average, no less than the most competitive
international prices in order to maximize profitability.
8.2 The Joint Venture Company shall be responsible for the sale of
products in all parts of the People's Republic of China except
Hong Kong, Macau and Taiwan (hereinafter referred to as "Territory
A"), and shall develop the market in Territory A through its
direct sales force or its sales representatives, making its best
efforts to increase market share. Commissions to the Joint
Venture Company's sales representatives in Territory A, if
applicable, shall be determined by the General Manager.
* Confidential information has been omitted and filed separately with the
Commission.
8.3 Party B and Party C shall be responsible for the sales of products
outside of Territory A. The contract or contracts for the foreign
sales of products by the Joint Venture Company to Party B or Party
C, as the case may be, shall be concluded separately from this
Joint Venture Contract and shall provide, without limitation, that
(i) the relationship between the Joint Venture Company, on the one
hand, and Party B and Party C on the other hand, under Chapter
8.3.1, shall be that of independent vendor and vendee and shall
not be construed to constitute an agency relationship; and that
(ii) Party B or Party C, as the case may be, shall negotiate and
obtain orders for the products outside of Territory A and submit
orders to the Joint Venture Company for manufacturing and shipment
by the Joint Venture Company all in accordance with the terms and
conditions set forth in such orders. Party B and Party C may use
either of the following options for compensation in the sale of
the products.
8.3.1 Party B or Party C, as the case may be, may purchase the
products for resale to the third party. The Joint Venture
Company shall sell the products to Party B or Party C, as
the case may be, at a reasonable distributor's discount
from the prices set forth in the Joint Venture Company's
price list used in sales to customers in Territory A.
Party B or Party C, as the case may be, shall resell the
products at prices fixed by them, and the Joint Venture
Company shall retain no control over such resale prices.
8.3.2 Party B or Party C, as the case may be, may sell the
products to a third Party as agent on behalf of the Joint
Venture Company at the prices set forth in the Joint
Venture Company's international price list. Party B or
Party C shall be paid a reasonable representative's
commission from the Joint Venture Company for the sales of
those products.
The value of the foreign sales of products, either directly or
indirectly, is estimated to become at least 70% of the total sales
of the Joint Venture Company. For the purposes hereof, the three
parties agree that foreign sales of products shall include sales
of products made to customers in Territory A which incorporate
such products into their products manufactured for resale outside
of Territory A.
8.4 The Joint Venture Company shall be licensed to use the relevant
trademarks and patents owned by Party B subject to the terms and
conditions set forth in the Agreement of Technology License and
Technical Service.
Chapter 9 Profit Distribution
9.1 Profits cannot be distributed unless the Joint Venture Company has
a positive retained earnings that year.
9.2 The profits of the Joint Venture Company cannot be distributed
unless the losses of previous years have been made up. Profits
remaining from previous fiscal year can be distributed together
with the current fiscal year.
9.3 The distribution of profits remaining after payment of taxes and
deduction of the reserve fund, expansion fund, and bonus and
welfare fund, shall be determined by the Board of Directors of the
Joint Venture Company. At the first Board of Directors meeting, a
schedule for profit distribution shall be determined and agreed
to. The Board of Directors may elect to retain a part or all of
the profits for business expansion. Any profits that are
distributed shall be distributed to the parties in proportion to
the amounts of their respective contributions to the registered
capital of the Joint Venture Company.
Chapter 10 Responsibilities of Each Party to the Joint Venture Company
Party A, Party B and Party C shall be responsible for the following
matters:
10.1 Party A shall be responsible for:
10.1.1 Handling the applications for approval, registration,
obtaining of the business license and other matters
concerning the establishment of the Joint Venture Company
from the appropriate departments of the Chinese
government;
10.1.2 Providing the equipment, installation and cash as
investment as stipulated in Chapter 5 and Appendix 2;
10.1.3 Assisting the customs clearance procedures of the
machinery and equipment imported from outside of the
People's Republic of China by the Joint Venture Company,
and their transportation within the territory of the
People's Republic of China;
10.1.4 Assisting the Joint Venture Company in purchasing
equipment, raw materials, office supplies, transportation
vehicles, communication facilities, etc. within the
territory of the People's Republic of China;
10.1.5 Assisting the Joint Venture Company to arrange water
supply, electricity supply, gas supply, communication,
transportation service and engineering consulting, and
other necessary utilities and services;
10.1.6 Assisting the Joint Venture Company in recruiting the
local management personnel, technicians, workers and
other personnel needed;
10.1.7 Assisting the foreign personnel in applying for entry
visas and certificates for employment, and other related
matters to enable foreign personnel to work, consult or
advise the Joint Venture Company in the People's Republic
of China;
10.1.8 In accordance with the Chinese laws and regulations,
assisting the Joint Venture Company to gain the
preferential treatment of tax exemption, and other
preferences in connection with investment and operation;
10.1.9 In consideration of the Joint Venture Company's being
provided access to proprietary technology of Party B,
Party A agrees not to compete with Party B or the Joint
Venture Company in the manufacture of Contract Products
(as defined in the Chapter 4 hereof) during the term of
the Joint Venture Company unless otherwise agreed to in
writing by Party B. Party A's efforts will include, but
are not limited to the following:
(i) As members of their respective Boards of
Directors, Party A will oppose all efforts by the
other Joint Ventures with facilities on Party A's
premises to manufacture products competitive with
the Joint Venture's Contract Products.
(ii) Party A will ensure that the Joint Venture will
receive priority for waste treatment, water and
utilities for the manufacture of Contract
Products.
(iii) Party A will not approve expansion requests by
the other Joint Ventures on Party A's premises
for the purpose of manufacturing products
competitive to the Joint Venture's Contract
Products.
(iv) Party A shall not establish any relationship with
any organization in competition with Party B or
the Joint Venture Company.
10.2 Party B and Party C shall be responsible for:
10.2.1 Contributing the investment stipulated in Chapter 5 of
this Joint Venture Contract and Appendix 1;
10.2.2 Handling the matters entrusted by the Joint Venture
Company concerning the purchasing of selected equipment
and materials from the outside of the People's Republic
of China and arranging the procedure for transportation
to Shanghai;
10.2.3 Providing technicians for the installation and the
initial verification of suitable operation of the
equipment imported to fulfill the intentions of the
contract;
10.2.4 Providing appropriate personnel and information for
technical personnel of the Joint Venture Company inside
and outside of the People's Republic of China as intended
in Appendix 1 and described in Chapter 4 of the Agreement
of Technology License and Technical Services;
10.2.5 Assist in obtaining entry visa, work license and
traveling matter for the personnel of Party A invited to
visit the facilities of Party B.
10.2.6 In consideration of the Joint Venture Company being
provided access to proprietary technology of Party B,
Party C agrees not to compete with Party B or the Joint
Venture Company in the manufacture or sale of Contract
Products (as defined in Chapter 4) during the term of the
Joint Venture Company unless otherwise agreed to in
writing by Party B.
10.2.7 Party B agrees not to compete with the Joint Venture
Company in the establishment or support of any new
organization which manufactures or sells Contract
Products in China, unless the capacity or technology
capabilities of the joint venture are insufficient to
meet the market demands. Any relationship that Party B
has previously established prior to the signing of this
contract is specifically excluded from this provision.
Chapter 11 The Board of Directors
11.1 The Board of Directors of the Joint Venture Company shall be
established on the date of issuance of the business license to the
Joint Venture Company. The Board of Directors shall be composed
of five Directors of whom two shall be appointed by Party A, two
by Party B and one by Party C. The Chairman of the Board of
Directors shall be appointed by Party A, and the Vice-Chairman of
the Board of Directors shall be appointed by Party B. The term
of office for the Directors and the Chairman and Vice-Chairman of
the Board of Directors shall be four years and they may be
continuously reappointed by their respective appointing parties.
The appointing parties may change the Directors whom they
appointed at any time. If a director is replaced prior to
completing his term, the newly appointed director shall serve for
the remainder of that term. A notice in writing shall be sent to
the other parties and the Board of Directors when a Party changes
any Director.
11.2 The Board of Directors is the organization of the highest
authority of the Joint Venture Company and shall decide the
following major matters, subject to either unanimous or majority
approval pursuant to Chapter 6.2 of the Articles of Association of
the Joint Venture Company:
11.2.1 Revising the Articles of Association of the Joint Venture
Company;
11.2.2 Deciding on the increase or assignment of the registered
capital and/or total investment of the Joint Venture
Company;
11.2.3 Deciding on the termination of the Joint Venture Company
or merger with another economic organization;
11.2.4 Assuming the responsibility of liquidation at the time of
termination;
11.2.5 Examining and approving the annual financial statements,
annual business plan, distribution of profits and
contribution to the reserve fund, expansion fund, and
bonus and welfare fund presented by the General Manager;
11.2.6 Adopting the major policies and regulations of the
management of the Joint Venture Company and any revisions
thereafter;
11.2.7 Approving the appointment of the General Manager,
Financial Manager, Deputy General Manager, Chief
Engineer, and Manufacturing Manager and their salaries
and welfare;
11.2.8 Deciding the upper limit of working capital and bank loan
indebted by the Joint Venture Company;
11.2.9 Deciding the employee's welfare policy.
11.3 The Chairman of Board of Directors is the legal representative of
the Joint Venture Company. In case the Chairman of Board of
Directors may be unable to execute his duty for whatever reason,
the Vice-Chairman or other Director shall be authorized as his
temporary proxy.
11.4 The Chairman of the Board of Directors shall convene the Board at
least twice per year for the first five years and once per year
thereafter. The Chairman shall preside over each meeting. The
second meeting in the first five years may be waived if agreed to
by all three parties. The Chairman shall notify the board members
one month in advance of the meeting in writing and provide a
written agenda including the draft resolutions to be voted on.
If requested by more than one-third of the Board of Directors, the
Chairman shall convene a Board of Directors meeting. This meeting
shall occur no sooner than fifteen (15) days and no later than
thirty (30) days from the Chairman's written notification of all
members. If the Chairman fails to convene the meeting after such
request, then the Directors who made the request may convene such
meeting by written notification to the Chairman and the other
Directors.
At least two-thirds of the members of the Board of Directors must
be present for a meeting of the Board to convene.
All records of the Board of Directors shall be kept. The minutes
of meeting of the Board of Directors shall be kept in both English
and Chinese and shall be signed by all attendees of the meeting.
Each party shall be given one copy of the signed minutes for their
records. Both versions shall be certified to be the same by an
independent legal counsel. The meetings shall normally be held at
the legal address of the Joint Venture Company.
11.5 All expenses for the Board of Directors of the Joint Venture
Company shall be decided by the Board of Directors.
11.6 Any Director may participate in a meeting of the Board of
Directors by means of conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other or by any other
means permitted by law. Such participation shall constitute
presence in person at such meeting. All formal actions taken at
such meeting shall be confirmed by a writing delivered by fax.
11.7 Should any of the Directors be unable to participate in a meeting
of the Board, he may present a proxy in written form to the Board
of Directors. Upon receipt of notice of the meeting and in the
event that any Director neither attends nor entrusts others to
attend the meeting on his behalf, he shall be deemed absent and
shall forfeit all voting rights for the meeting he is absent from.
Chapter 12 Management Organization
12.1 All the parties have confirmed that the Joint Venture Company
shall implement the responsibility system under the leadership of
the Board of Directors. The General Manager is responsible for
the daily management and operation of the Joint Venture Company.
12.2 The management organization shall have one General Manager
recommended by Party B and one Deputy General Manager recommended
by Party A. The General Manager and Deputy General Manager shall
be approved by the Board of Directors. The General Manager and
Deputy General Manager shall be appointed for two year periods.
The Board of Directors has the option to renew the terms of the
General Manager and Deputy General Manager for additional two year
periods thereafter. The Chairman and Vice-Chairman of the Board
of Directors and Directors can hold posts as General Manager,
Deputy General Manager or other senior staff concurrently. The
Joint Venture Company shall be exclusively responsible for
compensating the General Manager, the Deputy Manager and all other
managers and employees of the Joint Venture Company.
12.3 The functions and responsibilities of the General Manager shall be
to carry out the decisions made by the meeting of the Board of
Directors, to organize and lead the daily management and operation
of the Joint Venture Company and to establish the sales strategy
and pricing of products sold by the Joint Venture Company, inside
and outside of the People's Republic of China. The Deputy General
Manager shall assist the General Manager in his work. The major
issues of the Joint Venture Company shall be decided through
consultations among the General Manager and the Deputy General
Manager. The General Manager and such other officers appointed by
the Board of Directors shall have the authority to execute
contracts and other instruments on behalf of the Joint Venture
Company and to act for the Joint Venture Company in accordance
with authority identified in a vote taken by a majority of the
Board of Directors, either generally or as to specific matters.
Department managers shall be appointed by the General Manager in
consultation with the Deputy General Manager, shall be
respectively responsible for the work of the various departments,
shall handle the matters handed over by the General Manager and
Deputy General Manager and shall be responsible to them. During
the General Manager's absence, daily affairs of the company shall
be carried on by the Deputy General Manager or other senior
management staff.
12.4 The functions and responsibilities of the General Manager shall be
defined in the Articles of Association.
12.5 The Joint Venture Company has a Chief Engineer, responsible for
technology, a Manufacturing Manager, responsible for production,
and a Financial Manager, responsible for finance and accounting,
all of whom shall be recommended by the General Manager for the
approval of the Board of Directors.
12.6 The Board of Directors may decide to dismiss the General Manager
and Deputy General Manager, Financial Manager, Manufacturing
Manager, or Chief Engineer at any time. If it is necessary, the
General Manager may suggest to the Board of Directors to dismiss
the Deputy General Manager, Financial Manager, Manufacturing
Manager, and Chief Engineer. Other than as previously provided
for, the General Manager may dismiss managers of other departments
or other staff at any time, as he deems necessary.
12.7 If they so desire, the General Manager, Deputy General Manager,
Chief Engineer, Financial Manager and Manufacturing Manager shall
submit their resignation to the Board of Directors in writing at
least ninety (90) days in advance.
12.8 In the case of graft or dereliction of duty by the General
Manager, Deputy Manager, Chief Engineer, Financial Manager, or
Manufacturing Manager, the Board of Directors may dismiss them at
any time, with no further obligations under the individual's
employment contract in force at the time.
12.9 The General Manager and Deputy General Manager, within his
employment term and for 12 months thereafter, shall not hold any
position in other organizations in the People's Republic of China
which would present a conflict of interest with the Joint Venture
Company.
Chapter 13 Purchase of Equipment, Raw Materials and Auxiliary Materials
A best effort shall be made to purchase the raw materials, fuel,
auxiliary parts, vehicles, and office supplies in the People's Republic
of China, as long as conditions such as price, quality, technology,
delivery and other pertinent matters are favorable.
Chapter 14 Labor Management
14.1 A labor policy subject to the laws and regulations of the People's
Republic of China shall be presented by the General Manager to the
Board of Directors for review and approval.
14.2 Concerning the recruitment, employment, dismissal and resignation,
wages, labor insurance, welfare, rewards, penalty and other
matters of the staff and workers of the Joint Venture Company,
these matters shall be executed by the General Manager according
to the "Regulations of the People's Republic of China on Labor
Management in Joint Ventures Using Chinese and Foreign Investment"
and "Regulations of Shanghai Municipality on Labor and Personnel
Management in Joint Ventures Using Chinese and Foreign
Investment."
Chapter 15 Tax, Finance and Audit
15.1 The Joint Venture Company shall pay taxes in accordance with the
stipulations of the related laws and regulations of the People's
Republic of China.
15.2 Staff members and workers of the Joint Venture Company shall pay
individual income tax according to the individual "Income Tax Law
of the People's Republic of China."
15.3 The accounting system of the Joint Venture Company shall be
formulated in accordance with the People's Republic of China's
relevant laws and procedures on financial affairs and accounting,
and in consideration of the conditions of the Joint Venture
Company, and to be filed with local financial departments and tax
authorities.
15.4 The fiscal year of the Joint Venture Company shall coincide with
the calendar year, i.e. from January 1 to December 31 on the
Gregorian Calendar. The Joint Venture Company shall maintain a
second set of books to accommodate the reporting requirements of
Party B.
15.5 The accounting of the Joint Venture Company shall adopt the
internationally adopted accrual basis and debit and credit
accounting system in their work. All vouchers, account books,
statistic statements should be prepared in Chinese, and reports in
English.
15.6 The Joint Venture Company shall adopt Renminbi as its bookkeeping
basis currency. The conversion of Renminbi to other currency
shall be in accordance with the middle value of the exchange rate
of the converting day quoted by the People's Bank of China. This
shall be the effective exchange rate for the Joint Venture
Contract.
15.7 The Joint Venture Company should open Renminbi deposit accounts
and foreign exchange deposit accounts in banks approved by the
State Administration of Exchange Control and the Board of
Directors.
15.8 The Joint Venture Company shall employ an accountant registered in
the People's Republic of China to be responsible for auditing and
to forward the reports to the General Manager and the Board of
Directors. Any party to the Joint Venture Company shall have the
right to employ an auditor at their own expense to perform an
annual financial audit and examination. This report shall be for
reference only to other parties.
15.9 The Financial Manager shall prepare the balance sheet, income
statement and statement of cash flows of the previous year by the
end of the first three months of the next fiscal year. The
General Manager shall present the financial statements and
proposal for profit distribution, if any, to the Board of
Directors for examination and approval. Unaudited monthly
financial statements, similar to those prepared yearly, shall be
submitted to all members of the Board of Directors within 30 days
of the end of the month.
15.10 Subject to the "Detailed Rules and Regulations for the
Implementation of the Income Tax Law of the People's Republic of
China Concerning Enterprises with Foreign Investment and Foreign
Enterprises," the Board of Directors shall decide the depreciation
period of the fixed assets.
Chapter 16 Foreign Exchange
16.1 All matters concerning foreign exchange for Joint Venture Company
shall be handled according to the "Interim Regulations on Foreign
Exchange Control of the People's Republic of China" and relevant
regulations.
16.2 The Joint Venture Company shall make their best effort to transact
sales in foreign currency. To the extent that the Board of
Directors decides to distribute profits, the profits shall be
distributed to the parties in proportion to their contributions of
registered capital. Party B and Party C enjoy the priority to
have profits distributed in foreign currency if profits in foreign
currency exist.
Chapter 17 Duration of the Joint Venture Company
The duration of the Joint Venture Company shall be fifty (50) years
commencing on the date of issuance of the business license to the Joint
Venture Company. An application for the extension of the duration of
the Joint Venture Company proposed by one Party and unanimously approved
by the Board of Directors, shall be submitted to the original
authorities for approval six months prior to the end of the initial
fifty-year term.
Chapter 18 Liquidation
18.1 Upon the termination of the Joint Venture Company according to the
law, the Board of Directors shall work out procedures and
principles for the liquidation, nominate candidates for the
liquidation committee, and set up the liquidation committee for
liquidating the Joint Venture Company's assets.
18.2 The tasks of the liquidation committee are: to conduct the check
of the property of the Joint Venture Company, its claim and
indebtedness; to work out the statement of assets and liabilities
and list of property; and to formulate a liquidation plan. All
these shall be carried out upon the approval of the Board of
Directors. During the process of liquidation, the liquidation
committee shall represent the company to sue and be sued.
18.3 The liquidation expenses and remuneration to the members of
liquidation committee shall be paid on a priority basis from the
existing assets of the Joint Venture Company as determined by the
Board of Directors.
18.4 The remaining property after the clearance of debts of the Joint
Venture Company shall be distributed among the parties to the
Joint Venture Company according the proportion of each party's
investment in the registered capital. Party B and Party C enjoy
the priority to have the remaining assets distributed to them in
foreign currency if such foreign currency exists.
18.5 On completion of the liquidation, the Joint Venture Company shall
submit a liquidation report to the original examination and
approval authority, go through the formalities for nullifying its
registration in the original registration office and return its
business license. At the same time, a public announcement shall
be made.
18.6 After liquidation of the Joint Venture Company, its account books
shall be left in the care of Party A. Any Party shall have the
right to view and the right to obtain a copy of these account
books at their expense.
Chapter 19 Insurance
All insurance policies of the Joint Venture Company shall be
underwritten with any insurance company doing business in the People's
Republic of China. The types of insurance, the insured value and the
duration of the insurance shall be decided by the Board of Directors.
Chapter 20 The Revision, Alteration and Termination of the Joint Venture
Contract
20.1 The revision, alteration or termination of this Contract and its
Appendices shall come into effect only after the written agreement
has been signed by all parties and approved by the original
examination and approval authority.
20.2 In case of inability of the parties to carry out the Contract as a
result of Force Majeure or to continue operation due to losses in
successive years, the Contract may be terminated with the
unanimous decision of the Board of Directors and approval by the
original examination and approval authority.
Chapter 21 Liabilities for Breach of the Contract
Should any party fail to pay on time its amount of contribution in
accordance with the stipulations of Chapter 5.5 of this contract, the
breaching party shall pay to the Joint Venture Company interest at an
annual rate of one percent (1%) plus the prime lending rate established
from time to time by Citibank, N.A., of the delinquent contribution,
payable monthly starting thirty (30) days after notification of
delinquency. Should the breaching party fail to pay such amount for
three months, that party shall pay the Joint Venture Company interest at
an annual rate of a maximum of three percent (3%) plus the prime lending
rate established from time to time by Citibank, N.A., of the delinquent
contribution, payable monthly, and the other two parties shall have the
right to terminate the Contract in accordance with the stipulations in
Chapter 22. In addition, the Joint Venture Company and the non-
breaching parties shall have the right to initiate legal proceedings
against the breaching party in order to compel such payment.
Chapter 22 Resolution of Default
If any party defaults on their obligations under this Contract, the
Lease Agreement, the Equipment Leasing Agreement, or the Agreement of
Technology License and Technical Service and such default is of such
significance as to cause or threaten to cause material damage to the
Joint Venture Company or the interests of non-defaulting parties, the
defaulting party will be notified in writing by the other parties and
given thirty (30) days to remedy this default. If after thirty (30)
days the breach of contract is not remedied, the remaining parties may
elect to terminate the defaulting party. If this occurs the defaulting
party forfeits all voting rights on the Board of Directors, until the
remaining Board members exercise their options and resolve the default.
The remaining Board members may exercise the following options.
22.1 Offer additional time for the defaulting party to remedy the
breach;
22.2 Provide for the purchase by the Joint Venture Company or the
remaining parties of the defaulting party's equity less any amount
owed the Joint Venture Company;
22.3 Reduce the equity position of the defaulting party in proportion
to the amount owed the Joint Venture Company and increase the
equity share of the other parties proportionally;
22.4 If the amount owed the Joint Venture Company is equal to or
greater than the equity of the defaulting party, the remaining
parties may remove that party from the Joint Venture Company and
redistributed the equity in proportion to their equity or
liquidate the Joint Venture Company.
Chapter 23 Force Majeure
When any Force Majeure, such as earthquake, typhoon, flood, fire, war or
other unforeseen events of which the happening and consequences cannot
be prevented or avoided, causes direct effect on the fulfillment of the
Contract or the inability to fulfill the conditions of the Contract, the
party encountering the Force Majeure shall notify the other two parties
by fax without any delay. Within fifteen days thereafter the party
encountering the Force Majeure shall provide the detailed information of
the events and a valid document for evidence, issued by legal
authorities of the place where the Force Majeure occurred, giving
reasons for the failure to fulfill, for partial failure to fulfill, or
for deferring the fulfillment of the contract. All parties shall,
through consultations, decide whether to terminate the Contract or to
exempt part of obligations for implementation of the Contract or whether
to defer the execution of the Contract according to the extent of the
effects of events on the performance of the Contract.
Chapter 24 Environmental Matters
Party A represents and warrants that as of the date of this contract the
premises to be rented by the Joint Venture Company and the surrounding
areas are in full compliance with all relevant laws, regulations and
rules related thereto, and with all requirements of all relevant
government authorities for, land administration, environmental
protection, water and soil conservation and other relevant matters
concerning the land and the surrounding areas in effect as of the date
hereof. Neither the Joint Venture Company, Party B or Party C or any of
their affiliated companies or any of their affiliated companies (as
defined in Chapter 5.10.2) shall be responsible for any environmental
condition existing on or before the date of actual use of such premises,
or any problem arising therefrom. Neither the Joint Venture Company,
Party B or Party C shall be responsible for any environmental condition
existing at any time, prior to or after the execution of this Agreement,
with respect to any premises not used by the Joint Venture Company or
any other facilities surrounding such premises. Party A shall be
responsible for providing adequate and suitable means for disposal of
hazardous and other wastes generated by the Joint Venture Company at the
premises leased from Party A. Party A shall indemnify and defend the
Joint Venture Company, Party B and Party C and hold each of them
harmless against any claims that may be made against any of them which
result from the illegal or improper disposal of such wastes at such
premises, or from any condition at such premises constituting a
violation of the laws and decrees of the People's Republic of China on
environmental protection, unless Party A establishes by clear evidence
that the condition resulting in such claims or violation was caused
solely by the Joint Venture Company's operations. Details of the
utilization, limitations and fees associated with waste treatment are
included in Appendix 3.
Chapter 25 Applicable Law
25.1 The formation, validity, interpretation, execution of this
Contract and the settlement of disputes under it shall be governed
by the Laws of the People's Republic of China.
25.2 Parties B and C shall not be required by this Agreement to violate
any law of the United States of America.
Chapter 26 Settlement of Disputes
26.1 Any disputes arising from the execution of, or in connection with
the Contract shall be settled through friendly consultation among
all parties. In case no settlement can be reached through
consultation, the dispute shall be submitted to the Stockholm
Institute of International Commercial Arbitration for final and
binding arbitration under its Rules of Conciliation and
Arbitration by one or more arbitrators appointed in accordance
with such rules. Stockholm, Sweden shall be the site of the
arbitration.
26.2 The arbitration award is final and binding upon all parties.
26.3 During the arbitration the Contract shall be executed continuously
by all parties except for the matters in dispute. The award of
the arbitration shall be made by the arbitrator or a majority of
the arbitrators. The arbitration fee shall be born as designated
by the arbitrator(s).
Chapter 27 Language
This Joint Venture Company Contract shall be written in Chinese and
English versions. Both versions are equally valid.
Chapter 28 Effectiveness of the Contract and Miscellaneous
28.1 The contract and its Appendices shall come into force beginning
from the date of approval of the concerned competent authority of
the Shanghai Municipal government, the People's Republic of China.
Neither this contract nor any Appendix shall have any force or
effect prior to such approval, notwithstanding their execution and
delivery by the parties.
28.2 Should notice in connection with any party's right and obligations
be sent by either Party A, Party B, or Party C by fax, it shall be
confirmed by written letter notification.
The addresses of the parties are the legal addresses of the
parties which are written in the Contract.
28.3 The order of precedence of the documents and agreements shall be:
Joint Venture Contract
Articles of Association
Non-disclosure Agreement
Agreement of Technology Transfer and Technical Service
Lease Agreement
Equipment Leasing Agreement
Sales Representation Agreements
28.4 The Contract is signed in Shanghai, the People's Republic of China
by the authorized representatives of the parties on May 29, 1995.
