Technology Licensing Agreement

TECHNOLOGY LICENSING AGREEMENT MADE AND ENTERED INTO IN THE CITY AND DISTRICT OF MONTREAL, ON THE 16TH DAY OF OCTOBER, 1997


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


(hereinafter referred to as the "Licensor")


PARTY OF THE FIRST PART


AND: LAMINES CTEK INC., a body politic and corporate, duly
incorporated according to the Canadian 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 "Licensee")


PARTY OF THE SECOND PART


SECTION 1 - PREAMBLE


1.1 WHEREAS the Licensee wishes to build the Plant (as hereinafter defined) in order to manufacture and sell Products (as hereinafter defined);


1.2 WHEREAS Licensor is the owner of the Patents (as hereinafter defined), Copyrights (as hereinafter defined) and Technology (as hereinafter defined) required to manufacture Equipment (as hereinafter defined) and to manufacture and sell Products;


1.3 WHEREAS Licensor has agreed to grant to Licensee and Licensee wishes to acquire from Licensor the right and license to use the Patents, Copyrights and Technology to manufacture Products and to have manufactured, for its own use and to assemble Equipment;


1.4 WHEREAS Licensor has also agreed to grant to Licensee and Licensee wishes to acquire from Licensor the right and license to market, promote, advertise, sell, distribute and merchandise Products in association with the Trade Marks (as hereinafter defined).


NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:


SECTION 2 - DEFINITIONS


2.1 Definitions. In this Agreement:


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2.1.1 "Affiliate" has the meaning ascribed thereto in the Canada Business
Corporations Act;


2.1.2 "Approval" has the meaning ascribed thereto in paragraph 4.3;


2.1.3 "Art" has the meaning ascribed thereto in paragraph 8.3.4;


2.1.4 "Asset Sale" has the meaning ascribed thereto in subsection 6.4;


2.1.5 "Confidential Information" of a Disclosing Party means (a) all concepts,
methods, procedures, inventions, know-how, secrets, data and other
information of the Disclosing Party, whether in written, printed,
electronic, unrecorded or any other form whatsoever, and whether known
now or developed during the Term of this Agreement, useful in the
development or exploitation of the Products or the Equipment, including
all documentation thereof, and (b) all business plans of the Disclosing
Party relating to the manufacturing, marketing or selling of the
Products, except for information that the Receiving Party can reasonably
demonstrate:


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


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


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


2.1.6 "Copyrights" means in respect of the Technology, all the copyrights and
industrial designs and registrations thereof and applications therefor
and all renewals, modifications, developments and extensions thereto, as
well as all other copyrights and industrial designs in respect of the
Technology which may hereafter be issued to or acquired by Licensor or
for which the Licensor may have the right to grant licenses;


2.1.7 "Disclosing Party" has the meaning ascribed thereto at subsection 9.1;


2.1.8 "Equipment" means any machinery or equipment developed or patented by
the Licensor for the purpose of manufacturing the Products;


2.1.9 "Event of Default" has the meaning ascribed thereto at subsection 6.3;


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2.1.10 "Fairness Committee" has the meaning ascribed thereto in subsection
15.1;


2.1.11 "Fee Adjustment" has the meaning ascribed thereto in subsection 4.3;


2.1.12 "Intellectual Property" means the Patents, the Copyrights and the Trade
Marks;


2.1.13 "Integral Circuit" means laminates with integral circuits or printed
circuit boards with integral circuits as described by the following
claims or parts of such claims set forth in Licensor's patents Nos.
4,943,334, 5,037,691 and 5,478,421:


(i) claims 70-73 of U.S. Patent 4,943,334;


(ii)claims 16 and 26-30 of U.S. Patent No. 4,943,334, provided
that the conductive surface is in the form of a series of conductive
line traces etched or formed between two or more pads (hereinafter
called a "circuit") and further provided that the circuit is formed on
the tooling and transferred to the laminate or printed circuit board
during the molding process;


