TECHNOLOGY LICENSE, MANUFACTURE AND SUPPLY

EXHIBIT 10.1


** THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS STARRED AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXHCHANGE COMMISSION.


AGREEMENT


OF


TECHNOLOGY LICENSE, MANUFACTURE AND SUPPLY


FOR


TAPE FEEDERS


This Agreement made and entered into on this 20th day of June 1996 by and between SAMSUNG AEROSPACE INDUSTRIES, LTD., a corporation organized and existing under the laws of the Republic of Korea, having its principal place of business at 15th Fl., Samsung Life Insurance Bldg., 142-43 Samsung-Dong, Kangnam-Gu, Seoul, Korea (hereinafter referred to as "SSA") and QUAD SYSTEMS CORPORATION, a corporation organized and existing under the laws of the State of Delaware, USA, having its principal place of business at Two Electronic Drive, Horsham, PA 19044, USA (hereinafter referred to as Quad).


WITNESSETH


WHEREAS, Quad manufactures, distributes and sells accessories and parts of chip mounters, including, among others, tape feeders;


WHEREAS, SSA wishes to manufacture, distribute, repair, upgrade and sell tape feeders using the technology, technical information, know-how and technical assistance of Quad necessary for SSA to conduct such manufacturing, distribution and sales;


WHEREAS, Quad is willing to provide SSA with the technology, technical information, know-how and technical assistance necessary for the manufacture, distribution, repair, upgrade and sale of tape feeders and to purchase tape feeders manufactured by SSA using such technology, technical information, know-how and technical assistance for resale.


NOW, THEREFORE, to effect the above purposes, and in consideration of the covenants and premises set forth herein, SSA and Quad hereby agree as follows:


ARTICLE I. Definitions


The terms defined in this Article I shall, for all purposes of this Agreement, have the meanings herein below specified:


1.1 "Acceptance Test" shall mean the test to be performed by SSA and
Quad based on the acceptance criteria attached hereto as Exhibit
"E", after the completion of the pre-production of the Products
using the Technical Information and technical assistance provided to
SSA hereunder. The Acceptance Test shall be deemed successfully
completed if and when both SSA and Quad sign a certificate of the
Acceptance Test upon the completion of the successful pre-production
of the Products meeting the acceptance criteria set forth in Exhibit
"E".


1.2 "Deliverables" shall mean all drawings for the "Products" as defined
in Article 1.6 below, Tooling and Fixtures, manuals, specifications,
diagrams, inspection procedures, list of jigs for assembly and
adjustment, list of measurement equipment and any other documents or
things to be delivered by Quad to SSA, which are listed in Exhibit
"C" attached hereto, and which are necessary for the manufacture,
distribution, repair, upgrade and sale of Products using the
Technical Information and pursuant to the terms of this Agreement.


1.3 "Effective Date" shall mean (i) the date of the execution of this
Agreement by both parties or (ii) the date on which all the required
governmental approvals of this Agreement, if any, are obtained,
whichever occurs later. If Korean governmental approval(s) is (are)
required, SSA hereto shall make efforts in order to obtain such
approval(s) prior to July 15th, 1996


1.4 "Machines" shall mean chip mounting systems of all models which are
sold or may be sold by either SSA or Quad.


1.5 "Price" shall mean the price of each Product to be paid by Quad to
SSA, which is listed in Exhibit "B" attached hereto.


1.6 "Products" shall mean the 8mm, 12mm, 16mm, 24mm, 32mm, and 44mm tape
feeders currently being manufactured by Quad on the date of this
Agreement and which are currently used in Quad's Machines, as more
fully described in Exhibit "A", which meet the Specifications and
represent Quad's current line of self-contained, motor driven, tape
feeder apparatuses with a multiple gear train (the "Existing
Technology") and all upgrades and improvements on such tape feeders,
but only to the extent such upgrades and improvements are based on
the Existing Technology.


1.7 "Purchase Order" shall have the meaning ascribed to it in Article
10.1 hereof.


1.8 "Quad's Customers" shall have the meaning ascribed to it in Article
17.1 hereof.


1.9 "SSA's Customers" shall have the meaning ascribed to it in Article
17.2 hereof.


1.10 "Supply Term" shall mean the six (6) year period commencing from the
successful completion of the Acceptance Test and any extension
thereof to be made by mutual agreement between SSA and Quad,
provided that SSA and Quad shall determine the minimum quantities
and prices of the Products for each succeeding two (2) year period
after the first two (2) year period of the Supply Term in accordance
with Articles 9.3 and 11.2 hereof.