Parlex Corporation Shanghai 20th Radio Factory
/s/ HERBERT W. POLLACK /s/ SUI GUAN LIANG
- ---------------------------------- ----------------------------------
Authorized Signature Authorized Signature
Herbert W. Pollack Sui Guan Liang
- ---------------------------------- ----------------------------------
Name Name
President President
- ---------------------------------- -----------------------------------
Title Title
Mascon, Inc.
/s/ JAMES HUANG
- ----------------------------------
Authorized Signature
James Huang
- ----------------------------------
Name
Executive Vice President
- ----------------------------------
Title
Appendix 1
Registered Capital Investment Schedule of Parties B and C
Appendix 1
Registered Capital Investment Schedule of Parties B and C
The following schedule details the intentions of Party B and Party C to
contribute their investment to the Joint Venture Company.
Months 1 to 3
Technology License
both immediate and ongoing *
Cash *
Cash for Materials(1) *
Training *
Technical Support *
Equipment *
Preco Automatic Punch *
Extra Screen Equipment *
Excellon Drill/Router *
Hytron Punch *
Corannard Press *
Napco Oven *
VWR Oven *
Shipping and Installation of Equipment *
Maintenance Package *
Total for first three months *
% of investment *
Months 3 to 6
Cash *
Cash for Materials(1) *
Training *
Technical Support *
Equipment *
TMP Lamination Press #1 *
VJ Electrical Tester *
SMVL Laminator *
Spartanic Punch *
CAD/CAM System *
Excellon Data Link *
ASI Drying Module *
ASI Preclean *
Shipping and Installation of Equipment *
Maintenance Package *
Total for first three months *
% of investment *
* Confidential information has been omitted and filed separately with the
Commission.
Appendix 1
Registered Capital Investment Schedule of Parties B and C
Months 7 to 9(2)
Cash *
Cash for Materials(1) *
Technical Support *
Equipment *
Excellon Drill *
Shipping and Installation *
Total for nine months *
% of investment *
Months 10 to 12(2)
Technical Support *
Equipment *
Hot Air Solder Leveling *
Shipping and Installation *
Total for twelve months *
% of investment *
Notes:
1) The cash contributed as Cash for Materials shall be used only to
purchase materials.
2) These items are subject to modification by mutual agreement during
the training period.
Total Investment of Parties B & C:
Technology Transfer
Cash
Equipment (including shipping)
Other
Total
* Confidential information has been omitted and filed separately with the
Commission.
Appendix 2
Registered Capital Investment Schedule of Party A
<TABLE>
<CAPTION>
No. Process Description Specification Quantity
- ---------------------------------------------------------------------------------------
<C> <S> <S> <S> <C>
1 Shear Automatic Cutter 40" Commisheeter 1
Cutter Model #1110 1
Cutter Model #1035 1
2 D/R NC Drill EX-300 D/R 1
Hole Check Gauge 20A(0.25-0.55) 2
3 Pre-Clean Surface Preparation Pumi-flex-SHD 1
4 Image Laminator 360 1
Printer Optibeam 7120 1
Diazo Developer D-240 1
Developer Devmaster Miki 1
Oven 343 1
Static Remover System 1
5 Etch Acid Etcher (with Ink Stripper) 1
6 Dry Film Strip Stripper 1
7 Plating Semi-Automatic Ni/Au Plating Line 1
8 Coating Surface Preparation Machine 1
Roll Soldering Machine 24T 1
Vertical Hot Air Leveler PCL 6 1
Antioxidant Unit 1
Post Cleaning System SHD-2B 1
9 Steel Rule Die Steel Rule Die 1 Set
10 Quality Flex Ductility Tester 2FDF 1
Scanning Inspection System 104A 1
Microscope SVB-73 4
Magnifier Lovpe x 10 10
Round Magnifying Lamps 5" 4
Solderability Tester Nut x 10 1
Soldering Tip CT-5 6
Electric Powered Wire BF 1
Thermal Wire Stripper TWC-1 1
Handheld Heat Gun 46-021 1
Soldering Microscope EMF-210x 30x 4
Point, Wire, Fixture, Drive Board 1 Set
Metals Thickness Tester TC-2600 1
Ni Thickness Tester AIPT, ATOC 1
11 Assembly Pressing Connector (Single Core) 6S 6094-2 1
Pressing Connector (14 Core) 6S 7022-1 1
Totals
</TABLE>
Total Investment
Cash *
Equipment and Installation *
Materials and Others *
Total *
Notes:
1) The final value of the equipment contributed by Party A, shall be
determined by Party B after examining the equipment prior to
signing the contract.
2) The depreciation factor is 84.67%.
3) The total investment will be transferred after the insurance of the
business license.
* Confidential information has been omitted and filed separately with the
Commission
Appendix 3
Lease Agreement
Lease Agreement
Shanghai 20th Radio Factory (Party A) together with Parlex Corporation (Party
B) and Mascon, Inc. (Party C) shall establish a Joint Venture Company within
Party A's existing factory. The following is the agreement reached by both
parties for leasing the building from Party A by the Joint Venture Company.
Chapter 1 The Premises
Party A hereby leases to the Joint Venture Company, and the Joint
Venture Company hereby leases from Party A, the following premises (the
"Premises"): Building J-22, the second (2nd) and a portion of the third
(3rd) floor at 711 Yi San Road, Shanghai, China, Post Code 200233, which
represent 2,400 square meters of net usable space, to be used by the
Joint Venture Company for production operations and offices. Party A
also grants the Joint Venture Company the right to use, in common with
other parties entitled thereto, the hallways, stairways and elevators
necessary for access to the Premises and lavatories nearest thereto.
Chapter 2 Term
The term of this Lease Agreement shall be for three years, commencing on
the date hereof and ending on the third anniversary hereof. The Joint
Venture Company shall have the option to extend the term of this Lease
Agreement for two successive three-year periods (each hereinafter an
"extension term") following the expiration of the initial three-year
term, which option shall be exercisable by giving written notice to
Party A not less than 60 days prior to the end of the initial term or an
extension term, as the case may be.
Chapter 3 Rent
3.1 The Joint Venture Company shall pay to Party A rent at the rate of
* per square meter per month *, payable in advance
monthly. The rent for each extension term shall be at a fair
market rental rate determined by mutual agreement of the parties;
however, the rental rate for any such extension term shall not be
increased by an amount greater than 30% in any three year period.
Such increase shall be prorated in the event that this Lease
Agreement is in effect with respect to only a portion of any
calendar year.
3.2 In addition to the foregoing rent, the Joint Venture Company shall
pay a fee for the leasehold improvements set forth in the Appendix
attached hereto at the rate of US$ * , payable in advance
in monthly installments of US$ * .
* Confidential information has been omitted and filed separately with the
Commission.
3.3 The rent and leasehold improvement fees will be fixed in US
dollars for the term of this agreement. The rent and leasehold
improvement fees shall be paid in RMB. The U.S. dollar figures
referenced above shall be converted from U.S. dollars to RMB at
the middle value of the exchange rate quoted by the People's Bank
of China on the date this Lease Agreement is executed. This RMB
fee will be recalculated annually on the anniversary date of this
agreement based on the average exchange rate quoted by the
People's Bank of China for the previous twelve months.
Chapter 4 Land Use Fees
Party A shall be responsible for paying all land use fees with respect
to the Premises and the building in which the Premises are contained.
In the event that Party A fails to pay such fees, the Joint Venture
Company may make such payment to the appropriate governmental
authorities and deduct the amount of such payment, plus interest, from
future amounts owed to Party A under Chapter 3 hereof.
Chapter 5 Maintenance and Repair
5.1 Party A's Obligations: Party A shall make all necessary repairs,
replacements and renewals to the Premises to keep the same in good
condition, reasonable wear and tear and damage by fire and other
casualty only excepted, provided that if such repair, replacement
or renewal is required because of the Joint Venture Company's acts
or omissions or the acts or omissions of those for whom the Joint
Venture Company is legally responsible, the Joint Venture Company
shall reimburse Party A for the cost of such repair, replacement
or renewal. Party A shall be responsible for maintaining fire and
casualty insurance on the Premises and leasehold improvements to
secure performance of its obligations hereunder.
5.2 The Joint Venture Company's Obligations: The Joint Venture
Company shall maintain the Premises and leasehold improvements in
good condition, damage by fire and other casualties only excepted.
The Joint Venture Company shall not make structural alterations or
additions to the Premises, but may make non-structural
alterations, provided that Party A consents thereto, which consent
shall not be unreasonably withheld or delayed. All such allowed
alterations shall be at the Joint Venture Company's expense. The
Joint Venture Company shall be responsible to insure its own
equipment in the Premises.
Chapter 6 Utilities
6.1 Party A shall install and maintain separately metered utilities
for the Premises at its own expense. The Joint Venture Company
shall pay, as they become due, all bills for electricity and other
utilities (whether they are used for furnishing heat or other
purposes) that are furnished to the Premises and are separately
metered and all bills for fuel furnished to a separate tank which
services the Premises exclusively. Party A agrees to provide at
its own expense all other utility services and to furnish
reasonable water and reasonable heat and air conditioning (except
to the extent that the same are furnished through separately
metered utilities or separate fuel tanks as set forth above) to
the Premises, the hallways and stairways during operating hours on
regular business days of the heating and air conditioning seasons
of each year, to furnish elevator service and to light passageways
and stairways during business hours, and to furnish such cleaning
service as is customary in similar buildings in said city or town,
all subject to interruption due to any accident, to the making of
repairs, alterations, or improvements, to labor difficulties, to
trouble in obtaining fuel, electricity, service, or supplies from
the sources from which they are usually obtained for the building
containing the Premises, or to any cause beyond Party A's control.
6.2 The standard charges for services provided to the Joint Venture
Company by Party A that are not included in the rent payments for
the Premises or the leasehold improvements are as follows:
1. Production Service
Compressed Air * /m3 x 1.03 x monthly consumption
Electricity * /kwh x 1.13 x monthly consumption
Water * /m3 x 1.24 x 1.9 x monthly consumption
(1.9 is the markup charged by the authorities for discharging water)
Steam * /ton x 1.03 x monthly consumption
Elevator * /month (including all maintenance)
The above charges for water and electricity are all in
accordance with the unified price of the government and they
are subject to change. All other fees above are set for a
period of three years. After three years, Party A and the
Joint Venture Company shall re-negotiate the fees based on
the current situation.
2. Living Service
Regular eating in the * /month
cafeteria
Medical treatment * once per person
and registration fee
Medical expenses shall be paid based on
actual consumption.
Bath * per person per use
* Confidential information has been omitted and filed separately with the
Commission.
Telephone (inside) * per extension per month (TDD
or DDD will be charged additionally
according to relevant regulations)
Parking: (1) Auto * /month each
(2) Bicycle * /month each
The living service fees are set for the first year. Each
year Party A and the Joint Venture Company shall re-
negotiate the fees based on the current situation with an
increase of no more than 12% per service per year.
6.2.3 Building Services
Environmental sanitation * /month
Fire prevention * /month
Cleaning of common areas * /month
The above fees are set for a period of three years. After
three years, Party A and the Joint Venture shall re-
negotiate the fees based on the current situation.
Chapter 7 Waste Treatment and Environmental Liabilities
7.1 Party A represents and warrants that as of the date of this
contract the premises to be rented by the Joint Venture Company
and the surrounding areas are in full compliance with all relevant
laws, regulations and rules related thereto, and with all
requirements of all relevant government authorities for, land
administration, environmental protection, water and soil
conservation and other relevant matters concerning the land and
the surrounding areas in effect as of the date hereof. The Joint
Venture Company shall not be responsible for any environmental
condition existing on or before the date of actual use of such
premises, or any problem arising therefrom. The Joint Venture
Company shall not be responsible for any environmental condition
existing at any time, prior to or after the execution of this
Agreement, with respect to any premises not used by the Joint
Venture Company or any other facilities surrounding such premises.
Party A shall be responsible for providing adequate and suitable
means for disposal of hazardous and other wastes generated by the
Joint Venture Company at the Premises. Party A shall indemnify
and defend the Joint Venture Company and hold it harmless against
any claims that may be made against any of them which result from
the illegal or improper disposal of such wastes at the Premises,
or from any condition at the Premises constituting a violation of
the laws and decrees of the People's Republic of China on
environmental protection, unless Party A establishes by clear
evidence that the condition resulting in such claims or violation
was caused solely by the Joint Venture Company's operations.
7.2 As the waste water and solution which will be generated during the
production of Contract Products by the Joint Venture Company will
need to be treated, Party A is trusted to treat the copper
containing wastewater, as well as acid and alkaline wastewater
produced by the Joint Venture Company. Other wastes are outside
the scope of this agreement. Party A agrees to provide this
service and treat the waste water and solution in order to make it
meet the permitted discharging standard of the government. For
this purpose the following conditions apply:
1. The discharged waste water by the Joint Venture Company shall
be drained off into the container designated by Party A to be
treated. Party A shall have the right to randomly measure
the waste water for toxic and harmful contents and the Joint
Venture Company shall pay additional fees for the treatment
by Party A if the concentration of the discharged waste water
exceeds that agreed to by the two parties.
2. The Penalty shall be borne by Party A if the treatment of
discharged waste water does not meet the permitted standard
of the government and found by the environmental authorities.
The Penalty shall be borne by the Joint Venture Company if
the waste water, that does not meet the permitted standard of
the government and has not been treated by Party A, is
drained by the Joint Venture Company and found by
environmental authorities.
3. The standard treatment fee for waste water is * per
cubic meter
(* ).
4. The fee for waste water treatment is calculated according to
the total amount of water consumed as reflected on the
incoming water meter.
5. Payment is at the end of each month.
6. In order to implement the environmental law of the government
and the related regulations of the factory, the concentration
of the waste water must be controlled. It is specified that
the contained copper in the drained rising water of CuCl2 by
the Joint Venture Company is not allowed to exceed 200 mg/l.
An additional fee of * for each additional 50 mg/l
increment exceeding 200 mg/l shall be charged to the Joint
Venture Company. The additional fee for each increment of 50
mg/l shall be determined based on the volume between the
first measurement of a particular level of non-conformance
and the first measurement of either conformance or a lower
level of non-conformance. The concentration of discharged HCl
is not allowed to have a pH less than two (2). An additional
* will be charged to the Joint Venture Company for
each one percent of pH exceeded of HCl in the waste water.
The total fee will be based on the total volume treated
between the non-conforming measurement and the last
conforming measurement.
7. The two parties concerned have to be governed and inspected
by environmental authorities from the government and the fees
incurred shall be borne as specified hereunder:
(1) The measurement fee for the discharged waste water
before treatment by Party A shall be borne by the Joint
Venture Company.
(2) The measurement fee for the discharged waste water
after treatment by Party A shall be borne by Party A.
8. The surplus waste of CuCl2 solution of the Joint Venture
Company must be put into the container specified by Party A
and Party A shall be responsible to trust a third party to
treat it and bear the fees for transportation and treatment.
9. The fees for the treatment of waste water will be incurred on
the date trial production commences.
10. Any other matters other than specifically addressed above,
shall be negotiated in good faith between Party A and the
Joint Venture Company as the situation arises.
11. The above terms are valid for three (3) years.
7.3 Party A guarantees the Joint Venture Company enough waste water
treatment capacity for three years in order to fulfill the
estimated production schedule described in Chapter 4 of the Joint
Venture Contract. Any cost associated with increasing waste water
treatment capacity during the first three years and within the
Joint Venture Company's estimated production volume shall be borne
by Party A. The responsibility for any costs associated with
increasing waste water treatment capacity due to production
volumes exceeding the Joint Venture Company's estimates in the
first three years or any need for increased capacity after the
first three years shall be determined through negotiations by the
parties.
Chapter 8 Assignment
Either party may assign this Lease Agreement and the rights and
obligations hereunder to any of its affiliated companies, as defined in
Chapter 5.10.2 of the Joint Venture Contract between the parties.
Chapter 9 Language
This Lease Agreement shall be written in Chinese and English versions.
Both versions are equally valid.
Chapter 10 Notices
Any notices concerning the parties rights or obligations hereunder which
is sent by fax shall be confirmed by written letter notification. The
addresses of the parties are the legal addresses of the parties which
are set forth in Chapter 2 of the Joint Venture Contract.
Chapter 11 Effectiveness
This Agreement shall become effective only at such time as the Joint
Venture Contract among the parties becomes effective as provided in
Chapter 28.1 thereof.
This Lease Agreement is signed in Shanghai, the People's Republic of China by
the authorized representatives of the parties on May 29, 1995.
Shanghai 20th Radio Factory
/s/ SUI GUAN LIANG
- ----------------------------------
Authorized Signature
Sui Guan Liang
- ----------------------------------
Name
President
- ----------------------------------
Title
Parlex (Shanghai) Circuit Co., Ltd. Parlex (Shanghai) Circuit Co., Ltd.
/s/ HERBERT W. POLLACK /s/ JAMES CHEN
- ---------------------------------- -----------------------------------
Authorized Signature Authorized Signature
Herbert W. Pollack James Chen
- ---------------------------------- -----------------------------------
Name Name
Director Director
- ---------------------------------- -----------------------------------
Title Title
Leasehold Improvements
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
No Process Description Spec Qty Cost Discounted Monthly
Dep/Fee
- --------------------------------------------------------------------------------------------------
<C> <S> <S> <S> <C> <C> <C> <C>
1 Distribution Electric box XGL 6 * * *
2 Air Condition Electric box XGL 2 * * *
Cold water system 30HR225 1
Heat changer 1
Air conditioner 5
Pump 2
Computer controlled system 1
Cooling tower OT1260T 1
3 Drilling Room Cabinet air condition CS-3BHV11 1 * * *
4 Window air condition CKT-3A 1 * * *
5 Humidity remover KFQ-3 1 * * *
6 Clean Room Air shower room FLS-10 2 * * *
7 Press Room Electrical box XGL 2 * * *
8 Air compressor IEC-439 1 * * *
Totals * * *
<FN>
Notes:
<F1> 1) Landlord is responsible for any taxes on the above equipment.
<F2> 2) Joint Venture is responsible for maintenance of the above equipment.
<F3> 3) If leasehold improvements cannot be maintained or repaired, the
landlord shall replace them at no cost to the Joint Venture.
</TABLE>
* Confidential information has been omitted and filed separately with the
Commission.
Appendix 4
Equipment Leasing Agreement
Equipment Leasing Agreement
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
No. Process Description Specification Quantity Cost Discounted Monthly
Dep/Fee
- --------------------------------------------------------------------------------------------------------------
<C> <S> <S> <S> <C> <C> <C> <C>
1 Screen Print Semi-Automatic Screen Printer F-700 2 * * *
UV Curing System UVC-24-3 1
Viscosity Tester PCIT/VS-1A 1
Ink Mixer X-1 1
Oven 343 1
2 Laminate Vacuum Press PC377 VO 1
Lamination Plates AIAI 4140 18
Lamination Plates TYPE 420 24
Laminar Flow Work Station 2534 4
Paper Cutter J57-2 3
Static Remover System 1
Oven 1
Cooling Tank 1
3 Profiling Press J23-25T 1
Press J23-3.15T 2
Arbor Press 0.1 ~ 0.2mm 1
Bench Precision Cutter J57-2 1
Fork Lift for Die SLE 40 10 150 1
Puncher SPM 01 1
Saw U500 1
Press J23-16 1
Press J23-16 1
Shear Q11 1200 1
Photo Projection Drill GZ 2 1
Paper Trace Cutter PYQ 20ZC 1
4 Electrical Test Bare Board Tester CTM 1092 1
5 Assembly Pneumatic Press J1305B 4
Pneumatic Press J1310B 1
6 D.I. Water Centrifugal Pump for Clean Water IS50-32-160 3
Purified Water System 1
Totals
<FN>
Notes:
<F1> 1) Landlord is responsible for any taxes on the above equipment.
<F2> 2) Joint venture is responsible for maintenance of the above
equipment.
<F3> 3) Joint venture has the option, at any time, to purchase equipment
and spare parts at the remaining book value.
<F4> 4) The rental fee will be paid in RMB as defined in Section 3.3 of
the Lease Agreement.
</TABLE>
* Confidential information has been omitted and filed separately with the
Commission
Appendix 5
Articles of Association
ARTICLES OF ASSOCIATION
OF
PARLEX (SHANGHAI) CIRCUIT CO., LTD.
May 29, 1995
Contents of Articles of Association
Chapter 1 General Provisions
Chapter 2 Purpose, Scope and Scale of Production and Business
Chapter 3 Total Amount of Investment and Registered Capital
Chapter 4 Sale of Products
Chapter 5 The Board of Directors
Chapter 6 The Function of Board of Directors
Chapter 7 Management Organization
Chapter 8 Tax, Finance and Audit
Chapter 9 Foreign Exchange
Chapter 10 Profit Distribution
Chapter 11 Staff and Workers
Chapter 12 The Trade Union
Chapter 13 Duration of the Joint Venture Company
Chapter 14 Termination of Contract
Chapter 15 Resolution of Default
Chapter 16 Liquidation
Chapter 17 Policies and Regulations
Chapter 18 Supplementary Articles
Articles of Association
In accordance with the laws and regulations concerned and the contract
signed by Shanghai 20th Radio Factory, Parlex Corporation., and Mascon,
Inc., the Articles of Association hereby is as follows:
Chapter 1 General Provisions
1.1 Parties of this contract are as follows:
Shanghai 20th Radio Factory, hereinafter referred to as Party A,
registered in Shanghai, China.
Legal address: No. 711 Yi San Road, Shanghai, China,
Post Code 200233.
Legal representative: Mr. Sui Guanliang;
Position: Manager;
Nationality: Chinese.
1.2 Parlex Corporation, hereinafter referred to as Party B,
registered in the United States of America.
Legal address: 145 Milk Street,
Methuen, Massachusetts, 01844, USA
Legal representative: Herbert W. Pollack;
Position: President;
Nationality: United States of America.
1.3 Mascon, Inc., hereinafter referred to as Party C, registered in
the United States of America
Legal address: 5 Commonwealth Avenue, Woburn,
Massachusetts 01801-1032, USA
Legal representative: James Chen;
Position: President;
Nationality: United States of America.
1.4 In accordance with the "Law of the People's Republic of China on
Joint Ventures Using Chinese and Foreign Investment" and other
relevant laws and regulations, the three parties agree to
jointly invest to establish a Joint Venture Company to produce
and engage in the business of printed circuits and related parts
and assembly products in the People's Republic of China.
The name of the Joint Venture Company is Parlex (Shanghai)
Circuit Co., Ltd.
The legal address of the Joint Venture Company is at No. 711 Yi
San Road, Shanghai, China, Post Code 200233.
1.5 The Joint Venture Company is a Chinese legal person and is
subject to the jurisdiction and protection of Chinese law. All
activities of the Joint Venture Company shall be governed by the
laws, decrees and pertinent rules and regulations of the
People's Republic of China. Parties B and C shall not in any
way be obligated to violate any laws of the United States of
America.
1.6 The organizational form of the Joint Venture Company is a
limited liability company. Each party to the Joint Venture
Company is liable to the Joint Venture Company within the limit
of the capital subscribed by it. The profits and losses of the
Joint Venture Company shall be shared by the parties in
proportion to their contributions of the registered capital.
1.7 Any person who at any time serves or has served as a Director,
officer, or manager of the Joint Venture Company, or in such
capacity at the request of the Joint Venture Company for any
other corporation, partnership, joint venture, trust or other
enterprise, shall have the right to be indemnified by the Joint
Venture Company to the fullest extent permitted by law against
(i) reasonable expenses, including attorneys' fees, actually and
necessarily incurred by him or her in connection with any
threatened, pending or completed action, suit or proceedings,
whether civil criminal, administrative or investigative, and
whether or not brought by or on behalf of the Joint Venture
Company, seeking to hold him or her liable by reason of the fact
that he is or was acting in such capacity; and (ii) reasonable
payments made by him or her in satisfaction of any judgment,
money decree, fine, penalty or settlement for which he or she
may have become liable in any such action, suit or proceeding,
provided, however, that no such right to indemnification shall
be available with respect to liability arising out of such
individual's acts or omissions not in good faith, intentional
misconduct, or knowing violation of the law.
The Board of Directors of the Joint Venture Company shall take
all such action as may be necessary and appropriate to authorize
the Joint Venture Company to pay the indemnification required by
this Chapter, including without limitation, to the extent
needed, making a good faith evaluation of the manner in which
the claimant for indemnity acted and of the reasonable amount of
indemnity due him and giving notice to, and obtaining approval
by, the Parties.
Chapter 2 Purpose, Scope and Scale of Production and Business
2.1 The purpose of the parties to the Joint Venture Contract is
in conformity with the wish of enhancing the economic
cooperation and technical exchange, to import know-how and
processing equipment of manufacturing circuits and other
related products, to change obsolete processed products with
new ones, upgrade quality of products, develop marketable
products, and gain competitive position in the world market
in quality and price, so as to ensure satisfactory economic
benefits for each investor.
2.2 The scope of the production and operation of the Joint
Venture Company are to manufacture and sell printed circuits
and related parts and assembly products.
2.3 It is estimated that the scale of production of the Joint
Venture Company shall reach the production plan within 4
years after beginning its production. The estimated
production plan is as follows.
USD 000
--------------------------------------
Product/years 1 2 3 4
--------------------------------------
SSF * * * *
DSF * * *
MLF * *
Rigid Flex *
Total * * * *
The sales of the Joint Venture Company is estimated to
reach * million in 4 years, equivalent
to * . The parties acknowledge that the foregoing
amounts are only estimates and are not warranties by any
party as to how the Joint Venture Company will actually
perform.
Chapter 3 Total Amount of Investment and Registered Capital
3.1 The total amount of investment of the Joint Venture Company (the
"Total Investment") is USD 4.5 million, of which the registered
capital is USD 3 million. The difference between the total
amount of investment and the registered capital shall be
borrowed from the bank by the Joint Venture Company.
3.2 The registered capital contributed by the parties will be as
follows:
3.2.1 Party A shall contribute USD 1.200 million, accounting
for 40% of the registered capital, consisting of the
following:
1) Equipment and Installation: USD *
2) Cash: USD *
3) Material and others: USD *
3.2.2 Party B shall contribute USD 1.503 million, accounting
for 50.1% of the registered capital, consisting of the
following:
1) Technology License Fee: USD *
2) Equipment and Installation: USD *
3) Cash: USD *
4) Training: USD *
5) Technical Support: USD *
* Confidential information has been omitted and filed separately with the
Commission.
3.2.3 Party C shall contribute USD * , accounting for
9.9% of the registered capital, consisting of the
following:
1) Equipment and Installation: USD *
2) Cash: USD *
3.3 The form of investment contributions:
3.3.1 The investment contributed by Party A shall be the
equipment and its installation, and cash;
3.3.2 The investment contributed by Party B shall be cash in
USD, technical know-how, technical training and support
and equipment and its installation;
3.3.3 The investment contributed by Party C shall be cash in
USD, and equipment and its installation.