(iii) claims 7, 8, 36, 37, 42 and 43 of U.S. Patent No.
5,037,691, provided that the metal or metallic coating is in the form of
a circuit; and


(iv) claims 4, 5, 8-11, 50, 64 and 73 of U.S. Patent No.
5,478,421, provided that the metal or conductive surface is in the form
of a circuit and further provided that the circuit is formed on the
tooling and transferred to the laminate or printed circuit board during
the molding process;


2.1.14 "Investors" means Societe Innovatech du Grand Montreal, Industries Devma
Inc., Fonds de Solidarite des Travailleurs du Quebec (F.T.Q.) and Fonds
Regional de Solidarite Ile de Montreal;


2.1.15 "Joint Ventures" means any entity in which Licensor 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;


2.1.16 "Knowledge" - an individual will be deemed to have "Knowledge" of a
particular fact or other matter if:


2.1.16.1 such individual is actually aware of such fact or other
matter, or


2.1.16.2 a prudent individual could be expected to discover or
otherwise become aware of such fact or other matter in the
course of conducting a reasonably comprehensive review of the
files, books and records of the Corporation.


A Person (other than an individual) will be deemed to have
"Knowledge" of a particular fact or other matter if any
individual who is serving as an officer of such Person has, or
at any prior time had, Knowledge of such fact or other matter;


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2.1.17 "Licensee Determination" has the meaning ascribed thereto at subsection
4.3;


2.1.18 "Licensee Fee Adjustment" has the meaning ascribed thereto at subsection
4.3;


2.1.19 "Licensee's Improvements" has the meaning ascribed thereto at subsection
5.2;


2.1.20 "Licensor Approval" has the meaning ascribed thereto at subsection 4.3;


2.1.21 "Licensor Determination" has the meaning ascribed thereto at subsection
4.3;


2.1.22 "Licensor Improvements" has the meaning ascribed thereto at subsection
5.1 hereof;


2.1.23 "Multi Layer Printed Circuit Boards" means the circuit boards defined in
one or more of claims 18-26 and 63-68 of U.S. Patent No. 5,037,691 or
the circuit boards produced using the process described in any of the
claims of U.S. Patents Nos. 5,376,326 and 5,512,224;


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


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


2.1.26 "Patents" means all the patents and patent applications relating to,
used in or useful in the development, manufacturing, marketing or
distribution of Products or relating to the Equipment, patents and
patent applications covering Licensor Improvements, any patents and
patent applications covering improvements, modifications, developments,
additions and alterations to the Technology, Equipment or Products by
any licensee of Licensor for which Licensor may have the right to grant
licenses to Licensee during the Term, as well as all other patents
relating to the Technology, Equipment or Products which may hereafter be
issued to or acquired by Licensor or for which Licensor may have the
right to grant licenses, provided that the "Patents" shall not include
the subject matter of (i) any claims of any patents or applications,
present or future, to the extent that they relate to Multi Layer Printed
Circuit Boards or Integral Circuits, and (ii) any patents or patent
applications or claims thereof which may be filed or issued in the
future, directed to subject matter different from that included in the
Patents;


2.1.27 "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 similarly extended meaning;


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2.1.28 "Plant" means the manufacturing plant of Licensee to be situated in the
Montreal region;


2.1.29 "Products" means laminates for printed wiring boards and for all other
uses manufactured using the Patents, Copyrights and the Technology,
provided, however, that Multi Layer Printed Circuit Boards and Integral
Circuits shall not be deemed Products within the purview of this
Agreement;


2.1.30 "Proportion" means for North America for the first two twelve (12) month
periods commencing on the date hereof, a fraction, the numerator of
which shall be the annual planned Product manufacturing capacity of the
Plant and the denominator of which shall be the aggregate annual planned
Product manufacturing capacity of all plants (including the Plant) owned
or operated by Licensor or its Affiliates or any other Person licensed
(including Licensee) or otherwise authorized by Licensor or its
Affiliates to use the Intellectual Property and Technology and/or
manufacture or sell Products in North America;


2.1.31 "Purchaser" has the meaning ascribed thereto in subsection 6.4;