1.11 "Technical Information" shall mean all the proprietary and
confidential, technical data and processes, know-how and
specifications which Quad provides to SSA pursuant to the terms of
this Agreement, but only such data, processes, know-how and
specifications that are included in and are based upon the Existing
Technology and which are used in the manufacture, repair, upgrading
and sales of the Products and the use of the Tooling and Fixtures
and the development and use of any upgrades and improvements on the
Products, but only to the extent such upgrades and improvements are
based on the Existing Technology.


1.12 "Tooling and Fixtures" shall have the meaning ascribed to it in
Article 18.1 hereof.


1.13 "Warranty Period" shall have the meaning ascribed to it in Article
15.2 hereof.


1.14 "Specifications" shall mean the specifications to produce the
Products, using the Technical Information, as such specifications
are attached, referred to and included in Exhibit "A".


ARTICLE II. License Grant


2.1 Quad hereby grants to SSA a perpetual, paid-up, exclusive (except as
to Quad) right and license, with no right to sub-license (except as
described in the last sentence of this Section 2.1), to manufacture
the Products, using the Technical Information, in any part of the
world; provided, however, that Quad retains the right to continue to
manufacture the Products, using the Technical Information, for its
own use or for resale in Quad's Machines or other products, to
Quad's Customers, at any time during the term of this Agreement, if
SSA fails to meet Quad's requirements of delivery, quantity and
quality. After completion of the Acceptance Test, Quad retains the
right to repair any of the Products on any of Quad's machines,
either for its own use (including the production, sale and
distribution of products other than the Products) or to provide
service to Quad's Customers. SSA's rights under this Article 2.1
shall include the right to sub-license the piece part subassembly of
Products to subcontractors, subsidiaries and affiliates of SSA, and
the right to sub-license final assembly or testing of the Products,
provided SSA submits a prior written notification to Quad. Quad's
retained rights to use, make and sell the Products under this
Article 2.1 shall not affect Quad's minimum purchase requirements
for Products under Article IX.


2.2 Quad hereby grants to SSA a perpetual, paid-up, exclusive right and
license, with no right to sub-license (except as described in the
last sentence of this Article 2.2), to distribute and sell the
Products using the Technical Information, to SSA's Customers. SSA's
rights under this Section 2.2 shall include the right to make such
distribution and sales of the Products through SSA's distributors
and sales agents.


2.3 Upon a termination of the Supply Term pursuant to the terms of
Article XXI, SSA's rights and licenses granted under this Article II
shall automatically convert into a perpetual, paid-up, non-exclusive
right and license, with no right to sub-license (except as described
in the last sentences of each of Articles 2.1 and 2.2), to
manufacture, distribute and sell the Products using the Technical
Information in any part of the world and Quad shall thereupon retain
a similar non-exclusive right.


ARTICLE III. Transfer of Deliverables


Quad shall deliver Deliverables listed in Exhibit "C" attached hereto to SSA in accordance with the delivery schedule set forth in Exhibit "C".


ARTICLE IV. Technical Assistance; Training


4.1 SSA shall be entitled to dispatch its personnel to Quad to receive
training at Quad's facilities from time to time which includes
training during the mass-production period. The training and
assistance under this Article 4.1 shall include, but shall not be
limited to, training on the use of the Technical Information,
Deliverables, and quality control. The stay period, number, content
of training and other details of the dispatch of SSA's personnel
shall be determined by mutual agreement between SSA and Quad prior
to each dispatch. Quad shall not charge any fee to SSA for such
training conducted at Quad's facilities. The air fares and living
expenses of SSA's personnel during their stay in the USA shall be
borne by SSA.


4.2 Upon SSA's request, Quad shall dispatch a reasonable number of its
personnel to SSA to train SSA's personnel at SSA's facilities in
Korea. The number of Quad's personnel to be dispatched to SSA, their
stay period, details of their training and any other content of the
dispatch shall be determined by mutual agreement between SSA and
Quad prior to each dispatch. However, the number of Quad personnel
to be dispatched to SSA shall not at any time exceed three (3) and
this shall mean four (4) weeks x three (3) people = 12 manweeks. The
training by Quad personnel under this Article 4.2 shall be free of
charge up to a total of four (4) weeks. The number of Quad's
personnel to be dispatched to SSA in order to provide the above
mentioned free training shall be determined by mutual agreement
between SSA and Quad. For the training hereunder beyond the
above-mentioned four (4) weeks, SSA shall pay fifty United States
dollars (US$50) per hour as a labor charge. For Quad's personnel who
are dispatched to Korea under this Article 4.2, SSA shall bear their
round trip air-fares and expenses for lodging and meals during their
stay in Korea.


