SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES ACT OF 1934
Date of Report (Date of earliest event reported): May 8, 1995
OPTICAL COATING LABORATORY, INC.
(Exact name of Registrant as specified in its charter)
Delaware 0-2537 68-0164244
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) Number)
2789 Northpoint Parkway, Santa Rosa, California 95407-7397
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (707) 545-6440.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
7(a) Not applicable
7(b) Not applicable
7(c) Exhibits
2A Agreement by and between Optical Coating Laboratory, Inc.
and SICPA Holding S.A.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: April 11, 1996
OPTICAL COATING LABORATORY, INC.
(Registrant)
By: /s/JOSEPH ZILS
Vice President, General Counsel
and Corporate Secretary
7
AGREEMENT
AGREEMENT, made and entered into as of December 13, 1994, by and
between OPTICAL COATING LABORATORY, INC., a Delaware corporation
("OCLI"), and SICPA HOLDING S.A. ("SICPA").
R E C I T A L S
A. OCLI is presently the minority stockholder of FLEX PRODUCTS,
INC., a Delaware corporation ("FLEX"). The majority stockholder of
FLEX is ICI AMERICAS, INC., a Delaware corporation ("ICIA").
B. FLEX is the exclusive supplier to SICPA of optically
variable pigment ("OVP") under the terms of a Supply Agreement dated
as of July 1, 1993.
C. The parties wish to join together for the purpose of
purchasing between them the shares of the capital stock of FLEX which
are presently owned by ICIA, such that thereafter all of the capital
stock of FLEX would be owned by OCLI as the majority stockholder and
by SICPA as the minority stockholder, with certain terms to govern the
conduct of the business of FLEX and to restrict the transfer by either
of the parties of their respective shares of the capital stock of
FLEX.
D. The parties wish to memorialize in this Agreement the terms
of their association for the above purpose, and the terms of their
association for the above purpose, and the terms to apply to their
relationship as the two stockholders of FLEX if their efforts to
purchase the shares now owned by ICIA are successful.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises and the
respective covenants and undertakings of the parties contained herein,
the parties hereby agree as follows:
1. Certain Definitions. Certain terms as used in this
Agreement shall have the following meanings:
a. ICIA Shares. The term "ICIA Shares" shall mean the
120 shares of FLEX Common Stock and 12 shares of FLEX Series B
Preferred Stock presently owned by ICIA.
b. FLEX Note. The term "FLEX Note" shall mean the
promissory note, a copy of which is attached hereto as Exhibit A,
which evidences the debt owned by FLEX for working capital borrowings
by it from ICIA.
2. Transactions With ICIA.
a. Purchase Of Shares From ICIA. OCLI and SICPA agree
jointly to submit an offer, in the form of a Letter of Intent (the
"LOI"), to ICIA to purchase all of the ICIA Shares such that,
following the purchase, OCLI would own a total of 120 shares of Common
Stock and four shares of Series B Preferred Stock of FLEX, and SICPA
would own a total of 80 shares of Common Stock and eight shares of
Series B Preferred Stock of FLEX. The LOI, unless both parties
otherwise agree in writing, shall provide as follows:
i. The purchase price for the ICIA Shares (the
"Purchase Price") shall be US $24.5 Million.
ii. The Purchase Price shall be payable in immediately
available funds at the Closing.
iii. Of the total Purchase Price, OCLI shall pay a
total of $8.4 Million and SICPA, $16.1 Million.
iv. On or before the closing under the LOI, ICIA shall
contribute to the capital of FLEX cash in an amount equal to the
difference between (1) the amount FLEX has heretofore paid to OCLI
pursuant to Section 4.1 of that certain Research, Development and
Engineering Agreement dated December 19, 1994 between FLEX and OCLI,
and (2) $5 Million.
v. The LOI shall be in form and substance identical
to that attached as Exhibit B hereto, with only such changes therein
as the parties hereto may mutually agree.
vi. The closing of the purchase and sale of the ICIA
Shares (the "Closing") shall occur on or before the earlier of (1)
March 31, 1995, or (2) five business days following notice to ICIA
from OCLI and SICPA that they have satisfied all requirements under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules
and regulations thereunder.
vii. The LOI shall set forth the agreement by OCLI and
SICPA that they shall require no representations and warranties of
ICIA in the LOI or Definitive Agreements respecting the financial
statements and financial condition of FLEX prior to the date of
execution of the LOI on the condition that the audited financial
statements of FLEX for the years ended December 31, 1993 and its
unaudited in-house financial statements for the 11 months ended
November 30, 1994 correspond to and are not materially adversely
different from the financial information concerning FLEX presented
heretofore by ICIA to SICPA's investment advisor, ROBERT FLEMING CO.,
LIMITED.
b. Conduct of Negotiations with ICIA.
i. OCLI shall be the lead negotiator for the parties
vis-a-vis ICIA with respect to the purchase of the ICIA Shares, but
shall not have authority to vary or modify any of the above terms
without the express prior written consent of SICPA. OCLI shall notify
SICPA and SICPA's financial and legal advisors of the time and place
of each meeting or other scheduled contact with ICIA promptly as soon
practicable and SICPA, at its request in advance, shall be entitled to
attend and participate in all meetings and telephone conferences
between representatives of OCLI and ICIA with respect to the purchase
of the ICIA Shares.
ii. Except as set forth in this Section 2.b, OCLI and
SICPA agree to refrain during the Term of this Agreement, as set forth
in Section 11 below, and for a period of 15 months thereafter, from
soliciting or participating in any negotiations or discussions with
ICIA which are in conflict with the joint undertakings whereby the two
parties hereto shall seek to acquire the ICIA Shares together, as
contemplated herein, or which would envision the purchase solely by
OCLI or SICPA or by or through or with their respective affiliates,
assigns or any third parties of any of the ICIA Shares.
iii. This subparagraph shall apply if ICIA fails or
refuses to execute and deliver the LOI within the Term of this
Agreement, or if, thereafter, the Closing fails to occur within the
deadline therefor. In this event, if thereafter a party hereto wishes
to purchase the ICIA Shares, at least 15 business days prior to the
proposed date of purchase, it shall first notify the other party of
the proposed purchase, describing in detail the purchase price,
payment terms and all other material terms of purchase. Within 15
business days following its receipt of such notice, the other party,
if it wishes to participate in the purchase of the ICIA Shares, shall
notify the other party of its desire to do so, and each party shall
then be entitled to purchase the ICIA Shares in the same proportion as
contemplated herein, on the terms set forth in the notice from the
initiating party. In no event, however, shall a party be entitled to
this right of participation if the executed LOI cannot be obtained
from ICIA, or if the Closing thereunder cannot be consummated, due to
a breach or default by such party.
c. Purchase of FLEX Note. In the Stock Purchase
Agreement, OCLI and SICPA shall agree, at the Closing, to purchase the
FLEX Note from ICIA for an aggregate purchase price equal to the then
unpaid principal balance plus all then accrued but unpaid interest;
provided, however, that the unpaid principal balance of the FLEX Note
shall not exceed (i) $10 Million plus (ii) an additional amount, not
to exceed $3 Million, drawn down under the FLEX Note and applied
against the purchase of the Beta III machine. OCLI shall have assigned
to it 60%, and SICPA, 40%, of the principal balance and balance of
accrued but unpaid interest then owing, with each to pay a like
percentage of the purchase price for the Note to ICIA, in immediately
available funds at the Closing.
3. Governance of Flex after Closing. Following the Closing,
OCLI and SICPA agree that the following shall apply to the governance
of FLEX:
a. Reconstitution of FLEX Board. The Board of Directors
of FLEX shall be reconstituted, effective upon the Closing, such that
those then in office shall be replaced by the persons listed on
Exhibit C, three of whom have been designated by OCLI and two of whom
have been designated by SICPA and the Certificate of Incorporation or
Certificate of Designations of FLEX shall be amended if necessary to
provide that the stockholders of FLEX shall be entitled to cumulative
voting in connection with the election or removal of the Directors.
b. By-Laws. The By-Laws of FLEX shall, if necessary, be
amended to provide for at least five business days' advance notice of
any meeting of the Board, and that the Board and the Joint Technical
Committee shall each meet at least quarterly.
c. Supermajority Provisions. The Certificate of
Incorporation of FLEX shall be amended, effective immediately
following the Closing, to provide effectively that the approval of
both stockholders is necessary for any of the acts or decisions set
forth on Exhibit D hereto.
d. Additional Working Capital. The Board of Directors of
FLEX (the "Board"), consistent with the annual budget and any changes
therein during the fiscal year, shall have the right to determine the
amount of funds reasonably required for the ordinary and necessary
operation of FLEX's business (the "Working Capital") and to determine
whether, at what time, in what amounts and on what terms and
conditions borrowings by FLEX, including borrowings from OCLI and
SICPA, should be made. If, at any time and within the above
constraints, the Board determines that additional Working Capital is
reasonably required for the ordinary and necessary operation of FLEX's
business, the Board shall seek to obtain loans from independent third
parties on terms and conditions commercially reasonable under the
circumstances. In the event that such loans cannot be obtained, the
Board, in its sole discretion, may call upon OCLI and SICPA to provide
such working capital loans to FLEX (such loans to be referred to as
"Working Capital Loans"). All such Working Capital Loans shall be
provided by OCLI and SICPA in proportion to their respective ownership
of the Common Stock of FLEX. Working Capital Loans shall bear interest
at a rate of no less than prime plus 1.5%, provide for accrued
interest to be payable monthly and be on such other terms and
conditions as mutually agreed by OCLI and SICPA.
e. Preemptive Rights. The Certificate of Incorporation of
FLEX shall be amended, effective immediately following the Closing, to
provide for preemptive rights entitling each stockholder to subscribe
proportionally for any shares in any offering, issuance or sale of
additional corporate securities of FLEX, with the right of over
subscription for any securities as to which the other stockholder does
not exercise its own preemptive rights, except for stock offered
pursuant to an IPO or any employee incentive stock option plan or
other incentive stock program for employees, consultants or Directors.
f. Furnishing of Financial Statements and Other
Information. FLEX shall retain as its accountants KMPG Peat Marwich,
or another firm of independent public accountants of recognized
national standing who are acceptable to both OCLI and SICPA, and who
meet the standards of qualification of certified public accountants
prescribed in Regulation S-9 promulgated by the United States
Securities and Exchange Commission, as amended from time to time.
Such independent public accountants shall perform annual audits, and
FLEX shall furnish, at its own expense, to OCLI and to SICPA, the
following:
i. Within 90 days of the end of each fiscal year,
financial statements prepared on a consolidated basis (together with
consolidating statements in support thereof) consisting of comparative
balance sheets and statements of operations, stockholders' equity and
changes in financial position of FLEX as of the end of and for such
fiscal year, all in reasonable detail, prepared in accordance with
generally accepted accounting principles and practices consistently
applied and certified by the independent public accountants.
ii. Within 45 days of the end of each of the first
three fiscal quarters (or comparable accounting periods), in
duplicate, without audit, financial statements prepared on a
consolidated basis (together with comparative balance sheets and
statements of operations, shareholders' equity and changes in
financial position of FLEX as at the end of and for such quarter (or
comparable accounting period), the year to date, and as at the same
date and for the corresponding periods ended on the same date of the
preceding year, and comparison to the budgets in the corresponding
periods all of which shall be in reasonable detail. In each case the
quarterly financial statements shall be accompanied by (1) a
certification by a responsible officer of FLEX familiar with its
financial affairs, stating that, subject to normal audit and year-end
adjustments that are not material, either individually or in the
aggregate, such balance sheets and statements have been prepared in
accordance with generally accepted accounting principles and practices
applied on a consistent basis and fairly present the financial
condition of FLEX for the respective periods covered thereby; and (2)
by a statement by a responsible officer of FLEX familiar with its
financial affairs, explaining all variances from the annual budget.
iii. Promptly upon FLEX's receipt thereof, any
additional accounting reports concerning significant aspects of FLEX's
operations and financial affairs or in conjunction with any annual or
interim audit given to FLEX by its independent public accountants (and
not otherwise contained in other materials provided pursuant to this
section).
g. Stock Option Plan. FLEX shall establish an employee
stock option plan (the "Plan"), pursuant to which options to purchase
FLEX's Common Stock, in an aggregate amount not to exceed 10% of
FLEX's outstanding voting stock, will be granted to executives, key
employees and consultants of FLEX but not Directors. The Plan will
not provide for the grant or issue of any stock or stock options to
any employees or key executives (i) with a purchase or exercise price
of less than fair market value or (ii) permit the option recipient to
have the options vest more rapidly than ratably over a four-year
period from the date of grant, or in the alternative which permit the
option recipient to retain, free from FLEX's right of repurchase, any
shares purchased by the recipient upon the exercise of any options,
except pursuant to a vesting schedule whereby FLEX's right to
repurchase such shares shall expire no faster than ratably over a four-
year period from the date of grant. To the extent allowed by law, all
such option grants shall provide for a right of first refusal for FLEX
to purchase any of the shares offered for sale by the optionee or, if
it should decline, then OCLI and SICPA, each pro rata to its
stockholdings with the right to subscribe for any of the other's
unsubscribed for portion.
h. Joint Technical Committee. A Joint Technical
Committee will be formed consisting of representatives from FLEX, OCLI
and SICPA to oversee FLEX's ongoing research and development
activities. The Joint Technical Committee shall also perform those
duties enumerated in the License Agreement and the Research,
Development and Engineering Agreement described in Section 7.a.5.
i. Capacity. It is recognized that FLEX now serves as an
important source of supply of OVP to SICPA and in the future may be an
important source of supply of product for OCLI. The parties agree
that FLEX shall make available on a priority basis incremental
capacity on the customary commercial basis previously established for
the product or service for the benefit of the parties subject to
existing commitments to third party customers. SICPA shall have the
option to require FLEX to add OVP manufacturing capacity to supply
SICPA OVP under the terms of the License and Supply Agreement whenever
SICPA increases the minimum and maximum quantities under the License
and Supply Agreement for a minimum of five years at a price which,
when projected by FLEX management against the type of capacity needed
to satisfy such increased quantities, will yield a pre-tax profit on
the increased SICPA minimum purchases at least equal to the then
current pre-tax profit margin realized by FLEX for its production on
the Beta-III machine, and OCLI agrees to take and cause FLEX to take
all action necessary to implement this provision.
4. Put and Call, Right of First Refusal and Co-Sale Agreement.
OCLI and SICPA shall execute and deliver a Put and Call, Right of
First Refusal and Co-Sale Agreement, form and substance identical to
that attached as Exhibit E, to be effective upon consummation of the
Closing.
5. Initial Public Offering. Both parties agree that at the
request of either party at any time after three years from the
Closing, they shall use their best efforts to cause FLEX to have an
initial public offering of its Common Stock ("IPO") upon the following
conditions: (a) the offering price shall be equal to or exceed US
$300,000 per share (as adjusted for any stock dividends, combinations
or splits with respect to such shares), net of underwriting discounts
and expenses; (b) the aggregate proceeds to the selling stockholders
shall be in excess of US $15,000,000 net of underwriting discounts and
expenses and each of the parties shall have the right to participate
in the IPO pro rata to their share holdings; (c) the IPO shall be
firmly underwritten by one or more nationally recognized underwriting
firms; (d) shares of Common Stock sold by FLEX in the IPO shall not
attain an amount which would cause OCLI's ownership of FLEX to fall
below 50% without the consent of OCLI.
6. License and Supply Agreement; Beta-III Machine. By no later
than the date of execution and delivery by ICIA of the LOI, SICPA
agrees to execute and deliver to FLEX the License and Supply Agreement
in the form attached as Exhibit F on the condition that ICIA shall
first approve FLEX's placing its binding purchase order for the Beta-
III machine which it requires to increase production capacity,
together with FLEX's payment of the deposit required by the
manufacturer of the machine. OCLI agrees, and shall cause FLEX after
the Closing to agree, that SICPA may assign its rights and obligations
under the License and Supply Agreement to any of its affiliates,
provided that SICPA continues to be bound by its obligations
thereunder.
7. Representation and Warranties.
a. By OCLI. OCLI represents and warrants to SICPA as
follows:
i. OCLI is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
OCLI has all requisite corporate power and authority and is entitled
to carry on its business as it is now being conducted.
ii. The execution and delivery of this Agreement, the
agreements contemplated hereby (the "Other Agreements") and the
consummation of the transactions contemplated hereby have been duly
authorized by OCLI's Board of Directors and no other corporate
proceedings on the part of OCLI are necessary to authorize this
Agreement, the Other Agreements or the consummation of the
transactions contemplated hereby or thereby. OCLI has complete and
unrestricted right, power and authority to enter into and perform this
Agreement and the Other Agreements, and this Agreement and the Other
Agreements constitute valid and binding agreements of OCLI,
enforceable in accordance with their respective terms. Neither the
execution and delivery nor performance of this Agreement or the Other
Agreements by OCLI or FLEX, nor the performance of the Other
Agreements by FLEX, will, with or without the giving of notice or the
passage of time or both, violate, conflict with or constitute a
default under OCLI's Certificate of Incorporation or By-Laws or under
any contract, commitment, agreement, understanding, arrangement or
restriction of any kind to which OCLI is a party or by which OCLI or
its properties is bound; or violate any law, statute, rule, order,
writ, injunction, decree, judgment, or ruling of any court or
administrative or governmental body directed at OCLI or give to others
any interest or rights, including rights of termination, cancellation
or acceleration, in or with respect to any such contract, commitment,
agreement, understanding, or arrangement.
iii. Except as set forth in Schedule 7.a.iii, and
except the reports, forms and supplements required to be filed by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (and the rules
and regulations thereunder), no approval, consent, withholding of
objection or other authorization is required from any court,
administrative agency, governmental authority or any other third party
in connection with the execution or delivery of or performance by OCLI
under this Agreement or the Other Agreements.
iv. Except as set forth in Schedule 7.a.iv, OCLI has
received no notice of any claim, legal action, suit, including
infringement or violation of third party patents or trade secrets,
arbitration, governmental investigation or other legal, regulatory or
administrative proceeding, or any order, judgment, decree or award in
progress, pending or in effect (or to the best of OCLI's knowledge,
threatened) against or relating to the transactions contemplated by
this Agreement; and OCLI does not know of any basis for the same.
v. Except as set forth on Schedule 7.a.v, as of the
date of this Agreement, and as of the Closing, FLEX and OCLI are and
shall be parties to the following agreements, and no other agreements
which confer material benefits or impose material obligations upon
either OCLI or FLEX, and each of the following agreements shall, as of
the Closing, be in full force and effect, without amendment,
modification or supplement except as noted below:
(1) The Facilities Lease Agreement attached
hereto as Exhibit G, which has been extended for an additional five-
year term.
(2) The Assignment of Intellectual Property
Rights attached hereto as Exhibit H.
(3) The Exclusive License Agreement attached
hereto as Exhibit I, pursuant to which aggregate royalties paid to
date total approximately $3 million.
(4) The Research, Development and Engineering
Agreement attached hereto as Exhibit J, pursuant to which
approximately an additional $800,000 remains to be funded by FLEX.
(5) The Support and Administrative Services
Agreement attached hereto as Exhibit K, which is terminable at will by
FLEX, and terminable at will by OCLI when its share ownership falls
below 20%.
(6) The Assignment and Assumption Agreement
attached hereto as Exhibit L.