2.1.32 "Receiving Party" has the meaning ascribed thereto at paragraph 9.1.2;


2.1.33 "Representatives" has the meaning ascribed thereto at subsection 9.2;


2.1.34 "Sales Agency and Marketing Agreement" means the sales agency and
marketing agreement entered into between the parties hereto on the date
hereof;


2.1.35 "Sales Proportion" means (i) for North America commencing with the
twenty-fifth (25th) month following the date hereof and ending December
31, 2000 and in each fiscal year of Licensee thereafter, a fraction, the
numerator of which shall be the sales of Products in North America from
the Plant for the period in question, and the denominator of which shall
be the aggregate annual sales of Products in North America for the
period in question from all plants (including the Plant) and in the
event that a plant in North America has not made any sales, the planned
Product manufacturing capacity of such plant for the period in question,
owned or operated by Licensor or its Affiliates or any other Person
licensed (including Licensee) or otherwise authorized by Licensor or its
Affiliates to use the Intellectual Property and Technology and/or
manufacture or sell Products in North America from such plant in North
America multiplied by the weighted average selling price of all Products
sold in North America for the period in question ("North American Sales
Proportion") and (ii) for each country outside of North America in each
fiscal year, a fraction, the numerator of which shall be the annual
sales of Products in such country


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from the Plant and the denominator of which shall be the aggregate
annual sales of Products in such country from all plants (including the
Plant) and in the event that a plant in such country has not made any
sales, the annual planned Product manufacturing capacity of such plant,
owned or operated by Licensor or its Affiliates or any other Person
licensed (including Licensee) or otherwise authorized to use the
Intellectual Property and Technology and/or to manufacture or sell
Products in such country from such plant in such country multiplied by
the weighted average selling price of all Products sold in such country
for the period in question (the "Country Sales Proportion"). For the
purposes of subsection 11.2 hereof only, Sales Proportion, North
American Sales Proportion and Country Sales Proportion shall be based on
the twelve (12) month period following the issuance or registration of
the Patent, Copyrights or Trade Mark. For the purposes of this
definition, sales 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 transportation
insurance costs, transloading costs and all other costs associated with
deliveries, damage allowances, rebates, returns and volume incentives
and any other costs, duties and fees which should be excluded to allow
the sales to be calculated on an "Ex-Works" basis as provided in the
1990 Incoterms of the International Chamber of Commerce;


2.1.36 "Shareholders Agreement" means the shareholders agreement entered into
on the date hereof among all the holders of shares of Licensee;


2.1.37 "Share Sale" has the meaning ascribed thereto in subsection 6.4;


2.1.38 "Technical Services Agreement" means the services agreement entered into
on the date hereof between Licensor and Licensee;


2.1.39 "Technology" means information, technical knowledge, know-how,
processes, procedures, devices, jigs, fixtures, machines, methods,
inventions, software and trade secrets now known and which may become
known to Licensor during the Term (except technology that may be
disclosed to Licensor in the future by another licensee of Licensor
which Licensor is legally prohibited from disclosing to Licensee) (i)
relating to, used in or useful in the development, manufacture,
marketing or distribution of Products or (ii) relating to the Equipment;


2.1.40 "Term" has the meaning ascribed thereto in subsection 6.1 hereof;


2.1.41 "Territory" means the world;


2.1.42 "Trade Marks" means all trade marks, whether or not registered, that
Licensor may own or have the right to use anywhere in the Territory in
relation to Products.


