Sales Agency And Marketing Agreement

SALES AGENCY AND MARKETING AGREEMENT MADE AND ENTERED INTO IN THE CITY AND DISTRICT OF MONTREAL, ON THE 16TH DAY OF OCTOBER, 1997


BY AND BETWEEN: LAMINES CTEK INC., a body politic and corporate, duly
incorporated according to the Canada Business Corporations
Act, having its head office and principal place of business in
the City of Montreal, Province of Quebec,


(hereinafter referred to as the "Corporation")


PARTY OF THE FIRST PART


AND: COMPOSITECH LTD., a body corporate, duly incorporated
according to the laws of the State of Delaware, having its
head office and principal place of business in the Hamlet of
Hauppauge, State of New York,


(hereinafter referred to as the "Agent")


PARTY OF THE SECOND PART


SECTION 1 - PREAMBLE


1.1 WHEREAS the Agent is engaged in the business of developing, manufacturing, marketing and selling Agent's and JV's Products (as hereinafter defined);


1.2 WHEREAS the Corporation will be engaged in the business of manufacturing and selling Canco Products (as hereinafter defined);


1.3 WHEREAS the Agent's and JV's Products and the Canco Products are similar in nature and the Agent has represented to the Corporation that it is familiar with the market for the Canco Products in the Territory (as hereinafter defined) and is qualified and prepared to market and sell the Canco Products throughout the Territory for the mutual benefit of both parties;


1.4 WHEREAS the parties hereto are desirous of entering into this Agreement whereby the Agent shall act as the exclusive sales agent of the Corporation and shall solicit orders on its behalf for the Canco Products within the Territory.


NOW THEREFORE THE PARTIES HAVE AGREED AS FOLLOWS:


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SECTION 2 - DEFINITIONS


2.1 Definitions. In this Agreement:


2.1.1 "Affiliate" has the meaning ascribed thereto in the Canada Business
Corporations Act; however, the parties shall not be deemed to be
"Affiliates" of one another for the purposes of this Agreement;


2.1.2 "Agent Approval" has the meaning ascribed thereto at subsection 4.6;


2.1.3 "Agent Determination" has the meaning ascribed thereto at subsection
4.6;


2.1.4 "Agent's Bad Debts" means the aggregate annual amount of all accounts or
notes receivable related to the sale, in North America, of any Products
manufactured by the Agent or any of its Affiliates at Agent's Plants
that are reasonably considered uncollectible;


2.1.5 "Agent's and JV's Plant(s)" means any manufacturing plant of laminates
for printed wiring boards and all other uses owned, in whole or in part,
by the Agent, its Affiliates or Joint Ventures;


2.1.6 "Agent's Plant(s)" means any manufacturing plant of laminates for
printed wiring boards and all other uses owned, in whole or in part, by
the Agent or its Affiliates;


2.1.7 "Agent's and JV's Products" means any Products manufactured by the
Agent, any of its Affiliates or Joint Ventures at Agent's and JV's
Plants;


2.1.8 "Agent's Products" means any Products manufactured by the Agent or any
of its Affiliates at Agent's Plants;


2.1.9 "Agent's Proportionate Share" means a fraction, the numerator of which
shall be the aggregate amount of annual sales in North America of
Agent's Products and the denominator of which shall be the aggregate
amount of annual sales in North America of Canco Products and Agent's
Products;


2.1.10 "Amount" has the meaning ascribed thereto at subsection 9.3.2;


2.1.11 "Annual Marketing Plan" has the meaning ascribed thereto at subsection
4.1;


2.1.12 "Approval" has the meaning ascribed thereto at subsection 4.6;


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2.1.13 "Average Price per Similar Product" has the meaning ascribed thereto at
subsection 10.1;


2.1.14 "Canco Product(s)" means any Products manufactured at the Plant;


2.1.15 "Compensated Party" has the meaning ascribed thereto at subsection 10.2;


2.1.16 "Confidential Information" of a Disclosing Party means all business
plans, customers lists, selling price of Products and knowledge
concerning the business and affairs of the Disclosing Party, including,
without limitation, data as to sales of Products or as to customers and
any other information relating to the marketing or selling of the
Products, all of which information is proprietary to the Disclosing
Party, except for information that the Receiving Party can reasonably
demonstrate:


2.1.16.1 has become generally known to those in the printed wiring board
field other than through unauthorized disclosure by the
Receiving Party;


2.1.16.2 is known to the Receiving Party prior to disclosure by the
Disclosing Party; or


2.1.16.3 has become available to the Receiving Party on a
non-confidential basis from a source other than the Disclosing
Party.