As of the date of this Agreement, and as of the Closing, FLEX and OCLI
are and shall not be parties together to any other material agreements
affecting or in any way relating to the business or affairs of FLEX.
b. By SICPA. SICPA represents and warrants to OCLI as
follows:
i. SICPA is a corporation duly organized, validly
existing and in good standing under the laws of Switzerland, and has
all requisite corporate power and authority and is entitled to carry
on its business as it is now being conducted.
ii. The execution and delivery of this Agreement, the
agreements contemplated hereby (the "Other Agreements") and the
consummation of the transactions contemplated hereby have been duly
authorized by SICPA's Board of Directors and no other corporate
proceedings on the part of SICPA are necessary to authorize this
Agreement, the Other Agreements or the consummation of the
transactions contemplated hereby or thereby. SICPA has complete and
unrestricted right, power and authority to enter into and perform this
Agreement and the Other Agreements, and this Agreement and the Other
Agreements constitute valid and binding agreements of SICPA,
enforceable in accordance with their respective terms. Neither the
execution and delivery nor performance of this Agreement or the Other
Agreements by SICPA will, with or without the giving of notice or the
passage of time or both, violate, conflict with or constitute a
default under SICPA's Certificate of Incorporation or By-Laws or under
any contract, commitment, agreement, understanding, arrangement or
restriction of any kind to which SICPA is a party or by which SICPA or
its properties is bound; or violate any law, statute, rule, order,
writ, injunction, decree, judgment, or ruling of any court or
administrative or governmental body directed at SICPA or give to
others any interest or rights, including rights of termination,
cancellation or acceleration, in or with respect to any such contract,
commitment, agreement, understanding, or arrangement.
iii. Except as set forth in Schedule 7.b.iii, and
except for the reports, forms and supplements required to be filed by
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (and the
rules and regulations thereunder), no approval, consent, withholding
of objection or other authorization is required from any court,
administrative agency, governmental authority or any other third party
in connection with the execution or delivery of or performance by
SICPA under this Agreement or the Other Agreements.
iv. Except as set forth in Schedule 7.b.iv, SICPA has
received no notice of any claim, legal action, suit, including
infringement or violation of third party patents or trade secrets,
arbitration, governmental investigation or other legal, regulatory or
administrative proceeding, or any order, judgment, decree or award in
progress, pending or in effect (or to the best of SICPA's knowledge,
threatened) against or relating to the transactions contemplated by
this Agreement; and SICPA does not know of any basis for the same.
8. Public Announcements. The parties agree to cooperate in
releasing information concerning this Agreement and the transactions
contemplated herein. Each of the parties shall furnish to the other
drafts of all proposed releases at least two days prior to the desired
or schedule date of first publication and shall refrain from releasing
any public announcement or approving its publication or dissemination
until and unless the other party shall have given its approval. Each
party agrees not to withhold, deny or delay its approval unreasonably,
and SICPA agrees to approve any disclosure or announcement proposed to
be made by OCLI to the extent such disclosure or announcement is
reasonably required for compliance by OCLI with any reporting
requirements imposed upon it under the Securities Exchange Act of 1934
and/or any rules or regulations adopted thereunder.
9. Agents or Brokers. Each party hereby agrees to indemnify
and hold the other party harmless against and in respect of any claim
or action for brokerage or other commissions advanced by the brokers
or other agents, if any, retained by the indemnifying party to advise
or assist in connection with this Agreement or the transactions
contemplated hereby.
10. Corporate Opportunities. Following the Closing, and
conditioned upon its consummation, each party hereto agrees to refrain
from pursuing any opportunity for the manufacture, sale or development
of OVP or otherwise relating to roll-to-roll thin film flexible
coatings except through FLEX; provided that (a) SICPA may purchase,
utilize in the manufacture of optically variable inks and other
products and sell OVP to the extent permitted to it under its License
and Supply Agreement with FLEX in those instances where FLEX is not
able to supply it with adequate supply, and (b) OCLI may conduct
business in the FLEX Field for which it has a license under the
Exclusive License Agreement attached as Exhibit J, with "FLEX Field"
to have the same meaning for this Agreement as defined in such
exhibit.
11. Term. This Agreement shall remain in effect for a term
(the "Term") beginning as of the date hereof and ending on the earlier
of (a) March 31, 1995 if the Closing has not been consummated by and
among the parties and ICIA by that date, or (b) the date when either
OCLI or SICPA owns less than 20% of the Common Stock of FLEX.
12. Confidentiality and Non-Disclosure.
a. Obligation to Preserve Confidentiality. Except as
otherwise provided by the Assignment of Intellectual Property Rights,
Exclusive License Agreement and Research, Development and Engineering
Agreement described in Sections 7.a.v(2), (3) and (4) of this
Agreement, respectively, trade secret data (referred to hereinafter as
"Confidential Matter") disclosed by or otherwise obtained from a party
hereto (the "Disclosing Party") under this Agreement shall be treated
by the party hereto which receives such information (the "Recipient")
as confidential and shall not be disclosed to any third party. The
Recipient shall use the same care to keep Confidential Matter
confidential as it uses to preserve the confidentiality of its own
confidential information having a high degree of competitive
significance and shall take appropriate measures to ensure that its
employees are bound to the same degree that it is under this
Agreement.
b. Exclusions. This obligation of confidentiality does
not apply to any Confidential Matter which the Recipient can show to
fall into any one or more of the following categories:
i. The Confidential Matter was in the Recipient's
possession prior to the date of this Agreement.
ii. The Confidential Matter was generally available to
the public prior to the date of this Agreement or subsequently thereto
becomes generally available to the public through no fault of the
Recipient or the Recipient's employees.
iii. The Confidential Matter is obtained by the
Recipient from a third party on a non-confidential basis, lawfully and
through no breach of this Agreement.
iv. A judicial or governmental authority having
jurisdiction over the Recipient orders or requires disclosure,
provided that such disclosure shall be made only to the extent of such
order and the Recipient, before making any such disclosure, advises
the Disclosing Party of the disclosure required and cooperates fully
with the Disclosing Party in all legitimate efforts to avoid or limit
disclosure at the Disclosing Party's expense.
c. Representation of SICPA. As of the date of this
Agreement, SICPA represents and warrants that it has not received any
FLEX financial information including historical financial statements,
financial projections, product line cost and pricing data. SICPA and
OCLI agree that in order to protect the competitive business prospects
of FLEX, such financial information, as well as other Confidential
Matter of FLEX (other than that disclosed pursuant to the Supply
Agreement and Joint Venture Agreement dated July 1, 1993) will not be
disclosed to SICPA until the Stock Purchase Agreement and the License
and Supply Agreement are executed and delivered.
13. Miscellaneous.
a. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California
without regard to any doctrines concerning conflicts of laws.
b. Entire Agreement. This Agreement and the documents
attached hereto as Exhibits and Schedules constitute the entire
agreement and understanding by and between the parties with respect to
the subject matters herein and therein, and supersede and replace any
prior agreements and understandings, whether oral or written, by and
between them with respect to such matters. The provisions of this
Agreement may be waived, altered, amended or repealed in whole or in
part only upon the written consent of the parties to this Agreement.
c. Prohibition Upon Assignment. This Agreement is
personal among the parties hereto, each of which is relying upon the
identity and specific capabilities of the other party, and the rights
or obligations of any party herein may only be assigned by it as
elsewhere expressly provided herein or with the consent of the other
party except that SICPA may assign its rights and obligations
hereunder to any of its affiliates so long as SICPA remains liable for
its obligations hereunder. Any attempted assignment in violation of
these provisions shall be null and void, and of no force or effect.
d. Resolution of Disputes. The parties shall negotiate in
good faith to settle any dispute or difference arising out of or
relating to this Agreement. Either party may send to the other a
written request to negotiate.
i. If the parties cannot resolve any dispute that
arises under this Agreement by negotiation, the parties agree to
attempt to settle the dispute by mediation, as follows:
(1) Either party may initiate the mediation by
notice to the other party. The parties shall select as mediator for
purposes of mediation hereunder individuals, in an order of priority,
within 20 days from the date of execution of this Agreement, and shall
set forth their selections and priority on Schedule 10.d which they
shall sign as an attachment hereto. The parties hereafter at any time
or from time to time may add to, replace or reorder the names of such
individuals so selected by further annotations on or supplements to
Schedule 10.d signed by authorized representatives of both parties.
(2) The mediation shall be held within 20 days of
service of the notice under paragraph (1) above.
(3) The parties shall keep the mediation
proceedings confidential. Any admission made or document prepared for
such mediation shall not be admissible as evidence in any subsequent
action or proceeding. Disclosure of any such matter shall not be
compelled by law to be given or produced.
ii. Any dispute hereunder which cannot be resolved
within 60 days after the initiation of mediation as called for above
shall be settled by binding arbitration, and judgment upon the award
rendered by the arbitrator shall be final and may be entered in any
court having jurisdiction. Notwithstanding the foregoing, nothing in
this Agreement shall be interpreted to bar any party hereto or claim
arising out of or relating to this Agreement. The party desiring
arbitration shall serve notice upon the other party, together with
designation of the first party's representative. If the person
designated by the first party is acceptable to the second party as an
arbitrator, the second party shall so notify the first party within 10
days and such representative shall serve as the sole arbitrator; if
not acceptable, the second party shall designate his or its own
representative in a notice to the first party within the same 10 day
period. The two representatives so named, if such is the case, shall
within 10 days thereafter appoint an arbitrator, and the arbitrator
shall then proceed forthwith to hear and unilaterally determine the
matter. If either party fails, within the time allowed therefore, to
appoint its representative, the representative named by the other
party shall act as the sole arbitrator and unilaterally decide the
matter. If the two representatives are unable to agree upon an
arbitrator within the 10 days allowed therefore, either party may at
any time apply to the presiding Judge of any court of competent
jurisdiction for the appointment of an arbitrator, and the arbitrator
shall proceed forthwith to hear and unilaterally determine the matter.
The arbitrator selected shall comply with the appropriate rules of the
American Arbitration Association as then in effect. In no event shall
the demand for arbitration be made after the date when institution of
legal or equitable proceedings based on such claim, dispute or other
matter in question would be barred by the applicable statute of
limitations. This agreement to arbitrate shall be specifically
enforceable under the prevailing arbitration law. All of the
provisions of Section 1283.05 of the California Code of Civil
Procedure are hereby expressly made applicable to such arbitration.
e. Headings. The headings used herein and in the documents
attached hereto as Exhibits and Schedules are descriptive only and for
the convenience of identifying provisions, and are not determinative
of the meaning or effect of any such provisions.
f. No Waivers. The failure of any party at any time to
require performance by the other party of any provision hereof shall
not affect in any way the right to require such performance at any
time thereafter, nor shall the waiver by any party of a breach of any
provision hereof be taken or held to be a waiver of any subsequent
breach of the same provision or any other provision.
g. Notices. Any notice, payment, report or any other
communication required or permitted to be given by one party to the
other party by this Agreement shall be in writing and either (i)
served personally on the other party, (ii) sent by express, registered
or certified first-class mail, postage prepaid, addressed to the other
party at its address as indicated below, or to such other address as
the addressee shall have theretofore furnished to the other party by
proper notice, (iii) delivered by commercial courier to the other
party, or (iv) sent by telefax to the other party at its telefax
number indicated below or to such other telefax number as the party
shall have theretofore furnished to the other party by proper notice,
with machine confirmation of transmission. Notice shall be deemed
given upon actual physical delivery of upon the receipt of telefax, or
on the fifth day following the deposit in the mails as contemplated
above:
If to OCLI:
Optical Coating Laboratory, Inc.
2789 Northpoint Parkway
Santa Rosa, California 95407-7397
United States of America
Attention: Herbert M. Dwight, Jr.
Joseph C. Zils, Esq.
Telefax no. (707) 525-7410
Copy to:
John V. Erickson
Collette & Erickson
555 California Street, Suite 4350
San Francisco, California 94104-1791
United States of America
Telefax No. (415) 788-6929
If to SICPA
Maurice A. Amon
SICPA Holding S.A.
2, rue de la Paix
1002 Lausanne, Switzerland
Telefax No. 41-21-312-6895
Copy to:
William E. Horwich
Proskauer Rose Goetz & Mendelsohn
555 California street, Suite 4604
San Francisco, CA 94104-1791
United States of America
Telefax No. (415) 956-2324
h. Additional Documents. Each of the parties agrees
to execute and deliver, at the request of the other party, any and all
other documents or other written instruments as may be reasonably
necessary to effectuate the purposes of this Agreement.
i. Counterparts. This Agreement may be executed in
any number of counterparts, each of which may be executed by one or
both of the parties, each of which shall be enforceable against the
party or parties actually executing such counterparts, and all of
which together shall constitute one instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first set forth above.
SICPA HOLDING S.A. OPTICAL COATING LABORATORY, INC.
By /s/Maurice A. Amon By /s/Herbert M. Dwight, Jr.
Co-Chief Executive President
Exhibit A - MULTIPLE ADVANCE PROMISSORY NOTES
FLEX PRODUCTS, INC.
MULTIPLE ADVANCE PROMISSORY NOTE
Series 1995-II No. 1
$7,032,759.00 Santa Rosa, CA
December 4, 1995
FLEX PRODUCTS, INC. (the "Company"), a Delaware corporation, for
value received, hereby promises to pay to OPTICAL COATING LABORATORY,
INC., a Delaware corporation, or order ("Holder"), on or before
November 1, 1997, the maximum principal amount of Seven Million Thirty-
Two Thousand Seven Hundred Fifty-Nine Dollars ($7,032,759.00) (the
"Maximum Amount") or so much thereof as shall have been advanced
pursuant to the terms hereof, together with accrued interest on the
declining balance of principal at the rate set forth below, and on the
following terms and conditions:
1. Issuance As Part of Series. This Note is one of a series of
two Notes of the same Series, which Notes have together been issued
collectively to replace and supersede those certain Promissory Notes,
each dated May 8, 1995, one of which was issued by the Company to the
order of Holder in the principal amount of $7,032,759, and the other
of which was issued by the Company to SICPA Holding S.A. ("SICPA") in
the principal amount of $4,488,506.
2. Parity Between Notes of The Series. The Company, on even
date herewith, is executing and delivering the other Note of this
Series in favor of SICPA, with identical terms except for the original
principal amount and the amount of already accrued interest thereon,
and the maximum amount of principal which may be drawn down thereunder
(the "Other Note"). The Company shall concurrently make all payments
due hereunder and under the Other Note, and a default by the Company
in the payment when and as due under the Other Note shall likewise
constitute a default hereunder, whether or not the Company has
therefore made all payments as and when called for hereunder. Each
payment under this Note and under the Other Note shall be in amounts
equally proportionate to the respective amounts owed hereunder and
thereunder, and if the Holder hereunder receives any payment which, as
compared to the payment received by the holder of the Other Note, is
disproportionately greater, the amount of the disproportionate excess
shall be deemed received in trust by the Holder, for the benefit of
the holder of the Other Note, to the extent of the disproportionate
share of each payment.
3. Accrual Rate and Payment of Interest. Interest shall accrue
on the declining balance of principal from the date hereof, initially
at the rate of 10% per annum, and shall be adjusted effected as of the
first day of February, May, August and November each year, beginning
February 1, 1996, to equal the prime commercial lending rate, as
published in the Wall Street Journal on the last business day
proceeding the date of each adjustment, plus 1%. Interest accrued
hereunder shall be payable quarterly in arrears, on the first day of
February, May, August and November each year, beginning February 1,
1997. Any remaining accrued and unpaid interest shall be due and
payable with payment of the balance of outstanding principal.
4. Draw Downs. The Company shall be entitled to draw down
additional amounts from Holder periodically until the Maximum Amount
has been reached, provided that (a) each draw down shall be made by
written request in the form attached as Exhibit A hereto, on at least
five days' prior notice to Holder, unless Holder shall agree to less
notice; and (b) each draw down shall be accompanied by a similar draw
down, under the Other Note, with each draw down under each Note of
this Series to be in an amount proportionate to the then outstanding
principal balance owed under such Note as compared with the total then
outstanding aggregate principal balance owed under all Notes of this
Series.
5. Acknowledgment of Existing Balance Representing Prior Draw
Downs. The Company acknowledges and agrees that the amount of
principal set forth on Schedule I hereto shall be deemed to constitute
a prior draw down hereunder, which shall continue to accrue interest
at the rate specified herein from the date hereof, and that such
principal, together with all subsequent draw downs and all presently
accrued and hereafter accruing interest shall be repaid in accordance
with the terms and conditions of this Note, as if this Note had been
executed and in effect at the time when the first draw down had been
made.
6. Nature and Place of Payments. Payments of principal and
interest shall be made in lawful money of the United States of America
at Holder's address set forth on the signature page hereto or at such
other place as Holder shall have designated to the Company in writing.
7. Miscellaneous.
a. Titles And Subtitles. The titles and subtitles used in
this Note are for convenience only and are not to be considered in
construing or interpreting this Note.
b. Notices. Any notice required or permitted under this
Note shall be given in writing and shall be deemed effectively given
upon personal delivery to the party to be notified or, if mailed to a
destination within the United States, three days, and otherwise five
days following deposit with the United States Post Office, by
registered or certified mail or, for foreign delivery, by first class
air mail, postage prepaid and addressed to the party to be notified at
the address indicated below in the signature block for such party at
the end of this Note, or at such other address as such party may
hereafter designate by written notice to the other party, or by
sending a copy by telefax, with machine confirmation of transmission,
addressed to party at the telefax number indicated below for such
party in the signature block for such party at the end of this Note,
or at such other telefax number as such party may hereafter designate
by written notice to the other party.
c. Amendments And Waivers. Any term of this Note may be
amended and the observance of any term of this Note may be waived
(either generally or in a particular instance and either retroactively
or prospectively), only with the written consent of the Company and
the Holder. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon the Holder and the Company.
d. Attorneys' Fees. If any legal action or any
arbitration or other proceeding is brought for the enforcement of this
Note, or because of an alleged dispute, breach, default or
misrepresentation in connection with any of the provisions of this
Note, the successful or prevailing party or parties shall be entitled
to recover reasonable attorney fees and other costs incurred in that
action or preceding, in addition to any other relief to which it or
they may be entitled.
e. Governing Law. This Note shall be governed by and
constructed and enforced in accordance with the laws of the State of
California without giving effect to conflicts of law principals.
OPTICAL COATING LABORATORY, INC. FLEX PRODUCTS, INC.
2789 Northpoint Parkway 2793 Northpoint Parkway
Santa Rosa, CA 95407-7397 Santa Rosa, CA 95407-7397
Telefax No. (707)525-7410 Telefax No. (707)525-7725
By____________________ By____________________
Title_________________ Title_________________
EXHIBIT A
NOTICE OF DRAW DOWN EXERCISE
____________________, 199_
OPTICAL COATING LABORATORY, INC.
2789 Northpoint Parkway
Santa Rosa, CA 95407-7397
Gentlemen/Ladies:
The undersigned Company hereby elects to make an additional draw
down borrowing under that certain Multiple Advance Promissory Note
dated November __, 1995 (the "Note"), in the amount of
$___________________.
The undersigned agrees that the amount of the draw down shall be
added to the unpaid principal balance owed under the Note, and shall
be subject to all the terms and provisions of the Note.
FLEX PRODUCTS, INC.
By__________________________
Title_______________________
SCHEDULE I
PRIOR DRAW DOWNS
Principal $________________
Accrued Interest $________________
Total $________________
FLEX PRODUCTS, INC.
MULTIPLE ADVANCE PROMISSORY NOTE
Series 1995-II No. 2
$4,488,506.00 Santa Rosa, CA
December 4, 1995
FLEX PRODUCTS, INC. (the "Company"), a Delaware corporation, for
value received, hereby promises to pay to SICPA HOLDING S.A., a Swiss
corporation, or order ("Holder"), on or before November 1, 1997, the
maximum principal amount of Four Million Four Hundred Eighty-Eight
Thousand Five Hundred Six Dollars ($5,200,000.00) (the "Maximum
Amount") or so much thereof as shall have been advanced pursuant to
the terms hereof, together with accrued interest on the declining
balance of principal at the rate set forth below, and on the following
terms and conditions:
1. Issuance As Part of Series. This Note is one of a series of
two Notes of the same Series, which Notes have together been issued
collectively to replace and supersede those certain Promissory Notes,
each dated May 8, 1995, one of which was issued by the Company to the
order of Holder in the principal amount of $4,488,506, and the other
of which was issued by the Company to Optical Coating Laboratory, Inc.
("OCLI") in the principal amount of $7,032,759.
2. Parity Between Notes of The Series. The Company, on even
date herewith, is executing and delivering the other Note of this
Series in favor of OCLI, with identical terms except for the original
principal amount and the amount of already accrued interest thereon,
and the maximum amount of principal which may be drawn down thereunder
(the "Other Note"). The Company shall concurrently make all payments
due hereunder and under the Other Note, and a default by the Company
in the payment when and as due under the Other Note shall likewise
constitute a default hereunder, whether or not the Company has
therefore made all payments as and when called for hereunder. Each
payment under this Note and under the Other Note shall be in amounts
equally proportionate to the respective amounts owed hereunder and
thereunder, and if the Holder hereunder receives any payment which, as
compared to the payment received by the holder of the Other Note, is
disproportionately greater, the amount of the disproportionate excess
shall be deemed received in trust by the Holder, for the benefit of
the holder of the Other Note, to the extent of the disproportionate
share of each payment.