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SECTION 3 - GRANT OF LICENSE


3.1 Grant of License. Subject to the terms and conditions hereof, Licensor hereby grants to Licensee, the latter hereby accepting,


3.1.1 the right and license to manufacture Products at the Plant using the
Patents, Copyrights and Technology,


3.1.2 subject to subsection 3.3, the non-exclusive right and license to have
Equipment manufactured (and to assemble such Equipment) solely for its
own use in the Plant, for the manufacture of Products, using the
Patents, Copyrights and Technology,


3.1.3 subject to subsection 3.4, until the Plant operates at Normal Capacity,
the right and license, exclusive except as to Licensor, to manufacture,
market, promote, advertise, sell, distribute and merchandise Products in
North America, and the non-exclusive right and license to market,
promote, advertise, sell, distribute and merchandise Products
manufactured pursuant to paragraph 3.1.1 throughout the Territory,


3.1.4 subject to subsection 3.4, once the Plant shall have operated at Normal
Capacity, the non-exclusive right and licence to market, promote,
advertise, sell, distribute and merchandise Products throughout the
Territory, provided, however, that (i) Licensor shall not have any right
to grant to any Person any license which impairs the rights granted to
Licensee and; (ii) if the Plant ceases to operate at Normal Capacity at
any time, Licensor's right to grant to any Person any non- exclusive
right or license to market, promote, advertise, sell, distribute or
merchandise Products in North America is subject to Licensor maintaining
the Plant at a capacity no lower than any other plant in North America
owned by Licensor, any of its Affiliates or any entity in which the
Licensor or any of its Affiliates has an equity interest of at least
33 1/3%,


3.1.5 the right and license, subject to Licensee fulfilling its obligations
set forth in Section 8 hereof, to market, promote, advertise, sell,
distribute and merchandise Products in association with the Trade Marks
throughout the Territory, provided that as long as the Sales Agency and
Marketing Agreement is in force, Licensor shall be entitled to designate
the Trade Marks which Licensee may use in respect of the Products.


3.2 Sublicenses. Licensee shall not have any right to grant sublicenses hereunder.


3.3 Equipment Manufacturing. In connection with the rights granted to the Licensee pursuant to paragraph 3.1.2 hereof, Licensee shall be entitled to contract with any responsible and reputable suppliers and/or manufacturers, in connection with the manufacture of Equipment,


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which Equipment shall be delivered to and used solely by Licensee at Licensee's Plant. Licensee shall prior to so contracting notify Licensor in writing of the name of such supplier and/or manufacturer. In the event that Licensor does not advise Licensee within twenty (20) days of receipt of Licensee's notice that it believes, acting reasonably, that such supplier and/or manufacturer is not responsible or reputable, then Licensor shall be deemed to have accepted such supplier and/or manufacturer. Licensee shall consult with Licensor in order to establish such procedures as the parties will agree upon, acting reasonably, as will assure that the Technology is adequately protected against misappropriation or misuse by any such supplier or manufacturer. If Licensor notifies Licensee within the twenty (20) day period that it believes, acting reasonably, that such supplier and/or manufacturer is not responsible or reputable, then Licensee shall either (i) not contract with such supplier and/or manufacturer without again following the procedure set forth in this subsection 3.3, or (ii) contest the determination of Licensor and submit the matter to the Fairness Committee and Arbitration, if necessary, who shall make the determination.


3.4 Importation of Products into North America. Licensor hereby agrees that neither it nor its Affiliates or Joint Ventures shall, anywhere in North America, market, promote, advertise, sell, distribute or merchandise, directly or indirectly, products manufactured outside North America and which are the same or similar to the Products manufactured at the Plant, and Licensor and its Affiliates and Joint Ventures hereby further agree that they shall include in any license or sub-license granted to any Person a provision prohibiting such licensee or sub-licensee from marketing, promoting, advertising, selling, distributing or merchandising anywhere in North America, products manufactured outside North America and which are the same or similar to the Products manufactured at the Plant (and enforce such provision in the event of any breach thereof by any such licensee or sublicensee, to the extent reasonable), except if (i) such marketing, promotion, advertising, sale, distribution or merchandising is directly effected through the Licensor, acting as agent or principal; and (ii) a customer of Licensor, its Affiliates or Joint Ventures or such licensee or sub-licensee has expressly requested that such products be manufactured by a specific plant situated outside North America, after such customer has been informed by Licensor, its Affiliates or Joint Ventures or such licensee or sublicensee, that Licensee is an authorized supplier of such products in North America, and Licensee has a reciprocal right to market, promote, advertise, sell, distribute and merchandise Products from the Plant in such territory or territories outside North America from where the Person who owns such specific plant is authorized to market, promote, advertise, sell, distribute and merchandise products which are the same or similar to the Products manufactured at the Plant.


