Document:

slb-ex102_527.htm

Schlumberger-Private

 
 
EXHIBIT 10.2

 

Draft

 

2019 PERFORMANCE SHARE UNIT AWARD AGREEMENT 

(WITH RELATIVE TSR MODIFIER)

under the

SCHLUMBERGER 2017 OMNIBUS STOCK INCENTIVE PLAN

(Includes Confidentiality, Intellectual Property, Non-Competition, and Non-Solicitation Provisions in  Section 9 and Attachment II)

 

Performance Period:  2019, 2020 and 2021

 

This Performance Share Unit Award Agreement (as may be amended, the “Agreement”) is granted effective as of January 16, 2019 (the “Grant Date”) by Schlumberger Limited (the “Company”), for the benefit of ___________ (“Employee”), pursuant to the Schlumberger 2017 Omnibus Stock Incentive Plan, as may be amended (the “Plan”).

1.Award.  In consideration of Employee’s continued employment as hereinafter set forth, the Company hereby grants to Employee an award of “Performance Share Units,” provided that (except as otherwise provided in Section 2(c)) the final number of Performance Share Units will be determined in accordance with the performance criteria set forth on Attachment I to this Agreement.  The target Performance Share Units subject to this award is set forth in an award letter previously delivered to Employee and the Notice of Grant of Award of Performance Share Units attached hereto. The Performance Share Units are notional units of measurement denominated in shares of common stock of the Company, $.01 par value per share (“Common Stock”). Each Performance Share Unit represents a right to receive one share of Common Stock or equivalent value, subject to the conditions and restrictions on transferability set forth herein and in the Plan.  

2.Vesting of Performance Share Units.  The period of time from and including January 1, 2019 to December 31, 2021 is the “Performance Period.” The Performance Share Units will vest as follows:

(a)On the first Friday following the first meeting of the Compensation Committee of the Board of Directors of the Company (the “Committee”) in 2022 (the “First Committee Meeting”), or as soon thereafter as reasonably practicable (such date, the “initial Vesting Date”), a number of Performance Share Units will vest based on the extent to which the Company has satisfied the performance conditions set forth on Attachment I, provided that Employee is continuously employed by the Company or any of its Subsidiaries from the Grant Date through the initial Vesting Date and has not experienced a Termination of Employment (as defined in Section 12(y) below) as of such date. If, immediately following the First Committee Meeting, not all companies comprising the ROCE Peer Group (as defined in Attachment I) have publicly disclosed the full-year financial information required to determine the number of shares of Schlumberger common stock earned, the Committee may elect, at its discretion, to award to Employee a specified percentage of the number of such shares initially determined to be earned. 

 

	
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The percentage of shares initially issued to Employee will be based on available reported results of the ROCE Peer Group as of the First Committee Meeting, and the issuance of the shares will occur as soon after the First Committee Meeting as reasonably practicable.  Any additional shares earned will be issued to Employee as soon as reasonably practicable following the public release by all ROCE Peer Group companies of the requisite full-year financial results necessary to determine the final number of shares earned. The date of the issuance of such additional shares will be a “subsequent Vesting Date” for purposes of this Agreement). Except as provided in Sections 2(b) and 2(c) below, if there is any Termination of Employment during the period from and between the Grant Date until and including the initial Vesting Date, Employee will immediately and automatically forfeit all Performance Share Units.  The Committee may delegate, to an officer of the Company or to a subcommittee of the Committee, its authority to determine whether Employee has incurred a Termination of Employment, the cause of such termination or any related issue, and any such determination by the Committee or its delegate will be final and binding on all parties.

(b)If Employee’s Termination of Employment occurs due to Retirement (as defined in Section 12(q) below) or Special Retirement (as defined in Section 12(t) below), the Performance Share Units will vest in accordance with Section 2(a) above as if Employee had remained continuously employed by the Company or any of its Subsidiaries from the Grant Date through the initial Vesting Date. 

(c)If Employee’s Termination of Employment occurs due to Disability (as defined in Section 12(h) below) or death, then immediately on the occurrence of such Termination of Employment, the target number of Performance Share Units will vest, and the date of such Termination of Employment will be considered the initial Vesting Date.

3.Settlement of Performance Share Units.  Payment of vested Performance Share Units will be made in shares of Common Stock as soon as administratively practicable, but in no event later than 2-1/2 months following the end of the Performance Period (the date of any such payment, the “Settlement Date”); provided, however, that the Committee may, in its sole and absolute discretion, settle the vested Performance Share Units in cash based on the Fair Market Value of the shares of Common Stock on the Settlement Date.

4.Forfeiture of Performance Share Units.

(a)At any time during the Performance Period and up to and including the initial Vesting Date, upon a Termination of Employment for any reason that does not result in a continuation or acceleration of vesting pursuant to Section 2, Employee will immediately and automatically forfeit all unvested Performance Share Units, without the payment of any consideration.  Upon forfeiture, neither Employee nor any successors, heirs, assigns or legal representatives of Employee will thereafter have any further rights or interest in the unvested Performance Share Units.