3.4 The initial registered capital investment of Party A, Party B
and Party C is set forth in Appendix 1 and Appendix 2. At least
fifteen percent (15%) of the registered capital investment shall
be paid within the first three months after the date the
business license is issued. The balance of the registered
capital investment shall be paid in over the subsequent nine (9)
months according to the schedule in Appendix 1 and Appendix 2.
3.5 Any party delaying the payment of their investment in whole or
in part shall pay the Joint Venture Company interest on the
unpaid balance to the Joint Venture Company. The interest rate
shall be as set forth in Chapter 21 of the Joint Venture
Contract.
3.6 After the investment subscribed is paid by the parties to the
Joint Venture Company, a Chinese registered public accountant
shall verify it and provide a certificate of verification, in
accordance with which the Joint Venture Company shall issue
investment certificates which include the following items: name
of the Joint Venture Company; date of establishment; the
investment contribution; and date, and month and year of
issuance of investment certificate.
3.7 The Joint Venture Company shall not reduce its registered
capital during the life of the Joint Venture Company.
3.8 In the event that one of the parties (the "Seller") intends to
sell all or part of their interest in the Joint Venture Company,
the other two parties have a preemptive right to purchase it in
accordance with the following provisions:
* Confidential information has been omitted and filed separately with the
Commission.
3.8.1 The Seller shall first obtain a bona fide offer from a
third party (the "Third Party") to purchase such
interest in the Joint Venture Company (the "Offered
Interest"). The Seller shall disclose all pertinent
details of the offer to the other parties and shall
first offer the Offered Interest for purchase by the
other parties at the same price and upon the same terms
and conditions offered by the Third Party. The parties
to the Joint Venture Company receiving the offer shall,
within thirty (30) days after their receipt of such
offer, elect by written notice to purchase all, but not
less than all, of the Offered Interest, at the price and
upon the terms and conditions offered, in proportion to
their respective contributions to the registered capital
of the Joint Venture Company (exclusive of the Seller's
contribution), provided that if one of the parties
declines or fails to give written notice of its election
to purchase all of its proportion of the Offered
Interest, the remaining party or parties shall have the
right for the next thirty (30) days to elect by written
notice to purchase pro rata (exclusive of the interests
of the Seller and the party declining or failing to give
notice) the part of the Offered Interest not purchased
by the other party. If one or more parties shall have
elected to purchase all of the Offered Interest, payment
by and transfer to such party or parties shall be
completed no later than thirty (30) days after the last
notice of election to purchase. In the event that all
of the Offered Interest is not purchased pursuant to the
above provisions (whether or not one or more parties
have given notice of election to purchase a part, but
not all, of the Offered Interest), the Seller may sell
such Offered Interest to the Third Party at the same
price and upon the same terms and conditions offered by
the Seller to the other parties, provided that (i) the
Third Party agrees in writing to be bound by the terms
and conditions of this Joint Venture Contract and
executes copies of such other documents required
hereunder; (ii) the payment for and transfer of the
Offered Interest by and to the Third Party is effected
no later than ninety (90) days after the expiration of
all periods during which the other parties have the
right to give notice of their election to purchase the
Offered Interest; and (iii) such transfer is approved by
the Board of Directors under Chapter 3.10. To the
extent that the Offered Interest is not purchased
pursuant to the above provisions, then the Seller shall
not sell, transfer or dispose of such Offered Interest
without again complying with the provisions of this
Chapter 3.8.1.
3.8.2 Each party shall have the right to transfer all or part
of its respective rights and interests in the Joint
Venture Company to one or several of its affiliated
companies without following the procedure set forth in
Chapter 3.8.1 above. Each party hereby consents to any
such transfer by another party to an affiliated company
and waives any preemptive rights in respect of such
transfer.
3.9 In the event that one of the parties merges with or is acquired
by another company, all rights and privileges of this contract
shall be transferred to the resulting or acquiring company
without penalty.
3.10 Any increase or assignment of the registered capital or Total
Investment, other than as stipulated or excepted in Chapter 3.9,
shall be unanimously approved at a meeting of the Board of
Directors and submitted to the original examination and approval
authority for approval. In the case of a transfer effected in
compliance with Chapter 3.8.1 or Chapter 3.8.2, each party
agrees to instruct its representatives on the Board of Directors
to vote to approve the resulting assignment of the transferring
party's registered capital and total investment. Registration
procedures for change shall be dealt with at the original
registration and administration office.
Chapter 4 Sale of Products
4.1 The Joint Venture Company shall be responsible for the marketing
and sales of its products inside and outside the People's
Republic of China. A pricing policy will be proposed by the
General Manager, and approved by the Board of Directors,
designed to achieve pricing, on average, no less than the most
competitive international prices in order to maximize
profitability.
4.2 The Joint Venture Company shall be directly responsible for the
sale of products in all parts of the Peoples Republic of China
other than Hong Kong, Macau and Taiwan (hereinafter referred to
as "Territory A"), and shall develop the market in Territory A
through its direct sales force or its sales representatives,
making its best efforts to increase market share. Commissions
to the Joint Venture Company's sales representatives in
Territory A, if applicable, shall be determined by the General
Manager.
4.3 Party B and Party C shall be responsible for the sales of
products outside of Territory A. The contract or contracts for
the foreign sales of products by the Joint Venture Company to
Party B or Party C, as the case may be, shall be concluded
separately from this Joint Venture Contract and shall provide,
without limitation, that (i) the relationship between the Joint
Venture Company, on the one hand, and Party B and Party C on the
other hand, shall be that of independent vendor and vendee and
shall not be construed to constitute an agency relationship;
(ii) Party B or Party C, as the case may be, shall negotiate and
obtain orders for the products outside of Territory A and submit
orders to the Joint Venture Company for manufacturing and
shipment by the Joint Venture Company all in accordance with the
terms and conditions set forth in such orders. Party B and
Party C may use either of the following options for compensation
in the sale of the products.
4.3.1 Party B or Party C, as the case may be, may purchase the
products for resale to the third party. The Joint
Venture Company shall sell the products to Party B or
Party C, as the case may be, at a reasonable
distributor's discount from the prices set forth in the
Joint Venture Company's price list used in sales to
customers in Territory A. Party B or Party C, as the
case may be, shall resell the products at prices fixed
by them, and the Joint Venture Company shall retain no
control over such resale prices.
4.3.2 Party B or Party C, as the case may be, may sell the
products to a third party as agent on behalf of the
Joint Venture Company at the prices set forth in the
Joint Venture Company's international price list.
Party B or Party C shall be paid a reasonable
representative's commission from the Joint Venture
Company for the sales of those products.
The value of the foreign sales of products, either directly or
indirectly, is estimated to become at least * of the total
sales of the Joint Venture Company. For the purposes hereof,
the three parties agree that foreign sales of products shall
include sales of products made to customers in Territory A which
incorporate such products into their products manufactured for
resale outside of Territory A.
4.4 The Joint Venture Company shall be licensed to use the relevant
trademarks and patents owned by Party B subject to the terms and
conditions set forth in the Agreement of Technology License and
Technical Service.
Chapter 5 The Board of Directors
5.1 The Board of Directors of the Joint Venture Company shall be
established on the date of issuance of the business license to
the Joint Venture Company. The Board of Directors shall be
composed of five Directors of whom two shall be appointed by
Party A, two by Party B and one by Party C. The Chairman of the
Board of Directors shall be appointed by Party A, and the Vice-
Chairman of the Board of Directors shall be appointed by Party
B. The term of office for the Directors and the Chairman and
Vice-Chairman of the Board of Directors shall be four years and
they may be continuously reappointed by their respective
appointing parties. The appointing parties may change the
Directors whom they appointed at any time. If a director is
replaced prior to completing his term, the newly appointed
director shall serve for the remainder of that term. A notice
in writing shall be sent to other parties and the Board of
Directors when a party changes any Director.
5.2 The Board of Directors is the organization of the highest
authority of the Joint Venture Company and shall decide all its
major matters. The issues identified in Chapter 6.2 shall
require a unanimous vote by the Board. All other matters may
pass by a majority vote of the Board.
5.3 The Chairman of Board of Directors is the legal representative of
the Joint Venture Company. In case the Chairman of Board of
Directors may be unable to execute his duty for whatever reason,
the Vice-Chairman or other Director shall be authorized by the
Chairman as his temporary proxy.
5.4 The Chairman of the Board of Directors shall convene the Board
at least twice per year for the first five years and once per
year thereafter. The Chairman shall preside over each meeting.
The second meeting in the first five years may be waived if
agreed to by all three parties. The Chairman shall notify the
board members one month in advance of the meeting in writing and
provide a written agenda including the draft resolutions to be
voted on. If requested by more than one-third of the Board of
Directors, the Chairman shall convene a Board of Directors
meeting. This meeting shall occur no sooner than fifteen (15)
days and no later than thirty (30) days from the Chairman's
written notification of all members. If the Chairman fails to
convene the meeting after such request, then the Directors who
made the request may convene such meeting by written
notification to the Chairman and the other Directors.
At least two-thirds of the members of the Board of Directors
must be present for a meeting of the Board to convene.
All records of the Board of Directors shall be kept. The
minutes of meeting of the Board of Directors shall be kept in
both English and Chinese and shall be signed by all attendees of
the meeting. Each party shall be given one copy of the signed
minutes for their records. Both versions shall be certified to
be the same by an independent legal counsel. The meetings shall
normally be held at the legal address of the Joint Venture
Company.
5.5 Any Director may participate in a meeting of the Board of
Directors by means of conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other or by any other
means permitted by law. Such participation shall constitute
presence in person at such meeting. All formal actions taken at
such meeting shall be confirmed by a writing delivered by fax.
5.6 Should any of the Directors be unable to participate in a
meeting of the Board, he may present a proxy in written form to
the Board of Directors. Upon receipt of notice of the meeting
and in the event that any Director neither attends nor entrusts
others to attend the meeting on his behalf, he shall be deemed
absent and shall forfeit all voting rights for the meeting he is
absent from.
Chapter 6 The Function of Board of Directors
6.1 The functions of the Board of Directors are as follows:
6.1.1 Responsible for executing the Joint Venture Contract,
the Articles of Association and their appendices;
6.1.2 Deciding on the increase or assignment of the registered
capital and/or total investment of the Joint Venture
Company;
6.1.3 Deciding on the termination of the Joint Venture Company
or merger with another economic organization;
6.1.4 Assuming the responsibility of liquidation at the time
of termination;
6.1.5 Adopting the major policies and regulations of the
management of the Joint Venture Company and any
revisions thereafter;
6.1.6 Examining and approving the annual financial statements,
annual business plan, distribution of profits and
contribution to the reserve fund, expansion fund, and
bonus and welfare fund presented by the General Manager;
6.1.7 Approving the appointment of the General Manager,
Financial Manager, Deputy General Manager, Chief
Engineer, and Manufacturing Manager and their salaries
and welfare;
6.1.8 Deciding the upper limit of working capital and bank
loan indebted by the Joint Venture Company;
6.1.9 Deciding the employee's welfare policy.
6.1.10 Other important matters which shall be decided by the
Board of Directors.
6.2 The following issues shall be unanimously passed and decided by
the Board of Directors:
6.2.1 Amending the Articles of Association of the Joint
Venture Company;
6.2.2 Deciding on an increase or an assignment of the
registered capital of the Joint Venture Company, except
as noted in Chapter 3.9 of these Articles of
Association;
6.2.3 Deciding the termination and dissolution of the Joint
Venture Company;
6.2.4 Merger of the Joint Venture Company with another
economic organizations.
6.3 The following issues shall be passed and decided by a majority
of the Board of Directors of the Joint Venture Company.
6.3.1 Approving annual financial reports and annual business
plan;
6.3.2 Deciding the upper limit of working capital and bank
loan;
6.3.3 Adopting the major policies and regulations of the
management of the Joint Venture Company and any
revisions thereafter;
6.3.4 Deciding employee's welfare;
6.3.5 Approval of the appointment of the General Manager,
Deputy General Manager, Financial Manager, Chief
Engineer and Manufacturing Manager;
6.3.6 Contribution to the reserve fund, expansion fund and
bonus and welfare fund;
6.3.7 Distribution of profits;
6.3.8 Any other matters which are appropriate for action by
the Board of Directors.
Chapter 7 Management Organization
7.1 All the parties have confirmed that the Joint Venture Company
shall implement the responsibility system under the leadership
of the Board of Directors. The General Manager is responsible
for the daily management and operation of the Joint Venture
Company.
7.2 The management organization shall have one General Manager
recommended by Party B and one Deputy General Manager
recommended by Party A. The General Manager and Deputy General
Manager shall be approved by the Board of Directors. The
General Manager and Deputy General Manager shall be appointed
for two year periods. The Board of Directors has the option to
renew the terms of the General Manager and Deputy General
Manager for additional two year periods thereafter. The
Chairman and Vice-Chairman of the Board of Directors and
Directors can hold posts as General Manager, Deputy General
Manager or other senior staff concurrently. The Joint Venture
Company shall be exclusively responsible for compensating the
General Manager, the Deputy Manager and all other managers and
employees of the Joint Venture Company.
7.3 The functions and responsibilities of the General Manager shall
be to carry out the decisions made by the meeting of the Board
of Directors, to organize and lead the daily management and
operation of the Joint Venture Company and to establish the
sales strategy and pricing of products sold by the Joint Venture
Company, inside and outside of the People's Republic of China.
The Deputy General Manager shall assist the General Manager in
his work. The major issues of the Joint Venture Company shall
be decided through consultations among the General Manager and
the Deputy General Manager. The General Manager and such other
officers appointed by the Board of Directors shall have the
authority to execute contracts and other instruments on behalf
of the Joint Venture Company and to act for the Joint Venture
Company in accordance with authority identified in a vote taken
by a majority of the Board of Directors, either generally or as
to specific matters.
Department managers shall be appointed by the General Manager in
consultation with the Deputy General Manager, shall be
respectively responsible for the work of the various
departments, shall handle the matters handed over by the General
Manager and Deputy General Manager and shall be responsible to
them. During the General Manager's absence, daily affairs of
the company shall be carried on by the Deputy General Manager or
other senior management staff.
7.4 The Joint Venture Company has a Chief Engineer, responsible for
technology, a Manufacturing Manager, responsible for production,
and a Financial Manager, responsible for finance and accounting,
all of whom shall be recommended by the General Manager for the
approval of the Board of Directors.
7.5 The Board of Directors may decide to dismiss the General Manager
and Deputy General Manager, Financial Manager, Manufacturing
Manager, or Chief Engineer at any time. If it is necessary, the
General Manager may suggest to the Board of Directors to dismiss
the Deputy General Manager, Financial Manager, Manufacturing
Manager, and Chief Engineer. Other than as previously provided
for, the General Manager may dismiss managers of other
departments or other staff at any time, as he deems necessary.
7.6 If they so desire, the General Manager, Deputy General Manager,
Chief Engineer, Financial Manager and Manufacturing Manager
shall submit their resignation to the Board of Directors in
writing at least ninety (90) days in advance.
7.7 In the case of graft or dereliction of duty by the General
Manager, Deputy Manager, Chief Engineer, Financial Manager, or
Manufacturing Manager, the Board of Directors may dismiss them
at any time, with no further obligations under the individual's
employment contract in force at the time.
7.8 The General Manager and Deputy General Manager, within his
employment term and for 12 months thereafter, shall not hold any
position in other organizations in the People's Republic of
China which would present a conflict of interest with the Joint
Venture Company.
Chapter 8 Tax, Finance and Audit
8.1 The Joint Venture Company shall pay taxes in accordance with the
stipulations of the related laws and regulations of China.
8.2 Staff members and workers of the Joint Venture Company shall pay
individual income tax according to the individual "Income Tax
Law of the People's Republic of China."
8.3 The accounting system of the Joint Venture Company shall be
formulated in accordance with the People's Republic of China's
relevant laws and procedures on financial affairs and
accounting, and in consideration of the conditions of the Joint
Venture Company, and to be filed with local financial
departments and tax authorities.
8.4 The fiscal year of the Joint Venture Company shall coincide with
the calendar year, i.e. from January 1 to December 31 on the
Gregorian Calendar. The Joint Venture Company shall maintain a
second set of books to accommodate the reporting requirements of
Party B.
8.5 The accounting of the Joint Venture Company shall adopt the
internationally adopted accrual basis and debit and credit
accounting system in their work. All vouchers, account books,
statistic statements should be prepared in Chinese, and reports
in English.
8.6 The Joint Venture Company shall adopt Renminbi as its
bookkeeping basis currency. The conversion of Renminbi to other
currency shall be in accordance with the middle value of the
exchange rate of the converting day quoted by the People's Bank
of China. This shall be the effective exchange rate for these
Articles of Association.
8.7 The Joint Venture Company should open Renminbi deposit accounts
and foreign exchange deposit accounts in banks approved by the
State Administration of Exchange Control and the Board of
Directors.
8.8 The Joint Venture Company shall employ an accountant registered
in China to be responsible for auditing and to forward the
reports to the General Manager and the Board of Directors. Any
party to the Joint Venture Company shall have the right to
employ an auditor at their own expense to perform an annual
financial audit and examination. This report shall be for
reference only to other parties.
8.9 The Financial Manager shall prepare the balance sheet, income
statement and statement of cash flows of the previous year by
the end of the first three months of the next fiscal year. The
General Manager shall present the financial statements and
proposal for profit distribution, if any, to the Board of
Directors for examination and approval. Unaudited monthly
financial statements, similar to those prepared yearly, shall be
submitted to all members of the Board of Directors within 30
days of the end of the month.
8.10 Subject to the "Detailed Rules and Regulations for the
Implementation of the Income Tax Law of the People's Republic of
China Concerning Enterprises with Foreign Investment and Foreign
Enterprises," the Board of Directors shall decide the
depreciation period of the fixed assets.
Chapter 9 Foreign Exchange
9.1 All matters concerning foreign exchange for Joint Venture
Company shall be handled according to the "Interim Regulations
on Foreign Exchange Control of the People's Republic of China"
and relevant regulations.
9.2 The Joint Venture Company shall make their best effort to
transact sales in foreign currency. To the extent that the
Board of Directors decides to distribute profits, the profits
shall be distributed to the parties in proportion to their
contributions of registered capital. Party B and Party C enjoy
the priority to have profits distributed in foreign currency if
profits in foreign currency exist.
Chapter 10 Profit Distribution
10.1 Profits cannot be distributed unless the Joint Venture Company
has a positive retained earnings that year
10.2 The profits of the Joint Venture Company cannot be distributed
unless the losses of previous years have been made up. Profits
remaining from previous fiscal year can be distributed together
with the current fiscal year.
10.3 The distribution of profits remaining after payment of taxes and
deduction of the reserve fund, expansion fund, and bonus and
welfare fund, shall be determined by the Board of Directors of
the Joint Venture Company. At the first Board of Directors
meeting, a schedule for profit distribution shall be determined
and agreed to. The Board of Directors may elect to retain a
part or all of the profits for business expansion. Any profits
that are distributed shall be distributed to the parties in
proportion to the amounts of their respective contributions to
the registered capital of the Joint Venture Company.
Chapter 11 Staff and Workers
11.1 A labor policy subject to the laws and regulations of China
shall be presented by the General Manager to the Board of
Directors for review and approval.
11.2 Concerning the recruitment, employment, dismissal and
resignation, wages, labor insurance, welfare, rewards, penalty
and other matters of the staff and workers of the Joint Venture
Company, these matters shall be executed by the General Manager
according to the "Regulations of the People's Republic of China
on Labor Management in Joint Ventures Using Chinese and Foreign
Investment" and "Regulations of Shanghai Municipality on Labor
and Personnel Management in Joint Ventures Using Chinese and
Foreign Investment."
11.3 The General Manager, Deputy General Manager, Financial Manager,
Chief Engineer and Manufacturing Manager shall be approved and
discharged by the Board of Directors. The staff and workers
needed by the Joint Venture Company may be recommended by Party
A, and hired, subject to the approval of the General Manager,
Any other professionals which may still be needed may be
recruited from the public, after obtaining the consent of local
labor and personnel department, through an examination and
selection process in which only the best will be hired.
11.4 The Board of Directors shall authorize the General Manager to
decide the wage, salary and remuneration after referring to the
relevant regulations and combining the specific circumstance of
the Joint Venture Company.
Chapter 12 The Trade Union
12.1 The staff and workers of the Joint Venture Company have the
right to establish a trade union and carry out the activities in
accordance with the stipulations of the "Trade Union Law of the
People's Republic of China".
12.2 The union in the Joint Venture Company represents the interests
of the staff and workers. The tasks of the trade union are: to
protect the democratic rights and material interests of the
staff and workers pursuant to the law; to assist the Joint
Venture Company to arrange and make rational use of welfare
funds and bonuses; to organize political, professional,
scientific and technical studies, carry out literary, art and
sports activities; and to educate staff and workers to observe
labor discipline and strive to fulfill the economic tasks of the
Joint Venture Company.
12.3 The Joint Venture Company shall allot an amount of money
totaling 2% of all the salaries of the staff and workers of the
Joint Venture Company (excluding allowances paid to foreign
employees) as union's funds, which shall be used by the union in
accordance with the "Managerial Rule for the Trade Union Funds:
formulated by the All China Federation of Trade Unions."
Chapter 13 Duration of the Joint Venture Company
The duration of the Joint Venture Company shall be fifty (50) years
commencing on the date of issuance of the business license to the
Joint Venture Company. An application for the extension of the
duration of the Joint Venture Company proposed by one party and
unanimously approved by the Board of Directors, shall be submitted to
the original authorities for approval six months prior to the end of
the initial fifty-year term.
If, after the establishment of the Joint Venture Company, the People's
Republic of China government, whether at the national, provincial,
municipal or local level, adopts any new law, regulation, decree or
rule, any amendment which results in more favorable treatment to the
Joint Venture Company or any party (without resulting in less
favorable treatment to any other party than the terms of the Joint
Venture Contract), the Joint Venture Company and the party concerned
shall promptly apply to receive the benefits of such more favorable
treatment and each of the parties shall use its diligent efforts to
facilitate such application.
If, after the establishment of the Joint Venture Company, the People's
Republic of China government, whether at the national, provincial,
municipal or local level, adopts any new law, regulation, decree or
rule, or any amendment which materially and adversely affects any
party's economic benefits under the Joint Venture Contract, then upon
written notice thereof from the affected party to the other parties,
the parties shall promptly consult and determine whether (i) pursuant
to Article 40 of the "People's Republic of China Foreign Economic
Contract Law," to continue to implement the Joint Venture Contract in
accordance with the original provisions thereof, or (ii) to effectuate
necessary adjustment in order to preserve each party's economic
benefits under the Joint Venture Contract on a basis no less favorable
than the economic benefit it would have received had such law,
regulation, decree or rule not been promulgated or amended.
Chapter 14 Termination of Contract
14.1 The termination of the Joint Venture Contract and its Appendices
shall come into effect only after the written agreement has been
signed by all parties and approved by the original examination
and approval authority.
14.2 In case of inability of the parties to carry out the Contract as
a result of Force Majeure or to continue operation due to losses
in successive years, the Joint Venture Contract and the Articles
of Association may be terminated with the unanimous decision of
the Board of Directors and approval by the original examination
and approval authority.
Chapter 15 Resolution of Default
If any party defaults on their obligations under this Contract, the
Lease Agreement, the Equipment Leasing Agreement, or the Agreement of
Technology License and Technical Service and such default is of such
significance as to cause or threaten to cause material damage to the
Joint Venture Company or the interests of non-defaulting parties, the
defaulting party will be notified in writing by the other parties and
given thirty (30) days to remedy this default. If after thirty (30)
days the breach of contract is not remedied, the remaining parties may
elect to terminate the defaulting party. If this occurs the
defaulting party forfeits all voting rights on the Board of Directors,
until the remaining Board members exercise their options and resolve
the default. The remaining Board members may exercise the following
options.
15.1 Offer additional time for the defaulting party to remedy the
breach;
15.2 Provide for the purchase by the Joint Venture Company or the
remaining parties of the defaulting party's equity less any
amount owed the Joint Venture Company;
15.3 Reduce the equity position of the defaulting party in proportion
to the amount owed the Joint Venture Company and increase the
equity share of the other parties proportionally;
15.4 If the amount owed the Joint Venture Company is equal to or
greater than the equity of the defaulting party, the remaining
parties may remove that party from the Joint Venture Company and
redistributed the equity in proportion to their equity or
liquidate the Joint Venture Company.
Chapter 16 Liquidation
16.1 Upon the termination of the Joint Venture Company according to
the law, the Board of Directors shall work out procedures and
principles for the liquidation, nominate candidates for the
liquidation committee, and set up the liquidation committee for
liquidating the Joint Venture Company's assets.
16.2 The tasks of the liquidation committee are: to conduct the
check of the property of the Joint Venture Company, its claim
and indebtedness; to work out the statement of assets and
liabilities and list of property; and to formulate a liquidation
plan. All these shall be carried out upon the approval of the
Board of Directors. During the process of liquidation, the
liquidation committee shall represent the company to sue and be
sued.
16.3 The liquidation expenses and remuneration to the members of
liquidation committee shall be paid on a priority basis from the
existing assets of the Joint Venture Company as determined by
the Board of Directors.
16.4 The remaining property after the clearance of debts of the Joint
Venture Company shall be distributed among the parties to the
Joint Venture Company according the proportion of each party's
investment in the registered capital. Party B and Party C enjoy
the priority to have the remaining assets distributed to them in
foreign currency if such foreign currency exists.
16.5 On completion of the liquidation, the Joint Venture Company
shall submit a liquidation report to the original examination
and approval authority, go through the formalities for
nullifying its registration in the original registration office
and return its business license. At the same time, a public
announcement shall be made.
16.6 After liquidation of the Joint Venture Company, its account
books shall be left in care of Party A. Any Party shall have
the right to view and the right to obtain a copy of these
account books at their expense.
Chapter 17 Policies and Regulations
The following policies and regulations shall be established by the
General Manager under the guidelines of the Board of Directors:
17.1 Management regulations, including the powers and functions of
the managerial branches and its working rules and procedures;
17.2 Rules for the staff and workers;
17.3 System of labor and salary;
17.4 System of work attendance record, promotion and awards and
penalty for staff members and workers;
17.5 Detailed rules of staff and worker's welfare;
17.6 Financial system;
17.7 Business trip system;
17.8 Other necessary policies and regulations.
Chapter 18 Supplementary Articles
18.1 These Articles of Association shall be written both in Chinese
and English versions. Both versions are equally valid.
18.2 The Articles of Association are an appendix of the Joint Venture
Contract. If the Articles of Association conflicts with the
Joint Venture Contract, the Joint Venture Contract shall
prevail. The amendments to the Articles of Association shall
be unanimously agreed upon, signed by Party A, Party B and Party
C, and submitted to the original examination and approval
authority for approval.
18.3 The Articles of Association shall be approved by the competent
authority of Shanghai Municipal government and shall come into
force beginning from the date of approval.