2.1.17 "Corporation Determination" has the meaning ascribed thereto at
subsection 4.6;;


2.1.18 "Corporation Expense Adjustment" has the meaning ascribed thereto at
subsection 4.6;


2.1.19 "Corporation's Bad Debts" means the aggregate amount of all accounts or
notes receivable related to the sale of Canco Products in North America
that are reasonably considered uncollectible;


2.1.20 "Corporation's Proportionate Share" means a fraction, the numerator of
which shall be the aggregate amount of annual sales of Canco Products in
North America and the denominator of which shall be the aggregate amount
of sales in North America of Canco Products and Agent's Products;


2.1.21 "Defaulting Party" has the meaning ascribed thereto at subsection 21.1;


2.1.22 "Disclosing Party" has the meaning ascribed thereto at subsection 15.1;


2.1.23 "Dispute" has the meaning ascribed thereto at subsection 18.1;


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2.1.24 "Expense Adjustment" has the meaning ascribed thereto at subsection 4.6;


2.1.25 "Expenses" means the expenses, up to the maximum amount provided in the
Annual Marketing Plan, associated with the sale and marketing of the
Canco Products and Agent's and JV's Products in North America excluding
any expenses set out in subsection 13.1 of the License Agreement and
which are to be paid by the Corporation and similar expenses to be paid
by any licensee of the Agent as provided in a license agreement entered
into by such licensee and the Agent. Any Expenses payable in a currency
other than United States dollars shall be converted into United States
dollars on the date of the payment of such Expenses by the Agent;


2.1.26 "Fairness Committee" has the meaning ascribed thereto at subsection 15.1
of the License Agreement;


2.1.27 "First Period" has the meaning ascribed thereto at subsection 9.3;


2.1.28 "Force Majeure" has the meaning ascribed thereto at subsection 13.1;


2.1.29 "Joint Ventures" means any entity in which the Agent or any of its
Affiliates has an equity interest of at least 33 1/3 %; however, the
parties shall not be deemed to be in a "Joint Venture" relationship with
one another for the purposes of this Agreement;


2.1.30 "License Agreement" means that certain technology licensing agreement
entered into between the Agent and the Corporation on the date hereof;


2.1.31 "Licensee" means any entity which is a licensee or sub-licensee of the
Agent or any of its Affiliates or Joint Ventures and for which the Agent
acts as sales and/or marketing agent; however, for the purposes of this
Agreement, the Corporation shall not be deemed to be a "Licensee" of the
Agent;


2.1.32 "Licensee's Plant(s)" means any manufacturing plant of laminates for
printed wiring boards and all other uses owned, in whole or in part, by
a Licensee;


2.1.33 "Licensee's Products" means any Products manufactured by a Licensee at
Licensee's Plants;


2.1.34 "Normal Capacity" means the Plant both manufacturing and shipping
2,475,000 square feet of Canco Products during the same period of three
(3) consecutive months in response to firm orders received by the
Corporation in the normal course of business justifying the
manufacturing of such quantity of Canco Products;


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2.1.35 "North America" means Canada, the United States of America, Mexico, the
Caribbean Islands including the Antilles and the Bahamas;


2.1.36 "Person" means an individual, partnership, joint venture, trustee,
trust, corporation, division of a corporation, unincorporated
organization or other entity or a government, state or agency or
political subdivision thereof, and pronouns when they refer to a Person
have a similar extended meaning;


2.1.37 "Planned Proportion" means a fraction the numerator of which shall be
the planned manufacturing capacity of the Plant for the twelve (12)
month period in question and the denominator of which shall be the
aggregate of (i) the planned manufacturing capacity of the Plant for
such twelve (12) month period and (ii) the planned manufacturing
capacity of the Agent's and JV's Plants and the Licensee's Plants
situated in North America for such twelve (12) month period;


2.1.38 "Plant" means the manufacturing plant of the Corporation to be situated
in the Montreal region;


2.1.39 "Prime Rate" means the interest rate quoted publicly by the
Corporation's regular bankers as the reference rate of interest for
commercial demand loans made in US dollars and commonly known as such
bank's prime rate, as adjusted from time to time, on the basis of the
Prime Rate in effect on the first day of each month;


2.1.40 "Product(s)" shall have the meaning ascribed thereto at subsection
2.1.29 of the License Agreement;