3. Accrual Rate and Payment of Interest. Interest shall accrue
on the declining balance of principal from the date hereof, initially
at the rate of 10% per annum, and shall be adjusted effected as of the
first day of February, May, August and November each year, beginning
February 1, 1996, to equal the prime commercial lending rate, as
published in the Wall Street Journal on the last business day
proceeding the date of each adjustment, plus 1%. Interest accrued
hereunder shall be payable quarterly in arrears, on the first day of
February, May, August and November each year, beginning February 1,
1997. Any remaining accrued and unpaid interest shall be due and
payable with payment of the balance of outstanding principal.
4. Draw Downs. The Company shall be entitled to draw down
additional amounts from Holder periodically until the Maximum Amount
has been reached, provided that (a) each draw down shall be made by
written request in the form attached as Exhibit A hereto, on at least
five days' prior notice to Holder, unless Holder shall agree to less
notice; and (b) each draw down shall be accompanied by a similar draw
down, under the Other Note, with each draw down under each Note of
this Series to be in an amount proportionate to the then outstanding
principal balance owed under such Note as compared with the total then
outstanding aggregate principal balance owed under all Notes of this
Series.
5. Acknowledgment of Existing Balance Representing Prior Draw
Downs. The Company acknowledges and agrees that the amount of
principal set forth on Schedule I hereto shall be deemed to constitute
a prior draw down hereunder, which shall continue to accrue interest
at the rate specified herein from the date hereof, and that such
principal, together with all subsequent draw downs and all presently
accrued and hereafter accruing interest shall be repaid in accordance
with the terms and conditions of this Note, as if this Note had been
executed and in effect at the time when the first draw down had been
made.
6. Nature and Place of Payments. Payments of principal and
interest shall be made in lawful money of the United States of America
at Holder's address set forth on the signature page hereto or at such
other place as Holder shall have designated to the Company in writing.
7. Miscellaneous.
a. Titles And Subtitles. The titles and subtitles used in
this Note are for convenience only and are not to be considered in
construing or interpreting this Note.
b. Notices. Any notice required or permitted under this
Note shall be given in writing and shall be deemed effectively given
upon personal delivery to the party to be notified or, if mailed to a
destination within the United States, three days, and otherwise five
days following deposit with the United States Post Office, by
registered or certified mail or, for foreign delivery, by first class
air mail, postage prepaid and addressed to the party to be notified at
the address indicated below in the signature block for such party at
the end of this Note, or at such other address as such party may
hereafter designate by written notice to the other party, or by
sending a copy by telefax, with machine confirmation of transmission,
addressed to party at the telefax number indicated below for such
party in the signature block for such party at the end of this Note,
or at such other telefax number as such party may hereafter designate
by written notice to the other party.
c. Amendments And Waivers. Any term of this Note may be
amended and the observance of any term of this Note may be waived
(either generally or in a particular instance and either retroactively
or prospectively), only with the written consent of the Company and
the Holder. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon the Holder and the Company.
d. Attorneys' Fees. If any legal action or any
arbitration or other proceeding is brought for the enforcement of this
Note, or because of an alleged dispute, breach, default or
misrepresentation in connection with any of the provisions of this
Note, the successful or prevailing party or parties shall be entitled
to recover reasonable attorney fees and other costs incurred in that
action or preceding, in addition to any other relief to which it or
they may be entitled.
e. Governing Law. This Note shall be governed by and
constructed and enforced in accordance with the laws of the State of
California without giving effect to conflicts of law principals.
SICPA HOLDING S.A. FLEX PRODUCTS, INC.
2, rue de la Paix 2793 Northpoint Parkway
1002 Lausanne, Switzerland Santa Rosa, CA 95407-7397
Telefax No. 41-21-312-6895 Telefax No. (707)525-7725
By____________________ By____________________
Title_________________ Title_________________
EXHIBIT A
NOTICE OF DRAW DOWN EXERCISE
____________________, 199_
SICPA HOLDING S.A.
2, rue de la Paix
1002 Lausanne, Switzerland
Gentlemen/Ladies:
The undersigned Company hereby elects to make an additional draw
down borrowing under that certain Multiple Advance Promissory Note
dated November 29, 1995 (the "Note"), in the amount of
$___________________.
The undersigned agrees that the amount of the draw down shall be
added to the unpaid principal balance owed under the Note, and shall
be subject to all the terms and provisions of the Note.
FLEX PRODUCTS, INC.
By__________________________
Title_______________________
SCHEDULE I
PRIOR DRAW DOWNS
Principal $________________
Accrued Interest $________________
Total $________________
EXHIBIT B - LETTER OF INTENT
EXHIBIT C - RECONSTITUTION OF FLEX BOARD
RECONSTITUTION OF FLEX BOARD
As representatives of OCLI:
HERBERT M. DWIGHT, JR.
JOHN MCCULLOUGH
JAMES W. SEESER
As representatives of SICPA:
MAURICE A. AMON
EDUARDO BERUFF
EXHIBIT D - AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF FLEX PRODUCTS, INC.
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
FLEX PRODUCTS, INC.
MICHAEL B. SULLIVAN and _______________, President and Secretary,
respectively, of FLEX PRODUCTS, INC., a corporation organized and
existing under the laws of the State of Delaware, hereby certify and
attest as follows:
A. The name of the corporation is FLEX PRODUCTS, INC. FLEX
PRODUCTS, INC. was originally incorporated in the State of Delaware
under the same name, and the original Certificate of Incorporation of
the corporation was filed with the Delaware Secretary of State on
December 28, 1988.
B. Pursuant to Sections 242 and 245 of the General Corporation
Law of the State of Delaware, this Restated Certificate of
Incorporation restates and integrates and further amends the
provisions of the Certificate of Incorporation of this corporation.
C. This Amended and Restated Certificate of incorporation was
duly adopted by the Board of Directors with approval by the
stockholders of the corporation by the necessary number of shares as
required by statute.
D. The text of the Certificate of Incorporation as heretofore
amended or supplemented is hereby restated and further amended to read
in its entirety as follows:
I.
NAME
The name of the corporation is FLEX PRODUCTS, INC. (the
"corporation").
II.
AUTHORIZED BUSINESS
The nature of the business or purposes to be conduced or promoted
by the corporation is to engage in any lawful act or activity for
which corporation may be organized under the General Corporation Law
of Delaware (the "Delaware Law").
III.
CAPITAL STOCK
1. This corporation is authorized to issue two classes of
shares, designated respectively "Common Stock" and "Preferred Stock,"
and referred to herein either as Common Stock or Common shares and
Preferred Stock or Preferred shares, respectively. The number of
shares of Common Stock is 1,000 and the number of shares of Preferred
Stock is 1,000. The Common Stock and the Preferred Stock shall each
have a par value of $0.001.
2. The Preferred shares may be issued from time to time in one
or more series. Except for the Series B Preferred Stock, the rights,
privileges and preferences of which are set forth in Section III.3
below, the Board of Directors is hereby authorized to fix or alter the
dividend rights, dividend rate, conversion rights, voting rights,
rights and terms of redemption (including sinking fund provisions),
the redemption price or prices, and the liquidation preferences of any
wholly unissued series of Preferred shares, and the number of shares
constituting any such increase or decrease the number of shares of any
series subsequent to the issue of shares of that series, but not below
the number of shares of such series then outstanding. In case the
number of shares of any series shall be so decreased, the shares
constituting such decrease shall resume the status which they had
prior to the adoption of the resolution originally fixing the number
of shares of such series.
3. Of the Preferred shares, a total of 12 are designated as
Series B Preferred Stock, with the specific rights, privileges and
preferences as follows:
a. Voting Rights. Except as otherwise provided in Sections
III.3.f and III.3.g below, the holders of Series B Preferred shares
shall have no voting rights.
b. Redemption.
i. Mandatory Redemptions. The corporation shall
redeem all or such lesser number of its Series B Preferred shares (or
fractions thereof), as, whenever and to the full extent that funds
become lawfully available therefor (but only to the extent of current
and retained earnings determined in accordance with generally accepted
accounting principles consistently applied) at a price per share of
$150,000 (the "Redemption Price"). The corporation shall not declare
or pay dividends on, make any other distributions on, or redeem or
purchase or otherwise acquire for consideration any shares of any
other class or series of its capital stock until such time as all
Series B Preferred shares have been redeemed. If the funds of the
corporation legally available for redemption of Series B Preferred
Stock at the time of any such redemption are insufficient to redeem
the Series B Preferred shares in full, those funds which are legally
available shall be used to redeem the maximum number legally possible
of shares (or fractions thereof) of Series B Preferred Stock.
ii. Determination of Number of Redeemable Shares. The
number of shares to be set forth in the redemption notice described in
Section III.3.b.iii below to be redeemed from each holder of Series B
Preferred Stock in redemptions under this Section III.3.b will be the
number of shares determined, as nearly as practicable to the nearest
full share, by multiplying the total number of Series B Preferred
shares to be redeemed times a fraction, (1) the numerator of which is
the total number of outstanding Series B Preferred shares then held by
such holder and (2) the denominator of which is the total number of
Series B Preferred shares then outstanding.
iii. Notice of Redemption. Notice of any redemption of
Series B Preferred Stock pursuant to this Section III.3.b specifying
the time and place of redemption and the redemption price will be
mailed by certified or registered mail, return receipt requested, to
each holder of record of Series B Preferred Stock at the address of
such holder shown on the corporation's records, not more than 60 days
nor less than 30 days prior to the date on which such redemption is to
be made. If less than all Series B Preferred Stock owned by a holder
is then to be redeemed, the notice will also specify the number of
shares and the certificate numbers thereof which are to be redeemed.
Upon mailing any such notice of redemption, the corporation will
become obligated to redeem on the date of redemption specified
therein. In case less than all Series B Preferred Stock represented
by any certificate are redeemed in any redemption pursuant to this
Section III.3.b, a new certificate will be issued representing the
unredeemed Series B Preferred Stock without cost to the holder
thereof.
iv. Method of Redemption. If on, prior to or after
any date fixed for redemption of the Series B Preferred Stock, the
corporation shall deposit, with any bank or trust company in the State
of California, as a trust fund, a sum sufficient to redeem, as of the
date fixed for redemption thereof, the shares called for redemption,
with irrevocable instructions and authority to the bank or trust
company to pay, on or after the date fixed for redemption, the
redemption price of the shares to their respective holders upon
surrender of their share certificates, then from and after the later
of the date fixed for redemption or the date of deposit, but not until
such date, the shares so called shall be redeemed and dividends shall
cease to accrue after the date fixed for redemption. The deposit
shall constitute full payment of the shares to their holders, and from
and after the date of the deposit the shares shall no longer be
outstanding, and the holders thereof shall cease to be stockholders
with respect to such shares, and shall have no rights with respect
thereto except the right to receive from the bank or trust company
payment of the redemption price of the shares without interest, upon
the surrender of their certificates therefor. If the holders of
Series B Preferred shares so called for redemption shall not have
claimed, at the end of six months from the date fixed for redemption,
any funds so deposited, such bank or trust company shall thereupon pay
over to the corporation such unclaimed funds, and such bank or trust
company shall thereafter be relieved of all responsibility in respect
thereof to such holders, and such holders shall look only to the
corporation for payment of the redemption price.
c. Conversion. The Series B Preferred shares shall not be
convertible.
d. Reacquired Shares. Any Series B Preferred shares
purchased or otherwise acquired by the corporation in any manner
whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such shares shall, upon their cancellation,
become authorized but unissued Preferred shares and may be reissued as
part of a new series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein.
e. Liquidation, Dissolution, Winding Up or Merger, etc.
Upon any liquidation (voluntary or otherwise), dissolution or winding
up of the corporation, no distribution shall be made to the holders of
shares of any other class or series of capital stock until all then
outstanding Series B Preferred shares shall have been redeemed (the
"Series B Liquidation Preference"); provided, however, that the Series
B Liquidation Preference may only be paid out of, and only ranks prior
to all other classes and series of stock to the extent of current and
retained earnings in accordance with generally accepted accounting
principles consistently applied.
f. Ranking. The Series B Preferred Stock shall rank prior
to all other series and classes of the corporation's capital stock as
to the payment of dividends and the distribution of assets, but only
to the extent provided herein, and the corporation may not create any
series or class of capital stock ranking prior to or, as to the Series
B Liquidation Preference of the preference of the Series B Preferred
Stock as to dividends and distributions, on a parity with the Series B
Preferred Stock unless the terms of any such series or class shall
first be approved by not less than 66 2/3% of the outstanding shares
of Series B Preferred Stock, voting separately as a class.
g. Amendment. The Certificate of Incorporation of the
corporation shall not be further amended in any manner which would
materially alter or change the powers, preferences or special rights
of the Series B Preferred Stock so as to affect them adversely without
the affirmative vote of the holders of not less than 66 2/3% of the
outstanding Series B Preferred shares, voting separately as a class.
h. Fractional Shares. Series B Preferred Stock may be
issued in fractions of a share, which shall entitle the holder
thereof, in proportion to such holder's fractional shares, to exercise
voting rights, receive dividends, participate in distributions and to
have the benefit of all of the rights of holders of shares of Series B
Preferred Stock.
IV.
DIRECTORS
The number of directors which will constitute the whole Board of
Directors of the corporation shall be specified or determined in the
manner provided in the By-Laws of the corporation.
V.
STOCKHOLDER MEETINGS; RECORDS
Meetings of stockholders may be held within or without the State
of Delaware, as the By-Laws may provide. The books of the Corporation
may be kept (subject to any provision contained in the Delaware Law)
outside the State of Delaware at such place or places as may be
designated from time to time by the Board of Directors or in the By-
Laws of the Corporation.
VI.
CUMULATIVE VOTING
At all elections of directors of the corporation, each holder of
stock entitled to vote for the election of directors shall be entitled
to vote for the election of directors shall be entitled to as many
votes as shall equal the number of votes which (except for this
provision as to cumulative voting) he would be entitled to cast for
the election of directors with respect to his shares of stock
multiplied by the number of directors to be elected by him, and he may
cast all of such votes for a single director or may distribute them
among the number to be voted for, or for any two or more of them as he
may see fit.
VII.
SUPERMAJORITY PROVISIONS
The consent of holders of at least 67% of the then issued
and outstanding Common Stock of the corporation shall be required,
either in writing or by vote at a meeting of stockholders called for
the purpose, in order to do or effect any of the following:
i. Amendments to the Restated Certificate of
Incorporation, any Certificate of Designations or the By-Laws of the
corporation.
ii. Material changes in or departures from the nature of
the corporation's business of manufacturing or selling products made
by depositing one or more layers of materials onto flexible substrates
by Roll-to-Roll Coating. For this purpose, "Roll-to-Roll Coating"
shall mean the serial steps of (1) the unwinding of a flexible
substrate from a first roll, (2) the deposition of one or more layers
of materials onto the flexible substrate and (3) the winding of the
substrate onto a second roll, provided that "Roll-to-Roll Coating"
shall not include the deposition of more than one layer of material to
an area of the substrate during any period that the substrate is
motionless.
iii. Merger or consolidation, or other corporate
reorganization.
iv. Sale of all or substantially all of the corporation's
assets and business.
v. Redemptions of any of the corporation's capital stock,
other than its Series B Preferred shares, and other than from any
stockholders holding more than 5% of the corporation's voting capital
stock.
vi. Payment of compensation to the Chief Executive Officer
or Chief Financial Officer of the corporation which is materially
greater in amount than the range of compensation for persons with
comparable job titles, responsibilities and qualifications in
companies of comparable size and complexity within the same geographic
region.
vii. Unbudgeted borrowings or assumptions of liabilities in
excess of US $1,000,000 in any single transaction or related group of
transactions.
viii. Unbudgeted long-term lease obligations or material
capital expenditures, or other material contracts, which obligate the
corporation to expenditures of over US $1,000,000 per year, or US
$2,500,000 in the aggregate.
ix. The licensing or sale of any of the corporation's
technology, any joint ventures, or shares research and development
projects, for uses involving the manufacture or sale of products made
by depositing one or more layers of materials onto flexible substrates
by Roll-to-Roll Coating.
x. The issuance of any shares of the capital stock of the
corporation, other than in an underwritten initial public offering
registered pursuant to the Securities Act of 1933, as amended, except
upon the exercise of stock options granted in accordance with Section
VII.xi hereof.
xi. The adoption of a stock option plan or other program
conferring rights to acquire shares of the corporation's capital
stock, except for adoption of an employee stock option plan pursuant
to which options granted to purchase shares of the corporation's
Common Stock shall conform to the following: (a) All options granted
under such a permitted plan shall be in an aggregate amount not to
exceed 10% of the corporation's outstanding voting stock at the time
of grant of the options, may be granted to employees and consultants
but not directors of the corporation. (B) All such options shall be
exercisable at an exercise price no less than fair market value on the
date of grant, and shall permit the option recipient to have the
options vest more rapidly than ratably over a four-year period from
the date of grant, or in the alternative which permit the option
recipient to retain, free from the corporation's right of repurchase,
any shares purchased by the recipient upon the exercise of the options
except pursuant to a vesting schedule whereby the corporation's right
to repurchase such shares shall expire no faster than ratably over a
four-year period from the date of grant. (C) All of the option
grants shall further provide for a right of first refusal for the
corporation to purchase any of the shares offered for sale by the
option recipient or, if the corporation should decline, then its
stockholders other than the option recipient, each pro rata to its
stockholdings, with the right to oversubscribe for any shares not
purchased by the other stockholders.
xii. The adoption of an annual budget, or the adoption of
any changes thereto, which anticipate a loss or which call for capital
expenditures in excess of the total Operating Cash Flow for the year
just concluded and as projected for the current year, and the adoption
of any budget which allocates less funds to optically variable pigment
research and development for the current year than 3% of the optically
variable pigment sales for the preceding year. "Operating Cash Flow"
for this purpose shall mean the total of operating earnings,
depreciation and amortization.
xiii. Any declaration of dividends or other stockholder
distributions.
xiv. Any election to dissolve the corporation except where
grounds for an involuntary dissolution exist, or where the electing
stockholder has first offered its shares to the other stockholders at
a price to be negotiated or determined by a neutral appraisal, and the
other stockholders have rejected to offer to purchase the electing
stockholder's shares.
xv. The execution of any contract or entering into of any
agreement between the corporation and a stockholder or affiliate of a
stockholder.
xvi. The appointment of any successor firm of independent
public accountants to service and certify the financial books and
statements of the corporation.
VIII.
PREEMPTIVE RIGHTS
Except as provided below in this Article VIII, the corporation
shall not offer, issue or sell, or enter into any agreements or
commitments pursuant to which it may become obligated to issue, any
shares of its Common Stock or any warrants, options or other
securities convertible into shares of its capital stock, unless the
corporation shall first offer to sell to each of the holders of its
Common Stock, on the same terms and conditions and at the same price,
all such securities proposed to be offered by the corporation, each
pro rata to its proportionate ownership of such stock. Each holder of
Common Stock, without right of assignment, shall have the right to
purchase up to its pro rata interest of the shares proposed to be
offered by the corporation. Such offer shall remain outstanding for
at least 30 days following the date of notice. The foregoing
preemptive rights shall not apply to the issuance by the corporation
of 91) any stock options or stock bonuses to any employees, directors
or consultants of the corporation or any stock sold to any employees
of the corporation pursuant to an employee stock purchase plan; (2)
shares of stock issued pursuant to the exercise of any stock options
granted to employees, directors or consultants of the corporation; or
(3) any shares of Common Stock of the corporation which are offered
and issued in an underwritten initial public offering and registered
pursuant to the Securities Act of 1933, as amended.
IX.
LIMITATION OF LIABILITY OF DIRECTORS
A director of the corporation shall not be liable to the
corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director except for liability which, by express
provision of Delaware Law cannot be eliminated. Any repeal or
amendment of the provisions of this Article IX shall not adversely
affect any right or protection of any director in respect of any act
or omission occurring prior to the time of such repeal or amendment.
X.
INDEMNIFICATION
The Corporation is authorized to provide indemnification to the
fullest extent permitted by Section 145 of the General Corporation Law
of Delaware, as the same may be amended and supplemented, to any and
all persons whom it shall have power to indemnify under said section,
and to advance expenses, as is provided in such section, including
reasonable attorney's fees, of any and all such persons, through by-
law provisions, by agreement or otherwise.