18.4 Should a notice in connection with any party's rights and
obligations be sent by either Party A, Party B, or Party C by
fax, it shall be confirmed by written letter notification.
The addresses of the parties are the legal addresses of the
parties which are written in the Contract
18.5 The Articles of Association is signed by the authorized
representatives of the parties on May 29, 1995 in Shanghai,
China.
Parlex Corporation Shanghai 20th Radio Factory
/s/ HERBERT W. POLLACK /s/ SUI GUAN LIANG
- ---------------------------------- -----------------------------------
Authorized Signature Authorized Signature
Herbert W. Pollack Sui Guan Liang
- ---------------------------------- -----------------------------------
Name Name
President President
- ---------------------------------- -----------------------------------
Title Title
Mascon, Inc.
/s/ JAMES HUANG
- ----------------------------------
Authorized Signature
James Huang
- ----------------------------------
Name
Executive V.P.
- ----------------------------------
Title
Appendix 6
Agreement of Technology License and Technical Service
Agreement of Technology License and Technical Service
Of
Parlex (Shanghai) Circuits Co., Ltd.
May 29, 1995, Shanghai
Contents of Agreement of
Technology License and Technical Service
1. Definitions
2. Scope of Contract Technology
3. Technical Documentation
4. Technical Service
5. Technology Value
6. Acceptance
7. Patents and Trademarks
8. Environmental Protection
9. Taxes and Duties
10. Non-Disclosure
11. Applicable Law
12. Force Majeure
13. Proprietary Rights
14. Liabilities
15. Legal Compliance
16. Assignment and Sublicensing
17. Effectiveness of the Agreement
Appendix A General Specifications, Processes and Capacity of the Joint
Venture Company
Appendix B Content and Delivery of Technical Documentation
Appendix C Training and Treatment of the Joint Venture Company's Personnel
Appendix D Technical Service on Site
Appendix E Non-disclosure Agreement
Agreement of
Technology License and Technical Service
The following agreement is in consideration of the Joint Venture Contract
between the Shanghai 20th Radio Factory (Party A), Parlex Corporation (Party
B) and Mascon, Inc. Co. (Party C) to jointly invest to set up Parlex
(Shanghai) Circuit Co. Ltd., hereafter referred to as Joint Venture Company.
Whereas the Joint Venture Company needs new technology and accepts the
technology license and Technical Service from Party B, the Joint Venture
Company and Party B, through consultation, adhering to the principles of
equality and mutual benefit and in accordance with the principles specified
in the Joint Venture Contract, sign this agreement as an appendix and
integral part of the Joint Venture Contract. This agreement is effective
after the Joint Venture Contract is signed and the business license is
issued.
Party B, being a possessor of advanced printed circuits and related product
technology, agrees to license to the Joint Venture Company the above-
mentioned technology with associated design, marketing, manufacturing,
quality control and other related know-how;
The Joint Venture Company wishes to acquire the above mentioned technology
by license for manufacturing these products and selling both domestically
and abroad;
1. Definitions
1.1 Contract Products refer to the flexible single-sided, double-
sided, multilayer and rigid-flexible circuits as well as related
parts and assembly products.
1.2 Contract Technology refers to the patent, know-how and technical
knowledge owned by Party B for producing Contract Product
encompassing the design, manufacture, testing, quality control
and other related know-how as described in Chapter 2.1.
1.3 Technical Information refers to all drawings and technical
documents related to Contract Technology as used by Party B in
the manufacture of Contract Products and necessary and
sufficient for the manufacture of Contract Products by the Joint
Venture Company.
1.4 Technical Service is the necessary technical service concerning
technical training, installation of equipment and commissioning
provided by Party B to the Joint Venture Company to utilize the
Contract Technology.
2. Scope of Contract Technology
2.1 Party B hereby grants to the Joint Venture Company the
nonexclusive, paid up, royalty free, limited right and license
under Party B's rights in the Contract Technology, for the term
hereinafter set forth, to manufacture Contract Products in China
using the Contract Technology and Technical Information and to
sell such Contract Products anywhere in the world. The
foregoing license shall become effective with respect to each
category of Contract Products at the time that Technical
Information relating to such category is delivered to the Joint
Venture Company under Chapter 3.2, and shall thereafter extend
with respect to each such category for the term of this
Agreement.
2.2 The Contract Technology licensed by Party B to the Joint Venture
Company should include:
2.2.1 Patent and/or know-how related to design, manufacture,
control of raw and auxiliary materials, process control,
production management, environmental protection, quality
assurance, cost calculation and sales of flexible
single-sided, double-sided, multilayer, rigid-flexible
printed circuits and related assembly products.
2.2.2 Engineering design and drawing specifications.
2.2.3 List of raw and auxiliary materials including name,
type, specifications, manufacturer, alternatives,
quantities needed, storage condition, quality inspection
standards and test methods.
2.2.4 Additionally, any other technology possessed by Party B
related to and needed for production of contract
product.
2.2.5 This agreement is limited to technology which is owned
by Party B and specifically excludes the
PALFlex[Registration Mark] manufacturing technology, but
does not exclude the purchase by the Joint Venture
Company from Party B of pre-punched, metallized
PALFlex[Registration Mark] material.
2.3 Party B shall guarantee that the Contract Technology licensed to
the Joint Venture Company is legally owned by Party B. In case,
any part of the above technology is not owned by Party B, Party
B shall explain to the Joint Venture Company beforehand and
present the certificate showing that Party B has the right to
use.
2.4 If there are any articles or materials produced by a third party
for use in the Contract Technology transferred to Joint Venture
Company by Party B, Party B should provide the Joint Venture
Company with relevant Technical Information to the extent that
Party B is permitted to do so.
2.5 Through the license of Contract Technology and providing
Technical Service, Party B shall provide sufficient technology
and information to enable the Joint Venture Company to produce
the Contract Product to the standards referred to in Chapter
2.5.1 through 2.5.6 and revisions thereof. The Joint Venture
Company's achievement of these standards will depend on the
Joint Venture Company's manufacturing processes and quality of
raw materials and components, which are not Party B's
responsibility.
2.5.1 MIL-P-50884C Military Specification Printed-Wiring,
Flexible and Rigid-Flex
2.5.2 IPC-D-249 Design Standard for Flexible single and
Double-Sided Printed boards
2.5.3 IPC-RF-245 Performance Specification for Rigid-Flex
Printed Boards
2.5.4 IPC-FC-250 Specification for Single-and Double-
Sided Flexible Printed Wiring
2.5.5 Contract Products that have to obtain UL approval, Party
B shall assist The Joint Venture Company with the
formalities for approval.
2.5.6 Party B shall advise the Joint Venture Company about the
procedures to obtain ISO 9002.
2.6 During the term of this agreement any knowledge, information,
technical documents regarding the improvements in the Contract
Technology made by Party B, whether a patent has already been
acquired or not, shall be included as part of the technology
licensed under this agreement. To the extent applicable to the
Contract Products, this does not include improvements which
relate to products which are not Contract Products. No further
fees or royalties shall be required from the Joint Venture
Company. The ownership of the above-mentioned technology and
the right to apply for patents on that technology belong to
Party B. "Improvements" means improvements which relate to
efficiency and quality of manufacture. The foregoing
requirements do not apply to developments and inventions which
result in significant enhancement in the product's functions or
performance. The parties may negotiate a separate license
agreement for additional developments and inventions as they are
developed by Party B.
2.7 During the term of this agreement any knowledge, information,
technical documents regarding the basic improvement and
development in the Contract Technology made by the Joint Venture
Company, whether a patent has already been acquired or not,
shall be disclosed by the Joint Venture Company to Party B, and
Party B shall have the nonexclusive, royalty free, perpetual
right and license to use any such improvements and developments
in its own development, manufacturing and sales activities.
2.8 During the term of this agreement, the Joint Venture Company may
send its technical people to Party B with the consent of Party B
for a reasonable number of visits. All costs of such visits
shall be borne by the Joint Venture Company.
2.9 During the term of this agreement, Party B will assist, within
reason, at the Joint Venture Company's expense, the Joint
Venture Company to develop domestic sources for materials.
2.10 During the term of this agreement, the Joint Venture Company
will properly use the technology supplied by Party B. Party B
shall indemnify the Joint Venture Company against being involved
in legal proceedings for the right to use the technology to the
extent provided in Chapter 14.2.
3. Technical Documentation
3.1 Party B guarantees that the Technical Information provided to
the Joint Venture Company will be complete and reliable, correct
and entirely matching the requirements of manufacture of the
Contract Products.
3.1.1 Complete means that the Technical Information provided
by Party B shall be the complete materials stipulated in
Appendix B of this agreement, which is the same
technical documentation used and possessed by Party B in
producing the same products.
3.1.2 Reliable means that the Contract Products produced by
Party B using the Technical Information provided to the
Joint Venture Company under this Agreement are in
accordance with the specifications and performance index
as stipulated in Appendix A of this agreement.
3.2 Party B shall deliver the Technical Information listed in
Appendix B according to the Joint Venture Company's
requirements. The set of Technical Information for flexible
single-sided and double-sided boards shall be delivered to the
Joint Venture Company at Shanghai airport within two months
starting from the effective date of this Agreement. The date
stamped on the bill of lading by the Shanghai airport shall be
considered as the date of delivery. Subsequent Technical
Information shall be delivered in time according to the progress
requirements of the Joint Venture Company's products as
determined by the Board of Directors, and shall be delivered to
the Joint Venture Company at Shanghai airport within six weeks
from the date required by the Joint Venture Company in writing.
3.3 Within two days after dispatch of every set of Technical
Information, Party B shall notify the Joint Venture Company by
fax or express mail of the contract number, date of dispatch,
flight number, airway bill number, number of pieces, weight and
packing list of the technical documents.
3.4 After receiving the Technical Information dispatched by Party B,
the Joint Venture Company shall check the documents within two
weeks. In case of any inconsistency with the packing list or
during the process of implementation of the delivered Technical
Information, any shortages, errors, or non-conformance with
requirements stipulated in Appendix B of this agreement, the
Joint Venture Company may ask Party B to supplement the error or
omission . Party B shall send the supplement free of charge
within one month after requested by the Joint Venture Company.
Any delay shall be dealt with according to the provision of
Chapter 3.5.
3.5 Party B guarantees to provide Technical Information by the
scheduled time so as to ensure the construction progress of this
project. If the technical documents have not been delivered to
the Joint Venture Company at the fault of Party B within the
stipulated time in Appendix B of this agreement, at the
discretion of the Board of Directors, Party B shall pay
compensation to the Joint Venture Company at a rate of * of
the license fee for each month of delay starting from the fourth
week of delay. The maximum penalty incurred under such
conditions shall be * of the license fee.
3.6 Party B's payment of compensation in accordance with Chapter 3.5
shall not release Party B from obligation to continue to deliver
the technical documents.
4. Technical Service
4.1 The following Technical Services shall be the responsibility of
Party B
4.1.1 Party B shall be responsible to advise the Joint Venture
Company in designing a reasonable and correct process
layout for the contract factory space.
4.1.2 Party B shall be responsible for the recommendation of
equipment, chemicals and materials. Party B shall
recommend equipment whose performance is expected to be
in accordance with the requirements in Appendix A for
producing the Contract Products and shall be responsible
for advising on the feasibility of the finalized layout
of all the equipment.
* Confidential information has been omitted and filed separately with the
Commission.
4.1.3 Within the first year of the agreement and within
reason, Party B shall send experts to the Joint Venture
Company to provide Technical Service on site according
to the requirements of project progress. After the
first year, the Joint Venture Company will pay the cost,
including food, travel, lodging, and pro-rated annual
salary to Party B for additional Technical Services at
the Joint Venture Company. The details are included in
Appendix D.
4.1.4 The technical documentation shall be shipped freight
prepaid by Party B to the Joint Venture Company;
4.2 Party B shall be responsible for providing technical training.
4.2.1 In order to implement the Contract Technology, Party B
agrees that the Joint Venture Company will dispatch
managerial and technical personnel to Party B, at the
Joint Venture Company's expense. Party B shall assist
the Joint Venture Company in obtaining food and lodging
for the Joint Venture Company's personnel during their
visit to Party B's facility. Party B shall be
reimbursed by the Joint Venture Company for these
expenses.
4.2.2 Within the first year of the agreement and within
reason, Party shall send experts to the Joint Venture
Company at Party B's expense to provide technical
training on site according to the requirements of
project progress. After the first year, the Joint
Venture Company will pay the cost, including food,
travel, lodging, and pro-rated annual salary to Party B
for additional technical training at the Joint Venture
Company.
4.2.3 The scope and requirements for training of Joint Venture
Company's personnel by Party B are stipulated in
Appendix C.
4.3 Party B shall provide technical instruction for installation and
commissioning of the equipment provided by Party B.
4.3.1 During the installation and commissioning of Joint
Venture Company's factory, Party B shall dispatch
experts to the Joint Venture Company at Party B's
expense to provide technical instruction and service.
4.3.2 Party B shall be responsible for the installation and
commissioning and make available designated special
tools and materials necessary for installation and
commissioning while this process is taking place.
4.3.3 Party B shall be responsible for installation and
commissioning in accordance with Appendix 1 of the Joint
Venture Contract.
5. Technology Value
5.1 In consideration of Party B's technology license and Technical
Service according to this agreement, in accordance with
Section 7.3 of the Joint Venture Contract the three investing
Parties of the Joint Venture Company agree the value of
technology is:
*
5.1.1 Both Parties agree that the value for the above
mentioned items B and C include all expenses incurred in
the implementation during the first year;
5.1.2 The cost for the technology license shall be borne only
once. The technology and information provided to the
Joint Venture Company by Party B as required by this
Agreement will subsequently be free of charge. The
technology, and information provided to Party B by the
Joint Venture Company as required by this Agreement will
subsequently be free of charge;
5.1.3 The value of the Technology License will be used by
Party B as investment in the Joint Venture Company;
5.1.4 The value of the Technical Training will be used by
Party B as investment in the Joint Venture Company;
5.1.5 The value of the Technical Support will be used by Party
B as investment in the Joint Venture Company.
6. Acceptance
6.1 The newly purchased equipment, after being installed, should be
first tested to determine that the new equipment together with
the existing equipment of Shanghai 20th Radio Factory meets the
stipulated requirements.
6.2 If the trial production is made in the Joint Venture Company's
factory and the Contract Products meet the standards specified
in Appendix A, the representatives from the three Parties shall
sign a certificate of acceptance of the Joint Venture Company's
factory. A copy of the certificate of acceptance shall be
submitted to each party.
6.3 Party B shall lead the other parties in identifying and
determining resolution. All of the parties shall provide the
required support to achieve acceptance of the Joint Venture
Company's production process.
* Confidential information has been omitted and filed separately with the
Commission.
7. Patents and Trademarks
7.1 During the term of this agreement, the Joint Venture Company has
the right and license to use Party B's patents and trademarks on
its Contract Products so long as Party B remains a part of the
Joint Venture Company.
7.2 Party B has the right to examine and supervise the quality of
the Joint Venture Company's products which use Party B's
trademarks and the manner in which such trademarks are displayed
and used on products and in packaging and marketing materials.
If reasonably requested by Party B, the Joint Venture Company
shall stop using Party B's trademarks for products which Party B
finds unsatisfactory or in a manner to which Party B objects.
8. Environmental Protection
The drainage of waste sludge, waste water and waste gas, and the
influence to the environment, while producing contract product in
accordance with the technology incorporated by the Joint Venture
Company shall meet the requirement of the laws and decrees of the
People's Republic of China on environmental protection. Compliance
with environmental laws and decrees shall be the responsibility of the
Joint Venture Company and Party A as provided in Chapter 24 of the
Joint Venture Contract.
9. Taxes and Duties
9.1 All taxes and/or duties arising outside of China in connection
with the transfer of technology shall be borne by Party B.
9.2 The Joint Venture Company shall pay taxes to the Chinese
government in accordance with the relevant laws of taxation of
the People's Republic of China. Party A shall help the Joint
Venture Company apply to the taxation authority of China for tax
reduction or exemption according to the appropriate regulations.
10. Non-Disclosure
Attached as Appendix E to this Agreement is the Non-Disclosure
Agreement agreed to by the Joint Venture Company and Party B.
11. Applicable Law
11.1 The formation, validity, interpretation, execution of this
Agreement and the settlement of disputes under it shall be
governed by the Laws of the People's Republic of China.
11.2 Party B shall not be required by this agreement to violate any
laws of the United States of America.
12. Force Majeure
When any Force Majeure, such as earthquake, typhoon, flood, fire, war
or other unforeseen events of which the happening and consequences
cannot be prevented or avoided, causes direct effect on the
fulfillment of this Agreement or the inability to fulfill the
conditions of this Agreement, the party encountering the Force Majeure
shall notify the other two parties by fax without any delay. Within
fifteen days thereafter the party encountering the Force Majeure shall
provide the detailed information of the events and a valid document
for evidence, issued by legal authorities of the place where the Force
Majeure occurred, giving reasons for the failure to fulfill, for
partial failure to fulfill, or for deferring the fulfillment of the
contract. All parties shall, through consultations, decide whether to
terminate this Agreement or to exempt part of obligations for
implementation of this Agreement or whether to defer the execution of
this Agreement according to the extent of the effects of events on the
performance of this Agreement.
13. Proprietary Rights
All proprietary rights in and to the Contract Technology and Technical
Information including, without limitation, all rights with respect to
patents, copyrights and trademarks and rights under the trade secret
laws or the Anti-Unfair Competition Laws of any jurisdiction, shall be
and remain the sole property of Party B. Neither the Joint Venture
Company, any affiliate of the Joint Venture Company nor any customer
of the Joint Venture Company or any affiliate of the Joint Venture
Company shall have any right, title or interest therein except as
expressly provided herein. The Joint Venture Company's rights
hereunder are nonexclusive, and Party B shall not be limited or
restricted in its use, sublicensing or transfer (subject to the Joint
Venture Company's rights hereunder) of any such proprietary rights, or
its manufacture, marketing and sale of products based upon or
embodying such proprietary rights, except as expressly provided
herein. The Joint Venture Company agrees to place on all units of the
Contract Products appropriate notice of any patent registration or
application of which it is given notice by Party B, all in accordance
with Party B's reasonable instructions as to the content of such
notices, and shall promptly notify Party B of any infringement of
Party B's proprietary rights of which it has knowledge.
14. Liabilities
14.1 Indemnification by the Joint Venture Company. The Joint
Venture Company hereby agrees to indemnify and defend Party B,
and hold it harmless, against any claims that may be made
against Party B by any person which result from the
manufacturing or sale of the Contract Products by Joint Venture
Company.
14.2 Indemnification by Party B. Party B agrees to defend, at its
expense, and to pay all costs and damages awarded against the
Joint Venture Company based on, any and all claims by third
parties arising from actual or alleged infringement by any of
the Contract Technology or Technical Information of any
enforceable copyrights, patents, trade secrets or other
proprietary rights, provided that Party B's obligation under
this Chapter 14.2 shall not apply to the extent that such
actual or alleged infringement arises out of (i) modifications
to the Contract Technology or Technical Information made by the
Joint Venture Company, (ii) the combination of the Contract
Technology or Technical Information together with other
information, technology or processes not supplied by Party B,
or (iii) the use of the Contract Technology or Technical
Information in a manner other than as instructed by Party B,
and provided that Joint Venture Company complies in full with
all of the provisions of this Chapter 14.2. In the event that
Joint Venture Company receives a claim or notice of a claim
that is subject to Party B's obligations under this Chapter
14.2, Joint Venture Company shall (i) give Party B prompt
written notice of such claim or notice of claim, (ii) cooperate
with Party B at Party B's expense in every reasonable manner in
the defense of such claim, and (iii) permit Party B to assume
and control the defense thereof at Party B's cost and expense,
provided that Joint Venture Company shall have the right, at
its option and at its expense, to participate in the defense of
such claim through counsel of its own choosing. If
infringement is held to exist, or if either party determines
that a finding of infringement is likely, the parties agree to
discuss in good faith alternative arrangements under which the
liability of the parties could be reduced, including possible
revisions to the infringing material so as to make it non-
infringing, or arranging to procure for Joint Venture Company
the right to continue using the infringing material to the
extent permitted by this Agreement.
14.3 Limitation. In no event shall either party be liable for any
indirect, special, incidental or consequential damages arising
out of or in any way connected with this Agreement, the license
granted hereby, the services performed hereunder, or any other
matter related hereto. In any event, each party's total
liability for damages, in contract, tort or otherwise, arising
out of or in any way connected with this Agreement shall be
limited to a maximum amount equal to the amount attributed to
the value of the Technology License set forth in Section 5.
15. Legal Compliance
The parties acknowledge and agree that the necessity of compliance
with all legal requirements, rules and regulations relating to the
manufacturing, packaging, labeling, distributing, marketing and/or
sale of the Contract Products by the Joint Venture Company, including
compliance with all U.S. export control and other requirements
relating to re-export of the Contract Technology or Technical
Information or Contract Products manufactured thereby, shall be the
sole responsibility and obligation of Joint Venture Company at its
entire cost. Joint Venture Company will indemnify and hold Party B
harmless against any and all claims, damages, penalties and other
actions and costs, including, without limitation, reasonable fees of
legal counsel, arising out of or related to a failure to wholly or
partially comply with the legal requirements and regulations relating
to the manufacturing, design, quality, safety, packaging, labeling,
advertising, distributing, marketing and/or sale of the Contract
Products by Joint Venture Company.
16. Assignment and Sublicensing
Except as hereinafter set forth, neither party may assign this
Agreement in whole or in part without the prior written consent of the
other party. Any assignment attempted otherwise than in compliance
with this Chapter 16 shall be void. Joint Venture Company shall not
have any right to sublicense any of the rights granted hereunder,
except to the extent sublicensing of distribution rights may be
required in connection with Joint Venture Company's distribution of
Contract Products through distributors, retailers, representatives and
other intermediaries.
17. Effectiveness of the Agreement
17.1 This agreement is signed by the representatives of three
Parties and shall become effective on the date of approval by
the relevant authorities as provided in Chapter 28.1 of the
Joint Venture Contract and will continue to be effective during
the term of the Joint Venture Contract.
17.2 The effective period of this agreement is the same as the
effective duration of the contract as indicated in Chapter 17
of the Joint Venture Contract.
17.3 The following appendices are an integral part of this
agreement:
Appendix A General Specifications, Processes and Capacity
of the Joint Venture Company
Appendix B Content and Delivery of Technical Documentation
Appendix C Training and Treatment of the Joint Venture
Company's Personnel
Appendix D Technical Service on Site
Appendix E Non-Disclosure Agreement
Parlex Corporation
/s/ HERBERT W. POLLACK
- ----------------------------------
Authorized Signature
Herbert W. Pollack
- ----------------------------------
Name
President
- ----------------------------------
Title
Parlex (Shanghai) Circuit Co., Ltd. Parlex (Shanghai) Circuit Co., Ltd.
/s/ SUI GUAN LIANG /s/ JAMES CHEN
- ---------------------------------- -----------------------------------
Authorized Signature Authorized Signature
Sui Guan Liang James Chen
- ---------------------------------- -----------------------------------
Name Name
Director Director
- ---------------------------------- -----------------------------------
Title Title
Appendix A
General Specifications, Processes and Capacity of the Joint Venture Company
1 Production capacity
An annual production capacity of * after the 3 years shall
be the goal of the Joint Venture Company
Types of products: flexible printed circuits and related assembly
products
2 Working hours
The number of working hours and days shall be determine by the
General Manager in accordance with the operational and business
objectives of the Joint Venture Company.
3 Line width and spacing
Line width and spacing for normal production will be as follows:
Line width minimum: 0.2 mm (0.008 inches)
Space minimum: 0.15 mm (0.006 inches)
Feature tolerance shall be [+ or -] 20% of the master pattern, or that
specified by customer requirements.
4 Board thickness and number of layers
Board thickness and layer count shall be dependent on customer
design requirements and the specific technology selected for the
product. Training shall include the ability to produce products
in excess of fourteen layers and varying thickness.
* Confidential information has been omitted and filed separately with the
Commission
Appendix B
Content and Delivery of Technical Documentation
1.0 The following documents for manufacture of Contract Products shall be
delivered to the Joint Venture Company:
1.1 A complete set of Party B's standards and specifications for
designing, processing and controlling the quality of Contract
Product shall be delivered to the Joint Venture Company and
Party B shall notify the Joint Venture Company of any
significant procedural changes relevant to their process;
1.2 Descriptions, process formulations and operation methods of each
manufacturing process of Contract Product as well as
troubleshooting techniques;
1.3 Manuals for quality control, inspection and testing for commonly
used raw materials and standard products;
1.4 Standards and specifications of the base material for
manufacturing flexible printed circuits;
1.6 Specifications of chemical, physical and mechanical tests of
relevant, selected materials and their storage conditions;
1.7 Waste treatment specifications and analytical tests currently
performed by Party B.
2.0 The following process documents of existing products shall be
delivered to the Joint Venture Company:
2.1 Documents, including patents, for the Party B's impedance
matched shielding process;
2.2 Documents for manufacturing flexible printed circuits utilizing
PALFlex[Registration Mark] as a base material as indicated in
Chapter 2.2.5 of this Agreement.
2.3 Documents for the design and manufacture of Party B's
PALCore[Registration Mark] technology when multilayer capability
is achieved at the Joint Venture Company.
3.0 The following information for production technology management shall
be disclosed to the Joint Venture Company:
3.1 Raw material pricing;
3.2 Equipment performance expectations;
3.3 Performance expectations of tools, dies and fixtures;
3.4 Party B's safety processes and standards;
3.5 Process flow diagrams indicating the steps from order entry to
delivery.
4.0 Document delivery, language and quantity
4.1 Delivery time
Documents shall be delivered in accordance with Chapter 3 of
this Agreement.
4.2 Language
The language of all the technical documents in this Appendix
should be English.
4.3 Quantity
One (1) complete set of documentation shall be delivered to the
Joint Venture Company. Additional selected documents utilized
by the trainees may be brought back to the Joint Venture
Company.
Appendix C
Training and Treatment of the Joint Venture Company's Personnel
1.0 The training program in Party B's factory in the United States shall
include:
1.1 Party B agrees to receive 6 to 8 people sent by the Joint
Venture Company to be trained in Party B's factory for six
weeks.
1.2 The Joint Venture Company shall ensure all trainees are familiar
with the printed circuit board manufacturing process and that
they have communicative skills in English. Party B shall
designate qualified technical people to give instructions and
training to the Joint Venture Company's technical people.
1.3 Party B shall provide training designed to properly instruct
trainees in theory and in practice about the process, operation,
quality control and repair of flexible printed circuits in order
to introduce the technology to the Joint Venture Company. If
the trainees feel that the training has been incomplete, they
will submit to Party B a list of outstanding items before the
end of the training.
1.4 Party B shall provide access to all necessary equipment and
documentation in order to achieve the training objectives and
the trainees will be provided suitable administrative space
during the training period.