2.1.41 "Projected Sales Proportion" means a fraction the numerator of which
shall be the projected annual sales of Canco Products in North America
and the denominator of which shall be the aggregate of (i) the projected
annual sales of Canco Products in North America; (ii) when an Agent's
and JV's Plant has sold Agent's and JV's Products in North America, the
projected annual sales of Agent's and JV's Products in North America of
such plant; (iii) in the event that an Agent's and JV's Plant situated
in North America has not made any sales of Agent's and JV's Products in
North America in a given year, the planned manufacturing capacity of
such plant multiplied by the estimated weighted average selling price of
all Products sold in North America in such year; (iv) when a Licensee's
Plant has sold Licensee's Products in North America, the projected
annual sales of Licensee's Products in North America of such plant; and
(v) in the event that a Licensee's Plant situated in North America has
not made any sales of Licensee's Products in North America in a given
year, the planned manufacturing capacity of such plant multiplied by the
estimated weighted average selling price of all Products sold in North
America in such year;


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2.1.42 "Proportionate" means the proportion equal to the manufacturing capacity
of the Plant divided by the manufacturing capacity of the Plant and the
Agent's and JV's Plants situated in North America;


2.1.43 "Receiving Party" has the meaning ascribed thereto at subsection 15.1.2;


2.1.44 "Representatives" has the meaning ascribed thereto at subsection 15.2;


2.1.45 "Sales Proportion" means a fraction the numerator of which shall be the
actual annual sales of Canco Products in North America and the
denominator of which shall be the aggregate of (i) the actual annual
sales of Canco Products in North America; (ii) when an Agent's and JV's
Plant has sold Agent's and JV's Products in North America, the actual
annual sales of Agent's and JV's Products in North America of such
plant; (iii) in the event that an Agent's and JV's Plant situated in
North America has not made any sales of Agent's and JV's Products in
North America in a given year, the planned manufacturing capacity of
such plant multiplied by the weighted average selling price of all
Products sold in North America in such year; (iv) when a Licensee's
Plant has sold Licensee's Products in North America, the projected
annual sales of Licensee's Products in North America of such plant; and
(v) in the event that a Licensee's Plant situated in North America has
not made any sales of Licensee's Products in North America in a given
year, the planned manufacturing capacity of such plant multiplied by the
weighted average selling price of all Products sold in North America in
such year;


2.1.46 "Similar Products" means, when comparing Products manufactured by
different plants, Products having a similar core thickness, copper-grade
content (ounces per square foot), sheet size and thermal rating;


2.1.47 "Technical Services Agreement" means the services agreement entered into
on the date hereof between the Agent and the Corporation;


2.1.48 "Terms and Policies" shall have the meaning ascribed thereto at
subsection 7.1;


2.1.49 "Territory" means the world;


2.1.50 "Total Bad Debts" means the sum of the Agent's Bad Debts and the
Corporation's Bad Debts.


2.2 Determination of "sales" and "price". For the purposes of the definitions of "Agent's Proportionate Share", "Corporation's Proportionate Share", "Projected Sales Proportion" and "Sales Proportion" and for the purposes of determining the "Average Price per Similar Product" or the "average price per square foot" pursuant to subsections and hereof, the sales and prices shall be calculated on an "Ex-Works" basis net of any tariff, customs duties and penalties, sales and value added taxes, user fees, service fees, packaging costs, freight costs and


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transportation insurance costs, transloading costs and all other costs associated with deliveries, damage allowances, rebates, returns, volume incentives and any other costs, duties and fees which should be excluded to allow the sales and prices to be calculated on an "Ex-Works" basis as provided in the 1990 Incoterms of the International Chamber of Commerce.


SECTION 3 - EXCLUSIVE SALES REPRESENTATIVE


3.1 Appointment. The Corporation hereby grants to the Agent, who accepts, the exclusive right to act as the sales representative of the Corporation by soliciting orders for Canco Products within the Territory in accordance with the Annual Marketing Plan and the Terms and Policies, the whole in accordance with the terms and conditions hereof.


3.2 Exclusivity. The Corporation shall not, during the term of this Agreement, grant to any other person or entity within the Territory the right to represent or sell the Canco Products. The Corporation hereby undertakes to refer to the Agent all inquiries relating to the Canco Products received by the Corporation from actual or potential customers.


SECTION 4 - OBLIGATIONS OF THE AGENT


4.1 Annual Marketing Plan. The Agent shall prepare for each fiscal year of the Corporation an annual marketing plan (the "Annual Marketing Plan") for the Corporation, the Agent and all of its Affiliates and Joint Ventures. The Annual Marketing Plan shall provide without limitation, for the applicable fiscal year, the following, the goal of which shall be to operate the Plant at maximum production capacity:


4.1.1 the marketing budget details for North America;


4.1.2 the marketing and sales strategies and policies for North America;


4.1.3 the provisions as to the warranty to be granted for the Canco Products
and Agent's and JV's Products sold in North America;


4.1.4 the maximum Expenses for the fiscal year in question;


and shall provide, without limitation, the following to allow the Corporation to plan the Plant's production of Canco Products in the fiscal year in question:


4.1.5 the estimated delays for production and delivery of Canco Products;


4.1.6 information regarding the type, regional volumes and quantities of Canco
Products estimated by the Agent to be required in the Territory and to
be manufactured by the Plant during the fiscal year in question; and


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4.1.7 the projected sales of Canco Products and Agent's and JV's Products in
North America.