IN WITNESS WHEREOF, this Restated Certificate of incorporation
has been signed under the seal of the corporation on April ___, 1995.
_______________________________
MICHAEL B. SULLIVAN, President
[Seal]
ATTEST:
________________________________
_____________________, Secretary
EXHIBIT E - PUT AND CALL, RIGHT OF FIRST REFUSAL AND
CO-SALE AGREEMENT
PUT AND CALL, RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT
AGREEMENT made as of May 8, 1995, by and between OPTICAL COATING
LABORATORY, INC., a Delaware corporation ("OCLI"), and SICPA HOLDING
S.A. ("SICPA"). OCLI and SICPA are from time to time hereafter
referred to as a "Shareholder" or together as the "Shareholders".
R E C I T A L S
A. OCLI and SICPA are the sole stockholders of FLEX PRODUCTS,
INC., a Delaware corporation ("FLEX").
B. OCLI and SICPA desire to provide for certain put and call
rights, rights of first refusal and co-sale rights with regard to
their shares of the capital stock of FLEX.
A-G-R-E-E-M-E-N-T
NOW, THEREFORE, the parties hereto, in consideration of the
covenants and undertakings herein, hereby agree as follows:
1. Shares. For purposes of this Agreement, the term
"Shares" shall mean (a) all of the shares of any class of capital
stock of FLEX including, without limitation, shares which may be
issued by reason of stock splits, reverse stock splits, stock
dividends or other recapitalizations of FLEX, (b) all options,
warrants and other rights of any kind to purchase any class of such
capital stock, and (c) all securities convertible into or exchangeable
for any of the securities described in clause (a) or clause (b), now
owned or hereafter acquired by a Shareholder.
2. Restrictions On Transfer.
a. For purpose of this Agreement, the term "Transfer"
shall include any sale, assignment, encumbrance, hypothecation,
pledge, conveyance in trust, gift or other transfer or disposition of
any kind, including but not limited to transfers to receivers, levying
creditors, trustees or receivers in bankruptcy proceedings or general
assignees for the benefit of creditors, whether voluntary or by
operation of law, directly or indirectly, of any of the Shares.
b. Subject to the provisions of Sections 4 and 5 below,
no Shareholder may Transfer any of the Shares without complying with
the terms of this Agreement. Any attempted Transfer in violation of
this Agreement shall be void and of no force or effect and shall not
be honored by FLEX.
3. Excluded Transfers. Either Shareholder may Transfer
all or any portion of its Shares without compliance with Sections 4
and 5 below to any Affiliate, as defined below (a "Permitted
Transferee"); provided, however, that this Agreement shall be binding
upon all such Permitted Transferees with respect to all Shares
Transferred to them, in the same manner as if such Transferred Shares
had been retained by the transferor Shareholder. Each such Transfer
shall be void unless the Permitted Transferee first becomes a party to
this Agreement in writing. For the purposes of this Agreement, an
"Affiliate" shall mean and include any company, partnership or
business venture which either directly or indirectly controls, is
controlled by, or is under common control with SICPA or OCLI, as the
case may be. Control shall mean ownership, directly or indirectly, or
more than 50% of a stock or partnership interest having the right to
vote at meetings of shareholders or partners.
4. Right Of First Refusal. The provisions of this Section
4 shall apply in the event one or more Shareholders desire to sell,
and has or have received a bona fide offer in writing from a third
party to buy its or their Shares (the "Bonafide Offer").
Notwithstanding the foregoing, this Section 4 shall not apply to any
sale permitted within the excluded transfers described in Section 3
above.
a. In the event a Selling Shareholder receives a
Bonafide Offer as to which the terms of this section apply, the
Selling Shareholder, at least 30 days prior to the proposed date of
sale, shall first notify the other Shareholder of the proposed sale.
The notice from the Selling Shareholder to the other Shareholder shall
contain each and every material term of the proposed sale including,
without limitation, a copy of the written offer received, the name and
address of the prospective purchaser, the purchase price and terms of
payment, the date and place of the proposed sale, and the number of
Shares to be sold by the Selling Shareholder.
b. Within 30 days after its receipt of such notice,
the other Shareholder, if it wishes to purchase any of such Shares,
shall notify the Selling Shareholder of its desire to purchase such
shares, on the same cash equivalent terms as those on which the
Selling Shareholder proposes to sell its shares to the prospective
purchaser.
c. The other Shareholder, if it elects to purchase
such Shares from the Selling Shareholder, shall be required to pay for
the Shares being purchased by it on the same cash equivalent terms as
proposed by the would-be purchaser in the bona fide offer. The
closing of such purchase shall take place upon the later of (i) 30
days following the date when the other Shareholder receives the notice
from the Selling Shareholder and (ii) on the date of sale set forth in
the Bonafide Offer.
d. In no event shall the preceding provisions of this
section apply unless all of the Shares which the Selling Shareholder
proposes to sell are purchased by the other Shareholder.
5. Co-Sale Right.
a. In the event that the other Shareholder, within the
same 30-day period as referenced in the preceding Section 4, and
instead of electing to purchase the Shares of the Selling Shareholder,
shall notify the Selling Shareholder of its desire to sell its Shares,
the Selling Shareholder shall not proceed with the sale of its Shares
to the prospective purchaser unless a pro rata portion of the Shares
of the other Shareholder are purchased at the same time and on the
same terms and conditions by the prospective purchaser or its assigns.
b. If the other Shareholder fails to exercise in full
its first refusal rights within the purchase period set forth above,
and the other Shareholder further does not exercise its co-sale rights
in full with respect to the proposed transferee upon the terms and
conditions of such proposed transferee's purchase of the Shares, then
the Selling Shareholder shall be entitled to sell to the proposed
transferee, for a period of 60 calendar days from the date of the
Bonafide Offer, pursuant to the terms of such notice, up to that
number of Shares which equals the sum of (i) the number of Shares as
to which the co-sale rights are not exercised by the other Shareholder
and (ii) the total number of shares offered to be purchased under the
Bonafide Offer.
c. The proposed transferee shall purchase all such
shares from both Shareholders simultaneously if the other Shareholder
exercises its co-sale rights.
d. The number of shares which the Selling Shareholder
may Transfer under this section shall be proportionately reduced to
the extent that (i) the other Shareholder exercises its co-sale rights
and (ii) the proposed transferee fails to purchase those Shares which
the other Shareholder is entitled to sell to such proposed transferee
pursuant to its co-sale rights.
e. The Selling Shareholder shall not thereafter
Transfer any Shares without again first offering such Shares to the
other Shareholder in the manner provided in Section 4 and above in
this Section 5.
6. Put And Call Options. SICPA and OCLI agree that on the
third anniversary of the Closing, or at any time thereafter and prior
to the earlier of an initial public offering of shares of its capital
stock by FLEX or the eighth anniversary of the Closing, the following
put and call options shall apply:
a. SICPA shall be entitled to exercise, at its
election, a call option (the "Call") to purchase all of OCLI's Shares.
In the event that SICPA elects to exercise the Call, SICPA shall send
written notice of its election to OCLI (the "Call Notice") containing
an estimate of the Call Price (as defined below). Unless OCLI and
SICPA agree to an earlier date, as of the last day of the fifth
calendar month immediately following the month in which the Call
Notice is sent (the "Call Date"), OCLI shall sell its Shares, free and
clear of all liens, to SICPA for a price (the "Call Price") equal to
the Base Price (as defined below) plus (i) 2.0 times the amount by
which FLEX's Net Sales, as defined below, for the 12 calendar months
immediately preceding the month in which the Call Notice was sent to
OCLI exceeds FLEX's Net Sales for fiscal year 1994, (ii) times 60%.
b. If SICPA exercises its Call, for a period of two
years from the Call Date, SICPA shall not sell any of its Shares, and
shall not authorize FLEX to sell any Common Stock, at a price in
excess of the Call Price without first offering to sell to OCLI an
amount of Common Stock equal to the Shares purchased from OCLI at the
Call Price, which offer shall remain open for a period of 30 days and
may be accepted by OCLI in whole or in part.
c. OCLI shall be entitled to exercise, at its
election, a put option (the "Put") to sell all of OCLI's Shares. In
the event that OCLI elects to exercise the Put, OCLI shall send
written notice of its election to SICPA (the "Put Notice") containing
an estimate of the Put Price (as defined below). Unless OCLI and
SICPA agree to an earlier date, as of the last day of the fifth
calendar month immediately following the month in which the Put Notice
is sent (the "Put Date"), OCLI shall sell its Shares, free and clear
of all liens, to SICPA for a price (the "Put Price") equal to 80% of
the Base Price plus (i) 1.5 (the "Put Multiplier") times the amount by
which FLEX's Net Sales, as defined below, for the 12 calendar months
immediately preceding the month in which the Put Notice was sent to
SICPA exceeds or, so long as SICPA is not in default under the License
and Supply Agreement by and between FLEX and SICPA dated as of
December 2, 1994, falls below FLEX's Net Sales for fiscal year 1994,
(ii) times 60%. If, in the 12 calendar months immediately preceding
the month in which the Put Notice was sent to SICPA, (i) FLEX's pre-
tax income is zero or a loss and (ii) SICPA has purchased at least the
mean between the minimum and maximum Purchase Requirements set forth
in the Section 5.1 of the License and Supply Agreement then the Put
Multiplier shall be 1. For purposes of this provision, "purchase"
shall be as defined in Section 5.1 of the License and Supply
Agreement, and "pre-tax profits" shall be defined as the profits of
FLEX in United States currency as determined in accordance with U.S.
GAAP before taxes based on income.
d. For purposes of this Section 6, (i) "Net Sales"
shall be as determined by FLEX's accountants in accordance with United
States generally accepted accounting principles applied on a basis
consistent with FLEX's prior quarterly and annual financial
statements; and (ii) "Base Price" shall equal $25 million. If, at the
time when the Put Option or Call Option provided under this Section 6
is exercised, OCLI owns more or less than 60% of the issued and
outstanding Common Stock of FLEX, then the Put Price or Call Price
shall be appropriately and equitably adjusted to reflect that the Put
Option or Call Option is being exercised for a quantity of FLEX's
outstanding Common Stock which is more or less than 60% of the total
number of such shares then outstanding.
e. In addition to the Put Price or the Call Price, as
the case may be, upon any exercise of the Put or the Call, SICPA shall
also buy OCLI's portion of any Note for working capital loans
outstanding on the Put Date or the Call Date. The purchase price for
such Note portion shall equal the outstanding balance of unpaid
principal and accrued but unpaid interest due thereon as of the Put
Date or the Call Date, as applicable.
7. Legend. Each of the Shareholders agrees to cause all
certificates representing Shares now owned or hereafter acquired by
it, and all options, warrants and stock purchase agreements
representing its right to acquire or purchase Shares, to be imprinted
with the following endorsement:
THE SHARES REPRESENTED BY THIS CERTIFICATE [OR
PURCHASABLE PURSUANT TO THIS DOCUMENT] ARE SUBJECT TO AND
MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH A CERTAIN RIGHT
OF PUT AND CALL, RIGHT OF FIRST REFUSAL AND CO-SALE
AGREEMENT EXECUTED BY AND AMONG THE ISSUE AND CERTAIN OTHER
SHAREHOLDERS OF THE ISSUER COMPANY.
Each of the Shareholders agrees to provide photocopies of its share
certificate evidencing its ownership of all Shares, or other
applicable document, and reflecting that the above legend has been
imprinted thereon, to the other Shareholder within 30 days following
the execution of this Agreement.
8. Term. This Agreement shall automatically terminate
upon the earliest of (a) the effective date of a merger of FLEX with
and into another corporation where FLEX is not the survivor and the
Shareholders of FLEX do not control the surviving entity after the
merger; (b) upon the effective date of the first underwritten public
offering of securities of FLEX; or (c) the sale of substantially all
of the assets of FLEX and the election thereafter to dissolve and
liquidate FLEX. Except for the provisions of Section 6.b, this
Agreement shall also automatically terminate as of the date when
either Shareholder and its Permitted Transferees shall no longer own
any Shares.
9. Notices. Any notice, payment, report or any other
communication required or permitted to be given by one party to the
other party by this Agreement shall be in writing and either
(a) served personally on the other party, (b) sent by express,
registered or certified first-class mail, postage prepaid, addressed
to the other party at its address as indicated below, or to such other
address as the addressee shall have theretofore furnished to the other
party by proper notice, (c) delivered by commercial courier to the
other party, or (d) sent by telefax to the other party at its telefax
number indicated below or to such other telefax number as the party
shall have theretofore furnished to the other party by proper notice,
with machine confirmation of transmission. Notice shall be deemed
given upon actual physical delivery of upon the receipt of telefax, or
on the fifth day following the deposit in the mails as contemplated
above:
If to OCLI:
Optical Coating Laboratory, Inc.
2789 Northpoint Parkway
Santa Rosa, California 95407-7397
United States of America
Attention: Herbert M. Dwight, Jr.
Joseph C. Zils, Esq.
Telefax No. (707)525-7410
Copy to:
John V. Erickson
Collette & Erickson
555 California Street, Suite 4350
San Francisco, California 94104-1791
United States of America
Telefax No. (415)788-6929
If to SICPA:
Maurice A. Amon
SICPA Holding S.A.
2, rue de la Paix
1002 Lausanne, Switzerland
Telefax No. 41-21-312-6895
Copy to:
William E. Horwich
Proskauer Rose Goetz & Mendelsohn
555 California Street, Suite 4604
San Francisco, CA 94104-1791
United States of America
Telefax No. (415)956-2324
10. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
11. Enforcement. In addition to all other remedies
available at law or in equity, the parties agree that this Agreement
shall be enforceable by injunction, including specific performance.
12. Intended Scope Of Coverage. The words "sale," "sell,"
"transfer" and the like shall include any disposition by way of
transfer with or without consideration, to any persons for any purpose
and include without limitation public or private offerings, exchanges,
mergers, consolidations, reorganizations, redemptions or any other
transactions affecting the Shares held by the Shareholders or either
of them.
13. Attorneys' Fees. In the event a party breaches this
Agreement, the breaching party shall pay all costs and attorneys' fees
incurred by the other party in connection with such breach, whether or
not any litigation is commenced.
14. Applicable Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of California
without regard to conflicts of laws principles.
15. Prohibition Upon Assignment This agreement is personal
among the parties hereto, each of which is relying upon the identity
and specific capabilities of the other party, and the rights or
obligations of any party herein may only be assigned by it as
elsewhere expressly provided herein or with the consent of the other
party except that SICPA may assign its rights and obligations
hereunder to any of its affiliates so long as SICPA remains liable for
its obligations hereunder. Any attempted assignment in violation of
these provisions shall be null and void, and of no force or effect.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first written
above.
SICPA HOLDING S.A. OPTICAL COATING
LABORATORY, INC.
By /s/Eduardo Beruff By /s/Herbert M. Dwight, Jr.
EDUARDO BERUFF HERBERT M. DWIGHT, JR.
Authorized Signature President
By /s/William E. Horwich
WILLIAM E. HORWICH
Authorized Signature
EXHIBIT F - LICENSE AND SUPPLY AGREEMENT
_________________________________
LICENSE AND SUPPLY AGREEMENT
by and among
FLEX PRODUCTS, INC.
and
SICPA HOLDING S.A.
_________________________________
December 2, 1994
LICENSE AND SUPPLY AGREEMENT
AGREEMENT dated December 2, 1994, by and among Flex Products,
Inc., a Delaware corporation ("Flex") and SICPA HOLDING S.A., a Swiss
corporation ("SICPA").
W I T N E S S E T H:
WHEREAS, Flex and SICPA are currently parties to an agreement
dated as of July l, 1993, providing for the purchase and sale of
optically variable pigment ("OVP") (the "1993 Agreement"), and the
1993 Agreement will expire on June 30, 1998;
WHEREAS, Flex and SICPA wish to replace the 1993 Agreement with
this Agreement and to continue to work together for their mutual
benefit by further developing the business of supplying optically
variable ink ("OVI") utilizing OVP as an anti-counterfeiting component
of the world's currency and other value-documents;
WHEREAS, the parties have entered into a Joint Venture Agreement
dated July 1, 1993 and a Memorandum of Alliance dated March 9, 1993
for the purpose of coordinating their respective efforts to improve
and enhance the existing technologies for the utilization of OVP and
OVI;
WHEREAS, pursuant to said agreements, Flex has developed
valuable proprietary information and technical know-how as generally
described on Exhibit G (the "Know-how") which have value in the
manufacture, use and sale of OVP and OVI, which are not generally
known to others, and have been maintained as trade secrets by Flex;
WHEREAS, the parties wish to continue their joint development
efforts pursuant to said agreements;
WHEREAS, the OVP and OVI are covered by one or more of the
patents listed on Exhibit H (the "Patents");
WHEREAS, the parties wish to enter into an exclusive license
agreement, to provide for the supply by Flex to SICPA of OVP and
continue their joint development efforts all of which is considered to
be necessary for a technically satisfactory exploitation of the
Patents with respect to the making, using and selling of OVI.
NOW, THEREFORE, in consideration of the mutual agreements
hereinafter set forth, the parties hereby agree as follows:
1. Patent and Know-how License.
1.1 Patent License.
1.1.1 Patent License.
1.1.1(a) Grant of Exclusive Patent License. Flex hereby
grants to SICPA, for the Term (as such term is defined in Section 13
below), an exclusive worldwide and nontransferable right and license
under the Patents to use the products set forth in Exhibit A (the
"Exclusive Products") to make, use and sell OVI and to use OVP to
make, use and sell OVI in the fields of use set forth in Exhibit D
(the "Fields"). The term "Patents" as used in this Agreement shall
consist of those Flex patents which are specifically listed in Exhibit
H, and any foreign counterparts thereof, and any additions, extensions
or reissues thereof. The term "Patents" as used in this Agreement
shall include improvements that (a) cover the Fields or (b) relate to
the Exclusive Products. The term "Patents" as used in this Agreement
shall also include patents on continuations, continuations-in-part,
and divisionals of the Patents listed in Exhibit H that (a) cover the
Fields or (b) relate to the Exclusive Products. The term "Patents" as
used in this Agreement shall also include any patents which may issue
in the future that (a) cover the Fields or (b) relate to the Exclusive
Products. It is expressly understood and agreed that patent rights
regarding the manufacture of OVP are excluded from this License and
Supply Agreement.
1.1.1(b) Memorandum of Alliance and Joint Venture
Agreement. The parties agree to establish a committee (the
"Committee") which shall meet at least twice yearly to implement all
of the provisions of the Memorandum of Alliance and Joint Venture
Agreement, copies of which are attached hereto and made a part hereof
as Exhibits I and J, respectively. The agenda for such meetings shall
include, but not be limited to, a review of intellectual property
positions and strategies and long-term supply and demand issues. The
parties agree that, notwithstanding the existing terms of the
Memorandum of Alliance and the Joint Venture Agreement to the
contrary, the Memorandum of Alliance and the Joint Venture Agreement
shall remain in effect during the Term of this Agreement,and the
parties shall execute such amendments thereto which may be proper to
extend the length of the respective terms of the Memorandum of
Alliance and the Joint Venture Agreement to conform to length of the
Term (as such term is defined in Section 13 below).
1.1.2 Grant of Nonexclusive Patent License. Flex hereby grants
to SICPA, for the Term (as such term is defined in Section 13 below),
a nonexclusive worldwide and nontransferable right and license under
the Patents to use OVP to make, use and sell OVI in all fields of use
other than those listed on Exhibit D.
1.2.1 Grant of Exclusive Knowhow License. Flex hereby grants
to SICPA, for the Term (as such term is defined in Section 13 below),
an exclusive worldwide and nontransferable right and license to use
the Knowhow to use the Exclusive Products to make, use and sell OVI
and to use OVP to make, use and sell OVI in the Fields. It is
expressly understood and agreed that knowhow relating to the
manufacture of OVP is excluded from the Knowhow and from this License
and Supply Agreement.
1.2.2 Grant of Nonexclusive Knowhow License. Flex hereby
grants to SICPA, for the Term (as such term is defined in Section 13
below), a nonexclusive worldwide and nontransferable right and license
to use the Knowhow to use OVP to make, use and sell OVI in all fields
other than those listed on Exhibit D.
1.3 Consideration. No royalties shall be payable by SICPA to
Flex for the licenses granted hereunder. The sole consideration for
the grant of licenses shall be the obligation of SICPA to purchase OVP
exclusively from Flex as set forth in this Agreement and the
performance of the other obligations of SICPA contained herein.