1.5 Party B shall submit an outline of the training program to Joint
Venture Company two months before the training starts. One
month before the start of training, Joint Venture Company shall
inform Party B of the name, birth date, education and specialty
of its staff to be trained. The final training program shall be
fixed by both parties through consultations according to the
stipulations of the contract and the actual needs of the
trainees after their arrival in Party B's factory.
1.6 Before the training starts, Party B shall explain in detail to
the trainees the operation regulations and other precautions.
1.7 Party B shall arrange for the trainees' accommodation,
transportation and meals, with the cost to be borne by the Joint
Venture Company. In case of illness, Party B shall take all
necessary measures to care for the trainees in the best way, and
the cost shall be borne by Joint Venture Company. Party B shall
take every measure to insure the safety and well-being of the
trainees; however, the Joint Venture Company shall hold Party B
harmless for any accident or incident that might occur.
1.8 Party B shall assist the trainees in dealing with all
formalities of obtaining of visas for entrance and exit, as well
as their stay in the United States.
1.9 Party B shall take necessary measures to ensure that the
trainees have good living and working conditions during their
stay at Party B. Subject to compliance with security and site
regulations, Party B shall ensure the trainees of The Joint
Venture Company will have reasonable access to the work site at
working time where they will undertake their training.
1.10 The trainees of Joint Venture Company shall observe the laws and
regulations of the United States of America and the rules and
regulations of Party B.
1.11 Should the training course at Party B be delayed through no
fault of the Joint Venture Company, the Joint Venture Company
and Party B will consult to find ways to remedy the delay
through friendly discussion in order to ensure the completion of
the training course at minimum cost.
2.0 Contents of training
2.1 Design of flexible circuit
2.1.1 Design rules and layout of various power conditions
2.1.2 Optimization of electromagnetic interference
2.1.3 Panelization techniques
2.1.4 Consideration of productivity
2.1.5 Definition and design of conductive line
2.1.6 Establishment of documentation for own use
2.2 Material
2.2.1 Compatibility
2.2.2 Produceability
2.2.3 Reliability
2.2.4 Flexibility
2.2.5 Testing
2.2.6 Consideration for assembly
2.3 Product/process design
2.3.1 IPC Specification
2.3.2 Standard construction
2.3.3 Density problem
2.3.4 Alternative construction
2.4 Processing technology
2.4.1 Material preparation
2.4.2 Imaging
2.4.3 Etch
2.4.4 Lamination
2.4.5 Drilling/routing
2.4.6 Plating
2.4.7 Exposure/developing
2.4.8 Inspection and testing
2.5 Intellectual property
2.5.1 What is being protected
2.5.2 Patent process
2.5.3 Invention management
2.5.4 Examination of current patents
2.6 Trainees, process position and time will be decided through
consultation.
3.0 Training in China
The people that have been trained in the USA, after they return back
to China, will train the other employees with the help of the
technical people from Party B. Party B shall provide technical
support in accordance with Chapter 4.2.
4.0 Continuous training
As the production capability increases, there should be a technical
interchange in the United States or other mutually agreeable location
between the Joint Venture Company and Party B once per year or as
mutually agreed necessary. The detailed requirements will be decided
through consultation, but as a minimum, aspects of design and
manufacturing technology for the next phase should be included.
Appendix D
Technical Service on Site
1.0 At the commencement of operations of the Joint Venture Company, Party
B shall send skilled and competent technical support personnel to the
Joint Venture Company site to provide Technical Services.
2.0 Technical Service by the technical personnel from Party B.
2.1 When the Joint Venture Company commences production, Party B
shall appoint one individual as a general technical
representative who shall visit the Joint Venture Company.
2.2 The technical personnel from Party B shall support equipment
installation, testing and commissioning of the production
equipment. They will provide maintenance and technical advice
to the Joint Venture Company's staff in accordance with the
Joint Venture Contract.
2.3 Party B's technical personnel will address problems raised by
the Joint Venture Company within the scope of the contract.
2.4 The technical personnel from Party B shall give Joint Venture
Company's personnel adequate technical instructions and
necessary demonstrations.
3.0 Coordination of the parties
3.1 The working progress and schedule will be decided through
consultation by both sides according to the technical training
by Party B in China.
3.2 The technical people from Party B shall observe the laws and
regulations of the People's Republic of China and the rules and
stipulations of the project site during their stay in China.
3.3 Each of the Joint Venture Company and Party B shall indemnify
the other against property damage or personal injury occurring
to the employees or agents of the other caused by the negligence
or misconduct of the indemnifying party or its employees while
personnel of one party are visiting facilities of the other.
3.4 The Joint Venture Company shall be responsible for making the
arrangements for accommodation, transportation and meals for the
visiting personnel from Party B. The party responsible for
these costs is defined in Chapter 4.2.2 of this agreement. In
case of illness, the Joint Venture Company shall take the
necessary measures to care for Party B's personnel in the best
way, and the cost shall be borne by Party B.
3.5 The Joint Venture Company shall assist Party B in dealing with
the formalities of Customs clearance for the entrance and exit
of personal belongings, technical documents, tools and
instruments in accordance with the regulations of the Customs of
the People's Republic of China.
Appendix E
Non-Disclosure Agreement
This agreement is effective May 29, 1995 between Parlex Corporation
and Parlex (Shanghai) Circuit Co., Ltd.
The following agreement is in consideration of the Joint Venture
Contract between the Shanghai 20th Radio Factory (Party A), Parlex
Corporation (Party B) and Mascon, Inc. Co. (Party C) to jointly invest
to set up Parlex (Shanghai) Circuit Co. Ltd.
Whereas Parlex Corporation and Parlex (Shanghai) Circuit Co., Ltd.
will have access to the proprietary facilities, and proprietary and
confidential information of each other party and will engage in the
exchange of proprietary and confidential information for the purposes
of their activities under the Joint Venture Contract and the Agreement
of Technology License and Technical Service, the parties agree as
follows.
All information legended or otherwise identified in writing as
"Confidential" and all Contract Technology and Technical Information,
whether or not legended or identified as "Confidential", shall be
deemed Confidential Information under this agreement.
Each party agrees to use the Confidential Information disclosed
hereunder only for purposes of the Joint Venture Contract, and not to
otherwise use or disclose to others any such information.
The Confidential Information disclosed hereunder shall be held in
confidence for a period of ten (10) years from the date of disclosure
unless and to the extent that:
1 Such information can be demonstrated to be already known to
the receiving party prior to disclosure by the submitting
party;
2 Such information at the time of disclosure is available to
the public or which after such disclosure becomes available
to the public through no fault of the receiving party;
3 Such information was acquired by the receiving party without
restriction on disclosure or use from a third party who was
not in violation of an obligation of confidentiality in
disclosing it to the receiving party;
4 Such information is independently developed by the receiving
party without use of the Confidential Information;
5 Such information is approved for use or disclosure by
written authorization by the submitting party.
Parlex Corporation
/s/ HERBERT W. POLLACK
- ----------------------------------
Authorized Signature
Herbert W. Pollack
- ----------------------------------
Name
President
- ----------------------------------
Title
Parlex (Shanghai) Circuit Co., Ltd. Parlex (Shanghai) Circuit Co., Ltd.
/s/ SUI GUAN LIANG /s/ JAMES CHEN
- ---------------------------------- -----------------------------------
Authorized Signature Authorized Signature
Sui Guan Liang James Chen
- ---------------------------------- -----------------------------------
Name Name
Director Director
- ---------------------------------- -----------------------------------
Title Title
Appendix 7
Non-Disclosure Agreement
Non-Disclosure Agreement
This agreement is effective May 29, 1995 among Parlex Corporation,
Shanghai 20th Radio Factory and Mascon, Inc.
Parlex, Shanghai 20th Radio Factory, and Mascon have entered into a Joint
Venture Contract contemporaneously with this agreement under which each
party will have access to the proprietary facilities, and proprietary and
confidential information of each of the other parties and under which the
parties will engage in the exchange of proprietary and confidential
information for the purposes of their activities under the Joint Venture
Contract.
All information legended or otherwise identified in writing as
"Confidential" and all Contract Technology and Technical Information,
whether or not legended or identified as "Confidential", shall be deemed
Confidential Information under this agreement.
Each Party agrees to use the Confidential Information disclosed hereunder
only for purposes of the Joint Venture Contract, and not to otherwise use
or disclose to others any such information.
The Confidential Information disclosed hereunder shall be held in
confidence for a period of ten (10) years from the date of disclosure
unless and to the extent that:
1 Such information can be demonstrated to be already known to the
receiving party prior to disclosure by the submitting party;
2 Such information at the time of disclosure is available to the
public or which after such disclosure becomes available to the
public through no fault of the receiving party;
3 Such information was acquired by the receiving party without
restriction on disclosure or use from a third party who was not
in violation of an obligation of confidentiality in disclosing
it to the receiving party;
4 Such information is independently developed by the receiving
party without use of the Confidential Information;
5 Such information is approved for use or disclosure by written
authorization by the submitting party.
Parlex Corporation Shanghai 20th Radio Factory
/s/ HERBERT W. POLLACK /s/ SUI GUAN LIANG
- ---------------------------------- -----------------------------------
Authorized Signature Authorized Signature
Herbert W. Pollack Sui Guan Liang
- ---------------------------------- -----------------------------------
Name Name
President President
- ---------------------------------- -----------------------------------
Title Title
May 29, 1995 May 29, 1995
- ---------------------------------- -----------------------------------
Date Date
Mascon, Inc.
/s/ JAMES HUANG
- ----------------------------------
Authorized Signature
James Huang
- ----------------------------------
Name
Executive V.P.
- ----------------------------------
Title
May 29, 1995
- ----------------------------------
Date
DEVELOPMENT AND SUPPLY AGREEMENT
________________________________
This agreement ("Agreement") is made and entered into this 13 day of April
1993 ("Agreement Date"), by and between Parlex Corporation, a Massachusetts
corporation having a principal place of business at 145 Milk Street, Methuen,
MA 01844 ("Parlex"), and Motorola, Inc., a Delaware corporation, by and
through its Automotive and Industrial Electronics Group ("AIEG"), having a
place of business at 4000 Commercial Avenue, Northbrook, IL 60062 U.S.A.
("Motorola").
WHEREAS, Parlex manufactures and sells flexible substrate assemblies to the
AIEG division of Motorola for use in automotive applications; and
WHEREAS, Parlex has the capability of modifying the construction of flexible
circuits to lower its cost, the capability of manufacturing and selling
assemblies of such modified flexible circuits to AIEG on a long term basis,
and the desire to do so; and
WHEREAS, AIEG desires to continue purchasing flexible substrate assemblies
from Parlex while Parlex is developing such modified flexible circuits, and
desires to replace such purchases with purchases of assemblies constructed of
such modified flexible circuits if such assemblies meet AIEG's functional
requirements and cost constraints; and
WHEREAS, AIEG desires to purchase flexible substrate assemblies on a long term
basis from a supplier that will share productivity and materials savings in
the form of price reductions to Motorola.
NOW, THEREFORE, in consideration of the mutual obligations and promises set
forth herein, Motorola and Parlex agree as follows:
1.0 Definitions
1.1 Flexible Substrate Assembly: finished assembly consisting of
Acrylic Adhesive-Based Flexible Circuit Construction or New
Flexible Circuit Construction, Rigidizer, and Motorola's circuit
interconnect design.
1.2 Acrylic Adhesive-Based Flexible Circuit Construction: type of
flexible circuit incorporating acrylic adhesive as the bonding
material for attaching copper to dielectric layers, and conforming
to the functional specifications, production prices, and quality
and cycle time initiatives attached hereto as Appendices 1, 5 and
6 respectively.
1.3 New Flexible Circuit Construction: type of flexible circuit
conforming to the functional specifications, production prices,
and quality and cycle time initiatives attached hereto as
Appendices 2, 3 and 6 respectively.
1.4 Rigidizer: Base plate used as stiffener for flexible circuit.
2.0 Development Program
2.1 Development of New Flexible Circuit Construction
2.1.1 Parlex shall develop New Flexible Circuit
Construction, qualify it for Motorola's use in production,
and prepare to manufacture it at its facilities for supply
to Motorola in accordance with the terms of this Agreement.
The Product Qualification Procedure to be followed by Parlex
is attached as Appendix 4. Such development, product
qualification and manufacturing preparation shall be
completed for product launch on or before January 1, 1994.
2.1.2 All development costs shall be borne by Parlex,
with the exception that Motorola will assist in the funding
of equipment necessary to perform processes unique to
Motorola (i.e., equipment that is not usable for any other
customer of Parlex). Parlex shall notify Motorola in advance
of any equipment purchase for which it will request Motorola
assistance in funding. Parlex shall not use any such
equipment to service other Parlex customers.
2.1.3 For a period of one year commencing with the in-
service date of equipment funded by Motorola pursuant to
paragraph 2.1.2, Parlex shall not duplicate such equipment
to service any other Parlex customer. Thereafter, Parlex may
duplicate such equipment to service other Parlex customers
on equitable terms mutually acceptable to Parlex and
Motorola.
2.2 Prototype and Pre-Pilot Assemblies
2.1.1 Parlex shall build prototype and pre-pilot Flexible
Substrate Assemblies incorporating New Flexible Circuit
Construction, as needed by Motorola. Such Flexible Substrate
Assemblies shall be delivered to Motorola for delivery to
customers as samples and for evaluation and testing by
Motorola. The purpose of the prototype evaluation and tests
is to demonstrate the capabilities of the New Flexible
Circuit Construction, and the parties thereby anticipate
that desirable changes to the applicable specifications may
be identified. Any proposed changes to the applicable
specifications shall be made in accordance with paragraph
2.3.
2.2.2 Motorola shall purchase prototype and pre-pilot
Flexible Substrate Assemblies incorporating new Flexible
Circuit Construction at a price equal to four (4) times the
production price stated in Appendix 3 or at a lot charge of
twenty five hundred ($2,500) dollars, whichever is greater.
Such price includes all prototype engineering and tooling
costs, with the exception of electrical test tooling costs
which shall be agreed by the parties. Further, such price is
based on the standard delivery lead-time of four (4) weeks.
The following price premiums shall apply to three week, two
week and one week deliveries: twenty five percent, fifty
percent and one hundred percent, respectively.
2.3 Changes to Specifications or Qualification Procedure
Changes to the applicable specifications or Product
Qualification Procedure may be requested in writing by either
party. Changes requested by Parlex shall be submitted by use of a
Supplier Request for Engineering Change Notice (SREA). Any such
request shall set forth the nature of the proposed change(s) and
the effects thereof, including function, performance, reliability,
availability, development and tooling costs, production prices,
cycle time and quality. Any changes must be mutually agreed to in
writing by the parties to implementation.
2.4 Development Review Meetings
Three months after the Agreement Date, and at quarterly
intervals thereafter until completion of development,
knowledgeable representatives of Motorola and Parlex shall meet to
review Parlex's progress in its development of New Flexible
Circuit Construction under this Article 2.0.
3.0 Supply Program
3.1 Production Commitment
Parlex shall manufacture Flexible Substrate Assemblies in
accordance with Motorola's circuit interconnect design and
Rigidizer and assembly requirements. Parlex shall be capable of
manufacturing Flexible Substrate Assemblies incorporating New
Flexible Circuit Construction for sale to Motorola in compliance
with paragraph 3.2 on and after January 1, 1994. Testing for
continuity of the circuit interconnect design shall be performed
by Parlex in accordance with current Interconnecting and Packaging
Electronic Circuits (IPC) specifications.
3.2 Purchase and Sale Commitments
3.2.1 During the term of this Agreement, Parlex shall
sell to Motorola, and Motorola shall purchase from Parlex, *
percent of AIEG's requirements for Flexible Substrate
Assemblies.Motorola's purchase obligation in this paragraph
3.2 shall be limited to the extent that any purchaser of
flexible substrate assemblies, or products incorporating
flexible substrate assemblies, from AIEG has approved
another supplier of flexible substrate assemblies as of the
Agreement Date or requires another supplier or multiple
suppliers of flexible substrate assemblies in the future.
3.2.2 Motorola may request Parlex to sell Flexible
Substrate Assemblies to one or more Motorola customers. If
so, Parlex shall sell to any such Motorola customer its
requirements for Flexible Substrate Assemblies on terms
acceptable to Parlex, except that warranty and price shall
be identical to that herein provided. The volume of Flexible
Substrate Assemblies purchased from Parlex by any such
Motorola customer shall be considered, for the purpose of
volume pricing only, to be purchases by Motorola and the
price to Motorola (and any such customer(s)) shall
correspond to the price for the total volume purchased.
* Confidential information has been omitted and filed separately with the
Commission.
3.3 Price
The price of the Flexible Substrate Assemblies shall
conform to the production volume price schedules, attached as
Appendices 3 and 5. Unit prices invoiced to Motorola shall be
based on Motorola's estimate of its anticipated purchase volume
for that calendar year of production. If Motorola purchases for
the year a quantity corresponding to a unit price different than
the unit price at which it was invoiced, Motorola's contract unit
price shall be retroactively adjusted accordingly and Motorola or
Parlex, as the case may be, shall pay to the other party the
difference between the amount invoiced and the amount due for the
number of units actually shipped.
3.4 Purchase Terms and Conditions
Motorola shall issue purchase orders and/or releases for
all prototype and production Flexible Substrate Assemblies
purchased hereunder. Each Motorola purchase order shall specify
the circuit interconnect design ordered. Only the terms and
conditions contained in this document and in Motorola's standard
purchase order and release forms current at the time of purchase
shall apply to such purchases pursuant to this Agreement. To the
extent of any inconsistency or conflict between this Agreement and
the terms and conditions of such purchase order or release, this
Agreement shall control. Any terms and conditions contained in
Parlex's acknowledgment forms or elsewhere shall not change, alter
or add to these terms and conditions in any way and shall be of no
effect.
3.5 Exclusivity and Licenses
3.5.1 Parlex agrees not to sell to customers selling
products in the automobile industry the New Flexible Circuit
Construction developed hereunder for Motorola, or
substantially identical derivative flexible circuit, for one
year following the initial sale to Motorola of production
Flexible Substrate Assemblies incorporating the New Flexible
Circuit Construction, without first obtaining Motorola's
written permission.
3.5.2 Parlex grants Motorola a paid up, royalty free,
perpetual, non-exclusive, sublicensable license to make,
have made, use and sell under any patents or other
intellectual property rights for any new inventions
conceived or reduced to practice by Parlex jointly with
Motorola during and pursuant to new development work
performed under this Agreement for the New Flexible Circuit
Construction to be developed and delivered to Motorola under
this Agreement, and Parlex also grants to Motorola an
equivalent license under any new Parlex copyright rights for
new works of authorship which arise during and pursuant to
the development work performed, by Parlex, jointly with
Motorola, for the New Flexible Circuit Construction to be
developed and delivered to Motorola under this agreement.
With respect to any new inventions conceived or reduced to
practice solely by Parlex during and pursuant to new
development work performed under this agreement for the New
Flexible Circuit Construction to be developed and delivered
to Motorola under this agreement, Parlex agrees to grant to
Motorola a royalty-bearing, non-exclusive license on terms
and conditions to be reasonably negotiated by the parties.
The above licenses do not include rights for inventions or
works of authorship developed prior to or separately with
respect to development work performed under this Agreement
for the New Flexible Circuit Construction to be developed
and delivered to Motorola under this Agreement.
3.6 Service and Replacement
3.6.1 At Motorola's request, Parlex shall sell to
Motorola Flexible Substrate Assemblies necessary to satisfy
Motorola's current service and replacement requirements for
such Flexible Substrate Assemblies at the current applicable
production prices plus any actual cost differential for
packaging and manufacturing.
3.6.2 For a period of ten (10) years after Motorola
completes its purchases of Flexible Substrate Assemblies,
Parlex shall sell to Motorola Flexible Substrate Assemblies
necessary to satisfy Motorola's past model service and
replacement requirements at the last applicable production
prices plus actual cost differentials for packaging and
manufacturing. Motorola and Parlex will negotiate in good
faith with regard to Parlex's continued manufacture and sale
to Motorola of service and replacement Flexible Substrate
Assemblies beyond the tenth year.
3.7 Emergency Manufacturing Rights
In the event that Parlex is unable or may be unable to
deliver to Motorola production quantities of the Flexible
Substrate Assemblies to be supplied hereunder for any reason,
including a force majeure, and such inability continues or may
continue for more than a commercially reasonable period of time,
or if Parlex discontinues its manufacture of such Flexible
Substrate Assemblies for any reason, Parlex will grant Motorola
emergency manufacturing rights and transfer sufficient information
and tooling to Motorola to allow Motorola, at no cost for use of
Parlex's intellectual property rights, to have the Flexible
Substrate assemblies to be provided hereunder made by Motorola or
made for Motorola by a third party manufacturer. Motorola shall
request such rights and information from Parlex by notice to
Parlex as provided herein for notices. These emergency
manufacturing situation shall be under reasonable terms and
conditions mutually agreed to by Parlex and Motorola, and such
rights shall cease when Parlex can demonstrate that it is capable
of delivering production quantities of flexible substrate
Assemblies to the provided hereunder to Motorola at competitive
prices. Further, these emergency manufacturing rights and the
transfer of information acquired by Parlex from Polyonics and
which Parlex may not disclose to third parties.
3.8 Supplier Objectives
During term of this Agreement, Parlex shall comply with
the quality and cycle time initiatives stated in Appendix 6.
4.0 Post-Development Improvement of New Flexible Circuit Construction
Three months after product launch of the New Flexible Circuit
Construction, and at quarterly intervals thereafter, knowledgeable
representatives of Motorola and Parlex shall meet to review Parlex's
progress in making further technological improvements to the New
Flexible Circuit Construction.
5.0 Engineering Support
During the term of this Agreement, Parlex shall provide Motorola
with reasonable engineering support for the design and manufacturing of
Flexible Substrate Assemblies as needed by Motorola. Such support shall
be at Parlex's expense and shall be provided to AIEG engineering and
manufacturing facilities worldwide.
6.0 Confidential Information
All exchanges of information between the parties pursuant to the
present agreement shall be made in accordance with the terms and
conditions of the Mutual Non-Disclosure Agreement, attached hereto as
Appendix 7. The parties further agree that the term of said agreement
shall be coextensive with the term of this Agreement.
7.0 Release of News, Information and Advertisement
Neither party shall, without the prior written consent of the
other, release any information to which the Agreement applies nor make
any news releases or public announcements relating to the terms of this
Agreement. However, the foregoing sentence shall not be construed as
prohibiting either party from acknowledging that Motorola and Parlex
have entered into this Agreement nor shall it be construed as
prohibiting communication among employees of Parlex and Motorola
necessary to fulfill the parties' respective obligations under this
Agreement.
8.0 Limitation of Liability
Neither party shall be liable to the other for any incidental,
indirect, special or consequential damages whatsoever arising out of,
caused by or related in any way to the development, purchase of the
possibility of such damages. The parties expressly agree that the
limitations on incidental, consequential, special or indirect damages
set forth herein are agreed allocations of risk constituting in part the
consideration for this Agreement, and that such limitations shall
survive the determination of any court of competent jurisdiction that
any remedy provided herein or available at law fails of its essential
purpose.
9.0 Term
This Agreement shall commence on the Agreement Date and shall
extend for a term of three (3) years, unless sooner terminated as
provided herein. No less than sixty (60) days prior to the end of each
year of this Agreement, the parties shall declare their intentions to
add an additional one year to the term. If the Parties agree to such
extension, the term of this Agreement shall be so extended by amendment
as provided herein. Nothing contained in this Agreement shall be deemed
to create any express or implied obligation on either party to renew or
extend this Agreement or to create any right to continue this Agreement
on the same terms and conditions contained herein.
10.0 Termination
10.1 Any termination pursuant to this article 10.0 shall not
relieve either party of obligations previously incurred pursuant
to this Agreement, including but not limited to payment for
Flexible Substrate Assemblies shipped hereunder, warranty,
confidentiality, and patent, maskwork and copyright licenses,
rights and indemnity.
10.2 Termination of each purchase order or release for Flexible
Substrate Assemblies shall be in accordance with the terms stated
on the purchase order or release.
10.3 Development of the New Flexible Circuit Construction may be
terminated by either party if and when it occurs that, for any
reason, (I) the production prices (Appendix 3) cannot be achieved
based on the applicable specifications or other specifications
required to satisfy Motorola's needs, or (ii) flexible circuits of
significantly advanced design or processing become available to
Motorola, which are capable of being used as a replacement of or
in substitution for the New Flexible Circuit Construction being
developed hereunder. In any such event, either party may initiate
termination of this Agreement as it pertains to the development of
New Flexible Circuit Construction and Motorola may initiate
termination of this Agreement in its entirety. A party may
initiate termination by sending written notice to the other party
of its intent to terminate. The parties shall explore remedies
during a period not to exceed ninety (90) days from the date of
the notice. Failing agreement on a remedy, the development of New
Flexible Circuit Construction or this Agreement in its entirety,
as the case may be, shall terminate at the expiration of that
period. Motorola shall not be liable for any development costs
incurred or termination charges of any kind.
10.4 If Parlex fails to maintain its position as a satisfactory
supplier by not remaining competitive in quality and delivery as
defined in this Agreement with other responsible suppliers or
potential suppliers of flexible circuits of substantially similar
prices, Motorola may terminate this Agreement without further
liability to Parlex by furnishing written notice of a termination
date no less than ninety (90) days after the date of the notice.
If, however, prior to such termination date, Parlex becomes
competitive, or demonstrates to Motorola's satisfaction its
capability of becoming competitive within an additional time
period selected by Motorola, the notice of termination shall be
withdrawn and this Agreement shall continue.
10.5 If flexible circuits of significantly advanced design or
processing become available to Motorola, which are capable of
being used as a replacement of or in substitution for the
production of Flexible Substrate Assemblies being purchased
hereunder, Motorola may terminate this Agreement without further
liability to Parlex by furnishing written notice of a termination
date no less than one hundred eighty (180) days after the date of
the notice. If, however, prior to such termination date, Parlex
demonstrates to Motorola's satisfaction its capability of
producing and delivering Flexible Substrate Assemblies of the same
or comparable design or processing, at competitive prices in the
quantities required, the notice of termination shall be withdrawn
and this Agreement shall continue with respect to the Flexible
Substrate Assemblies of significantly advanced design or
processing.
10.6 In the event of a material breach of this agreement,
Motorola or Parlex, as the case may be, shall give written notice
to the defaulting party of the breach and of the non-defaulting
party's intention to terminate this Agreement if the non-
defaulting party is not, within thirty (30) days from and after
receipt of the written notice of default, provided with a plan of
corrective action and if substantial efforts to cure the default
in accordance with the plan are not made. If such breach is not
substantial corrected as provided above, the nondefaulting party
may terminate this Agreement by sending written notice to the
other party of such termination, whereupon this Agreement shall
terminate and the non-defaulting party, subject to the terms of
this Agreement, shall be entitled to pursue remedies provided by
law. In the event the nondefaulting party elects to terminate this
Agreement, the notice of termination must be sent to the
defaulting party within five (5) days after the expiration of the
thirty (30) day period mentioned above.