The Annual Marketing Plan shall be submitted to the board of directors and/or shareholders, if applicable, of the Corporation for their approval at the latest three (3) months before the end of each fiscal year of the Corporation. If the board of directors or shareholders of the Corporation is(are) unable to arrive at a decision relating to an Annual Marketing Plan, the Annual Marketing Plan of the prior year shall be renewed mutatis mutandis. The Annual Marketing Plan shall be adjusted on a quarterly basis (particularly to take into account changing market conditions including, without limitation, the volume of sales or expenses related to the marketing of Canco Products and Agent's and JV's Products and requested types of Products) and any adjustment to the Annual Marketing Plan shall be submitted to the board of directors and/or shareholders, if applicable, of the Corporation for their approval before coming into effect.


4.2 First Annual Marketing Plan. The Agent shall submit to the board of directors of the Corporation, at its first meeting following the execution hereof, a first Annual Marketing Plan for a period commencing on the date hereof and ending on December 31, 1998. Until such time as the board of directors approves the first Annual Marketing Plan, the Corporation shall not make any payments to the Agent pursuant to Section 9 hereof, however, after such approval, the Corporation shall reimburse the Agent, retroactively to the date hereof and in the manner provided in Section 9 hereof, for the Expenses incurred.


4.3 Guiding Principles. The parties shall, at all times, adhere to the guiding principles set forth in Section 19 hereof.


4.4 Receivables. The Agent shall, with commercially reasonable diligence, collect all the outstanding accounts owed to the Corporation pursuant to orders accepted by the Corporation failing which, the Agent, after reasonable notice from the Corporation, shall cease to be responsible for such collection. Such accounts shall remain at all times the property of the Corporation. Furthermore, the Agent shall transmit promptly to the Corporation any payments received by the Agent on behalf of the Corporation and until such payments are transmitted, the Agent shall hold such payments separately on deposit on the Corporation's behalf. The Agent shall satisfy itself, with due diligence, of the solvency of customers whose orders it transmits to the Corporation and shall not transmit orders from customers of which it knows or ought to know that they are unable to pay their creditors in the ordinary course of business, without informing the Corporation in advance of such fact.


4.5 Information. The Agent shall, at all times, maintain updated and accurate information, in all material respects, on the sales of Canco Products and Agent's and JV's Products and on all the customers (actual, potential and targeted) of the Corporation, the Agent, its Affiliates and Joint Ventures and shall make such information and all marketing plans, data and information concerning the sales of the Canco Products and Agent's and JV's Products available


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at all times to the Corporation for its consultation and the Corporation shall be allowed to make copies of all such documents subject to confidentiality requirements.


4.6 Planned Manufacturing Capacity. The Agent shall be obliged to promptly inform the Corporation in writing of the planned manufacturing capacity in square feet of Products in all Agent's and JV's Plants and Licensee's Plants situated in North America and of any change thereto (the "Agent Determination"). The board of directors of the Corporation shall then decide whether or not to approve such Agent Determination. In the event that such board of directors approves of same in writing within 10 days of being informed by the Agent thereof (the "Approval"), then the parties shall determine any adjustment to the Expenses already paid by the Corporation for the period in question and the manner in which same is to be acquitted (the "Expense Adjustment"). In the event that the parties cannot agree on the Expense Adjustment within 10 days of the Approval, then the parties shall submit this matter to the Fairness Committee pursuant to Section 18 hereof. However, in the event that such board of directors does not approve of the Agent Determination within 10 days of being informed by Agent thereof, then the parties shall submit the Agent Determination as well as the Expense Adjustment to the Fairness Committee pursuant to Section 18 hereof.


The board of directors of the Corporation shall be obliged to promptly inform the Agent in writing of the planned manufacturing capacity in square feet of Products in the Plant and of any change thereto (the "Corporation Determination"). The Agent shall then decide whether or not to approve such Corporation Determination. In the event that the Agent approves of same in writing within 10 days of being informed by the Corporation thereof (the "Agent Approval"), then the parties shall determine any adjustment to the Expenses already paid by the Corporation for the period in question and the manner in which same is to be acquitted (the "Corporation Expense Adjustment"). In the event that (i) the parties cannot agree on the Corporation Expense Adjustment within 10 days of the Agent Approval or (ii) the board of directors of the Corporation cannot advise the Agent in writing of the Corporation Determination within 10 days of being requested in writing to do so by the Agent, then the parties ...