1.4. Claims of Infringement. If at any time after the date
hereof SICPA or Flex shall become aware of any suspected or actual
infringement by a third party of any of the Patents, or of any alleged
infringement or misappropriation of the intellectual property rights
of others by SICPA's or Flex's use of the Patents, SICPA or Flex, as
the case may be, shall promptly notify the other thereof.
1.5. Defense. 1.5(a) In the event that a third party is
infringing any of the Patents, or is alleging infringement or
misappropriation of its intellectual property rights by SICPA's or
Flex's use of any of the Patents, and the position taken by such third
party materially and adversely affects the rights and obligations of
both parties under this Agreement, then Flex shall initiate and
prosecute legal proceedings against, or take other appropriate action
with respect to, such third party for the purpose of terminating such
infringement or establishing that no such infringement or
misappropriation exists. The costs and expenses of such legal
proceedings or other appropriate action shall be paid by Flex.
1.5(b) For the purposes of this Section, each party shall
give the other, via the Committee as established pursuant to Section
1.1.1(b) above, at least twenty-four hours advance notice of any
proposed correspondence intended to be delivered to a third party in
relation to any claim or suspected claim (the "Claim") relating to (i)
the infringement, misappropriation, or invalidity, either real or
alleged, of one or more of the Patents or the Knowhow as they relate
to the OVP and OVI in the Exclusive Products and Fields, (ii) the use
or suspected use of OVP by a third party in violation of SICPA's
rights under this Agreement, or (iii) the alleged use of OVP by SICPA
and/or Flex in violation of the rights of a third party. Each party
shall give the other forty-eight hours advance notice of any proposed
legal action intended to be taken by such party in relation to a
Claim. In addition, each party shall, within twenty-four hours of
receipt thereof, give the other party copies of any correspondence
received from any third party in relation to a Claim. The term
"correspondence" as used in this Section shall include communications,
letters, reports, memoranda, statements, notes, facsimiles, telegrams,
lawsuits, notices, and all other written documents.
1.6 Limitation of Licenses. Except as expressly set forth
herein, no license is granted, and no act or acts hereunder shall be
construed to create any licenses, expressly or by implication,
estoppel or otherwise, except the licenses herein expressly granted.
2. Obligation of Purchase and Sale. As a condition to and as
consideration for the licenses granted herein, during the Term (as
such term is defined in Section 13 below), subject to the terms and
conditions set forth below, (a) SICPA shall purchase exclusively from
Flex all OVP required by SICPA for use in the production of any and
all OVI to be marketed by SICPA and any of the SICPA Companies (as
such term is defined below) anywhere in the world, and (b) Flex shall
sell (i) exclusively to SICPA the Exclusive Products; (ii) exclusively
to SICPA OVP to use in the manufacture of OVI for use in the Fields;
and (iii) nonexclusively to SICPA OVP other than the Exclusive
Products that may be used to make OVI for use other than in the
Fields. If Flex desires to sell any ink product that does not use an
Exclusive Product, under its own name or otherwise, it shall contract
with SICPA for the production of such ink product unless the terms
which SICPA is willing to provide are materially inferior to those
which Flex is able to obtain from another ink manufacturer. Flex
shall be free to supply OVP other than the Exclusive Products to third
parties for all uses outside of the Fields. In order to protect the
OVI manufactured and sold by SICPA as an anticounterfeiting device, in
no event shall Flex sell OVP which meets the specifications of the
Exclusive Products to any person other than SICPA for any purpose. In
addition, Flex agrees to cooperate with SICPA and SICPA's customers,
and to use its reasonable best efforts, to investigate any instances
which come to its attention where it is reasonably believed that OVP
or OVI from any source other than SICPA has or will threaten the
ability of SICPA's OVI to act as an effective anticounterfeiting
device, and to take such reasonable actions to minimize or eliminate
the threat consistent with Flex's rights and obligations under this
Agreement and Flex's contractual obligations to others. Flex will
include in its contracts with others for the sale of OVP provisions
that (i) restrict such customers from making, using and selling OVI in
the Fields to the extent allowed by applicable law, and (ii) grant
Flex or its designee the right to audit such customers in the event of
a suspected or actual leakage of OVP or the suspected or actual use of
OVP in a manner that violates the rights granted to SICPA herein.
(For purposes of this Agreement, the term "SICPA Companies" shall mean
any person or entity controlled by, controlling, or under common
control with SICPA. The term "control" of any person or entity means
possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such person or entity,
whether through the ownership of voting securities or by contract or
otherwise.)
3. Changes to Price and Quantity. During the period from
March 1, 1999 through June 30, 1999 and the period March 1, 2004
through June 30, 2004, the parties shall discuss what the price and
quantity terms of this Agreement shall be for the period 2000 through
2004 and 2005 through 2009 respectively. In the event that the
parties cannot agree to any other provisions, the price for OVP shall
be the price set forth in Section 4, as adjusted by Section 5.6, the
minimum and maximum quantities for the period 2000 through 2004 shall
be the same as for the year 1999, and the minimum and maximum
quantities for the period 2005 through 2009 shall be the same as for
the year 2004.
4. Price.
4.1 Base Price. SICPA shall pay a Base Price of US$4,850 per
kilogram for all OVP purchased pursuant to this Agreement, subject to
Sections 4.2 and 5.6 below.
4.2 Base Price Adjustments. The price specified in Section 4.1
above is a base price which shall be subject to an annual adjustment,
starting in 1995, as set forth in this Section 4.2. The adjustment
shall be calculated in accordance with the percentage increase in
"Average Hourly Earnings" shown in the Establishment Data Index
entitled, "Average Hours and Earnings of Production Workers on
Manufacturing Payroll in States and Selected Areas," (currently
designated Index C-8) for the area specified as Santa Rosa-Petaluma,
California (not seasonally adjusted), as it appears in the periodical
Employment and Earnings, published by the U.S. Department of Labor,
Bureau of Labor Statistics (the "Index"), using December 1993 as the
base period (the "Base Period") for computing any required price
adjustments. The base price shall be adjusted as of December 31 of
each year based on the percentage increase in the Index calculated by
comparing the Index for December 1993 and the latest version of the
Index published as of December 31 of each such adjustment year. If
the Index is not published in any of the three months preceding a
December 31 adjustment, then the parties shall agree on a substitute
index that best approximates the Index. (For reference purposes only,
a copy of the current version of the Index is attached hereto as
Exhibit B.) No such annual adjustment shall be made unless and until
the Index increase over the Base Period or any subsequent annual
adjustment exceeds on a cumulative basis 3%, at which time all
increases over the Base period or any subsequent annual adjustment
shall be included. (E.g., assuming an Index increase of 2.8% as of
December 1994, increasing to 5% as of December 1995 on a cumulative
basis, the annual adjustment starting in 1996 would be 5%; no further
adjustment would be made until the Index increase over the December
1995 Index exceeded 3%.) In addition, in the event that the cost of
any materials used by Flex for the manufacture of OVP increases during
the term of this Agreement by more than 20% over the current price for
such material (i.e., the price at the date of this Agreement) adjusted
for changes by the reduction of any increase in the Index over the
Base Period Index, Flex shall thereafter be allowed to pass through to
SICPA the entire amount of such adjusted increase as it may change
from time to time (not just the amount in excess of 20%) subject to
SICPA's right to retain the services of an independent auditor who
shall have the right to audit Flex's books of account for the sole
purpose of verifying the accuracy of the increase. In addition, any
materials used by Flex which result in the increase shall be purchased
at or below fair market value.
4.3 Price Adjustment. The base price per kilogram set forth in
Section 4.1 as adjusted pursuant to Sections 4.2 and 5.6 shall be
reduced by 5% for each 500 kilograms purchased per year over 2,500
kilograms as set forth below:
Purchases per Year Base Price/Kg (before
increases pursuant to
Sections 4.2 and 5.6)
First - 2,500 kg US$4,850
2,501 - 3,000 kg US$4,608
3,001 - 3,500 kg US$4,377
3,501 - 4,000 kg US$4,158
4,001+ kg US$3,950
5. Minimum Purchase Requirements.
5.1 Minimum Annual Purchases.
5.1(a) Minimum Purchases Necessary to Maintain Exclusive
License. The parties agree that SICPA shall purchase from Flex
minimum annual amounts of OVP set forth below:
Year Minimum Maximum
1995 4,000 kg 5,000 kg
1996 5,500 kg 6,000 kg
1997 6,000 kg 7,500 kg
1998 7,000 kg 8,000 kg
1999 7,500 kg 8,500 kg
Flex may, but shall not be obligated to, supply OVP in annual
quantities above the annual maximum quantities set forth above. The
annual maximum quantities set forth above shall not constitute a
limitation on SICPA's obligation to purchase OVP from Flex. For each
year after 1999, the minimum and maximum quantities shall be
determined pursuant to Section 3. (For purposes of this Agreement,
each 12-month period from January 1 through December 31 during the
Term shall be designated as a "Purchase Period.") If SICPA fails to
make the minimum purchase of OVP required in any Purchase Period, Flex
shall have the following options exercisable after 30 days written
notice: (i) Flex may waive the breach; (ii) Flex may terminate the
exclusive license granted in Section 1.1; (iii) Flex may hold SICPA
liable to Flex for any damages arising from such breach (subject to
the provisions of Section 8 below); (iv) Flex may be relieved of the
obligation under Section 2 above to supply OVP to SICPA for use with
respect to the Exclusive Products on an exclusive basis in which case
it shall continue to satisfy all of SICPA's requirements for OVP on a
nonexclusive basis during the Term, and SICPA shall continue to
purchase all of its requirements of OVP from Flex for the Term; or
(v) Flex may exercise its right of cancellation as provided in
paragraph 15.1 below. For purposes of this Section 5 and Sections 3
and 14, a "purchase" shall be deemed to have occurred during the
Purchase Period or portion thereof during which OVP that is ordered is
to be delivered after SICPA delivers to Flex an irrevocable order for
OVP for delivery, provided that SICPA thereafter makes timely payment
therefor in accordance with Section 6 below.
5.1(b) SICPA Call on Flex Excess Capacity. The parties
agree to meet no later than December 1st in each year during the Term,
and at such meeting:
(i) Flex shall advise SICPA of Flex's excess capacity
for the production of OVP, including the maintenance of any inventory
reserve required by Section 11, for the calendar year immediately
following the then-current year which Flex has not committed to other
uses; and
(ii) SICPA shall have the right, exercisable no later
than December 15, to increase the minimum and maximum quantities set
out in Section 5.1(a) above by an amount not to exceed the amount of
such excess capacity available in Section 5.1(b)(i) above.
5.2 Minimum Quarterly Purchases. SICPA shall purchase at least
25% of the minimum annual purchase requirement of OVP per calendar
quarter.
5.3 Production Releases. SICPA shall provide Flex with written
releases for production of the amount of OVP on or before the
first-day of each quarter to cover the quarter following the current
quarter. For example, the release for the third quarter of 1995
shall be given on or before April 1, 1995. Each such release shall
serve as authorization for commencement of production of the released
product and shall be an irrevocable order for the OVP specified in the
release. Color specifications and requested delivery dates shall be
provided throughout the quarter. A minimum of 5 kilograms shall be
required for each color included in the release.
5.4 Forecasts. Also on or before the first day of each
quarter, SICPA shall supply Flex with its forecast for the two
quarters following the quarter for which the release is being
provided. For example, on or before April 1, 1995, SICPA shall
provide the release for the quarter ending September 30, 1995, and its
forecast for the quarters ending December 31, 1995, and March 31,
1996. The forecasts shall constitute SICPA's good faith best estimate
of its requirements under this Agreement in order to assist Flex in
planning. The forecasts shall not be binding on the parties and Flex
is not authorized to commence production based on forecasts.
5.5 Shipments. Flex shall not be obligated to produce and/or
ship in excess of 25% of the maximum annual purchase amount in any
calendar quarter without its prior written consent Flex will attempt,
consistent with other commitments and available resources, to supply
greater amounts requested by SICPA to support the market.
5.6 Product Specification. The product specifications
regarding brightness, durability, color and particle size for all OVP
purchased pursuant to this Agreement shall be as set forth in
Exhibit A to this Agreement. The prices specified in this Agreement
apply to Flex's current product design, materials and colors, as set
forth in Exhibit A attached hereto. The parties acknowledge that any
change in the product specification, quantities and/or delivery
schedule shall be the subject of renegotiation, and shall require the
mutual agreement of the parties with respect to any change in terms
and price.
6. Terms and Conditions of Orders. Sections 1, 2, 3, 4, 5, 6,
7, 8a, 11 (except the last sentence), 13 and 14 of Flex's Standard
Terms and Conditions of Sale, a copy of which is attached hereto as
Exhibit C, shall apply to this Agreement. Payment terms shall be net
30 days from the date of Flex's invoice. Acceptance of OVP supplied
under this Agreement for conformity with the shipping documents shall
occur within 30 days after delivery to SICPA. In the event that SICPA
fails to make payment within such 30-day period or as long as such
payment remains unpaid, Flex may in addition to any other remedies
available to it, at its option, (i) make immediately due and payable
any subsequent invoices delivered by it to SICPA; (ii) suspend all
deliveries; or (iii) require that SICPA pay Flex's finance charge at
the maximum rate permissible by law not to exceed 1% per month on the
unpaid balance of SICPA's account from date of Flex's invoice.
7. Warranty. Flex warrants for a period of 180 days from the
date of shipment that all OVP supplied by it shall be free from
defects in material and workmanship and shall conform to all
specifications and other applicable provisions of this Agreement or
such other specifications and provisions as are otherwise requested by
SICPA and agreed to in writing by Flex. Should any failure to conform
to this warranty appear within 180 days of shipment of OVP, then upon
notification thereof and confirmation that the OVP has been shipped,
stored and maintained in accordance with the guidelines annexed hereto
as Exhibit A, and upon return of such OVP, Flex will, at Flex's
option, either (i) replace the nonconforming OVP within 15 days after
return thereof, or (ii) in lieu of such replacement refund any payment
made by SICPA for the nonconforming OVP and reimburse SICPA for any
delivery costs directly incurred by SICPA with respect to such OVP.
THIS WARRANTY DOES NOT COVER DAMAGE OR DEFECTS CAUSED BY SICPA'S
PRODUCTION CYCLE.
THIS WARRANTY IS EXCLUSIVE AND IS IN LIEU OF ANY IMPLIED
WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHER
WARRANTY OF QUALITY, WHETHER EXPRESSED OR IMPLIED, EXCEPT FOR WARRANTY
OF TITLE AND WARRANTY AGAINST PATENT INFRINGEMENT.
8. LIMITATION OF LIABILITY. SUBJECT TO LIQUIDATED DAMAGES
PROVISIONS OF SECTION 14, AND EXCEPT FOR DAMAGES PAYABLE UNDER THE
INDEMNITY PROVISIONS OF SECTION 16 AND THE CONFIDENTIALITY PROVISIONS
OF SECTION 12, NEITHER FLEX ON THE ONE HAND NOR SICPA ON THE OTHER
HAND SHALL BE LIABLE TO THE OTHER, UNDER ANY CIRCUMSTANCES, FOR
SPECIAL OR CONSEQUENTIAL DAMAGES SUCH AS, BUT NOT LIMITED TO, DAMAGE
OR LOSS OF OTHER PROPERTY OR EQUIPMENT, LOSS OF PROFITS OR REVENUE,
COST OF CAPITAL, OR COST OF PURCHASED OR REPLACEMENT GOODS. THE
REMEDIES OF THE PARTIES SET FORTH HEREIN ARE EXCLUSIVE, AND THE
LIABILITY OF EACH PARTY WITH RESPECT TO ANY CONTRACT, OR ANYTHING DONE
IN CONNECTION THEREWITH SUCH AS THE PERFORMANCE OR BREACH THEREOF, OR
FROM THE MANUFACTURE, SALE, DELIVERY, RESALE OR USE OF ANY OVP
FURNISHED UNDER THIS AGREEMENT, WHETHER ARISING OUT OF CONTRACT, NEGLI
GENCE, STRICT TORT OR ANY WARRANTY OR OTHERWISE, SHALL NOT, EXCEPT AS
EXPRESSLY PROVIDED HEREIN, EXCEED THE PRICE OF THE OVP UPON WHICH SUCH
LIABILITY IS BASED IN THE CASE OF FLEX OR THE DAMAGES DETERMINED UNDER
AND PURSUANT TO SECTION 14 IN THE CASE OF SICPA. ANY LIMITATION ON
LIABILITY HEREUNDER SHALL NOT LIMIT THE LIABILITY OF EITHER PARTY FOR
BREACH OF SECTION 2 OR 12, NOR SHALL IT LIMIT THE LIABILITY OF SICPA
UNDER SECTION 16.
9. Cure. Flex and SICPA each shall have the right to cure any
default or nonconformity under the Agreement within 15 days of receipt
of written notice from the other party specifying the default or
nonconformity. In the case of failure of delivery of OVP by Flex, or
the delivery by Flex of nonconforming OVP, Flex shall not be deemed to
have cured the non-delivery, or the nonconformity, until it shall have
delivered the conforming goods to SICPA's facilities.
10. Force Majeure. No party shall be held responsible for any
delay or failure in performance under this Agreement to the extent
such delay or failure is caused by federal, state or municipal action
including a change in any statute, ordinance or regulation;
unavailability of any material required or currently utilized by Flex
for the production of OVP; environmental controls or restrictions
placed on the use or disposal of any such materials that makes the use
of such materials impracticable; strike against Flex or a third party;
fire damage, flood, explosion, war or any other cause, act of God,
contingency or circumstance within or outside the United States not
subject to its control ("Force Majeure Conditions"). If any Force
Majeure Condition occurs, the party delayed or unable to perform shall
as soon as reasonably practicable give notice to the other party and
any obligations that the other party has to perform shall be suspended
for the duration of such Force Majeure Condition. If any Force
Majeure Condition causes a delay in delivery by Flex of over 60 days,
for as long thereafter as such Force Majeure Condition shall continue
SICPA shall have the right to terminate this Agreement prospectively
by giving written notice to Flex effective immediately when such
notice is given. Such a termination shall in no way alter any
obligation which SICPA may have under this Agreement to pay for OVP
delivered prior to the effective date of termination.
11. Assurances Re Supply of OVP. The parties acknowledge that
an assured supply of OVP is a matter of concern to customers utilizing
OVI. The parties agree that they will endeavor to work out a mutually
acceptable plan for creating and maintaining an inventory reserve for
the purpose of providing reasonable assurances that sufficient
quantities of OVP will be available to satisfy SICPA's requirements to
protect against contingencies, such as equipment breakdowns or other
casualty losses.
12. Confidentiality and Nondisclosure. All technical data,
including the Knowhow, and all information which concerns the business
operations of either Flex on the one hand or SICPA on the other hand
disclosed in the course of performing this Agreement, which data or
information, at the time of its communication to the other party, was
not rightfully in the other party's possession or in the public domain
("Confidential Matter"), shall be treated as confidential and shall
not be disclosed by the recipient to any third party. The recipient
shall use the same care to protect Confidential Matter as it uses to
preserve and protect its own information having the highest degree of
competitive significance and shall take appropriate measures to ensure
that its employees are bound to the same degree that it is bound under
this Agreement, and the recipient shall not use any Confidential
Matter in its own business operations except to the extent necessary
to implement this Agreement without the written consent of the other
party. This obligation does not apply to any Confidential Matter
which (i) was in the recipient's possession prior to its disclosure,
(ii) was in the public domain prior to its disclosure or thereafter
entered the public domain through no fault of the recipient or the
recipient's employees, or (iii) is lawfully obtained by the recipient
on a non-confidential basis from a third party having an unrestricted
legal right to disclose the information to others. Notwithstanding
the foregoing, a recipient may disclose Confidential Matter if and to
the extent that a judicial or governmental authority having
jurisdiction over the recipient orders or requires disclosure,
provided that the recipient, before making any such disclosure,
advises the other party (the "Disclosing Party") of the disclosure
required and cooperates with the Disclosing Party in all legitimate
efforts to avoid or limit disclosure at the Disclosing Party's
expense. SICPA agrees that its obligations under this Section 12
shall extend to the SICPA Companies as well as to SICPA, and any
breach or violation of this Section by any SICPA Company shall be
deemed to be a breach by SICPA.