10.7 Either party may terminate this Agreement on thirty (30)
days written notice without liability to the other party in the
event of the happening of any of the following with regard to that
other party: (a) ceases to function as a going concern, (b) makes
as assignment of the benefit of creditors, (c) becomes the subject
of any proceeding under any applicable bankruptcy, receivership,
insolvency or similar laws instituted by or against such party,
which proceeding is not dismissed as to such party within forty-
five (45) days after it has been instituted, or (d) liquidates,
dissolves, sells substantially all of its assets, mergers or
consolidates.
11.0 Notices
All notices or permits hereunder shall be in writing and shall be
deemed duly given when personally delivered or sent by registered mail,
return receipt requested, postage prepaid, or by telex, cable or telex
confirmed by letter as aforesaid, addressed as follows:
If to Motorola:
Motorola, Inc.
Automotive and Industrial Electronics Group
4000 Commercial Avenue
Northbrook, IL 60062 - USA
Attn: Group Sourcing Manager
If to Parlex:
Attn: President
or to such other address as either party may hereafter designate
in writing by like notice.
12.0 General
12.1 Neither party shall be liable for any failure to perform or
for any delay in performance of its obligations hereunder which is
caused by circumstances beyond its reasonable control, including
but not limited to acts of God or a public enemy, fires, storms,
floods, epidemics, quarantine restrictions, riots, insurrections,
explosions, accidents, war, labor disputes, transportation
embargoes, acts or failures to act of or by any government or
agency thereof, judicial action, or any act, neglect or default of
the other party. Each party shall promptly notify the other of the
existence of any excusable nonperformance or any delays and the
anticipated duration thereof.
12.2 No delay on the part of either party in exercising any of
its respective rights hereunder or the failure to exercise the
same nor the acquiescence in or waiver of a breach of any term,
provision or condition of this Agreement shall be construed to
operate as a waiver of any such rights or acquiescence thereto,
except for the specific instance of delay, waiver or acquiescence.
12.3 This Agreement and the rights and obligations hereunder may
not be assigned by either party without the prior written consent
of the other party.
12.4 This Agreement is deemed to have been entered into in
Illinois, and its interpretation, construction and remedies for
its enforcement or breach are to be applied in accordance with the
laws of the State of Illlinois without reference to principles of
choice and conflicts of laws.
12.5 Section and paragraph headings used in this Agreement are
for convenience only and are not to be deemed or construed to be
part of this Agreement.
12.6 This Agreement does not create an agency, joint venture or
partnership between Motorola and Parlex. Neither party shall
impose or create any obligation or responsibility, express or
implied, or make any promises, representations or warranties on
behalf of the other party, other than as expressly provided
herein.
13.0 Dispute Resolution
13.1 Motorola and Parlex will attempt to settle any claim or
controversy arising out of this Agreement through consultation and
negotiation in good faith and a spirit of mutual cooperation. If
those attempts fail, then the dispute will be mediated by a
mutually acceptable mediator to be chosen by Motorola and Parlex
within 45 days after written notice by either to the other
demanding mediation. Neither party may unreasonably withhold
consent to the selection of a mediator, and Motorola and Parlex
will share the costs of the mediation equally. By mutual
agreement, however, Motorola and Parlex may postpone mediation
until some specified but limited discovery about the dispute has
been completed. The parties may also agree to replace mediation
with some other form of alternative dispute resolution (ADR), such
as neutral fact-finding or a minitrial.
13.2 Any dispute which cannot be resolved between the parties
through negotiation, mediation or other form of ADR within six
months of the date of the initial demand for it by one of the
parties may then be submitted to the courts for resolution. The
use of any ADR procedures will not be construed under the
doctrines of laches, waiver or estoppel to affect adversely the
rights of either party. And nothing in this section will prevent
either party from resorting to judicial proceedings if (a) good
faith efforts to resolve the dispute under these procedures have
been unsuccessful or (b) interim relief from a court is necessary
to prevent serious and irreparable injury to one party or to
others.
14.0 Entire Agreement
This Agreement, together with the Appendices referred to herein
and the terms and conditions of Motorola's current standard purchase
order form, constitutes the entire Agreement and understanding of the
parties with regard to the matters covered and herein have merged all
prior and collateral representations, promises or conditions, whether
oral or written. No amendment or modification of any of the provisions
contained herein shall be binding upon either party unless made in
writing and signed by a duly authorized representative of each party.
IN WITNESS WHEREOF, each of the Parties hereto have caused this Agreement to
be signed by its respective duly authorized representative.
Motorola, Inc. Parlex Corporation
Automotive and Industrial
Electronics Group
By: /s/ LEE H. CRAFT By: /s/ HERBERT W. POLLACK
------------------------------- -------------------------------
Title: Director, Group Operations Title: President
and Services
-------------------------- ---------------------------
Appendices included:
1. Specification: Acrylic Adhesive-Based Flexible Circuit Construction
2. Specification: New Flexible Circuit Construction
3. Production Prices: New Flexible Circuit Construction
4. Product Qualification Procedure
5. Production Prices: Acrylic Adhesive-Based Flexible Circuit
Construction
6. Quality and Cycle Time Initiatives
7. Mutual Non-Disclosure Agreement
April 8, 1993
APPENDIX 1
Specification: Acrylic Adhesive-Based Flexible Circuit
______________________________________________________
Construction
____________
The Flexible Substrate Assembly using Acrylic Adhesive-Based Flexible Circuit
Construction is:
<TABLE>
<CAPTION>
Typical
<S> <C>
Solder Protection (HASL)
Solder Mask
Copper (1 oz. plated to 2 oz.) 0.0028"
Acrylic Adhesive 0.001"
Polyimide Dielectric 0.001"
Acrylic Adhesive 0.001"
Copper (1 oz. plated to 2 oz.) 0.0028"
Acrylic Adhesive 0.002"
Polyimide Dielectric 0.001"
Pressure Sensitive Adhesive 0.002"
Aluminum Rigidizer
</TABLE>
Performance Specifications:
___________________________
- - The flexible circuit must meet or exceed the current established
Institute for Interconnecting & Packaging Electronic Circuits
requirements (IPC-FC-250A) and Motorola specifications.
- - In addition to the IPC specifications, the flexible circuits must
meet the Automotive Environmental requirements as followed:
Temperature Extremes: -50 degree C to +150 degree C
- Both Storage and Cycle testing
Humidity: +85 degree C and 85% Relative Humidity Fluid Compatibility
with typical Automotive Fluids
- - All prototype and production flexible substrate assemblies must be
electrically tested to IPC specification IPC-250A.
The design and panel utilization requirement:
_____________________________________________
The pricing in the Appendix 3 is based on the following producibility
requirements:
<TABLE>
<CAPTION>
Part Requirement Panel Requirement (18" x 24")
________________ ____________________________
<S> <C>
Min line .006" .750 border, usable area 16.5"x22.5"
Min space .005" 2 datums per part
Min hole .018" Min datum edge to datum edge .350"
Min edge to edge .090"/.300"*
<F*> Min edge to edge distance for single up/multi up blanking dies
respectively.
</TABLE>
April 8, 1995
APPENDIX 2
Specification: New Flexible Circuit Construction
________________________________________________
The Flexible Substrate Assembly using New Flexible Circuit Construction is:
<TABLE>
<CAPTION>
Typical
<S> <S>
Solder Protection To Be Developed
Solder Mask To Be Developed
Copper To Be Developed
Dielectric To Be Developed
Copper To Be Developed
Adhesive and/or Dielectric To Be Developed
Aluminum Rigidized
</TABLE>
Performance Specifications:
___________________________
- - The flexible circuit must meet or exceed the current established Institute
for Interconnection & Packaging Electronic Circuits requirements
(IPC-FC-250A) and Motorola specifications.
- - In addition to the IPC specifications, the flexible circuits must meet the
Automotive Environmental requirements as followed:
Temperature Extremes: -50 degree C to +150 degree C
- Both Storage and Cyclic testing
Humidity: +85 degree C and 85% Relative Humidity
Fluid Compatibility with typical Automotive Fluids
- - All prototype and production flexible substrate assemblies must be
electrically tested to IPC specification IPC-250A.
The design and panel utilization requirement:
_____________________________________________
The pricing in the Appendix 5 is based on the following producibility
requirements:
<TABLE>
<CAPTION>
Part Requirement Panel Requirement (18"x24")
________________ __________________________
<S> <C>
Min line .006" .750 border, usable area 16.5"x22.5"
Min space .005" 2 datums per part
Min hole .018" Min datum edge to datum edge .350"
Min edge to edge .090"/.300"*
Min datum edge to border .240"
<F*> Min edge to edge distance for single up/multi up blanking dies
respectively.
</TABLE>
April 8, 1993
APPENDIX 3
PRODUCTION PRICE: New Flexible Circuit Construction
___________________________________________________
*
1. Price of New Flexible Circuit Construction on a Panel Basis
_______________________________________________________________
<TABLE>
<CAPTION>
Yearly Business Volume 1993 1994 1995 1996
______________________ ____ ____ ____ ____
<C> <C> <C> <C> <C>
* * * * *
</TABLE>
2. Price of finishing and testing a circuit
____________________________________________
*
3. Price of Rigidizer
______________________
*
4. Tooling - *
_______________
Price to Motorola and Payment term:
___________________________________
*
* Confidential information has been omitted and filed separately with the
Commission.
April 8, 1993
APPENDIX 4
Product Qualification Procedure
_______________________________
The following Product Qualification Procedure must be followed when the
circuit construction's material or manufacturing process is modified. For all
Purchase Orders placed by Motorola, Parlex must document in writing the
circuit construction, materials and manufacturing process used to produce the
order. This information will be treated as Parlex Confidential and will be
distributed within Motorola on a need to know basis only. Once Parlex has
produced pre-pilot samples any circuit construction changes, material changes
or manufacturing process changes must be approved by Motorola prior to
shipment of the changed flexible substrate assembly.
The procedure which will be used to evaluate and qualify new materials,
manufacturing process or circuit constructions will be as follows:
<TABLE>
<CAPTION>
Activity Responsible Time Duration
________ ___________ _____________
<S> <S> <S> <C>
1. New Material, Process or Parlex or Motorola Time 0
Construction Idea
2. Initial Evaluation Test Parlex and Motorola Time 0 + 2 weeks
3. Schedule developed and Parlex and Motorola Time 0 + 4 weeks
mutually agreed to
4. Material, Process or Parlex Time 0 + 14 weeks
construction level
qualification
5. If required, product level Motorola Time 0 + 26 to 30 weeks
design validation test
6. If required, product level Motorola Time 0 + 44 to 48 weeks
process validation test
</TABLE>
The Production Flexible Substrate Assembly is considered preliminary qualified
after successful completion of Product Level Design Validation Testing and
final qualification after successful completion of Product Level Process
Validation testing.
For each proposed material, process or construction change, this schedule will
be reviewed to determine the appropriate qualification tests required. Once a
Flexible Substrate Assembly is in production the qualification schedule will
become dependent on Motorola's customer approval and may require additional
time than detailed above.
Under no circumstances can a production approved Flexible Substrate Assembly
be changed without Parlex obtaining prior approval from Motorola. Notification
of changes to a production approved Flexible Substrate Assembly must be done
in using the Supplier Request for Engineering Change Notice (SREA). The
development schedule and qualification testing requirements may apply to any
changes.
April 8, 1993
APPENDIX 5
PRODUCTION PRICE: Acrylic Adhesive-Based Flexible Circuit Construction
______________________________________________________________________
*
1. Price of Acrylic Based Flexible Circuit Construction on a Panel Basis
_________________________________________________________________________
<TABLE>
<CAPTION>
Yearly Business Volume 1993 1994 1995 1996
______________________ ____ ____ ____ ____
<C> <C> <C> <C> <C>
* * * * *
</TABLE>
2. Price of finishing and testing a circuit
____________________________________________
*
3. Price of Rigidizer
______________________
*
4. Tooling - *
___________
Price to Motorola and Payment term:
___________________________________
*
* Confidential information has been omitted and filed separately with the
Commission.
April 8, 1993
APPEXNDIX 6
Quality and Cycle Time Initiatives
__________________________________
- - Manufacturing Quality: The manufacturing quality level will be established
as soon as practicable after the Agreement Date as the baseline Flexible
Substrate Assemblies. Then 10X improvement goals every 2 years will be
established and progress reported quarterly.
- - Design Cycle Time: The Design Cycle Time, stated in working days, will be
established as soon as practicable after the Agreement Date as the
baseline as the base for Flexible Substrate Assemblies. The 10X
improvement goals every 5 years will be established and progress
reported semi-annually.
- - Prototype Manufacturing Cycle Time: The manufacturing cycle time for
prototypes, stated in working days, will be established as soon as
practicable after the Agreement Date as the baseline for Flexible
Substrate Assemblies. Then 10X improvement goals every 5 years will be
established and progress reported semi-annually.
- - Production Manufacturing Cycle Time: The manufacturing cycle time for
production, stated in working days, will be as the baseline for Flexible
Substrate Assemblies. Then 10X improvement goals every 5 years will be
established and progress reported semi-annually.
- - Tooling Cycle Time: The tooling cycle time for production, stated in
working days, will be established and progress reported semi-annually.
- - Tooling Cycle Time: The tooling cycle time for production, stated in
working days, will be established as soon as practicable after the
Agreement Date as the baseline for Flexible Substrate Assemblies. Then
10X improvement goals every 5 years will be established and progress
reported semi-annually.
APPENDIX 7
- B -
NON-DISCLOSURE AGREEMENT
________________________
MUTUAL
______
This Agreement is effective the 4th day of March, 1992 between MOTOROLA,
INC., a Corporation of the State of Delaware, U.S. A., (hereinafter
"Motorola",) by the through its Automotive and Industrial Electronics Group,
having a principal place of business at 4000 Commercial Avenue, Northbrook,
Illinois 60062, and Parlex Corporation, a corporation having a principal place
of business at 145 Milk Street, Methuen, MA 01844 (hereinafter "Parlex").
WHEREAS, Motorola and Parlex each have or may acquire certain
confidential information relating to the subject area of flexible printed
circuit board for electronic control modules for engine, brake etc. which they
desire to disclose to each other and each party is willing to accept the
other's information confidentially and as limited herein;
NOW, THEREFORE, the parties agree as follows:
1. "Confidential Information" is defined as any device, graphics,
written information or information in other tangible forms that is disclosed,
for evaluation and/or development purposes, to the receiving party by the
disclosing party relating to the above-identified subject areas and that is
marked at the time of disclosure as being "Confidential" or "Proprietary".
Information disclosed orally or visually and identified at that time as
Confidential shall be considered as "Confidential Information" if it is
reduced to tangible form, marked Confidential, and transmitted to the
receiving party within thirty (30) days after the oral or visual disclosure.
2. During the "Confidential Period" defined below, each party will use
its best efforts to prevent its disclosure of the other party's "Confidential
Information" for any purpose other than the aforesaid evaluation and
development purposes, and to limit dissemination of the other party's
"Confidential Information" to such of its employees who have a need to know
for the aforesaid evaluation and/or development purposes. "Best efforts" with
respect to any "Confidential Information" means at least that degree of care
normally used by the receiving party to prevent disclosure to others of its
own confidential information of similar importance, but in no case less than a
reasonable degree of care.
The "Confidential Period" shall mean five (5) years from the date of
receipt of the "Confidential Information" or until such time as the
information no longer qualifies as "Confidential Information" pursuant to
Paragraph 4.
3. Except as may be provided in another written agreement between
parties, neither party shall be obligated: to do business with the other
party; to refrain from dealing with others in the above-identified subject
area; or to begin, continue, or terminate any business venture.
4. Notwithstanding any other provisions of this Agreement, each party
acknowledges that "Confidential Information" shall not include any information
which: (a) is or becomes publicly known through no wrongful act on the
receiving party's part; or (b) is, at the time of disclosure under this
Agreement, already known to the receiving party without restriction on
disclosure; or (c) is, or subsequently becomes, rightfully and without breach
of this Agreement, in the receiving party's possession without any obligation
restricting disclosure; or (d) is independently developed by the receiving
party without breach of this Agreement; or (e) is furnished to a third party
by the disclosing party without a similar restriction on the third party's
rights; or (f) is explicitly approved for release by written authorization of
the disclosing party.
5. Each party agrees to return to the disclosing party upon request,
the devices, graphics, writings, and information in other tangible forms
containing any of the "Confidential Information" referred to in Paragraph 1,
and any copies of "Confidential Information".
6. No license, express or implied, in the "Confidential Information",
is granted to either party other than to use the information in the manner and
to the extent authorized by this Agreement.
7. This Agreement shall terminate on 3rd of March 1997 (the Termination
Date). The obligations recited herein relating to information disclosed prior
to the Termination Date shall survive such termination.
8. Each party acknowledges that it is not prohibited by the Office of
Export Administration for the U.S. Department of Commerce from receiving
technical information, know-how, data or other information, and it agrees not
to export such information, or products incorporating it, to any prohibited
country.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives.
MOTOROLA, INC.
By /s/ JOHN PELLAND
------------------------------------
Corporate Vice President and General
Manager, Automotive Powertrain and
Chassis Electronics Division
Dated: March 12, 1992 Title ---------------------------------
PARLEX CORPORATION
By /s/ JILL POLLACK KUTCHIN
------------------------------------
Dated: March 12, 1992 Title Vice President
--------------------------------
AMENDMENT TO
DEVELOPMENT AND SUPPLY AGREEMENT
This amending agreement is made and entered into this 19th day of
August, 1994 by and between Parlex Corporation, a Massachusetts corporation
having a principal place of business at 145 Milk Street, Methuen, MA 01844
("Parlex"), and Motorola, Inc., a Delaware corporation, by and through its
Automotive and Industrial Electronics Group ("AIEG"), having a place of
business at 4000 Commercial Avenue, Northbrook, IL 60062 U.S. A. ("Motorola").
WHEREAS, the parties hereto made and entered into a written Development
and Supply Agreement ("Agreement") dated April 13, 1993; and
WHEREAS, the parties desire to amend the Agreement in certain respects.
THEREFORE, Motorola and Parlex agree as follows:
1. Article 1. of the Agreement (Definitions) is amended by:
(i) modifying Paragraph 1.1 to read:
1.1 Flexible Substrate Assembly: finished assembly panel
consisting of circuits made of either the Acrylic Adhesive-
Based Flexible Circuit Construction or New Flexible Circuit
Construction, Rigidizer, and Motorola's circuit interconnect
design.
(ii) adding the following as Paragraph 1.5:
1.5 Prototype: prototype, pre-pilot or other pre-
production Flexible Substrate Assembly panel.
2. Paragraph 2.1.1 of the Agreement is amended by deleting
"January 1, 1994" and replacing it with "July 1, 1994".
3. Paragraph 2.2 of the Agreement is deleted in its entirety and
replaced with the following:
2.2 Prototype and Pre-Pilot Assemblies
2.2.1 Parlex shall build prototypes incorporating
New Flexible Circuit Construction as needed by
Motorola. Prototypes shall be delivered to Motorola
for delivery to customers as samples and for
evaluation and testing by Motorola. The purpose of the
prototype evaluation and tests is to demonstrate the
capabilities of the New Flexible Circuit Construction,
and the parties thereby anticipate that desirable
changes to the applicable specifications may be
identified. Any proposed changes to the applicable
specifications shall be made in accordance with
paragraph 2.3.
2.2.2 A standard prototype delivery shall be five
(5) panels with a delivery lead time of four (4)
weeks. The balance of any prototype order exceeding
the standard delivery quantity of 5 panels, up to a
maximum of two hundred fifty (250) circuits, shall
have a delivery lead time of five (5) weeks. Delivery
of that portion of prototype orders exceeding 250
circuits will be scheduled as agreed by the parties.
Parlex shall provide one standard delivery per week,
as requested by Motorola.
2.2.3 Motorola shall purchase prototypes
incorporating new Flexible Circuit construction at a
price equal to four (4) times the production price
stated in Appendix 3 or at a lot charge of *
dollars, whichever is greater. Such price includes all
prototype engineering and tooling costs, with the
exception of electrical test tooling costs which shall
be agreed by the parties. Further, such price is based
on the standard delivery lead-time as described in
paragraph 2.2.2 for prototype orders up to two hundred
fifty (250) circuits. The following price premiums
shall apply to three week, two week and one week
deliveries: twenty five percent, fifty percent and one
hundred percent, respectively.
4. Paragraph 3.1 of the Agreement is amended by deleting "January
1, 1994" and replacing it with "July 1, 1994".
5. Paragraph 3.2.1 of the Agreement is deleted and replaced with
the following:
During the term of this Agreement, Parlex shall sell to
Motorola, and Motorola shall purchase from Parlex, Flexible
Substrate Assemblies in an amount * of AIEG's requirements as
measured in square footage. Motorola's purchase obligation in this
Paragraph 3.2 shall be limited to the extent that purchasers from
AIEG of Flexible Substrate Assemblies, or products incorporating
Flexible Substrate Assemblies, have approved other suppliers of
Flexible Substrate Assemblies as of the Agreement Date or require
other suppliers of Flexible Substrate Assemblies in the future.
6. The second sentence of Paragraph 3.2.2 of the Agreement is
deleted and replaced with the following:
If so, Parlex shall sell to any such Motorola customer its
requirements for Flexible Substrate Assemblies on terms acceptable
to Parlex, except that warranty shall be identical to that herein
provided.
* Confidential information has been omitted and filed separately with the
Commission.
7. Article 3.0 of the Agreement is amended by adding the
following as Paragraph 3.9:
3.9 FORECAST
On or about December 15 of each year during the term of
this Agreement, Motorola will provide Parlex with a forecast of
AIEG's anticipated purchase volume for the following calendar year
of production for the purpose of establishing invoiced unit prices
as described in Paragraph 3.3. Performance to each forecast will
be reviewed by the parties on or about June 15 and on or about
December 15 of each year to determine if an adjustment of the
invoiced unit price is required to reflect unit volumes actually
purchased for that year.
8. Paragraph 3.5.1 of the Agreement is deleted and replaced with
the following:
Parlex agrees not to sell to customers selling products in
the automobile industry the New Flexible Circuit Construction
developed hereunder for Motorola, or substantially identical
derivative flexible circuit, for one year following the initial
delivery to Motorola of satisfactory product level process
validation units of Flexible Substrate Assemblies incorporating
the New Flexible Circuit Construction, without first obtaining
Motorola's written permission. For the purpose of this Paragraph,
multi-layer circuits incorporating New Flexible Circuit
Construction shall not be considered to be "substantially
identical".
9. The first sentence of Paragraph 10.4 is deleted and replaced
with the following:
If Parlex fails to maintain its position as a satisfactory
supplier by not remaining competitive in quality, price and
delivery as defined in this Agreement with other responsible
suppliers or potential suppliers of flexible circuits of
substantially similar prices, Motorola may terminate this
Agreement without further liability to Parlex by furnishing
written notice of a termination date no less than ninety (90) days
after the date of the notice.
10. In all other respects, the Agreement shall continue in full
force and effect.
11. This Amendment shall become effective on the date hereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this amendment
to be signed by its respective duly authorized representative.
MOTOROLA, INC. PARLEX CORPORATION
AUTOMOTIVE & INDUSTRIAL ELECTRONICS GROUP
By: /s/ CARNEY YAKMALIAN By: /s/ PETER J. MURPHY
------------------------------------- --------------------------
Title: Group Materials Manager Title: Executive Vice President
--------------------------------- ------------------------
March 23, 1995
JTEC Price Structure
PRODUCTION PRICE: PALFlex Circuit Construction for JTEC 1
_________________________________________________________
*
1. Price of PALFlex Circuit Construction on a Panel Basis
_________________________________________________________
<TABLE>
<CAPTION>
Yearly Business Volume 1995 1996 1997
______________________ ____ ____ ____
(Annualized Rate)
_________________
<C> <C> <C> <C>
* * * *
</TABLE>
2. Price of finishing and testing a circuit
___________________________________________
*
3. Price of Rigidizer/PSA
_________________________
*
4. Tooling - *
__________
5. PIC - *
______
6. Price Reduction Commitment - *
_____________________________
* Confidential information has been omitted and filed separately with the
Commission.
JTEC First and Second Year Pricing
Model Year 1996 *
Model Year 1997 *
Agreement on JTEC Pricing:
/s/ PETER J. MURPHY 3/23/95 /s/ REX T. ELLINGTON 3/23/95
- ----------------------- --------- ------------------------ ---------
Parlex Authorization Date Motorola Authorization Date
* Confidential information has been omitted and filed separately with the
Commission.
CENTRAL TRUST OF CHINA
PROCUREMENT DEPARTMENT
Contract No. YL-7604-5498 (95-GFR3-0453) Contract Date June 5, 1995
CENTRAL TRUST OF CHINA, Procurement Department, (hereinafter referred to as
Buyer) 45 Wu-Chang Street, Section 1, Taipei, Taiwan 100, Republic of China
(Telex: 11377 TRUSTPRO, Fax: (02)382-2010) on behalf of the client Chung
Shan Institute of Science and Technology hereby agrees to buy and Parlex
Corporation, 145 Milk Street, Methuen, MA 01844 U.S.A. (hereinafter referred
to as Seller) agrees to sell the following in accordance with the terms and
conditions set forth hereunder and at the back of this contract:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Item
No. Description Qty. Extension
- --------------------------------------------------------------------------------------
<S> <C> <C>
Rigid-Flex PCB Manufacturing Technology Transfer. 1 lot *
Details as per attached statement of work.
Payment by 100% irrevocable L/C against invoices, etc.,
and advised through Shawmut Bank N.A., 1 Federal Street,
Boston, MA 02210, USA, A/C #020-074183-9, ABA #011000206.
All banking charges outside Taiwan shall be paid by the
beneficiary.
All required documentation should be delivered to
consignee by common carrier. The consignee's address:
Chung Shan Institute of Science and Technology, No. 481,
Chia-An Sec., Chung-Cheng Rd.., Chia-An Village, Lungtan,
Taiwan.
All other requirements specified in special notes
attached.
</TABLE>
SHIPPING MARKS: L/C beneficiary ____________________
ORDER NO: YL-7604-5498(95-GFR3-0453) same as seller
Address: same as seller
Supplier: same as seller
Shipping Wts: Address: same as seller
GFR3-840321 Measurements: Manufacturer: same as seller
XB4165A Case No.: Address: same as seller
CSIST
P D
Taipei, Taiwan
INSURANCE: To be effected by Buyer upon receipt of Seller's shipping notice.
TO COMPLETE THE PROGRAM:
SHIPMENT: Within 28 weeks after the contract being effected.
Partial shipments are/not permitted.
INSPECTION: Maker's Inspection Certificate required on specifications,
quantity, quality, proper packing and marking.
IN WITNESS WHEREOF, the parties hereto have caused this Contract signed by
their respective officers duly authorized.
FOR CENTRAL TRUST OF CHINA FOR Parlex Corporation
PROCUREMENT DEPARTMENT
/s/ JAMES CHANG /s/ PETER J. MURPHY
- ---------------------------------- ----------------------------------
* Confidential information has been omitted and filed separately with the
Commission.
