EXHIBIT 10.11
_________________________________
SECOND AMENDMENT TO
LICENSE AND SUPPLY AGREEMENT
by and between
FLEX PRODUCTS, INC.
and
SICPA HOLDING S.A.
_________________________________
December 22, 1998
SECOND AMENDMENT TO
===================
LICENSE AND SUPPLY AGREEMENT
============================
SECOND AMENDMENT TO AGREEMENT dated December 22, 1998,
by and between Flex Products, Inc., a Delaware corporation
("Flex") and SICPA HOLDING S.A., a Swiss registered company
("SICPA").
W I T N E S S E T H:
WHEREAS, Flex and SICPA are currently parties to a
License and Supply Agreement dated as of December 2, 1994
and amended as of November 19, 1997 providing for the
purchase and sale of optically variable pigment ("OVP") (as
amended, the "1994 Agreement");
WHEREAS, Flex and SICPA wish to further amend the 1994
Agreement by means of this Second Amendment to the 1994 Agreement;
NOW, THEREFORE, in consideration of the mutual
agreements hereinafter set forth, the parties hereby agree as follows:
Section 1.1.1(b) shall be amended and replaced to read
in full as follows:
The Memorandum of Alliance by and between SICPA
and Flex, dated March 9, 1993, and the Joint
Venture Agreement by and between SICPA and Flex,
dated July 1, 1993, and any committees established
pursuant thereto are terminated. The parties
agree to establish a new committee (the
"Committee") which shall meet at least twice
yearly to review prevailing market conditions and
trends and consider possible joint product
development efforts.
Section 3 of the 1994 Agreement shall be amended and
replaced to read in full as follows:
3. Changes to Price and Quantity. During
the period from March 1, 2001 through June 30,
2001 and the period March 1, 2005 through
June 30, 2005, the parties shall discuss what
the price and quantity terms of this Agreement
shall be for the period 11/1/2001 through
10/31/2005 and 11/1/2005 through 12/31/2009
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 for the
period ended 10/31/2001, the minimum and maximum
quantities for the period 11/1/2001 through
10/31/2005 shall be the minimum and maximum
quantities for periods from and after 11/1/2001
(as set forth in Section 5.1(a)), and the
minimum and maximum quantities for the period
11/1/2005 through 12/31/2009 shall be the same
as for the year ended 10/31/2005 (prorated on a
month-for-month basis for the period from
11/1/2009 to 12/31/2009).
Section 4.3 of the 1994 Agreement shall be amended and
replaced to read in full as follows:
4.3 Price Adjustment. The price per kilogram shall be as
set forth below without adjustment pursuant to Sections 4.2
and 5.6 from November 1, 1997 through October 31, 1999:
Base Price/Kg (before
increases pursuant to
Purchases per Year Sections 4.2 and 5.6)
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[CONFIDENTIAL TREATMENT REQUESTED]
The price per kilogram shall be as set
forth below without adjustment pursuant to
Sections 4.2 and 5.6 from November 1, 1999
through October 31, 2001:
Base Price/Kg (before
increases pursuant to
Year Sections 4.2 and 5.6)
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[CONFIDENTIAL TREATMENT REQUESTED]
The table set forth in 5.1(a) of the 1994 Agreement
shall be amended and replaced to read in full as follows:
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
amounts (each a "Minimum") of OVP set forth
below for the periods indicated:
Year Minimum Maximum
-------- --------- ---------
[CONFIDENTIAL TREATMENT REQUESTED]
In addition, for the periods shown below, SICPA shall
also purchase the following amounts (the "Incremental
Amounts") of OVP, in addition to the Minimums, as set forth
below for the periods indicated:
Year Incremental Amounts
-------- -------------------
[CONFIDENTIAL TREATMENT REQUESTED]
Section 14 of the 1994 Agreement shall be amended and
replaced to read in full as follows:
14. Liquidated Damages for Cancellation or
Breach. SICPA acknowledges: (i) that the price
specified for the sale of OVP in Section 4.3
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 periods running
from 1/1/1995 through 10/31/2001, 11/1/2001
through 10/31/2005 or 11/1/2005 through
12/31/2009, SICPA shall pay damages to Flex as
follows:
The "OVP Shortfall" for the period shall be
calculated by subtracting the aggregate amount
of OVP purchased during the entirety of such
period from the sum of the Minimum purchase
requirements for the entire period. The damages
shall then be calculated from the following
table:
OVP Shortfall Damages
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[CONFIDENTIAL TREATMENT REQUESTED]
For example, if this Agreement is terminated during the
second period 11/1/2001-10/31/2005 and total purchases
over the second period were [CONFIDENTIAL TREATMENT
REQUESTED] kg less than the Minimum(so the OVP
Shortfall is [CONFIDENTIAL TREATMENT REQUESTED]kg), the
amount of liquidated damages for the second five-year
period would be [CONFIDENTIAL TREATMENT REQUESTED]or
[CONFIDENTIAL TREATMENT REQUESTED]plus liquidated
damages for the third period based upon the OVP
Shortfall for that period. The OVP Shortfall for the
third period 11/1/2005-12/31/2009 will be based upon
the Minimum quantities in effect for annual periods
after 11/1/2001, i.e., [CONFIDENTIAL TREATMENT
REQUESTED] kg. Unless the parties otherwise agree
pursuant to Section 3, the Minimum quantities would be
[CONFIDENTIAL TREATMENT REQUESTED] kg per year and the
OVP Shortfall for the period 11/1/2005 - 12/31/2009
would be [CONFIDENTIAL TREATMENT REQUESTED] kg.