13. Term of Agreement.
13.1 Term. The term of this Agreement (the "Term") shall
commence on the date of the execution hereof and shall terminate on
December 31, 2009, unless terminated earlier pursuant to the terms of
this Agreement.
13.2 Invalidity of European Patent. Upon the expiration or
final judicial determination of invalidity of European Patent No. 0
227 423 B1 (but in no event before December 31, 1999) the provisions
of Sections 2(a), 2(b)(i) and 2(b)(ii) of this Agreement shall
terminate with respect to exclusive purchases and sale of OVP for use
in OVI for sale by SICPA in the European Economic Area (the "EEA");
provided, however, that in such an event SICPA shall continue to
purchase OVP from Flex, and Flex shall continue to sell OVP to SICPA
pursuant to this Agreement, on a nonexclusive basis for use and sale
by SICPA in the EEA, and all the terms of this Agreement, including
the annual minimum purchase obligation of Section 5.1, shall remain in
effect throughout the rest of the world.
13.3 Substitute OVP. Notwithstanding anything herein to the
contrary, in the event that during the Term of this Agreement (but in
no event before December 31, 1999) an OVI product becomes commercially
and legally available on the market from a third party, due to either
a final judicial determination of invalidity or non-infringement of
any of the claims of the Patents, or due to a non-infringement for
which there has been no legal action taken challenging the OVI product
under the Patents, and such product containing substitute OVP is (i)
substantially identical in performance to that resulting from the use
of one or more of the Exclusive Products, and (ii) sold at a price
less than the price of a corresponding amount of OVP as set forth
herein, then Flex shall promptly elect to (a) reduce the price and
performance of OVP sold to SICPA hereunder to a price and performance
that is equivalent to the corresponding price and performance of
substitute OVP available in the market; (b) modify the provisions of
Sections 2(a), 2(b)(i) and 2(b)(ii) of this Agreement by deleting the
word "exclusively" and replacing it with "non-exclusively" in such
sections; or (c) terminate this Agreement.
14. Liquidated Damages for Cancellation or Breach. SICPA
acknowledges: (i) that the price specified for the sale of OVP in
Section 3 above is based on the commitment of SICPA to purchase the
entire minimum quantity specified hereunder; (ii) that Flex has
advised SICPA that the price specified is substantially below the
price that Flex would normally charge for the OVP and is being
specially allowed by Flex as a concession to help SICPA develop the
market for its inks using OVP; and (iii) that Flex has further advised
SICPA that Flex's binding itself to SICPA on an exclusive basis for
the Exclusive Products and the Fields during the Term will cause Flex
to forego the opportunity to pursue other business opportunities for
the commercial exploitation of OVP manufactured by it. The parties
agree that if SICPA were to breach its covenant to purchase the
minimum quantity of OVP during the Term the resulting damages would be
impracticable or extremely difficult to determine, because of Flex's
inability to establish with certainty the magnitude and extent of the
opportunities lost due to its exclusive commitment to the SICPA
Parties hereunder. Because of this difficulty the parties agree that,
in the event of the termination of this Agreement because of such
breach or in the event SICPA cancels this Agreement before the Term
expires or fails to purchase the minimum amount of OVP required to be
purchased during any of the five year periods running from 1995
through 1999, 2000 through 2004 or 2005 through 2009, SICPA shall pay
damages to Flex as follows:
The "OVP Shortfall" for the five-year period shall be calculated by
subtracting the amount of OVP purchased during the five-year period
from the sum of the minimum purchase requirements for each of the five
years during the five-year period. The damages shall then be
calculated from the following table:
OVP Shortfall Damages
Up to 2000 kg US$100/kg x
OVP Shortfall
2001 kg to 4000 kg US$200,000 +
US$200/kg x (OVP Shortfall - 2000 kg)
4001 kg to 6000 kg US$600,000 +
US$500/kg x (OVP Shortfall - 4000 kg)
More than 6000 kg US$1,600,000 +
US$1000/kg x (OVP Shortfall - 6000 kg)
For example, if this Agreement is terminated during the second five-
year period 2000-2004 and total purchases over the second five-year
period were 3,500 kg less than the minimum (so the OVP Shortfall is
3,500 kg), the amount of liquidated damages for the second five-year
period would be US$200,000 plus US$200 x (3,500-2,000) or US$500,000
plus liquidated damages for the third five-year period based upon the
OVP Shortfall for that five-year period. The OVP Shortfall for the
third five-year period 2005-2009 will be based upon the minimum
quantities and prices in effect for the last year of the second five-
year period. Unless the parties otherwise agree pursuant to Section
3, the minimum quantities would be 7,500 kg per year and the OVP
Shortfall for the period would be 37,500 kg.
15. Termination.
15.1 Grounds for Termination. Flex may terminate this
Agreement prior to the stated expiration date if during the
immediately preceding Purchase Period SICPA fails to make the minimum
purchases required for that Purchase Period. Either Flex or SICPA may
terminate this Agreement prior to the stated expiration date upon
(i) material breach by the other party of any of the covenants or
conditions to be performed by such party hereunder or material
inaccuracy of any of the representations and warranties of the other
party set forth herein, or (ii) the filing by or against the other
party of a petition in bankruptcy or seeking reorganization or
arrangement or for the appointment of a trustee, liquidator or
receiver, or (iii) the making by the other party of an assignment for
the benefit of creditors, the consenting by it to the appointment of a
trustee, liquidator or receiver, or the filing by it of a petition
taking advantage of any insolvency law. In each case notice of
termination shall be given in writing to the breaching party of such
breach and of the intention to terminate. Such notice of termination
shall be effective 30 days following the date such notice is given, or
on such later date as may be set forth in such notice, unless the
breach shall be remedied during such 30-day period; provided, however,
that any notice of termination based on the occurrence of any event
described in clauses (ii) or (iii) of this Section 15.1 shall be
effective immediately when such notice is given. Any such termination
shall be in addition to and not in lieu of other rights and remedies
at law or in equity.
15.2 Rights After Termination. Upon termination of this
Agreement for any reason, nothing herein contained shall be construed
to release any party to this Agreement from any obligation matured
prior to the effective date of such termination. All other rights and
obligation provided for in this Agreement shall terminate forthwith
except the obligation of confidentiality set forth in Section 12 and
the indemnity obligation set forth in Section 16.
16. Indemnity. SICPA shall indemnify and hold harmless Flex,
and Flex's officers, directors, employees, shareholders, agents, and
assigns, ("Indemnitees") from and against, on an after-tax basis, any
and all liabilities (including but not limited to liabilities arising
out of the doctrine of strict liability), losses, damages, suits,
judgments and costs (including, without limitation, legal fees and
expenses and costs of investigation) arising out of or relating to any
claims by third parties relating to or arising directly or indirectly
as a result of SICPA's use of OVP or manufacture, use and sale of OVI.
This indemnity shall not apply to any claim against an Indemnitee
arising from the gross negligence or willfulness misconduct of such
Indemnitee.
17. Notices. All notices hereunder shall be in writing and
shall be deemed to have been given either (i) when received, if
delivered in person or transmitted by tested telex or facsimile, or
(ii) three business days after having been mailed by registered or
certified mail addressed as follows:
To Flex: Flex Products, Inc.
2793 Northpoint Parkway
Santa Rosa, California
95407-7350
Attn: Michael Sullivan
FAX: (707) 525-7725
To SICPA: SICPA HOLDING S.A.
2 rue de la Paix
P.O. Box 3930
CH - 1002 Lausanne,
Suisse
Attn: Maurice A. Amon
FAX: 41-21-312-6895
or to such changed address as such party may have fixed by notice
provided that any notice of change of address shall be deemed to have
been given when received.
18. Relationship of the Parties. This Agreement shall not be
construed to create between Flex and SICPA, or their respective
successors or assigns, the relationship of principal and agent, joint
venturers, co-partners, employer and employee, master and servant or
any other similar relationship, the existence of all of which are
expressly denied by the parties.
19. Binding Nature. This Agreement shall be binding on and
shall inure to the benefit of the parties hereto and their respective
successors and assigns. Neither party may assign its rights under
this Agreement without the prior written consent of the other party.
20. No Waiver. Failure on the part of either Flex on the one
hand or SICPA on the other hand to insist on strict compliance by the
other with any of the provisions of this Agreement shall not be deemed
a waiver of such provision.
21. Integration Clause. This instrument is the entire
agreement among the parties and exclusively determines their rights
and obligations, any prior course of dealing, custom or usage of
trade, or course of performance notwithstanding, and may not be
amended or terminated except by another agreement in writing executed
by the parties.
22. Governing Law. This contract shall be governed by and
interpreted according to California law as it applies to contracts
made and performed entirely within California by California residents.
The United Nations convention on contracts for international sale of
goods shall not apply to this Agreement.
23. Invalidation. If any of the provisions of this Agreement
shall contravene the laws of any country or other jurisdiction, it is
agreed that such invalidity or illegality shall not invalidate the
whole Agreement, but this Agreement shall be construed as if it did
not contain the invalid or illegal provision or provisions insofar as
such construction does not materially affect the substance of this
Agreement, and the rights and obligations of the parties hereto shall
be construed and enforced accordingly. In the event, however, that
such invalidity or illegality shall result in a substantial alteration
of the relationship between the parties hereto having a material
adverse effect on the interest of either party, then the parties
hereto shall negotiate mutually acceptable alternative provisions as
consistent as possible with the terms of this Agreement and not
conflicting with such laws.
24. Enforcement of Agreement.
24.1 United States District Court. In the event of the
commencement of any action, proceeding or litigation to enforce any
provision of this Agreement or for damages or other remedies for an
alleged breach of any provision of this Agreement ("Action"), the
parties agree that such Action shall be conducted in the United States
District Court for the Northern District of California ("District
Court"). The parties agree that the District Court shall have
personal jurisdiction over the parties and, except as provided below,
shall be the exclusive forum for any Action. The parties hereby waive
their right to a trial by jury and any right they may have to assert
the doctrine of forum non conveniens or to object to venue to the
extent that any such Action is conducted in accordance with this
provision. The parties agree that they each may be served with
service of process in connection with any Action, by mailing such
service of process by registered or certified mail addressed to the
parties at the addresses for notices under this Agreement, as set
forth in Section 17 hereof with a copy to each party's counsel. The
parties agree that they will not object to the method of service
pursuant to this Section, notwithstanding any provisions of United
States or Swiss law or any treaty to which the United States or
Switzerland is a signatory. For purpose of this section, until
changed by notice given in the manner set forth herein, the name and
address of the parties' counsel shall be:
For Flex: Pillsbury Madison & Sutro
P.O. Box 7880
San Francisco, CA 94120
Attention: George P. Haley
For SICPA: Leonard, Ralston, Stanton & Danks
1000 Thomas Jefferson St. NW, Suite 609
Washington, DC 20007
Attention: Jerris Leonard
24.2 Reference Proceeding if District Court Lacks Subject
Matter Jurisdiction. In the event that the District Court lacks
subject matter jurisdiction for any Action, then said Action shall be
conducted in the Superior Court of the State of California for the
City and County of San Francisco ("Superior Court") by a reference
pursuant to the provisions of California Code of Civil Procedure
Sections 638 and 641 through 645.1, inclusive, according to the
following procedures:
24.2.1 The parties shall agree upon a single referee
("Referee") who shall then try all issues, whether of fact or
law, and report a statement of decision thereon to the Superior
Court. If the parties are unable to agree upon the Referee
within 10 days of a written request to do so by either party,
then either party may thereafter seek to have the Referee
appointed pursuant to California Code of Civil Procedure
Section 638;
24.2.2 The parties shall promptly and diligently cooperate
with one another and the Referee, and shall perform such acts as
may be necessary to obtain a prompt and expeditious resolution
of the dispute or controversy in accordance with the terms
hereof;
24.2.3 The cost of such proceeding shall initially be
borne equally by the parties. However, the prevailing party in
such proceeding shall be entitled, in addition to all other
costs, to recover its contribution for the costs of the
reference.
24.2.3 The provisions of Section 21.1 hereof, concerning
personal jurisdiction, venue and service of process are
applicable to any Action which is conducted under this Section
21.2.
24.3 SICPA Consents to and Waives Objections to Enforcement of
Judgment in Switzerland. SICPA consents to, and waives all objections
to, the enforcement in Switzerland of any judgment in any Action
entered in favor of Flex.
25. Headings. The headings of the various Sections and
Paragraphs of this Agreement are for convenience of reference only and
shall not modify, define or limit any of the terms or provisions
hereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed, and intends this Agreement to be
effective, as of the date first set forth above.
FLEX PRODUCTS, INC., a Delaware corporation
By _______________________________
SICPA HOLDING S.A., a Swiss corporation
By _______________________________
Exhibit A - License and Supply Agreement
OVP SPECIFICATIONS
AND
EXCLUSIVE PRODUCTS
Exhibit B - License and Supply Agreement
EMPLOYMENT AND EARNINGS INDEX
Exhibit C - License and Supply Agreement
FLEX PRODUCTS, INC.
TERMS AND CONDITIONS OF SALE
Exhibit D - License and Supply Agreement
FIELDS
a. Currency, postage stamps, government stamps, excise stamps,
banderoles, travelers' checks and other special checks (such as
cashier's checks and specified value checks), banknotes, currency,
passports, visas, lottery tickets, credit cards, identification cards,
and stocks and bonds.
b. Intaglio inks.
c. Inks, including silkscreen inks, exhibiting a color shift
set forth in specifications of Exhibit A to this Agreement.
Exhibit E - License and Supply Agreement
ASSURANCES RE SUPPLY OF OVP
1. New Production Machine. The parties acknowledge that an
assured supply of OVP is a matter of concern to customers utilizing
OVIO. In order to increase its capability for the production of OVP,
and to provide a greater assurance of uninterrupted supply, Flex
intends to purchase and install a new production machine after Flex
receives all necessary approvals from its affiliate, ICI plc, and
Flex's Board of Directors ("New Production Machine"). The parties
agree that they will endeavor to work out a mutually acceptable plan
for creating and maintaining an inventory reserve for the purpose of
providing reasonable assurances that sufficient quantities of OVP will
be available to satisfy SICPA's requirements to protect against
contingencies, such as equipment breakdowns or other casualty losses.
2. OVP License.
2.1 OVP License - OCLI. In the event that during the term
hereof, Flex decides to (a) cease to do business; (b) cease its own
production of OVP, other than for Force Majeure Conditions; or (c)
sell or transfer one or more of the Patents, then it shall so notify
SICPA (the "OVP License Notification Date"), and Flex shall promptly
thereafter offer to grant to Optical Coating Laboratory, Inc., a
Delaware corporation ("OCLI") (1) an exclusive license to use Flex's
patents and related technology required for the manufacture and sale
of OVP to SICPA (the "OVP License"), and (ii) an assignment of Flex's
rights and obligations under this Agreement (the "OVP License
Assignment"). OCLI shall have 30 days from the date such offer is
made to decide whether to accept or reject the offer of the OVP
License and the OVP License Assignment. If OCLI shall decide to
accept such offer, then it shall (x) so notify both Flex and SICPA in
writing within said 30-day period, and (y) assume all of Flex's
obligations under this Agreement accruing thereafter, subject,
however, to the following conditions:
(xx) OCLI shall have no liability or obligation with
respect to this Agreement for matters, transactions or claims
arising out of or accruing from any act, omission, event or
transaction which occurred before the date of said assumption
(including without limitation any warranty claims relating to OVP
manufactured or delivered by Flex); and
(yy) OCLI shall use its best effort attempts to commence
production of OVP within 90 days after accepting the offer of the
OVP License and the OVP License Assignment so as to minimize any
delay or interruption to the production and delivery of OVP.
Flex shall grant OCLI the necessary easements and other property
rights to use any manufacturing equipment and other technology
necessary for the production of OVP and OCLI shall pay Flex
reasonable fees for the use of the equipment and technology and
for any easement or other property rights.
SICPA hereby consents to the assignment and assumption of Flex's
obligations under this Agreement on the basis described above, and
agrees that OCLI shall be allowed the time necessary to accomplish the
activities described in Clause (yy) above without liability for
ensuing delays in production or delivery of OVP attributable thereto.
2.2 OVP License -- SICPA or its Third Party, Designee. If OCLI
shall fail to accept Flex's offer and to assume Flex's obligations
hereunder, as described and subject to the conditions set forth in
Section 2.1 of this Exhibit E, then SICPA shall have the right to
require that the OVP License be offered to SICPA or to a third party
designated by SICPA.
2.3 Terms of OVP License. The OVP License (whether granted to
OCLI, SICPA or SICPA's third party designee) shall be granted on the
terms and conditions set forth in Exhibit F attached hereto.
2.4 Equipment and Technology Transfer. In connection with the
grant of the OVP License to SICPA or its third party designee, Flex
shall also: (i) offer to sell to the designated licensee any
equipment then being utilized by Flex for the production of OVP
hereunder at its then current fair market value as determined by its
replacement cost and offer an easement or other interest at fair
market value for use of such equipment at Flex's premises (in each
case, such value or cost to be determined by an independent appraisal
if the parties shall be unable to agree thereon); and (ii) offer to
provide to the designated licensee at Flex's facilities such
engineering and other technical assistance as may be reasonably
necessary to enable such licensee to resume the production of OVP (but
not to exceed one hundred (100) man/woman hours), at rates equal to
those charged for comparable professional expertise within the
industry and with all other out-of-pocket costs associated therewith
to be borne by such licensee.
2.5 Release of Flex. Following the grant of the OVP License
(whether to OCLI, SICPA or SICPA's third party designee), Flex shall
be deemed released from any further obligations under this Agreement
which arise out of or accrue from any act, omission, event or
transaction which occurred after the OVP License Notification Date.
2.6 Force Majeure Conditions. Nothing in this Exhibit E is
intended to obligate Flex either to offer or to grant the OVP License
where its inability to produce OVP is caused by Force Majeure
Conditions.
Exhibit F - License and Supply Agreement
TERMS AND CONDITIONS OF OVP MANUFACTURING LICENSE
GRANTED UNDER EXHIBIT E
The OVP License to be granted pursuant to the foregoing Agreement
shall contain the following terms and conditions:
1. Quarterly payments of earned royalties of 5% based on
all sales or uses of OVP by the licensee (or, in the event SICPA
or an affiliate is the licensee, then the presumed fair value of
the OVP if SICPA were to purchase it from a third party in an
arms-length transaction);
2. Full audit rights of the licensee by Flex (limited,
however, to sales of OVP by licensee, its sublicensee and
assignees);
3. No sublicenses or assignments except to "SICPA
Companies" as defined in Section 1 of the Agreement;
4. Full protection of Flex's confidential and/or
proprietary information;
5. License term not to exceed 15 years;
6. Limitations on the scope of the license exclusively to
those applications described in clauses 1. through 3. in the
definition of the Fields.
7. Royalties denominated and payable in U.S. currency;
8. No warranty of infringement;
9. Licensee to provide detailed quarterly financial reports
covering OVP sales and royalty obligations;
10. Licensee obligation to grant back innovations of
licensed technology to Flex; and
11. No territorial restrictions.
Exhibit G - License and Supply Agreement
KNOWHOW
General areas of Knowhow transferred as of the date of this Agreement:
Confidential information generated and communicated pursuant to the
Joint Venture Agreement dated July 1, 1993, as documented in the
minutes of the Flex Products Inc./SICPA Operations/
Management Committee Meetings.
Exhibit H - License and Supply Agreement
PATENTS
Incorporated by reference to Registrant's Form 8-K
Current Report dated May 23, 1995
Exhibit I - License and Supply Agreement
MEMORANDUM OF ALLIANCE
MEMORANDUM OF ALLIANCE
BETWEEN SICPA S.A. AND FLEX PRODUCTS, INC.
1.0 PURPOSE
This memorandum confirms the intention of the parties to work together
for their mutual benefit by continuing to develop the business for
optically variable ink used as a primary anti-counterfeiting component
in the world's currencies and other value documents. This memorandum
defines the respective roles and describes the organization and
working relationship of the parties. The objective of the alliance is
to create an effective, coordinated approach to satisfying the market.
Flex acknowledges the need to coordinate with SICPA its marketing and
sales activities for products outside the exclusivity field in order
to protect the usefulness and value of OVI(tm) for anti-counterfeiting
applications. SICPA and Flex recognize that their success will depend
upon building a close, cooperative, and cordial relationship.