CENTRAL TRUST OF CHINA
REPRESENTATIVE OFFICE IN NEW YORK
ONE WORLD TRADE CENTER - SUITE 3857
NEW YORK, NY 10048-0279
Telephone: (212)775-1055-9 Fax: (212)775-0490
CONTRACT NO. YL-7604-5498, 95-GFR3-0453
ATTACHMENT: SPECIAL NOTES
1. THE SELLER IS RESPONSIBLE FOR THE TRANSPORTATION, LODGING AND MEALS OF
THREE TRAINEES VISITATION DURING THE PHASE ONE.
2. THE SELLER SHOULD PROVIDE THE SUPPORT OF ANY REASONABLE REQUEST FOR
ENGINEERING ASSISTANCE IN WRITTEN FORM WITHOUT ANY ADDITIONAL CHARGE. IF
THE ENGINEERING SUPPORT IN THE BUYER'S FACILITY IS REQUIRED, WITHIN A
PERIOD OF TWO YEARS, THE FEE SHOULD BE LESS THAN US *
(PLUS AIR FARE, HOTEL & SUBSISTENCE). IF REFRESHER TRAINING IS REQUIRED
BY THE ENDUSER, CSIST, AFTER 12 MONTHS, THE FEE WILL BE NO MORE THAN
*.
3. THE REQUIRED DOCUMENTATION AND TRAINING MATERIALS WHICH WILL BE DELIVERED
TO THE ENDUSER, CSIST, IN TAIWAN VIA COMMON CARRIER WITH AIR FREIGHT
PREPAID. THE DOCUMENTATION SHALL BE SHIPPED TO CSIST WITHIN TWO MONTHS
AFTER RECEIPT OF THE LETTER OF CREDIT.
4. CONSIGNEE: CHUNG-SHAN INSTITUTE OF SCIENCE OF TECHNOLOGY
481, CHIA-AN SEC., CHUNG-CHENG ROAD, CHIA-AN VILLAGE
LUNG-TAN, TAIWAN, R.O.C.
5. THE SELLER SHALL SEND A SHIPPING NOTICE TO CSIST BY FAX (#011-886-3-471-
1494) FOR APPROVAL AT LEAST 30 DAYS BEFORE SHIPMENT. CSIST WILL APPROVE
THE SHIPMENT WITHIN TWO WORKING DAYS AFTER RECEIPT OF SUCH NOTICE AND
NOTIFY CTC/PD TO ISSUE AN APPROVED SHIPPING ADVICE, STATING THAT SHIPMENT
IS APPROVED AND CAN BE MADE, THROUGH THE L/C ISSUING BANK TO THE SELLER.
THE APPROVED SHIPPING ADVICE ISSUED BY CTC/PD SHALL BE PRESENTED WITH THE
SHIPPING DOCUMENTS FOR L/C NEGOTIATION.
6. PAYMENT SCHEDULE:
1ST PAYMENT: * FOR DOCUMENTATION WILL BE MADE AGAINST
SHIPPING DOCUMENTS EVIDENCING THE SHIPMENT OF
DOCUMENTATION HAVE BEEN DONE.
2ND PAYMENT: * FOR TECHNOLOGY, MATERIAL AND TRAINING AT
PARLEX & CSIST WILL BE MADE AGAINST SIGNED SIMPLE
RECEIPT AND CTC/PD'S PAYMENT ADVICE THROUGH THE
L/C ISSUING BANK AFTER THE COMPLETION OF TRAINING.
3RD PAYMENT: * FOR SAMPLE QUALIFICATION ADMINISTRATION AND
PROGRAM MANAGEMENT WILL BE MADE AGAINST SIGNED
SIMPLE RECEIPT AND CTC/PD'S PAYMENT ADVICE
THROUGH THE L/C ISSUING BANK AFTER THE FINAL
ACCEPTANCE OF THE ENTIRE PROGRAM BY THE CSIST.
* Confidential information has been omitted and filed separately with the
Commission.
CENTRAL TRUST OF CHINA
REPRESENTATIVE OFFICE IN NEW YORK
ONE WORLD TRADE CENTER - SUITE 3857
NEW YORK, NY 10048-0279
Telephone: (212)775-1055-9 Fax: (212)775-0490
CONTRACT NO. YL-7604-5498, 95-GFR3-0453
ATTACHMENT: SPECIAL NOTES
(continuing from previous page)
7. ALL SERVICE INCOMES INCURRED IN TAIWAN, R.O.C. WILL BE LEVIED THE
BUSINESS INCOME TAX AT PREVAILING RATE AT THE TIME OF PAYMENT. THE
CURRENT RATE FOR SAID TAX IS 20%. SELLER HAS TO PAY THE TAX FOR DOING
TRAINING AT CSIST AND THE TAX AMOUNT, * WILL BE WITHHELD
UPON PAYMENT.
8. EFFECTIVENESS OF THE CONTRACT:
THIS CONTRACT WILL BE IN EFFECT AFTER CSIST'S TRAINING AT PARLEX PROGRAM
HAS BEEN APPROVED BY THE DEFENSE DEPT. GOVERNMENT OF TAIWAN REPUBLIC OF
CHINA. CSIST SHOULD SEND A NOTICE BY FAX TO SELLER (FAX: 508-685-8809)
TO EFFECT THE CONTRACT WITH A COPY TO CTC/PD FOR ISSUING THE L/C AFTER
THE SAID PROGRAM BEING APPROVED.
9. THE AIR TICKETS FEE AND LIVING EXPENSES FOR CSIST'S PERSONNEL (TRAINEES)
SENT TO PARLEX SHALL BE BORNE BY CSIST. HOWEVER, PARLEX SHALL PROVIDE
ASSISTANCE IN ARRANGING LOCAL TRANSPORTATION, ROOM AND BOARD, MEDICAL
ASSISTANCE, ETC. FOR THOSE TRAINEES.
* Confidential information has been omitted and filed separately with the
Commission.
PARLEX CORPORATION
RIGID-FLEX PCB
TECHNOLOGY TRANSFER PROPOSAL
FOR CENTRAL TRUST OF CHINA AND
CHUNG SHAN INSTITUTE OF SCIENCE
AND TECHNOLOGY
16 May 95
TABLE OF CONTENTS
Section I - Introduction
Section II - Technology
Section III - Training Plan
Section IV - Documentation
Section V - Pricing
----------------------------------------------------------------------------
| This proposal and the entirety of its contents is proprietary to |
| Parlex Corporation. Its use is restricted to staff members of CSIST for |
| evaluation and it may not be transferred to any other organization without |
| the written permission of Parlex. Further the data included must be |
| treated as commercially confidential information. |
----------------------------------------------------------------------------
SECTION I
INTRODUCTION:
Parlex, a Methuen, Massachusetts based corporation is a world leader
in the flexible interconnect industry. Founded in 1970, the Company has
maintained a focus on flexible and rigid flex circuits and has been a prime
influence in the development of this technology.
Parlex has a large engineering staff and is active in the development
of new interconnect technologies. The Company is highly capitalized and has
the proper organization to support a technology sharing venture. CSIST can
expect the highest level of support from every level of this organization.
SECTION II
TECHNOLOGY
Introduction
1. QUALIFICATION PROGRAM
2. FLEXIBLE MULTILAYERS
3. FLEX RIGID MULTILAYERS
4. ADHESIVELESS FLEX RIGID MULTILAYERS
Qualification Program for Rigid-Flex Printed Wiring Boards
Parlex will assist CSIST in the fabrication of Qualification Rigid-Flex
printed wiring boards. This program is designed around the ten layer Rigid-
Flex board used to qualify manufacturers to fabricate boards which will be
in compliance with MIL-P-50884C, the Specification for Flexible and Rigid-
Flex Printed Wiring and MIL-STD-2118, the Design Requirements for Flexible
and Rigid-Flex Printed Wiring for Electronic Equipment.
The board to be fabricated during this program will be manufactured using
the artwork for the IPC-A-100043. This has the advantage of incorporating
several degrees of difficulty which allow for the evaluation of your process
technology as well as demonstrating the ability to fabricate complex Rigid-
Flex boards.
Parlex has designed this program so that upon successful completion, you
should be able to fabricate Zone B level boards and pass the qualification
of Zone B level by the Defense Electronics Supply Center (DESC).
FLEXIBLE CIRCUITRY
ALL FLEXIBLE MULTILAYER
CROSS SECTION
CU ______ Copper Pad Layer
______ Cover Coat
KAPTON
______ Inner Layer
COPPER
______ Base Laminate
KAPTON
______ Inner Layer
COPPER
______ Cover Coat
KAPTON
______ Copper Pad Layer
CU
(Adhesive layers not shown for clarity)
FLEXIBLE CIRCUITRY
FLEX RIGID MULTILAYER
CROSS SECTION
CU
FR-4 OR GI
______ Double sided rigid board
COPPER
KAPTON
COPPER ______ Single flexible layer
KAPTON
COPPER
FR-4 OR GI ______ Double sided rigid board
CU
(Adhesive layers not shown for clarity)
SECTION III
TRAINING
REQUIREMENTS
1 - TRAINING AT PARLEX
2 - TRAINING AT CSIST
TRAINING AT PARLEX
---------------------------------------------------------
| The training program will be centered on the required |
| elements for qualification to Mil-P-50884C. |
---------------------------------------------------------
CSIST TECHNOLOGY TRANSFER PROGRAM
Option I
Training at Parlex:
The training session at Parlex is critical to successful transfer of
technology. The technicians from CSIST will learn every unique element of
the rigid flex process and gain first hand experience designing and
manufacturing circuits. Training will include the following:
1.0 Flexible Circuit Design
1.1 Design rule layout for various power conditions
1.2 EMI optimization
1.3 Mil-coupon considerations
1.4 Producibility considerations
1.5 Conductor routing and design
2.0 Material
2.1 Compatibility
2.2 Producibility
2.3 Reliability
2.4 Flexibility
2.5 Testing
3.0 Product Process Design
3.1 Mil-P-50884C requirements
3.2 Standard Constructions
3.3 Density issues
3.4 Alternative constructions
4.0 Processing Techniques
4.1 Material prep
4.2 Image
4.3 Etching
4.4 Lamination
4.5 Drill Rout
4.6 Plating
4.7 Photo Develop
TRAINING AT PARLEX - Continued
---------------------------------------------------------
| The training program will be centered on the required |
| elements for qualification to Mil-P-50884C. |
---------------------------------------------------------
CSIST TECHNOLOGY TRANSFER PROGRAM
Option I
5.0 Assembly
5.1 Soldering (hand and wave)
5.2 Connector prep
5.3 Rigid flex prep
5.4 Assembly considerations
5.5 Dielectric sealing
5.6 Assembly testing
---------------------------------------------------------
| Typical Training Sequence |
| |
| Review Documentation |
| |
| Classroom Training of Process |
| |
| Practical Training of Process |
| |
| Associated Quality Training |
---------------------------------------------------------
The intensive course will require students to spend 50 hours a week at
Parlex. The course will last 30 days.
* Parlex will develop and implement a comprehensive training program for
your technical staff and will provide a matrix for material selection for
each process. Parlex will also provide the supporting documentation,
encompassing Engineering procedures. Quality standards and Manufacturing
work instructions.
* Parlex personnel will be assigned to work with CSIST technical staff to
assure a smooth transition of technical information.
TRAINING AT PARLEX - Continued
* Parlex will provide a complete list of all equipment that will be
necessary for processing advanced products.
TRAINING AT CSIST
* Engineering and Manufacturing personnel will be available to assist
CSIST in Taiwan for 200 hours.
* Phase two training will include:
1.0 Quality Assurance:
1.1 Classroom training
1.2 Practical training
2.0 Rigid-flex multilayer board fabrication:
Parlex will assist CSIST in the fabrication of ten-layer
rigid-flex board using the artwork of the IPC-A-100043) which
will be in compliance with MIL-P-50884C.
The total time duration for this program is limited to 28
weeks. The time duration for phase one shall be no less than five
(5) weeks or six hundred (600) hours. The phase two should start six
weeks after the phase one is completed. The time duration for phase
two shall be no less than two weeks or two hundred (200) hours.
Parlex will provide the exact time schedule for this program.
Parlex will provide a matrix for material selection for each
process. Parlex will also provide the supporting documentation,
encompassing Engineering procedures, Quality standards and
Manufacturing work instructions.
SECTION IV
DOCUMENTATION
REQUIREMENTS
DOCUMENTATION
Parlex will provide CSIST with all of the documentation required to
manufacture the advanced products. The attached list represents the level
of detail that will be provided to your technical, quality and management
staff. The key to any successful technical exchange is a comprehensive
documentation package.
In addition to providing the documentation, Parlex will also assist CSIST in
the establishment of documentation control procedures. Parlex will provide
semi-annual updates on the documentation for a period of two years from
contract date and will make additional updates available upon request. It
should be noted that some documentation is proprietary data and must be
treated as CSIST treats its own proprietary information.
COMPANY CONFIDENTIAL
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Parlex Document List
Prefix Number Revision Title
- ----------------------------------------------------------------------------------------------
<S> <C> <S> <S>
POP 1000 B Documentation and Revision Control
POP 1001 - Quality Manual
POP 1002 A Document Generation Procedure
POP 1003 - Handling and Storage of Resin Impregnated Glass Cloth
POP 1004 - Handling, Storage, Packaging, and Delivery
POP 1005 - Shipping and Packaging Procedure
EPS 1006 - Engineering Change Order Procedure
POP 1007 A Control of Nonconforming Product
POP 1008 - Indication of Inspection Status
POP 1009 - Corrective Action Procedure
POP 1010 - Problem Solving Procedure
POP 1011 - Contract Review Procedure
POP 1012 A Final Inspection Procedure
POP 1013 - Electrical Test Procedure
POP 1014 - Receiving Inspection Procedure
MPS 1015 - Chemical Clean
MPS 1017 - Chemical Clean Etch Rate Measurement
MPS 1018 - ASI Chemical Clean Water Break Test
POP 1019 - Material Review Procedure
QCP 1020 - Final Visual Inspection Work Instruction
EPS 1022 - On Hold Procedure
PMS 1023 - GF Prepreg Specification
PMS 1024 - GF Laminate Specification
PMS 1025 - GI Prepreg Specification
PMS 1026 - GI Laminate Specification
MPS 1027 - Chemical Add Notice
POP 1029 A Calibration Procedure
MPS 1030 - Developing
MPS 1031 - Developer pH Control
MPS 1032 - Developer Concentration
SOW 1033 - Documentation Control Software
POP 1034 - Control of Customer Supplied Product
POP 1035 - Selection and Approval of Material Suppliers
POP 1036 A Purchasing Procedure
POP 1037 - Control of Purchased Product
POP 1038 A Internal Audit Procedure
POP 1040 - Product Identification and Traceability
POP 1041 - New Process/Equipment/Material Release Procedure
POP 1042 - Process Control Plan
POP 1043 - In-process Inspection Procedure
QCP 1044 - Quality Plan
POP 1045 A Storage and Retrieval of Quality Records
POP 1046 - New Employee Orientation
MPS 1049 - Automatic Screening
ATP 1050 - ED Copper Test Plan
MPS 1052 - Developer Direct Bath Addition Procedure
MPS 1053 - pH Probe Cleaning and Calibration
MPS 1054 - Hand Stamping
MPS 1055 - Etch Inspection
MPS 1056 - AOI Inspection
MPS 1057 - Shipping
MPS 1058 - Shearing
ATP 1059 - Impedence Test Guideline
ATP 1060 - SIR Test
MPS 1061 - Trace 948E Tester
MPS 1062 - Electrical Test Program Generation
MPS 1063 - Procedure F.A.C.T.
MPS 1064 - Cross Section, Automatic
MPS 1065 - Cross Section, Manual
MPS 1066 - Glass Etch
MPS 1067 - Pouch Venting and Sealing
MPS 1068 - Plasma Desmear and Etchback
MPS 1069 - In-process Cross Section
MPS 1070 - Nickel/Gold Plating
MPS 1071 - Solder Strip
MPS 1073 - Developer 1/2 Process Control Plan
EPS 1074 - New Order Procedure
EPS 1075 - Repeat Order Procedure
EPS 1076 - Electrical Test Fixture Generation Procedure
ATP 1077 - Cleanliness Testing Procedure
MPS 1078 - Production Control (Release of Material)
MPS 1109 - Preventive Maintenance - Wave Solderer.
MPS 1110 - Conformal Coat
MPS 1111 - Clean Potting Molds
MPS 1112 - Clean Prior Coat
MPS 1113 - Prepare Potting Compound
MPS 1114 - Filleting Circuits
QCP 1115 - X- Ray
MPS 1116 A Copper Solder Plating - Manual line
MPS 1117 - Electroless Copper - Manual Line
MPS 1118 - Application of Pressure Sensitive Adhesive to Backers/Stiffeners
MPS 1119 - Entry/Exit Material Emboss
MPS 1121 A Backer Tacking
MPS 1122 - Heatsink /Backer Alignment
MPS 1123 - Baking Prior to Comp Layup
MPS 1124 - Composite Layup/Breakdown
MPS 1125 - Dry Film Lamination
MPS 1126 - Changing Resist Rolls
MPS 1127 - Dry Film Parameter Matrix
MPS 1128 - Image
EPS 1130 - Engineering Departmental Development Plan
EPS 1131 - Panel Pinning Requirements
EPS 1132 - Drilling Requirements for Electrical Test Fixtures
EPS 1133 - Rout Machine Special requirements
EPS 1134 - Drill Machine Special Concerns
EPS 1135 - Border Requirements
EPS 1136 - Product Scaling Requirements
EPS 1137 - Data Archiving
EPS 1138 - Tooling Scheme Definitions
EPS 1139 - Layering Convenetions
EPS 1140 - Modeming Criteria
EPS 1141 - Stiffener Programs
EPS 1142 - Engineering Hardware and Software
EPS 1144 - Spartanics Targets
EPS 1145 - Master Pattern Requirements
EPS 1146 - Design Rule Checking
EPS 1147 - Data Format Requirements
EPS 1148 - Shipping and Approving Master Pattern Artwork
EPS 1149 - Outside Information Requirements
EPS 1150 - Internal Master Pattern Approval
EPS 1151 - Artwork Scaling
EPS 1152 - Manufacturing Release Procedure
EPS 1153 - Compliance Requirements
EPS 1154 - A/W Sign off Procedure
EPS 1155 - D/P Sign off Procedure
EPS 1156 - Tooling Sign off Procedure
EPS 1157 - BOM Release Procedure
EPS 1158 - Repeat Review Procedure
EPS 1159 - New Product Introduction
EPS 1160 - Design Quoting Procedure
EPS 1161 - Panel Design Review
EPS 1162 - Order Entry Requirement
EPS 1163 - Prototype Release Procedure
EPS 1164 - Product vs. Process Requirements
EPS 1165 - Feedback Implementation Procedure
EPS 1166 - Vent Hole Requirements
EPS 1167 - Soldermask Pullback
EPS 1168 - Panel Size & Profiling
EPS 1169 - A/W Registration System
EPS 1170 - Panel Plating Rack Requirements
EPS 1171 - PPE vs. PE Criteria
EPS 1172 - Preco Tooling Concepts
EPS 1173 - Black vs. Brown Oxide
EPS 1174 - Manufacturing Capabilities
EPS 1175 - Plasma Etch Standards and Requirements
EPS 1176 - Plating Requirements
EPS 1177 - Soldermask Requirements
EPS 1179 - RTV's
EPS 1180 - Rubbers
EPS 1181 - Pre-preg Types and Compression's
EPS 1182 - Kapton Types
EPS 1183 - Laminate Types
EPS 1184 - Construction Options
EPS 1185 - Pouching Method
EPS 1186 - Figure Sheets Requirements
EPS 1187 - Marking of Military Parts & Packaging
EPS 1188 - Marking of Commercial Parts & Packaging
EPS 1189 - Tooling Schemes
EPS 1190 - Tool System Entry Procedure
EPS 1191 - Cost Estimating and Quoting
EPS 1192 - ECO Review for the Quoting
EPS 1193 - P.O.Review
EPS 1194 - Cancellation Procedure
EPS 1195 - Generating APEC Quote
EPS 1196 - Steel Rule Dies
EPS 1197 - Covercoat Rigistration Fixtures
EPS 1198 - Wave Solder Fixture
EPS 1199 - Punch Jigs
EPS 1200 - Hard Tooling (Blanking Dies)
EPS 1201 - Tool Request
EPS 1202 - Tool Storage
EPS 1203 - Tool Obsoleting Requirements
EPS 1204 - Producing and Using Diazo's
EPS 1205 - Numbering of Artworks
EPS 1206 - Remakes
EPS 1207 - Revision Verification
EPS 1208 - Tagging Artwork
EPS 1209 - Inspection of Artwork
EPS 1210 - Obsoleting Artwork
EPS 1211 - Drill Program Generation
EPS 1212 - Rout Program Generation
EPS 1213 - Drill Rout Program Generation
EPS 1214 - Cost Estimating and Quoting
POP 1227 - Management Review Procedure
POP 1228 - Order Entry Procedure
MPS 1229 - Vacuum Oven
MPS 1230 - Water Break Test
EPS 1231 - Soldermask Requirements
MPS 1232 - Image
MPS 1233 - Image Matrix
MPS 1234 - Image - Process Control Plan
POP 1235 - Preventative Maintenance Procedures
QCP 1238 - Thermal Shock Test
QCP 1239 - Moisture and Humidity
KEY DESCRIPTION
POP Parlex Operating Procedure
EPS Engineering Process Specifications
MPS Manufacturing Process Specification
QCP Quality Control Procedure
PMS Parlex Material Specification
ATP Acceptance Test Plan
</TABLE>
Parlex will make available the following documents (as determined applicable)
SECTION V
PRICING PROPOSAL
Definitions:
Item 5.1 Technology
Rights to proprietary data and intellectual property concerning development,
design and production of mil approved rigid flex circuitry - technology
transfer.
Item 5.2 Supporting Documentation
The establishment of a documentation system, all required documentation,
documentation updates for two years.
Item 5.3 Training
Training to be conducted at Parlex for 5 weeks and CSIST for two weeks in
preparation for qualifications to
Mil-P-50884C.
Item 5.4 Materials
Materials required to understand characteristics of various constructions,
learn testing techniques and build sample products at Parlex and CSIST, fees
for filing export license and Mil-P-508842 quality charges.
Item 5.5 Equipment (optional item)
Parlex has reviewed the equipment list supplied by CSIST. It is our
understanding that all required equipment is in place for the production of
rigid flex circuits with the following exception:
Single drawer mechanical press system; controlled Z axis outlining maching
to be used in conjunction with steel rule dies. The cost of new equipment
is * . Parlex could supply reconditioned used equipment for *
(FOB, Methuen, MA).
Item 5.6 Payment Method
Payment will be made by an irrevocable letter of credit to Shawmut Bank
N.A., 1 Federal Street, Boston, MA 02210, account # 020-074183-9, ABA #
011000206, swift code NASHUS33.
* Confidential information has been omitted and filed separately with the
Commission.
SECTION V
5.7 PAYMENT SCHEDULE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Accumulated
Payment Due Date
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C> <S>
1. A. Technology * * Completion of Training
B. Material * * at Parlex
2. Documentation * * Shipment of Documents
3. Training at Parlex * * Completion of Training at Parlex
4. Training at CSIST * * Completion of Training at CSIST
5. A. Sample Qualification * * Completion of Sample Build and
B. Admin. & Program Submittal of Data for Mil
Management * * Approval
</TABLE>
* Confidential information has been omitted and filed separately with the
Commission.
Parlex will provide the support of any reasonable request for engineering
assistance in written from without any charge. If the engineering support
in the Buyer's facility is required, within a period of two years, the fee
will be * (plus airfare, hotel & subsistence). If refresher
training is required by CSIST, after 12 months, the fee will be *.
* Confidential information has been omitted and filed separately with the
Commission.
MANUFACTURING AND SALES AGREEMENT
This Agreement is made as of September 29, 1994 by and between
Parlex Corporation
a Massachusetts corporation
145 Milk Street
Methuen, MA 01844 U.S.A. (hereinafter Parlex)
and
Samsung Electro-Mechanics Co., Ltd.
a Republic of Korea corporation
314 Maetan 3-dong, Paldalgu
Suwon, Kyunggi-do, Korea
(hereinafter Samsung)
Whereas, Parlex owns the technology and patent rights for multi-layer
circuit boards sold under the Parlex trademark PALCORE;
Whereas, Samsung desires to acquire certain rights, as set forth herein,
to manufacture and sell PALCORE products;
Whereas, Parlex is willing to grant to Samsung and Samsung is willing to
accept certain rights to manufacture and sell PALCORE products on the terms and
conditions as set forth herein;
Now, Therefore, in consideration of the mutual undertakings set forth
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
1.0 Definitions
-----------
1.1 PALCORE products shall mean multi-layer circuit boards covered by
one or more claims of the Parlex patent applications of Attachment E hereto or
resulting patents, and/or technology and know-how of Parlex for the design,
manufacture, testing and quality assurance of such boards to meet Parlex
quality standards, and meeting the specifications of Attachment C hereto.
1.2 Engineering Support shall mean reasonable engineering assistance
and consultation to be provided by Parlex by telephone and/or by facsimile, and
by such personal visits of Samsung personnel to Parlex facilities or of Parlex
personnel to Samsung facilities as may be arranged by mutual agreement of the
parties from time to time.
1.3 Technology Upgrade shall mean modifications to the PALCORE
technology to enhance the manufactureability or lower the cost of the PALCORE
products.
1.4 Sales Support shall mean efforts by Parlex in the United States to
obtain orders from those customers listed in Attachment A hereto which orders
are to be referred hereunder to Samsung.
1.5 Improvements shall mean improvements to the PALCORE products,
manufacturing processes or materials which are covered by one or more claims of
the Parlex patent applications of Attachment E or resulting patents, or which
are based on or derived from the PALCORE technology.
1.6 Attachments shall mean the following Attachments which are appended
to this Agreement and which are a part of this Agreement:
Attachment A: Parlex customers for which PALCORE orders are to be
referred to Samsung
Attachment B: Customers to whom Samsung directly deals
Attachment C: PALCORE specifications
Attachment D: Confidential Disclosure Agreement
Attachment E: Parlex PALCORE patent applications:
1.7 Effective Date shall mean the date the Agreement is approved by the
Republic of Korea Government.
2.0 Training
--------
2.1 Parlex will provide six (6) weeks of training at Parlex facility in
Methuen, Massachusetts, U.S.A. for up to eight (8) qualified Samsung employees
in the design, manufacturing and testing of PALCORE products in accordance with
Parlex standards. The specific scheduling of this training will be as
determined between the parties and is intended to commence within a reasonable
time following the effective date of this Agreement.
2.2 Samsung shall pay all travel and living expenses and salaries of
their employees during the training visit of section 2.1 above and during any
other visits by Samsung employees to Parlex facilities.
2.3 Samsung represents that it has the general knowledge and ability to
design, manufacture and test printed circuit boards, and that its employees
attending training at Parlex have sufficient understanding of written and
spoken English to facilitate such training.