In addition to liquidated damages for OVP
Shortfalls, SICPA shall pay the sum of [CONFIDENTIAL
TREATMENT REQUESTED] per kilogram for Incremental
Amounts of OVP not purchased as required pursuant
to Section 5.1(a)(the "Incremental Liquidated Damages").
Incremental Liquidated Damages shall be payable
within 30 days of the end of any period during
which Incremental Amounts of OVP were not
purchased as required pursuant to Section
5.1(a). The maximum amount of Incremental
Liquidated Damages shall be [CONFIDENTIAL
TREATMENT REQUESTED]. Notwithstanding anything
to the contrary in this Agreement, such
Incremental Liquidated Damages shall be the sole
remedy for Flex in the event that SICPA fails to
purchase the Incremental Amounts required
pursuant to Section 5.1(a), and Flex shall have
no other remedy under this Agreement with
respect to such failure to purchase Incremental
Amounts including, without limitation, no right
to terminate this Agreement pursuant to Section
15 and no right to take any action or invoke any
remedy under Section 5.1(a).
In partial consideration for the increases
in quantities of OVP, pricing for OVP and
liquidated damages over the 1994 Agreement, Flex
hereby agrees to increase its capacity for the
production of OVP. This undertaking is set
forth in detail in that certain Capital
Equipment Request presented to the Flex Board of
Directors on November 19, 1998, a copy of which
has been delivered to representatives of SICPA
who were present as Directors. In the event
Flex is unable to fulfill its obligations to
deliver OVP as required by this agreement, the
quantities of OVP required to be purchased by
SICPA pursuant to Section 5.1(a) shall be as set
forth in the 1994 Agreement prior to this Second
Amendment and the provisions of Exhibit E
attached hereto, which replaces the Exhibit E
attached to the 1994 Agreement, shall become
effective.
Section 17 of the 1994 Agreement shall be amended and
replaced to read in full as follows:
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.
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Attn: President
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
To SICPA: SICPA Holding S.A.
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Attention: President
FAX: ▇▇-▇▇-▇▇▇-▇▇▇▇
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.
A new Section 26 shall be added to the 1994
Agreement as set forth below:
26. Press Releases and Public Announcements. The
parties to this Agreement shall keep confidential all terms
and provisions of this Agreement except as may be required
by applicable law. Neither party shall issue any press
release or make any public announcement relating to the
subject matter of this Agreement without the prior written
approval of the other party; provided, however, that any
party may make any public disclosure it is required to make
by applicable law or any listing or trading agreement
concerning its publicly-traded securities (in which case the
disclosing party shall prior to such disclosure, consult
with the non-disclosing party concerning the manner and
content of such disclosure, using good faith best efforts to
mutually agree on the content, manner and timing of such
disclosure and shall furnish copies of the intended
disclosure to the non-disclosing party prior to making the
disclosure allowing a reasonable time for such consultation,
and any such disclosure shall only be made to the extent
required by applicable law. In the event that OCLI or Flex
determines that it is required by U.S. federal securities
laws to file with the Securities and Exchange Commission
(the "SEC") a copy of this Agreement or any amendment
hereto, then OCLI or Flex, as the case may be, shall be
permitted to make such filing but only after making best
efforts to obtain confidential treatment from the SEC to the
maximum extent possible (including, without limitation, as
to pricing and quantity terms).
IN WITNESS WHEREOF, each of the parties hereto has
caused this Amendment 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 _______________________________