2.0 ROLES
SICPA and Flex have primary contributions to make in the joint
development of the business for optically variable ink. However, each
is dependent on the other for the success of the business. Both
parties must be willing to freely exchange information and openly
discuss needs in order to fulfill their primary responsibilities.
2.1 FLEX PRODUCTS
The role of Flex is to develop and product pigment, develop new
pigment products (OVP) that will provide competitive advantages,
identify and assess competitive technologies and their
competitive threat, and maintain a high quality of product and on-
time delivery so that SICPA can best serve its customers. Flex
will provide information and prepare SICPA to reassure its
customers regarding the reliability of the OVP supply.
2.2 SICPA
The role of SICPA will be to develop, produce and sell optically
variable ink OVI(tm) systems, be aware and responsive to market
needs and keep both parties aware of competitive threats. SICPA
will continue to develop printing processes compatible with the
use of OVI(tm), maintain good customer relations and price the
product to provide profit opportunities for both SICPA and Flex.
3.0 ORGANIZATION
The parties will manage their activities through an organizational
structure intended to provide coordinated planning and implementation
of their activities. Joint and coordinated programs presume sharing
of information necessary for the success of the joint endeavor. The
organization will be comprised of two committees each with specific
areas of responsibility. These committees will operate within an
overall strategic plan approved by the respective companies and their
Board of Directors. Each committee will publish an agenda preceding
each meeting and will publish minutes as soon as possible following
each meeting.
3.1 STRATEGIC COMMITTEE
The Strategic Committee shall be made up of the following members:
SICPA
Maurice A. Amon, Managing Director, SICPA HOLDING S.A.
Philippe Amon, Managing Director, SICPA HOLDING S.A.
Haim Bretler, Managing Director, SICPA HOLDING S.A.
Jacques Van Droogenbroeck, Managing Director SICPA S.A., Security Ink
Division
FLEX PRODUCTS
Danforth Joslyn, President, FLEX PRODUCTS, INC.
John McCullough, Director, FLEX PRODUCTS, INC.
Jim Alles, Chairman of the Board, FLEX PRODUCTS, INC.
The Strategic Committee will develop the long range strategic plan for
the alliance. It will be responsible to ensure that the alliance
succeeds by providing necessary policies to support the alliance at
all levels with the respective companies. It will define the mission
and responsibilities of the Management Committee. The Strategic
Committee will meet twice a year unless otherwise decided by the
members. When meetings in person are not possible, teleconferences
will be held.
3.2 MANAGEMENT/OPERATIONS COMMITTEE
The Management/Operations Committee will be composed of the following
members from each company:
SICPA
Jacques Van Droogenbroeck, Managing Director, Security Ink Division
Representative from R&D
Representative from Manufacturing
Account Executive*
FLEX PRODUCTS
Danforth Joslyn, President
Marketing Director
Production Manager
R&D Director
Account Executive*
* An Account Executive will be designated by each company. The
responsibility of that person will be to coordinate meetings as
needed, assure complete and prompt response to communications,
promote understanding and communicate status of the business to
his team.
The Management/Operations Committee will carry out the long range plan
established by the Strategic Committee. The Committee will develop
the oeprations plans for the alliance. It will set priorities and
allocate scarce resources to assure compliance with the plan and
ensure success of the alliance. It will be responsible for organizing
ad hoc teams that will be responsible for specific projects, such as
new product development. It will ensure tha tproduction schedules are
met, new product development is undertaken, new products are
introduced on a timely basis, and that cost reduction programs are
implemented and meet their objectives. The Committee is also
responsible to review market needs, identify new product requirements,
assess competitive threats, develop guidelines for ownership of
jointly developed technology and analyze the economics of the
business. This Committee is a working committee and has overall
responsibility for the day-to-day execution of the plans. The
Committee will meet twice each quarter, one in person and once
telephonically. The Committee will submit to the Strategic Committee
quarterly reports within twenty-one days after the quarter ends.
4.0 PROTECTION OF PROPRIETARY INFORMATION
The parties acknowledge that the protection of proprietary information
is essential. Appropriate confidentiality agreements will be entered
into with respect to any proprietary information which either party
elects to disclose to the other.
5.0 NATURE OF THE ALLIANCE
This memorandum is intended to describe the working relationship
between SICPA and Flex for matters outside the scope of the five year
supply agreement to be executed by the parties in April 1993. The
memorandum is not intended to be a legally enforceable agreement.
Lausanne, March 9, 1993
FLEX PRODUCTS, INC.
By /s/DANFORTH JOSLYN
SICPA S.A.
By /s/J. VAN DROOGENBROECK
Exhibit J - License and Supply Agreement
________________________________
JOINT VENTURE AGREEMENT
BETWEEN
FLEX PRODUCTS, INC.
and
SICPA INDUSTRIES OF AMERICA, INC.
FOR RESEARCH AND DEVELOPMENT VENTURE
_________________________________
July 1, 1993
JOINT VENTURE AGREEMENT
THIS JOINT VENTURE AGREEMENT, dated as of July 1, 1993, by and
between Flex Products, Inc., a Delaware corporation ("Flex") and SICPA
Industries of America, Inc., a New Jersey corporation ("SIPCA
Industries"), (collectively, the "Venturers").
W I T N E S S E T H:
WHEREAS, Flex possesses substantial technical and proprietary
technology relating to the design and manufacture of optically
variable pigment ("OVP"); and
WHEREAS, SICPA Industries (which is a subsidiary of SICPA S.A.)
and its affiliates possess substantial technical and proprietary
technology relating to the design and manufacture of optically
variable ink ("OVI");
WHEREAS, Flex and SICPA Industries' parent, SICPA S.A., executed
that certain non-binding Memorandum of Alliance dated March 9, 1993
(the "MOA"), which set forth the basis on which the parties thereto
intend to work together for the further development and marketing of
OVP and OVI; and
WHEREAS, Flex and SICPA Industries now wish to form a Joint
Venture for the purpose of coordinating their respective efforts for
further research and development related to the improvement of their
respective OVP and OVI technologies with the intent of increasing the
commercialization of such products;
NOW, THEREFORE, the parties hereby establish a joint venture to
accomplish the foregoing on the following terms and conditions:
ARTICLE I
FORMATION OF JOINT VENTURE
1.1 FORMATION AND NAME. Flex and SICPA Industries hereby form a
joint venture pursuant to the provisions of the California Uniform
Partnership Act and upon the terms and conditions set forth in this
Agreement (the "Joint Venture"). The Joint Venture shall conduct its
business affairs under the name of "OVI Technology Company."
1.2 TERM. The Joint Venture's term shall continue until
terminated in accordance with Article VII.
1.3 PURPOSES AND POWERS. The purposes of the Joint Venture
shall be to coordinate the efforts of the Venturers to develop further
innovations and improvements of OVP and OVI for use on value-documents
and to perform other activities and to take other action incident
thereto. The Joint Venture shall not engage in any business or
activity outside the scope of its purposes without the consent of each
Venturer.
1.4 PRINCIPAL OFFICE. The principal places of business of the
Joint Venture shall be 2793 Northpoint Parkway, Santa Rosa, California
95407-7350, and 8000 Research Way, Springfield, Virginia 22153.
1.5 FILINGS. Contemporaneously with the execution and delivery
of this Agreement, the Venturers shall execute and acknowledge such
instruments as may be necessary under the laws of the State of
California in connection with the formation of the Joint Venture and
the commencement of its business.
1.6 REPRESENTATIONS AND WARRANTIES OF FLEX. Flex represents and
warrants to SICPA Industries that:
(a) Flex is a corporation duly organized and in good
standing under the laws of the State of Delaware, and has the
corporate power and authority to enter into and perform its
obligations under this Agreement.
(b) This Agreement has been duly authorized by all
requisite corporate action on the part of Flex.
1.7 REPRESENTATIONS AND WARRANTIES OF SICPA INDUSTRIES. SICPA
Industries represents and warrants to Flex that:
(a) SICPA Industries is a corporation duly organized and in
good standing under the laws of New Jersey, and has the corporate
power and authority to enter into and perform its obligations under
this Agreement.
(b) This Agreement has been authorized by all requisite
action on the part of SICPA Industries.
ARTICLE II
JOINT DEVELOPMENT EFFORTS
2.1 AREAS OF COOPERATION. SICPA Industries and Flex agree to
work together on a mutually exclusive basis for the term of this
Agreement for the purpose of coordinating their respective efforts to
improve and enhance the existing technologies for the utilization of
Flex's OVP and SICPA Industries' OVI for anti-counterfeiting
applications on value-documents. SICPA Industries and Flex also agree
to cooperate in good faith for the purpose of (i) coordinating the
development of new products to be used for anti-counterfeiting
purposes for value-documents, (ii) evaluating competitive technologies
and products, and (iii) evaluating market trends. To facilitate this
working arrangement, SICPA Industries and Flex shall form a team to be
known as the Management/Operations Committee (the "Committee"). The
initial meeting of the Committee will occur at a mutually convenient
time within no less than 90 days after the execution of this Agreement
by the parties. Thereafter, the Committee shall meet twice each
quarter, once in person and once telephonically.
2.2 DESIGNATION OF PROJECTS. Specific tasks to be undertaken by
SICPA Industries and Flex shall be determined by the unanimous vote of
the Committee. Neither SICPA Industries on the one hand nor Flex on
the other hand shall have any obligation to perform any tasks or
projects except as authorized and directed by a unanimous vote of the
Committee.
2.3 DESIGNATION OF COMMITTEE MEMBERS. The Committee will be
composed of the following members from each party:
SICPA
Industries: Jacques Van Droogenbroeck,
Managing Director,Security Ink Division
Representative from R&D
Representative from Manufacturing
Account Executive*
FLEX: Danforth Joslyn, President
Marketing Director
Production Manager
R&D Director
Account Executive*
* An Account Executive will be designated by each
company. The responsibility of that person will be to
coordinate meetings as needed, assure complete and prompt
response to communications, promote understanding, and
communicate status of the business to his/her team.
Either Venturer shall have the right to object to any individual
designated by the other Venturer, in which event the Venturers shall
meet and confer for the purpose of agreeing on an individual
acceptable to both Venturers.
2.4 EXPENSES. Unless otherwise agreed in writing, each of the
Venturers shall bear its own expenses relating to its participation on
the Committee and the performance of any tasks or projects carried out
by such Venturer pursuant to the direction of the Committee.
2.5 EXCHANGE OF INFORMATION. Each Venturer shall disclose to
the other the results of tasks or projects undertaken pursuant to the
unanimous direction of the Committee and the Venturers will meet and
confer, or otherwise communicate, for the purpose of exchanging
information concerning the status of their respective undertakings.
Each Venturer will maintain all technical information received from
the other, which such Venturer has designated in writing as
confidential information, in strict confidence and subject to the
obligations of confidentiality and nondisclosure as set out in Article
III below, and subject to the further restriction that the recipient
of such information shall not use the information or disclose it to
any person or organization other than the employees of the recipient
whose job performance reasonably require a knowledge of such
information.
2.6. OWNERSHIP OF DISCOVERIES. Each Venturer shall retain the
ownership of any inventions, trade secrets and/or proprietary know-how
developed by it during the term hereof, and any patents based on such
inventions, trade secrets or know-how, whether or not pursuant to a
task or project undertaken at the direction of the Committee, and the
other Venturer shall not have any license or right to use any such
discoveries except as may be expressly granted pursuant to a written
agreement duly signed by both Venturers. Only such technologies as
the Venturers agree in writing to develop jointly shall be excluded
from the above provision, and all other technology developed during
the joint undertaking contemplated by this Agreement shall be
conclusively presumed to be the property of the Venturer who developed
the technology. To the extent that specific technology is, by such
written agreement, jointly developed, any resulting inventions, trade
secrets and/or proprietary know-how shall be owned by the Joint
Venture, and each of the Venturers shall be entitled to use any such
inventions, trade secrets and/or proprietary know-how on a royalty-
free basis, providing, however, that neither of the Venturers nor the
Joint Venture itself shall be entitled to grant licenses to third
Venturers to use such inventions, trade secrets and/or proprietary
know-how without the prior written consent of both Venturers. Any
patentable technology developed jointly pursuant to a prior written
agreement between the Venturers, as aforesaid, shall be owned by the
Joint Venture, and any decisions to file patent applications or to
grant licenses thereunder shall require the unanimous consent of the
members of the Committee.
2.7 NO DISCLOSURE OF BACKGROUND TECHNOLOGY REQUIRED. Nothing in
this Agreement shall be construed to create any obligation on the part
of either Venturer to disclose to the other Venturer any background
technology or other technology owned by either Venturer prior to the
formation of this Joint Venture, nor shall this Agreement be construed
to require either Venturer to disclose to the other Venturer any
technology developed by such Venturer, whether or not pursuant to a
task or project undertaken at the direction of the Committee. It is
the contemplation and intention of the Venturers that each of them
will remain free to continue to conduct research and development work
on OVP and OVI independent of their activities and involvement under
the Joint Venture contemplated pursuant to this Agreement.
2.8 NO PRODUCTION CONTEMPLATED. The Venturers contemplate that
the Joint Venture will engage exclusively in research and development
activities, and will not undertake any production of OVP or OVI.
ARTICLE III
CONFIDENTIALITY AND NONDISCLOSURE
All technical data and all information which concerns the
business operation of either Flex on the one hand or SICPA Industries
on the other hand disclosed in the course of the activities of the
Joint Venture, which data or information, at the time of its
communication to the other Venturer, was not rightfully in the other
Venturer's possession or in the public domain ("Confidential Matter"),
shall be treated as confidential and shall not be disclosed by the
recipient to any third party. The recipient shall use the same care
to keep Confidential Matter confidential as it uses to preserve the
confidentiality of its own confidential information having a high
degree of competitive significance and shall take appropriate measures
to insure that its employees are bound to the same degree that it is
bound under this agreement. This obligation of confidentiality does
not apply to any Confidential Matter which (i) was in the recipient's
possession prior to the effective date of its disclosure, (ii) was in
the public domain prior to the effective date of its disclosure or
thereafter entered the public domain through no fault of the recipient
or the recipient's employees, or (iii) is lawfully obtained by the
recipient on a non-confidential basis from a third party having an
unrestricted legal right to disclose the information to others.
Notwithstanding the foregoing, a recipient may disclose Confidential
Matter if and to the extent that a judicial or governmental authority
having jurisdiction over the recipient orders or requires disclosure,
provided that the recipient, before making any such disclosure,
advises the disclosing party of the disclosure required and cooperates
with the disclosing party in all legitimate efforts to avoid or limit
disclosure at the disclosing party's expense. SICPA Industries agrees
that its obligations under this Article III shall extend to the SICPA
Companies as well as to SICPA Industries, and any breach or violation
of this Section by any SICPA Company shall be deemed to be a breach by
SICPA Industries. (For purposes of this Agreement, the term "SICPA
Companies" shall mean any person or entity controlled by, controlling,
or under common control with SICPA Industries. The term "control" of
any person or entity means possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies
of such person or entity, whether through the ownership of voting
securities or by contract or otherwise.)
ARTICLE IV
CONTRIBUTIONS TO CAPITAL
Neither of the Venturers shall be obligated to make any
contributions of capital to the Joint Venture, it being contemplated
that each Venturer shall bear its own expenses relating to its
participation on the Committee, and the performance of any tasks or
projects carried out by such Venturer pursuant to the direction of the
Committee.
ARTICLE V
MANAGEMENT AND OPERATION
The Committee shall manage all affairs and business of the Joint
Venture to the best advantage of the Joint Venture. The Committee
shall have all of the powers, rights and authority necessary to
conduct such business and affairs, subject, however, to the
requirement that any decision of the Committee shall require the
unanimous consent of all members of the Committee.
ARTICLE VI
TRANSFERS OF INTERESTS IN THE JOINT VENTURE
Neither of the Venturers shall transfer its interest (or any
portion thereof) in the Joint Venture without the consent of the other
Venturer, and any transfer in violation of this Article will
automatically cause the dissolution of the Joint Venture.
ARTICLE VII
TERMINATION OF THE JOINT VENTURE
The Joint Venture shall dissolve and its affairs shall be wound
up upon the first to occur of the following:
(a) The sale or other disposition of all or
substantially all of the assets of the Joint Venture; or
(b) The delivery to the other Venturer of a written demand
from either Venturer that the Joint Venture be dissolved, in either of
which events the Joint Venture's affairs shall be wound-up and the
Joint Venture terminated as soon as practicable thereafter in
accordance with applicable California law.
ARTICLE VIII
MISCELLANEOUS
8.1 RESTRICTION ON HIRING EMPLOYEES. For a period of two years
following the termination of employment of an employee of either
Venturer, the other Venturer shall be prohibited from employing such
employee without the prior written consent of the other Venturer;
provided, however, that this restriction shall terminate two years
after the termination of the Joint Venture.
8.2 INDEMNIFICATION. Each Venturer hereby indemnifies and
agrees to hold harmless the other Venturer from and against all costs,
expenses, liabilities, damages, claims, demands, actions, suits and
proceedings which shall arise by virtue of any representation or
warranty of the indemnifying Venturer in this Agreement which was
incorrect in any material respect as of the date made, or which shall
arise by virtue of any act of a Venturer which was not authorized by
the Committee.
8.3 GOVERNING LAW. This Agreement shall be construed in
accordance with and governed by the laws of the State of California.
8.4 ARBITRATION. If the Venturers hereto are unable to resolve
by mutual agreement any dispute or controversy between them concerning
this Agreement, the Venturers agree that the dispute or controversy
shall be finally settled by mandatory, binding arbitration, in
accordance with the rules and procedures of the American Arbitration
Association applicable to commercial transactions. Costs of
arbitration shall be borne by the Venturers in accordance with the
decision of the arbitrators. Judgment upon the award rendered shall
be entered into any court having competent jurisdiction thereof, or
application may be made to such court for a judicial acceptance of the
award and an order of enforcement as the case may be. The arbitration
proceedings shall be conducted at a reasonable location selected by
the Venturer that is the defendant in such action.
8.5 ATTORNEYS FEES. In case suit is brought or arbitration
proceedings commenced by a Venturer because of the breach of any term,
covenant or condition contained in this Agreement, the prevailing
Venturer shall be entitled to recover against the other Venturer the
full amount of its costs, including expert witness fees and reasonable
attorneys fees. If neither Venturer prevails entirely, such fees and
expenses shall be prorated based upon the relative success of each
Venturer to the relief being sought.
8.6 NOTICES. All notices, approvals and other communications
under this Agreement shall be in writing and shall be given to such
Venturer, addressed to it, at its address or telecopy number set forth
below or such other address or telecopy number as such Venturer may in
the future specify for such purpose by notice to the other Venturer.
If To Flex: Flex Products, Inc.
2793 Northpoint Parkway
Santa Rosa, California 95407-7350
Attn: Danforth Joslyn, Chief
Executive Officer
Fax: 707/525-7725
With A Copy To: Collette & Erickson
555 California Street, Suite 4350
San Francisco, California 94104-1791
Attn: John M. Collette, Esq.
Fax: 415/788-6929
If To SICPA
Industries: SICPA Industries of America, Inc.
111 East 61st Street
New York, New York 10021
Attn: Maurice Amon
Fax: 212/308-9167
With A Copy To: David T. Ralston, Esq.
SICPA Industries of America, Inc.
1000 Thomas Jefferson Street, N.W.
Suite 609, Georgetown
Washington, D.C. 20007
Fax: 202/298-7810
Either Venturer may from time to time specify as its address or
telecopy number for purposes of this Agreement any other address or
telecopy number upon the giving of ten (10) days notice thereof to the
other Venturer.
8.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original.
8.8 INTERPRETATION. The headings to the various subdivisions of
this Agreement are for convenience of reference only and shall not
define or limit any of the terms or provisions hereof. The language
in all parts of this Agreement will in all cases be construed as a
whole and in accordance with its fair meaning and not restricted for
or against either party.
8.9 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the Venturers and their respective
permitted successors and assigns.
8.10 BOARD APPROVAL REQUIRED. Anything herein to the contrary
notwithstanding, this Agreement shall not become effective unless and
until it is approved by the Boards of Directors of both Flex and SICPA
Industries, and each party has notified the other in writing of such
approval.
IN WITNESS WHEREOF, the Venturers have executed this Agreement to
be effective as of the date first above written.
FLEX PRODUCTS, INC.