2.4 Subsequent to the training at the Parlex facility set forth in
section 2.1 above, Parlex will provide at a Samsung facility in Korea, up to
four (4) man-months of training of Samsung employees, at a schedule to be
determined by the parties.
2.5 Samsung shall provide room and board, not including any salaries
and travel expenses, for the Parlex employees attending such training at
Samsung.
2.6 Parlex will provide necessary documents in English to Samsung
believed by Parlex to be appropriate as part of the training of Samsung
employees, and Parlex will provide the material required for the initial
training program of section 2.1 above.
3.0 Payment
-------
3.1 Samsung shall pay to Parlex * as consideration for
the rights granted under this Agreement by Parlex to Samsung. Such payment
shall be the complete and final payment to cover the cost for training to be
provided by Parlex to Samsung employees in the U.S. and in Korea under sections
2.1 and 2.4 above, the supply of raw materials for such training, Engineering
Support, technology Upgrade, Sales Support by Parlex, the exclusive
manufacturing right in Korea and right to use the PALCore trademark on PALCore
products, and appropriate taxes.
3.2 Samsung shall either deduct or withhold tax within the Republic of
Korea from the * that is to be paid by Samsung to
Parlex pursuant to Paragraph 3.1 above. After deduction or withholding of the
tax, Samsung shall pay Parlex the remaining sum no later than November 29,
1994. Samsung shall thereafter provide Parlex with a receipt evidencing
payment of such tax.
4.0 Manufacturing Rights
--------------------
4.1 Parlex hereby grants to Samsung the exclusive right to manufacture
PALCORE products in Korea.
4.2 Nothing in this Agreement shall limit the right of Parlex to
authorize others to manufacture PALCORE products in any country outside of
Korea, or limit the right of Parlex to sell PALCORE products in any country
outside of Korea. Parlex shall offer Samsung the license rights granted herein
in the most favored terms that it offers such to any other licensee. Parlex
shall notify Samsung prior to granting license rights to the PALCORE products
to any other party, and Samsung will be given an opportunity to match the offer
of such license rights on the same terms as offered to the third party. It is
recognized that circumstances including customer preference may dictate the
choice of another licensee and that Parlex shall have the sole right to select
the licensee.
* Confidential information has been omitted and filed separately with the
Commission.
4.3 Samsung shall sell PALCORE products only to Parlex or to customers
designated or to be designated by Parlex, which customers are identified in
Attachment A hereto, or to pre-existing Samsung customers as identified in
Attachment B hereto.
4.4 Parlex will provide technical assistance to insure Samsung clearly
understands product and quality standards established by Parlex.All PALCORE
products manufactured hereunder by Samsung shall meet the product and quality
standards established by Parlex including the specifications of Attachment C
hereto.
4.5 At the request of Samsung, Parlex shall take reasonable measures,
including but not limited to, negotiation on behalf of Samsung to obtain supply
of base materials at a fair price which is as favorable to Samsung as prices
charged to Parlex for such material. Samsung will only use the base material
approved by Parlex in its manufacture of PALCORE products. Approval of such
materials shall not be unreasonably withheld.
4.6 Both parties will be given the opportunity to negotiate the price,
shipping and other applicable terms of purchase orders placed with Samsung.
Parlex will issue purchase orders with these terms to Samsung for particular
PALCORE products to be made hereunder by Samsung.
4.7 For sales by Samsung of PALCORE products to customers except Parlex
and Samsung Group, Samsung shall pay a sales commission to Parlex of * of
such sales. Such payments shall be based on sales F.O.B. Korea and shall be
payable quarterly within thirty (30) days following the end of each calendar
quarter.
4.8 Samsung will allocate 50% of its PALCORE capacity to the customers
listed in Attachment A hereto.
4.9 Samsung shall respond in timely manner and give the highest
priority to each request for quotation (RFQ) issued by Parlex.
* Confidential information has been omitted and filed separately with the
Commission.
4.10 Parlex shall not assert any patent rights against Samsung's
manufacture, use or sale of PALCORE products made under this Agreement,
including Samsung's use of technology relating to PALCORE products acquired
from other legitimate sources.
4.11 Parlex represents that it is the owner of the PALCORE technology
and has the authority to grant the rights under this Agreement.
4.12 Parlex represents that the PALCORE technology when appropriately
implemented will produce PALCORE products meeting the specifications of
Attachment C hereto.
4.13 Except for product liability arising as a result of Parlex design
defects, Samsung shall be solely liable for any product liability arising from
defective PALCORE products built and sold by Samsung.
4.14 Parlex warrants that, upon the Effective Date of the Agreement, (a)
it has the right to disclose confidential information associated with PALCORE
products to Samsung, and (b) it has the right to transfer said confidential
information to Samsung.
5.0 Marketing and Sales
-------------------
5.1 Parlex and Samsung shall cooperate in marketing and sales efforts
to develop and expand the market for PALCORE products.
5.2 Samsung shall support the marketing and sales efforts by providing
brochures, facilities descriptions and other documents showing Samsung's
capability to manufacture PALCORE products.
5.3 Samsung shall use the PALCORE trademark on all advertisements and
other promotional and product literature in a manner specified by Parlex, and
shall identify Parlex as the trademark owner and as the originator of the
PALCORE technology in all such literature. All advertisements and other
literature for PALCORE products shall be based upon mutually agreed upon
promotional guidelines. In order to permit Samsung to legitimately utilize the
PALCORE trademark, Parlex shall register Samsung as an authorized user of such
trademark in Korea.
5.4 Parlex will support Samsung in obtaining product approval for the
initial PALCORE order. For the first twelve (12) months of this Agreement,
Parlex will place high volume PALCORE orders with Samsung if their quotations
are competitive.
5.5 Parlex will provide front end engineering as set forth and at the
compensation provided in a customer purchase order accepted by Parlex.
5.6 Customers identified in Attachment A hereto may be removed and
additional customers added by mutual written Agreement of the parties. Any
changes to customers identified in Attachment B requested by Samsung may be
made after approval by Parlex, which approval shall not unreasonably be
withheld.
6.0 Term
----
6.1 This Agreement shall remain in force and effect until the fifth
(5th) anniversary of the Effective Date of this Agreement.
6.2 If at the end of the initial five-year term of the Agreement,
Samsung is selling PALCORE products to Attachment A and Attachment B customers
at an annual rate of at least * of which Attachment A customers amount to at
least fifty percent (50%) of such sales this Agreement shall be renewed for an
additional five-year term. At such renewal, the annual minimum sales rate for
the second five-year term shall be established by the parties which if met will
permit renewal for another five-year term. Five-year renewals shall continue
in similar manner with a new minimum annual sales level being established for
each new renewal term.
* Confidential information has been omitted and filed separately with the
Commission.
6.3 In any renewal of this Agreement, there shall be no additional fee
under section 3.1 hereof, but the sales commissions called for under section
4.7 of this Agreement shall remain applicable.
7.0 Termination
-----------
7.1 Parlex shall have the right to terminate this Agreement
(a) upon failure by Samsung to develop the manufacturing capability for
producing PALCORE products meeting Parlex' quality standards in commercially
reasonable quantities within one (1) year of the effective date;
(b) upon failure by Samsung to maintain acceptable Parlex standards for
PALCORE products;
(c) upon breach or default by Samsung of any obligation under this
Agreement.
7.2 Samsung shall have the right to terminate this Agreement in the
event Samsung determines that it cannot manufacture the PALCORE products to
acceptable Parlex standards. If termination under this section 7.2 is
effective within six (6) months following the effective date, Parlex shall
refund one-half (1/2) of the initial payment set forth in section 3.1 above.
If termination under this section 7.2 is effective six (6) months or later
following the effective date, there shall be no refund of the initial payment.
7.3 All notices of termination shall be in writing and shall be
effective sixty (60) days following receipt of the notice unless the breach or
default can be cured within the sixty (60) day notice period.
7.4 Upon termination or expiration of this Agreement, Samsung shall
have the right to complete orders booked prior to the effective termination
date so long as the scheduled delivery is not longer than six (6) months
following such date of termination and so long as PALCORE products meeting
Parlex standards can be shipped.
7.5 After termination or expiration of this Agreement, Samsung shall
have no right to use the PALCORE technology, patents or trademark, or the right
to make or sell PALCORE products or to represent to others that it has such
right.
8.0 Improvements to PALCORE
-----------------------
8.1 Any Improvements to the PALCORE products, manufacturing processes
or materials made by Parlex, or by Samsung, shall be owned by the party
originating the same. Any Improvements to the PALCORE products, manufacturing
processes or materials made jointly by Parlex and Samsung shall be jointly
owned in equal shares by Parlex and Samsung. The originating party shall have
the right to seek patent protection for such Improvements at its own expense.
The parties will mutually determine the manner of seeking patent protection on
such joint Improvements.
8.2 Parlex grants to Samsung a royalty-free right to practice all
Improvements made hereunder by Parlex in connection with the PALCORE products
and for so long as Samsung has rights under this Agreement. Samsung grants to
Parlex a royalty-free right to practice all Improvements made hereunder by
Samsung in connection with PALCORE products and for so long as Parlex has
rights to the PALCORE technology. Neither party shall grant to any other party
any rights to joint Improvements made under this Agreement without the prior
written permission of the other.
8.3 Each party shall promptly notify the other of each such Improvement
and keep the other party informed of all patent applications and resulting
patents in Korea for such Improvements.
8.4 Each party shall maintain the confidentiality of the Improvements
in accordance with a Confidential Disclosure Agreement executed by both parties
in the form and content as set forth in Attachment D hereto.
9.0 Export Control
--------------
9.1 Parlex will be responsible for obtaining any export control
licenses and permits required by United States laws and regulations. Samsung
shall be responsible for obtaining any export or import licenses and permits
required by Republic of Korea laws and regulations.
10.0 Infringement
------------
10.1 Samsung will notify Parlex if Samsung learns of any infringement
by others of any patents or other rights of Parlex relating to PALCORE.
10.2 The parties will cooperate in determining an appropriate course of
action to redress any infringement of the PALCORE rights.
10.3 Parlex represents that the patent applications relating to PALCORE
are as set forth in Attachment E hereto. Parlex further represents that it has
no knowledge of any prior patents or other information which adversely affects
the validity of such patent applications or resulting patents, and no knowledge
of any rights of others that would be infringed by practice of the PALCORE
technology. In the event that PALCORE products manufactured by Samsung are
held to constitute an infringement of another's U. S. or Korean patent, and its
manufacture and sale are enjoined as a result of any such proceeding, Parlex
shall at its sole option, either (1) procure for Samsung the right to continue
using the patent, or (2) modify such PALCORE products so that it becomes non-
infringing, or (3) refund the sum of *.
11.0 Disputes
--------
11.1 Any dispute arising out of or related to this Agreement shall be
finally settled by arbitration in accordance with the Rules on Conciliation and
Arbitration of the International Chamber of Commerce. In event of any conflict
between these Rules and this Article, the provisions of this Article shall
govern. This arbitration shall take place in New York City, U.S.A.
11.2 Each of the parties shall appoint one arbitrator and the two so
nominated shall in turn choose a third arbitrator. If the arbitrators chosen
by the parties cannot agree on the choice of the third arbitrator within a
period of thirty (30) days after their nomination, then the third arbitrator
shall be appointed by the Court of Arbitration of the International Chamber of
Commerce.
11.3 The arbitration shall be conducted in the English language.
Relevant documents in other languages shall be translated into English if the
arbitrators so direct. In arriving at their award, the arbitrators shall make
every effort to find a solution to the provisions of the Agreement and give
full effect to all parts thereof. However, if a solution cannot be found in
the provisions of the Agreement, the Arbitrators will apply the domestic law of
the State of New York, U.S.A.
11.4 The arbitrators shall state the reasons upon which the award is
based. The award of the arbitrators shall be final and binding upon the
parties. Judgment upon the award may be entered in any court having
jurisdiction.
12.0 Business Meeting
----------------
12.1 Parlex and Samsung will hold a business meeting twice a year
alternating sites between Parlex and Samsung. Parlex will host a meeting in
April and Samsung will host a meeting in October. The first business meeting
will be in April, 1995.
12.2 The business meeting will consist of a manufacturing capacity,
marketing and technology review.
12.3 Parlex will provide Samsung with a two year estimate of
required capacity for planning purposes.
13.0 Modifications to the Agreement
------------------------------
13.1 Parlex and Samsung shall endeavor to negotiate changes or
modifications to this Agreement to suit particular customer demands or
circumstances or to suit other particular circumstances, and all such changes
or modifications shall be set forth in an amendment to this Agreement signed by
both parties.
14.0 General Provisions
------------------
14.1 Parlex and Samsung shall have the right to verify compliance with
the provisions of this Agreement in accordance with standard business
practices.
14.2 This Agreement shall be assignable by Parlex upon thirty (30) days
notification by Parlex to Samsung, and shall not be assignable by Samsung to
any other party including any related company of Samsung without the prior
written permission of Parlex, which permission shall not unreasonably be
withheld.
14.3 The proprietary information of each party shall be maintained in
confidence in accordance with the Confidential Disclosure Agreement of
Attachment D, and the provisions of this Agreement shall not be disclosed
without the authorization of both parties.
14.4 All payments made under this Agreement shall be in United States
currency. Conversion of any payments resulting from Samsung direct sales
(Attachment B) in a currency other than United States dollars shall be at the
exchange rate as quoted in the United States edition of the Wall Street Journal
on the last business day of the month for which payments accrued.
14.5 This Agreement shall be governed and construed in the English
language text, and may be executed in two or more counterparts.
14.6 All notices under this Agreement shall be in writing and shall
be transmitted to the other party by facsimile, and confirmed by
international courier delivery at the addresses indicated herein.
PARLEX CORPORATION SAMSUNG ELECTRO-MECHANICS CO., LTD.
By /s/ HERBERT W. POLLACK By /s/ SANG-JIN KIM
------------------------------ -------------------------------------
Title President Title Senior Executive Managing Director
---------------------------- -----------------------------------
Date September 29, 1994 Date September 29, 1994
----------------------------- ------------------------------------
52931
Rev. 10/11/94
Attachment A:
Parlex customers for which PALCORE orders
are to be referred to Samsung
*
* Confidential information has been omitted and filed separately with the
Commission.
Attachment B:
Customers to whom Samsung directly deals
*
* Confidential information has been omitted and filed separately with the
Commission.
Attachment C:
PALCORE specifications
*
* Confidential information has been omitted and filed separately with the
Commission.
Attachment D:
C D A
ATTACHMENT D:
CONFIDENTIAL DISCLOSURE AGREEMENT
---------------------------------
This agreement is effective September 29, 1994 between Parlex
Corporation and Samsung Electro-Mechanics Co., Ltd.
Parlex and Samsung have entered into a Manufacturing and Sales
Agreement contemporaneously with this agreement under which each party will
have access to the proprietary facilities and proprietary and confidential
information of the other party and under which the parties will engage in
the exchange of proprietary and confidential information for the purposes of
their activities under the Manufacturing and Sales Agreement.
All such proprietary and confidential information whether disclosed
orally, visually or in writing shall be deemed Confidential Information
under this agreement.
Each party agrees to use the Confidential Information disclosed
hereunder only for purposes of the Manufacturing and Sales Agreement, and
not to otherwise use or disclose to others any such information.
The Confidential Information disclosed hereunder shall be held in
confidence by the receiving party for a period of five (5) years from the
date of disclosure unless and to the extent that:
1. Such information can be demonstrated to be already known to
the receiving party prior to disclosure by the submitting
party;
2. Such information at the time of disclosure is available to
the public or which after such disclosure becomes available
to the public through no fault of the receiving party;
3. Such information was acquired by the receiving party from a
third party without restriction on disclosure or use;
4. Such information was disclosed to a third party by the
submitting party without restriction on disclosure or use;
5. Such information is independently developed by the
receiving party without use of the Confidential
Information;
6. Such information is approved for use or disclosure by
written authorization by the submitting party.
SAMSUNG ELECTRO-MECHANICS CO., LTD. PARLEX CORPORATION
By /s/ SANG-JIN KIM By /s/ HERBERT W. POLLACK
-------------------------------------- ------------------------------
Title Senior Executive Managing Director Title President
----------------------------------- ---------------------------
Date September 29, 1994 Date September 29, 1994
------------------------------------ ----------------------------
Attachment E:
Parlex PALCORE patent applications:
<TABLE>
<CAPTION>
Attorney File Number Country Title
- -------------------- ------- -----
<S> <S> <S>
PAR-108XX United States MULTIPLE LAYER PRINTED CIRCUIT
BOARDS AND METHOD OF MANUFACTURE
PAR-108Xq999 PCT (South Korea, China MULTIPLE LAYER PRINTED CIRCUIT
Japan, Canada, Europe (EPO)) CIRCUIT BOARDS AND METHOD OF MANUFACTURE
PAR-108AX United States PRINTED CIRCUIT HAVING VIA HOLES
AND MANUFACTURE THEREOF
</TABLE>
EMPLOYMENT AGREEMENT
AGREEMENT (the "Agreement") made as of the first day of July, 1994 by
and between Parlex Corporation, a Massachusetts corporation (the "Company"),
and Herbert W. Pollack of Lexington, Massachusetts (the "Employer").
In consideration of the mutual promises herein contained, the Company
and the Employee hereby agree as follows:
1. Employment
__________
The Company hereby employs the Employee, and the Employee hereby accepts
employment by the Company to render such services in connection with the
business of the Company as the Company may from time to time request. However,
the services to be rendered shall be consistent with the level of
responsibility that the Employee has previously held and shall be performed
only at the Company's headquarters or at such other location that is
acceptable to the Employee. The term of the Employee's employment hereunder
shall begin on July 1, 1994 and shall end on June 1, 1997.
2. Compensation
____________
In consideration of all services to be rendered by the Employee during
the term of this Agreement, the Company shall pay to the Employee during the
term of his employment hereunder compensation at the rate of sixteen thousand
four hundred and twenty dollars ($16,420.00) per month, payable on the last
business day of each calendar month or at such other times as the Company and
the Employee shall agree.
3. Death Benefit
_____________
If the Employee dies during the term of employment hereunder, the
Company agrees to pay to the Designated Beneficiary (as hereinafter defined)
the compensation provided in section 2 for the remaining term of this
Agreement. The Company shall also continue to pay the Designated Beneficiary
for a period of twenty-four (24) months after June 30, 1997 an amount equal to
seventy-five percent (75%) of the rate of compensation per month payable to
the Employee pursuant to section 2 hereof at the time of the Employee's death.
For purposes of this Agreement, the term "designated Beneficiary" shall
be the person or persons designated in a writing filed by the Employee with
the Company or, upon the designation, the Employee's estate.
4. Fringe Benefits
_______________
In addition to the compensation provided for in section 2 above, while
this Agreement is in effect Employee shall be entitled to receive all fringe
benefits and perquisites customarily extended to officers and key employees of
the Company, including but no limited to, profit sharing, bonus, stock option,
health and life insurance. The Company agrees to continue medical, hospital
and life insurance benefits for the Employee for a period of 24 months after
completion of the term of the Agreement with co-payments to be made by the
Employee subject to and on a basis consistent with the terms and conditions of
such plans during the term of this Agreement. If the Employee dies during the
term of the Agreement, the Company shall continue to provide medical and
hospital benefits for his spouse for a period of 24 months beginning with the
first month after the Employee's death with co-payments to be made by his
spouse as provided herein.
5. Further Covenants
_________________
5.1 The Employee agrees that all knowledge and information of a secret
or confidential nature with respect to the business of the Company possessed
or acquired by him will be held in confidence and will not, either during or
after his employment by the Company, be disclosed, published, or made use of
without the consent of the Company unless and until such knowledge and
information shall have ceased to be secret or confidential as evidenced by
general public knowledge.
5.2 The Employee agrees that all inventions, developments, patents, and
paten applications relating to the business of the Company made, conceived, or
obtained by him either alone or in conjunction with others during the term of
his employment by the Company shall be the sole property of the Company. The
Employee agrees to promptly disclose and assign to the Company all such
inventions, developments, patents, and patent applications, and, at the
request of the Company to promptly execute and deliver any documents and take
any other action which the Company deems necessary or advisable in order to
vest in it all rights to such inventions, developments, patents, and patent
applications.
5.3 The Employee agrees that at the termination of his employment by
the Company he will promptly deliver to the Company all technical data,
drawings, memoranda, customer lists, and other documents in his possession or
control which relate to the business of the Company.
5.4 The Employee agrees that so long as he is employed by the Company
hereunder, and for a period of twelve (12) months after he ceases to be
employed by the Company, he will not, directly or indirectly, own, operate, or
manage or participate in the ownership, operation, or management of, or be
connected in any matter (whether as owner, employee, or otherwise) with, any
business in competition with that of the Company anywhere in the United
States; provided, however, the Employee shall not be deemed to be in violation
of this subsection 5.4 solely by reason of his ownership of not more than two
percent (2%) of the equity of any securities exchange or in the over-the-
counter market. In the event the Company terminates the Employee's employment
with the Company during the term of this Agreement and said termination was
not for cause (as said term is defined herein), then and in that event only
the post termination provisions of this Section 5.4 shall not apply. For
purposes of this Agreement, the term "cause" shall mean that the Employee
shall have breached or failed to perform his obligations and job
responsibilities in accordance with the terms and conditions of this Agreement
or his job description, shall demonstrate negligence, inefficiency, gross
misconduct, dishonesty, or insubordination in the execution of his duties as
an employee of the Company, or upon conviction of a felony or any crime
involving moral turpitude.
5.5 The Employee agrees that so long as he is employed by the Company
hereunder and for a period of twelve (12) months after he ceases to be
employed by the Company, he will not, directly or indirectly, through one or
more persons, offer employment to any employee of the Company, he will not,
directly or indirectly, through one or more persons, offer employment to any
employee of the Company, assist in the hiring of any employee of the Company
by any other person, or encourage any employee of the Company to terminate his
or her employment by the Company. In the event the Company terminates the
Employee's employment with the Company during the term of this Agreement and
said termination was not for cause (as said term is defined in Section 5.4
above), then and in that event only the post termination provisions of this
Section 5.5 shall not apply.
5.6 The Employee agrees that the remedy at law for the breach of any of
the provisions of this section 5 will be inadequate and that the Company shall
be entitled to injunctive or other equitable relief, in addition to any other
remedy it may have, without having to prove actual damage to the Company
because of any breach hereunder by him.
6. Change of Control
_________________
In the event of a Change of Control (as defined herein), the Company
shall, in the sole discretion of the Employee, pay to the Employee in a lump
sum, an amount equal to the aggregate amount accrued to the deferred
compensation account, including interest, held by the Company for Employee
since May of 1982 and all compensation to be paid to Employee under the terms
of this Agreement through June 30, 1997. The payment shall be made to Employee
within 30 days after receipt of written notice from Employee exercising his
rights under this provision. For purposes of this section, the term "Change of
Control" means the happening of any of the following: (i) when any "person",
as such term is used in Sections 13 (d) and 14(d) of the Securities Exchange
Act of 1934 (the "Act") other than the Company or a subsidiary or any employee
benefit plan (including its trustee) of either the Company or a subsidiary)
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Act),
directly or indirectly of the combined voting power of the Company
representing 30 percent or more of the combined voting power of the Company's
then outstanding securities; or (ii) the occurrence of a transaction requiring
stockholder approval for the acquisition of the subsidiary through purchase of
assets, or by merger, or otherwise or (iii) if, as a result of, or in
connection with, any tender or exchange offer, merger or other business
combination, sale of assets or contested election, or any combination of the
foregoing transactions, the persons who were directors of the Company before
such transaction shall cease to constitute a majority of the Board of
Directors of the Company or of any successor institution. For purposes of this
Section, the term "person" shall exclude all persons who are currently
officers or directors of the Company, or spouses, blood relatives or
stepchildren of such officers or directors, and trusts for the benefit of any
such persons, and the estates of any such persons.
7. Attachment; assignability
_________________________
The right of the Employee or his Designated Beneficiary to any payment
hereunder shall not be subject in any manner to attachment or other legal
process for the debts of the Employee or such Designated Beneficiary, and the
right to any such payment shall not be subject to anticipation, alienation,
sale, transfer, assignment, or encumbrance.
8. Severability
____________
The provisions of this Agreement shall be severable, and the invalidity
of any portion of this Agreement shall not affect the validity of any other
portion hereof.
9. Successors
__________
This Agreement shall be binding upon and shall inure to the benefit of
the Company, its successors and assigns, and the Employee, his executors,
administrators, and personal representatives.
10. Governing Law
_____________
This Agreement shall be construed and interpreted in accordance with the
laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
in its behalf by an officer thereof thereunto duly authorized and has caused
its seal to be hereunto affixed and duly attested, and the Employee has
hereunto set his hand and seal, as of the day and year first above written.
ATTEST: PARLEX CORPORATION:
/s/ Earlene Daigneault /s/ Jill Pollack Kutchin
_____________________________ By: ______________________________
EMPLOYEE:
/s/ Herbert W. Pollack
__________________________________
Herbert W. Pollack
PARLEX CORPORATION
Listing of Subsidiaries
Parlex International Corporation
Incorporated - St. Thomas, U.S. Virgin Islands
Organized as a Foreign Sales Corporation
January 8, 1985
Parlex Nevada, Inc.(Inactive)
Incorporated in State of Nevada
Date of Incorporation - February 1, 1988
Parlex (Shanghai) Circuit Co., Ltd.
Incorporated in Shanghai, China
Date of Incorporation - May 29, 1995
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement Nos.
33-10250, 33-39646,333-39648, 33-88470 and 3388472 of Parlex Corporation on
Form S-8 of our report dated August 4, 1995, appearing in this Annual Report
on Form 10-K of Parlex Corporation for the year ended June 30, 1995.
/s/ DELOITTE & TOUCHE LLP
Boston, Massachusetts
September 26, 1995
POWER OF ATTORNEY
We the undersigned, officers and directors of Parlex Corporation, hereby
severally constitute Herbert W. Pollack and Steven M. Millstein, and each of
them singly, our true and lawful attorneys, with full power indicated below,
to sign for us the Report on Form 10-K of Parlex Corporation for the fiscal
year ended June 30, 1994 and any required amendments thereto, hereby ratifying
and conforming our signatures as they may be signed by our said attorneys to
said Report and any and all such amendments.
Witness our hands on the dates set forth below:
Dated: August 22, 1995
---------------------------
/s/ SHELDON A. BUCKLER
- ----------------------------------- Director
Sheldon A. Buckler
/s/ RICHARD W. HALE
- ----------------------------------- Director
Richard W. Hale
/s/ M. JOEL KOSHEFF
- ----------------------------------- Director
M. Joel Kosheff
/s/ PETER J. MURPHY
- ----------------------------------- Director
Peter J. Murphy
/s/ LESTER POLLACK
- ----------------------------------- Director
Lester Pollack
/s/ BENJAMIN RABINOVICI
- ----------------------------------- Director
Benjamin Rabinovici