4.3 Quad shall support SSA in SSA's efforts to upgrade the current tape
feeders for CP-30. Such support of Quad shall consist of technical
reviews and recommendations and Quad's assignment of at least one
(1) engineer to the development and upgrading of tape feeders for
CP-30. Such engineer shall devote at least one-half of his/her time
to the development and upgrading of tape feeders for CP-30 for SSA.
Quad's support under this Article 4.3 shall last for one (1) year,
and thereafter SSA shall be responsible for the development and
upgrading of tape feeders for CP-30. Improvements created jointly by
SSA and Quad become the intellectual property of Quad, and of SSA,
and improvements made solely by each party shall become the
intellectual property of that party, and are automatically licensed
to the other party. Both SSA and Quad shall promptly notify each
other of any such improvements and shall provide amendments to the
documentation and Deliverables for the Products, as applicable, to
reflect such improvements.


ARTICLE V. License Fee


5.1 In consideration of the license and the rights granted, Deliverables
to be delivered and technical assistance provided herein, SSA shall
pay Quad a license fee of three hundred thousand United States
dollars (US$300,000.) (the "License Fee"). The License Fee shall be
paid in three (3) installments as follows:


(a) **


(b) **


(c) **


5.2 All taxes and any similar charges which may be imposed by the Korean
Government with respect to payments to be made under this Article V
shall be borne by Quad. If SSA is required to withhold tax from the
payment made under this Article V under the pertinent law, SSA shall
withhold such amount from the payments to be made to Quad, pay it to
the pertinent tax authorities on behalf of Quad and deduct the sum
from the payment to be made to Quad. SSA shall provide the evidence
of the payment of such tax to Quad so that Quad may receive credit
under the pertinent law of the USA. SSA shall provide all
cooperation to Quad in reducing Quad's tax liability hereunder to
the maximum extent permissible under the relevant laws of the US and
Korea.


ARTICLE VI. Indemnification


6.1 In the event that SSA receives notice, or is informed, of any claim,
suit or demand by a third party against SSA alleging SSA's
infringement upon any intellectual property rights of the third
party, relating to the use of the Technical Information, SSA shall
promptly notify Quad of any such claim, suit, or demand. Thereupon,
Quad shall promptly take such action as may be necessary to protect
and defend SSA against any such claim, suit, or demand by any third
party and shall indemnify SSA against any loss, cost or expense
incurred in connection therewith.


6.2 SSA shall indemnify Quad from any and all claims, suits, demands and
liabilities against Quad which might arise out of SSA's manufacture
of the Products and which is not caused by any defect in the
Technical Information or Deliverables provided to SSA or furnished
to SSA by Quad hereunder. Quad shall promptly notify SSA of any such
claim, suit, demand or liability and thereupon, SSA shall promptly
take such action as may be necessary to protect and defend Quad
against any such claim, suit, demand or liability and shall
indemnify Quad against any loss, cost or expense incurred by Quad in
connection therewith.


6.3 SSA, its agents and employees waive any said claims against Quad.


6.4 SSA shall indemnify Quad for any losses arising from alleged
infringement of any third party intellectual property rights by the
use of any SSA components included in the Products by SSA in its
manufacturing techniques. Quad, its agents and employees waive any
such claims against SSA.


ARTICLE VII. Representation and Warranty


7.1 Quad hereby represents and warrants that the Technical Information
and Deliverables are sufficient for the manufacture of the Products
with the quality being the same as or better than that of tape
feeders which are currently manufactured by Quad as of the date of
this Agreement.


7.2 EXCEPT AS PROVIDED IN ARTICLE 7.1 ABOVE, QUAD HEREBY EXCLUDES ANY
OTHER WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE PRODUCTS OR
THE TECHNICAL INFORMATION, INCLUDING, WITHOUT LIMITATION ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.


7.3 Any information disclosed by one party to the other party hereunder
or disclosed by one party to the other party prior to the Effective
Date of this Agreement, which is proprietary or confidential to the
disclosing party, including, but not limited to the Technical
Information, shall be so marked or otherwise designated
conspicuously as confidential. (S ...