By ___________________________
SICPA INDUSTRIES OF AMERICA, INC.
By ___________________________
EXHIBIT G - FACILITIES LEASE AGREEMENT
Incorporated by reference to Exhibit (10)(p)
of Registrant's Form 10-K for the fiscal year
ended October 31, 1988.
EXHIBIT H - ASSIGNMENT OF INTELLECTUAL PROPERTY RIGHTS
Incorporated by reference to Exhibit (10)(p)
of Registrant's Form 10-K for the fiscal year
ended October 31, 1988.
EXHIBIT I - EXCLUSIVE LICENSE AGREEMENT
Incorporated by reference to Exhibit (10)(p)
of Registrant's Form 10-K for the fiscal year
ended October 31, 1988.
EXHIBIT J - RESEARCH, DEVELOPMENT AND ENGINEERING AGREEMENT
Incorporated by reference to Exhibit (10)(p)
of Registrant's Form 10-K for the fiscal year
ended October 31, 1988.
EXHIBIT K - SUPPORT AND ADMINISTRATIVE SERVICES AGREEMENT
Incorporated by reference to Exhibit (10)(p)
of Registrant's Form 10-K for the fiscal year
ended October 31, 1988.
EXHIBIT L - ASSIGNMENT AND ASSUMPTION AGREEMENT
Incorporated by reference to Exhibit (10)(p)
of Registrant's Form 10-K for the fiscal year
ended October 31, 1988.
ADDENDUM NO. 1 TO JOINT ACQUISITION AGREEMENT
DATED MAY 1, 1995
BY AND BETWEEN OCLI AND SICPA
ADDENDUM NO. 1
TO
OCLI/SICPA AGREEMENT
THIS ADDENDUM NO. 1 ("Addendum"), is made and entered into as of
May 1, 1995, by and between OPTICAL COATING LABORATORY, INC., a
Delaware corporation ("OCLI"), and SICPA HOLDING S.A., a Swiss
corporation ("SICPA").
R E C I T A L S
A. The parties entered into an Agreement, dated December 13,
1994 (the "Agreement"), wherein they set forth and memorialized
certain terms to govern a joint undertaking by them to purchase the
shares of capital stock of FLEX PRODUCTS, INC., a Delaware
corporation ("FLEX") owned by ICI AMERICAS INC. ("ICIA") and a
promissory note issued by FLEX to and owned by ICI AMERICAN HOLDINGS
INC. ("ICIAH").
B. Concurrently with the execution of this Addendum, the
parties are executing a Stock and Note Purchase Agreement (the
"Purchase Agreement") together with FLEX ICIA AND ICIAH.
C. The parties wish to memorialize in this Addendum certain
additional covenants and undertakings of one or the other, or both, of
the parties, as a supplement and amendment to the Agreement, with the
intent that the terms of this Addendum shall be integrated with and
complement the Agreement, as and to the extent set forth herein.
A D D E N D U M
NOW, THEREFORE, in consideration of the premises and the
respective covenants and undertakings of the parties contained herein,
the parties hereby agree as follows:
1. Definitions; References to Certain Agreement Terms.
a. Definitions. All capitalized terms used herein shall
have the same meanings as attributed to them in the Purchase Agreement
and the Agreement, unless expressly defined herein. In case of any
conflict, the definitions in the Purchase Agreement shall control. In
addition, a "Paragraph 4(o) Indemnifiable Event" shall mean an event
set forth in paragraph 4(o) of the Disclosure Schedule to the extent
such event occurred prior to Closing and arose from actions or
omissions in violation of Applicable Law taken by FLEX. The foregoing
sentence notwithstanding, a Paragraph 4(o) Indemnifiable Event shall
not include (A) any event resulting directly or indirectly from action
taken by ICIA or ICIAH prior to Closing or by FLEX or SICPA after
Closing or (B) any event the existence or occurrence of which would
constitute a breach of a representation or warranty under the Purchase
Agreement.
b. Extension of Deadline for Closing. The parties agree
that references to March 31, 1995 in Sections 2.a.vi and 11 of the
Agreement shall be amended to refer instead to May 31, 1995.
2. Governance of FLEX after Closing. Following the Closing,
OCLI and SICPA agree that the following additional terms shall apply
to the governance of FLEX:
a. Reconstitution of FLEX Board. The Board of Directors of
FLEX shall be reconstituted, effective upon the Closing, such that
those then in office shall be replaced by the persons listed below:
3. Governance of Flex after Closing. Following the Closing,
OCLI and SICPA agree that the following shall apply to the governance
of FLEX:
a. Reconstitution of FLEX Board. The Board of Directors
of FLEX shall be reconstituted, effective upon the Closing, such that
those then in office shall be replaced by the persons listed on
Exhibit C, three of whom have been designated by OCLI and two of whom
have been designated by SICPA and the Certificate of Incorporation or
Certificate of Designations of FLEX shall be amended if necessary to
provide that the stockholders of FLEX shall be entitled to cumulative
voting in connection with the election or removal of the Directors.
As representatives of OCLI:
HERBERT M. DWIGHT
JOHN McCULLOUGH
JAMES W. SEESER
As representatives of SICPA:
MAURICE A. AMON
EDUARDO BERUFF
b. Joint Technical Committee. The Joint Technical
Committee to be formed shall consist of the following representatives
from FLEX, OCLI and SICPA.
As representatives of OCLI:
JAMES W. SEESER
BRYANT P. HICHWA
LEONARD P. MOTT
As representatives of SICPA:
ANTON BLEIKOLM
ARTHUR M. LIEBERMAN
As representatives of FLEX:
MICHAEL SULLIVAN
PATRICK HIGGINS
ROGER PHILLIPS
c. Approval of Minutes. All proposed minutes of
deliberations of, and resolutions adopted and actions taken by, the
Board of Directors and/or by the stockholders of FLEX (collectively,
the "Minutes") shall be deemed approved so as to serve as an official
record of such deliberations and memorialization and expression of
such resolutions and actions only after draft copies of the Minutes
have been delivered to all of the Directors and the Directors have
been given the opportunity to provide comments on them.
d. Legal Representation. Except when the Board of
Directors of FLEX, by a majority of at least four Board members,
otherwise directs, FLEX shall be represented for the purpose of legal
advice and representation in connection with any of the following
matters solely by co-counsel consisting of one or more attorneys of a
firm selected by OCLI and one or more attorneys of a firm selected by
SICPA, with each of OCLI and SICPA to bear the entire costs of the
firm selected by it:
i. Any merger, consolidation or other corporate
reorganization of FLEX.
ii. The sale of all or substantially all of the assets
or business of FLEX or any of its operating divisions.
iii. The employment agreement and any incentive stock
option or bonus arrangements (other than under group plans adopted by
the Board of Directors) for any executive officer of FLEX, and the
engagement agreement and any such stock option or bonus arrangement
for any consultant of FLEX whose annual compensation from it is
reasonably expected to exceed $100,000.
iv. The licensing or sale of any of FLEX's technology,
other than to OCLI or SICPA, or the licensing or purchase of any
technology of any third-parties, other than from OCLI or SICPA, where
the projected consideration payable by the licensee or acquirer during
the first 36 months is expected to exceed $500,000.
v. Any joint ventures or shared R&D Projects where
the projected budget for the first 36 months of the joint venture or
project is expected to exceed $500,000.
vi. The negotiation and execution of any sale of
securities of FLEX to any third party purchaser or purchaser, where
the aggregate consideration payable for such securities in any
offering shall exceed $500,000 or where the securities to be sold (or
any securities into which such securities may be converted) represent
in excess of 20% of the issued and outstanding shares of voting stock
of FLEX, calculated on a fully-diluted, fully-converted basis.
3. Covenant Not To Compete.
a. Covenant. OCLI and SICPA each agrees that following the
disposition of its shares of the capital stock of FLEX, it shall not
compete with FLEX in the manufacture or sale of products made by
depositing one or more layers of materials onto flexible substrates by
Roll-to-Roll Coating or to manufacture or sell any product being
manufactured by FLEX by Roll-to-Roll Coating at the time of the
party's sale of its capital stock of FLEX.
b. Geographical Application of Covenant. The covenant not
to compete set forth above shall be applicable worldwide, reflective
of the worldwide market for the products manufactured and sold by
FLEX.
c. Duration. The covenant not to compete set forth above
shall apply only if, at the time when the party disposes of its shares
of the capital stock of FLEX, the other party remains as a holder of
no less than 50% of the issued and outstanding shares of FLEX voting
capital stock. If the foregoing condition is satisfied, the covenant
not to compete shall thereafter remain in effect for a period of three
years.
d. Definition. As used herein, "Roll-to-Roll Coating"
shall mean the serial steps of (i) the unwinding of a flexible
substrate from a first roll, (ii) the deposition of one or more layers
of materials onto the flexible substrate and (iii) the winding of the
substrate onto a second roll, provided that "Roll-to-Roll Coating"
shall not include the deposition of more than one layer of material to
an area of the substrate during any period that the substrate is
motionless.
e. Breadth of Restraint. The foregoing covenant is
intended to require that the applicable party refrain from, and each
party subject to the covenant not to compete hereby agrees to refrain
from, any activity described in Paragraph 3.a above individually, or
in conjunction with others, directly or indirectly, whether as
principal, partner, joint venturer, stockholder of an affiliate or
otherwise.
f. Severability. The parties intend that the covenants
and undertakings contained in this Paragraph 3 shall be construed as
distinct covenants and agreements covering competition in each of the
separate jurisdictions in which the party subject to the covenant not
to compete operates or may operate in the future. To the extent that
this covenant as set forth in this Paragraph 3 shall be deemed illegal
or unenforceable in any one or more such jurisdictions, it shall
nevertheless not be affected with respect to each other such
jurisdiction.
g. Enforceability. Each party acknowledges and agrees
that any remedy at law which may be available to the other party for
any breach of this covenant by the party subject to the covenant not
to compete will be inadequate to protect the other party's interest
hereunder and that the other party (and FLEX, as a third-party
beneficiary) shall be entitled to injunctive relief in the event of
such breach, in addition to any other appropriate relief and remedy.
h. Reasonableness of Restrictions. Each party
acknowledges and agrees that the restrictions set forth in this
Paragraph 3, including without limitation the restrictions relating to
duration, geographic area and breadth of application, are reasonable
in scope.
4. Amended Certificate of Incorporation. OCLI and SICPA agree
that promptly following the Closing, they shall vote their shares, and
direct their respective representatives on the FLEX Board of Directors
to vote, so as to amend the Certificate of Incorporation of FLEX in
its entirety and replace it with the Amended and Restated Certificate
of Incorporation attached as Exhibit A to this Addendum.
5. Representations, Warranties and Undertakings by OCLI.
a. Representations and Warranties. To induce SICPA to
enter into the Stock and Note Purchase Agreement with ICIA and ICIAH
(the "SPA"), and to purchase a portion of the ICIA Shares and a
portion of the FLEX Note as called for under the SPA, OCLI represents
and warrants to SICPA that as of the date of this Addendum, FLEX is in
default in the payment when and as due of certain research and
development payments from it to OCLI, which breach OCLI shall waive at
the Closing in favor of an obligation on the part of FLEX to make
payment of its research and development payments to OCLI on an as-
expended basis. As of the date of this Addendum, and as of the
Closing under the SPA, FLEX and OCLI are each in full compliance with
each of the agreements referenced in Paragraph 7.a.v of the Agreement,
and all other agreements and contracts between them, and all such
agreements and contracts are valid and binding, and OCLI knows of no
act or failure to act on the part of FLEX or any third parties which
constitutes, or would with the passage of time or the giving of notice
or both constitute, an act of breach or default by FLEX thereunder.
b. Patent Assignments. OCLI agrees, prior to or promptly
following the Closing under the Purchase Agreement and at OCLI's
expense, to execute and cause to be filed with the appropriate
government patent offices (including the U.S. Patent Office and
corresponding foreign offices) all assignments and other forms which
are necessary to record the assignment from it to FLEX of all patents
which it has heretofore conveyed to FLEX and corrective filings where
needed to correct clerical errors and mistaken references in
previously recorded assignments.
6. Environmental Indemnification.
a. Definitions.
i. "Indemnified Parties" shall mean any or all of the
following: (1) SICPA; (2) FLEX; and/or (3) the subsidiaries,
affiliates, officers, Directors, stockholders, agents, attorneys,
employees, heirs, successors and assigns of SICPA and/or FLEX.
ii. "Environmental Laws" shall mean all local, state
and federal environmental laws or regulations relating to operations
or businesses or properties or assets of OCLI (including the assets
and operations of FLEX during the time while FLEX was a division of
OCLI), including all environmental requirements imposed by any law,
rule, regulation or order of any federal, state or local judicial,
regulatory or administrative agency, board or authority (including
laws relating thereto which may be asserted in common law or under
statute and regardless of form including strict liability and
negligence), existing at the date of this Addendum or hereafter
enacted or created, which relate to (1) noise; (2) pollution or
protection of the air, surface water, ground water or land; (3) solid,
gaseous or liquid waste generation, handling, treatment, storage,
disposal or transportation; or (4) manufacturing, processing,
distribution, use, storage, handling or exposure to hazardous or toxic
substances or materials. The Environmental Laws shall include, but
shall not be limited to, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended; the Hazardous
Materials Transportation Act, as amended; the Resource Conservation
and Recovery Act, as amended; the California Health and Safety Code,
as amended; the California Water Code, as amended; California Code of
Regulations Titles 22, 23, and 26; the Toxic Substances Control Act,
15 U.S.C. Sec. 2601 et seq.; and all other federal, state and local
laws regulating hazardous or toxic wastes and materials (collectively,
"Hazardous Materials"), underground tanks and safety in connection
therewith, water quality, air quality or other environmental matters.
b. OCLI's Liability and Indemnity.
i. OCLI shall retain liability for, and shall
indemnify the Indemnified Parties from and against, all fines,
penalties, costs, liabilities, expenses, damages and losses of any
nature whatsoever, including, but not limited to, remedial, removal,
response, abatement, clean-up, investigative and monitoring costs and
any other related costs and expenses, including reasonable attorneys'
and experts' fees (collectively, the "Environmental Liabilities")
arising from or relating to (1) OCLI's violation of any environmental
Law; or (2) the release by OCLI or OCLI's predecessors-in-interest of
any Hazardous Materials into the environment, including, without
limitation, a release of Hazardous Materials, at, under or adjacent to
any real property owned or occupied by OCLI or FLEX.
ii. Without limiting the foregoing, OCLI shall retain
liabilities for, and shall indemnify the Indemnified Parties from and
against, all Environmental Liabilities arising from or relating to the
contamination caused by OCLI or OCLI's predecessors-in-interest of
surface water, ground water or land which is currently the subject of
investigation and inquiry by OCLI pursuant to any clean-up and
abatement or similar order issued by the California Regional Water
Quality Control Board or any government agency with relevant
jurisdiction.
iii. Notwithstanding the foregoing, and except as and
to the extent set forth in the following Paragraph 6.b.iv, OCLI shall
not be so liable to the extent that such violation, act, omission,
occurrence or failure is attributable to FLEX's violation of any
Environmental Law or FLEX's release of Hazardous Materials into the
environment.
iv. Notwithstanding anything to the contrary in
Paragraph 6.b.iii, OCLI shall indemnify SICPA for response costs, less
response costs for which SICPA is entitled to indemnification pursuant
to the Indemnification Agreement between SICPA and ICIA dated May 1,
1995, arising out of a Paragraph 4(o) Indemnifiable Event, if and to
the extent that FLEX is unable to pay or otherwise respond to the
Paragraph 4(o) Indemnifiable Event; provided, however, that OCLI's
obligations under this subparagraph 6.b.iv shall be limited to 40% of
the total of the response costs in respect of the Paragraph 4(o)
Indemnifiable Event. "Response" and "respond" shall have the meanings
given to those terms as set forth in 42 U.S.C. Section 9601(25).
c. Notice and Opportunity to Defend.
i. Upon receiving notice or obtaining information of
an occurrence or event that may give rise to an Environmental
Liability, OCLI or the Indemnified Parties, as the case may be, to the
extent permitted by law and confidentiality agreements, shall promptly
provide written notice thereof to all of the other parties.
ii. If such event involves a legal action or
administrative proceeding, OCLI shall thereafter assume in writing
liability under this indemnity and shall control the defense of such
action or proceeding, at its own expense and with its own
environmental and other experts and its own counsel, who shall be
reasonably satisfactory to the Indemnified Parties. Prior to OCLI's
assuming and controlling such action or proceeding, the Indemnified
Parties shall not take any action in respect of such action or
proceeding unless the Indemnified Parties determine in good faith that
such action is required by emergency conditions.
iii. Where OCLI assumes and controls such action or
proceeding, (1) the Indemnified Parties at their own cost and expense
may participate in the conduct of such action or proceeding, and (2)
OCLI shall promptly inform the Indemnified Parties of all material
developments and events relating to such action or proceeding.
iv. OCLI shall conduct all activities pursuant to this
Paragraph 6.c in a fashion so as to minimize the interruption of, or
interference with, the conduct of the business of FLEX.
v. Prior to commencing or implementing any action to
remedy or mitigate a condition giving rise to any action that may
result in an Environmental Liability for which OCLI may be liable
pursuant to this Paragraph 6., OCLI shall provide written notice to
the Indemnified Parties of the nature and extent of the action
proposed. Within 20 business days after receipt of such notice, the
Indemnified Parties shall notify OCLI of any objection they may have
to the reasonableness of the proposed action to remedy or mitigate the
condition, and the reasons therefor. In the event OCLI is notified of
such an objection, the parties hereto shall negotiate in good faith to
resolve the objection and to develop a mutually agreeable plan for
action.
vi. Notwithstanding any of the foregoing, in the event
that the Indemnified Parties or either of them at any time determines,
in their reasonable business judgment, that such action or proceeding
reasonably may be anticipated to adversely impact the business or
operations of FLEX or an Indemnified Party and retain environmental
and other experts and counsel who shall be reasonably satisfactory to
the other Indemnified Parties and to OCLI, at OCLI's sole expense.
d. Cooperation. With respect to any potential OCLI
liability to third parties or government agencies arising from an
action or proceeding or Environmental Law pursuant to this Paragraph
6, the Indemnified Parties will cooperate with OCLI in any reasonable
manner to satisfy such liability provided that OCLI honors its
indemnification obligations hereunder. Such cooperation shall be at
OCLI's sole expense.
e. Reasonable Access. The parties shall allow necessary,
reasonable and uncompensated access to each other's files, data,
information, property and personnel in order that each party may fully
protect and satisfy its legal interest in connection with any pending
or future action or proceeding or Environmental Law. OCLI shall
deliver to the Indemnified Parties copies of all information,
including without limitation, analytical results, consultants' data
and evaluations and correspondence relating to any Environmental
Liabilities for which OCLI may be liable pursuant to this Paragraph 6.
f. Confidentiality of Information Concerning Environmental
Liabilities. Notwithstanding anything herein to the contrary, each
party to this Addendum will hold and will cause its employees,
consultants and advisors to hold in strict confidence, unless
compelled to disclose such documents or information by judicial or
administrative process or, in the opinion of its counsel, by other
requirements of law, all documents and information concerning the
other parties to this Addendum furnished to it pursuant to the
provisions of this Paragraph 4, and in any such instance where
disclosure appears to be compelled by law, will notify all other
parties so that such other parties may avail themselves of such
measures as may be available for protecting the confidentiality of
such information.
7. Counterparts. This Addendum may be executed in any number
of counterparts, each of which may be executed by one or both of the
parties, each of which shall be enforceable against the party or
parties actually executing such counterparts, and all of which
together shall constitute one instrument.
8. Integration. This Addendum is intended to and shall be
integrated with and into the Agreement, and shall be entitled to the
benefit of all provisions thereof. In the event of any conflict
between the provisions of this Addendum and the Agreement, the
provisions of this Addendum shall prevail. Subject to the terms
hereof, the Agreement is hereby ratified and continued in full force
and effect by the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Addendum as of
the date first set forth above.
SICPA HOLDING S.A. OPTICAL COATING LABORATORY, INC.
By /s/Eduardo Beruff By /s/Herbert M. Dwight, Jr.
EDUARDO BERUFF, HERBERT M. DWIGHT, JR.
Authorized Signatory President
By /s/William E. Horwich
WILLIAM E. HORWICH,
Authorized Signatory