3.5 Immunity. The rights and licenses granted to Licensee pursuant to this Section 3 shall include the right to pass on immunity under the Patents to any user or purchaser of Products manufactured or sold by Licensee in accordance with this Agreement, as to all reasonably intended uses of the Products.


3.6 Multi Layer Printed Circuit Boards or Integral Circuits. In the event that Licensor wishes to grant any licenses in respect of Multi Layer Printed Circuit Boards or Integral Circuits in the Territory, it shall negotiate in good faith with Licensee for the granting of such


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licenses to Licensee, it being understood that Licensor shall be entitled to negotiate with others at the same time.


3.7 Rights of Licensor Outside of North America. Licensee hereby acknowledges and confirms that insofar as the license rights granted to it pursuant to subsection 3.1 hereof are concerned, its Territory shall exclude (i) the exclusive territory contemplated in the license agreement between HT Troplast AG (successor of Huls Troisdorf AG) and Licensor dated June 22, 1990 and (ii) any other territory outside of North America for which Licensor grants any exclusive license rights in connection with the Patents and the Technology, the whole subject to any reciprocal rights, if any, granted to Licensee pursuant to paragraph (ii) of subsection 3.4 hereof;


SECTION 4 - LICENSOR'S OBLIGATIONS


4.1 Licensor's Initial Obligations. Concurrently with the execution of this Agreement, Licensor shall disclose to Licensee the Technology and provide Licensee with copies of the documents set forth in Schedule annexed hereto. Thereafter, Licensor shall from time to time upon the request of Licensee promptly provide Licensee with copies of all other existing documents, records, drawings, plans and writings in connection with the Technology. Such Technology and the services to be furnished by Licensor pursuant to the Technical Services Agreement shall enable Licensee to benefit fully from the rights and licenses granted to it pursuant to this Agreement.


4.2 Technical Services Agreement. In addition to the obligations of Licensor set forth herein, Licensor shall furnish to Licensee certain services in accordance with the Technical Services Agreement.


4.3 Planned Manufacturing Capacity. Licensor shall be obliged to promptly inform Licensee in writing of the planned manufacturing capacity in square feet of Products in all plants owned or operated by Licensor or its Affiliates or any other Person licensed or otherwise authorized by Licensor or its Affiliates to use the Intellectual Property and the Technology and/or manufacture or sell Products in North America or outside of North America, if applicable, and of any change thereto (the "Licensor Determination"). The board of directors of Licensee shall then decide whether or not to approve such Licensor Determination. In the event that such board of directors approves of same in writing within 10 days of being informed by Licensor thereof (the "Approval"), then the parties shall determine any adjustment to the fees and costs provided in Section 11 hereof already paid by Licensee for the period in question and the manner in which same is to be acquitted (the "Fee Adjustment"). In the event that the parties cannot agree on the Fee Adjustment within 10 days of the Approval, then the parties shall submit this matter to the Fairness Committee pursuant to Section 15 hereof. However, in the event that such board of directors does not approve of the Licensor Determination within 10 days of being informed by Licensor thereof, then the parties shall submit the Licensor Determination as well as the Fee Adjustment to the Fairness Committee pursuant to Section 15 hereof.


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The board of directors of Licensee shall be obliged to promptly inform Licensor in writing of the planned manufacturing capacity in square feet of Products in the Plant and of any change thereto (the "Licensee Determination"). Licensor shall then decide whether or not to approve such Licensee Determination. In the event that Licensor approves of same in writing within 10 days of being informed by Licensee thereof (the "Licensor Approval"), then the parties shall determine any adjustment to the fees and costs provided in Section 11 hereof already paid by Licensee for the period in question and the manner in which same is to be acquitted (the "Licensee Fee Adjustment"). In the e ...