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(b)Notwithstanding any provision in this Agreement to the contrary, if at any time during the Performance Period and up to and including the subsequent Vesting Date, Employee engages in Detrimental Activity (as defined in Section 12(f) below), Employee will immediately and automatically forfeit all Performance Share Units without the payment of any consideration. Upon forfeiture, neither Employee nor any successors, heirs, assigns or legal representatives of Employee will thereafter have any further rights or interest in the unvested Performance Share Units.

5.Restrictions on Transfer of Performance Share Units.  

(a)Performance Share Units granted hereunder to Employee may not be sold, assigned, transferred, pledged or otherwise encumbered, whether voluntarily or involuntarily, by operation of law or otherwise (any of the foregoing, a “Transfer”), other than (i) to the Company as a result of the forfeiture of Performance Share Units, or (ii) by will or applicable laws of descent and distribution.  Payment of Performance Share Units after Employee’s death will be made to Employee’s estate or, in the sole and absolute discretion of the Committee, to the person or persons entitled to receive such payment under applicable laws of descent and distribution.

(b)Consistent with the foregoing, no right or benefit under this Agreement will be subject to Transfer, and any such attempt to Transfer will have no effect and be void.  No right or benefit hereunder will in any manner be liable for or subject to any debts, contracts, liabilities or torts of the person entitled to such benefits.  If Employee attempts to Transfer any right or benefit hereunder or if any creditor attempts to subject the same to a writ of garnishment, attachment, execution, sequestration, or any other form of process or involuntary lien or seizure, then such attempt will have no effect and be void and immediately upon any such attempt the Performance Share Units will terminate and become of no further effect.

6.Rights as a Stockholder.  Employee will have no rights as a stockholder of the Company with regard to the Performance Share Units.  Rights as a stockholder of the Company will arise only if the Performance Share Units are settled in shares of Common Stock pursuant to Section 3 above.

7.Tax and Social Insurance Withholding.

(a)Regardless of any action the Company takes with respect to any or all income tax (including foreign, federal, state and local taxes), social insurance, payroll tax, payment on account or other tax-related items related to Employee’s participation in the Plan and legally applicable to him or her (“Tax-Related Items”), Employee acknowledges that the ultimate liability for all Tax-Related Items legally due by Employee is and remains his or her responsibility and may exceed the amount actually withheld by the Company.  Employee further acknowledges that the Company (i) makes no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Performance Share Units, including the grant of the Performance Share Units, the vesting of the Performance Share Units, the conversion of the Performance Share Units into shares of Common Stock or the receipt of any equivalent cash payment, or the subsequent sale of any shares of Common Stock acquired at vesting, and (ii) does not commit to structure the terms of the grant or any aspect of the Performance Share Units to reduce or eliminate Employee’s liability for the Tax-Related Items.

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(b)Prior to any relevant taxable or tax withholding event (“Tax Date”), as applicable, Employee will pay or make adequate arrangements satisfactory to the Company to satisfy all Tax-Related Items.  In this regard, Employee authorizes the Company or its respective agents, at their discretion, to satisfy the obligations with regard to all Tax-Related Items by one or a combination of the following:  (i) accept a cash payment in U.S. dollars in the amount of the Tax-Related Items, (ii) withhold whole Shares which would otherwise be delivered to Employee having an aggregate Fair Market Value, determined as of the Tax Date, or (iii) withhold an amount of cash from Employee’s wages or other cash compensation which would otherwise be payable to Employee by the Company or from any equivalent cash payment received upon vesting of the Performance Share Units, equal to the amount necessary to satisfy any such obligation.  

(c)The Company shall withhold or account for Tax-Related Items by considering applicable minimum statutory withholding rates, unless Employee elects, pursuant to the Company’s prescribed procedures as in effect from time to time, to have withholding for Tax Related Items based on the maximum withholding rate applicable to Employee.  If the obligation for Tax-Related Items is satisfied by withholding in shares of Common Stock, for tax purposes, Employee is deemed to have been issued the full number of shares of Common Stock due to him or her at vesting, notwithstanding that a number of shares of Common Stock are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of Employee’s participation in the Plan.  Finally, Employee shall pay to the Company any amount of Tax-Related Items that the Company may be required to withhold as a result of Employee’s participation in the Plan that cannot be satisfied by the means previously described.  The Company may refuse to issue shares of Common Stock to Employee if Employee fails to comply with his or her obligations in connection with the Tax-Related Items as described herein. The Performance Share Units are intended to be “short-term deferrals” exempt from Section 409A of the Internal Revenue Code and shall be construed and interpreted accordingly.

8.Changes in Capital Structure.  As more fully described in the Plan, if the outstanding shares of Common Stock at any time are changed or exchanged by declaration of a stock dividend, stock split, combination of shares, or recapitalization, the number and kind of Performance Share Units will be appropriately and equitably adjusted so as to maintain their equivalence to the proportionate number of shares.

9.Confidential Information, Intellectual Property and Noncompetition. Employee acknowledges that Employee is in possession of and has access to confidential information of the Company and its Subsidiaries, including material relating to the business, products and services of the Company and its Subsidiaries, and that he or she will continue to have such possession and access during employment by the Company and its Subsidiaries. Employee also acknowledges that the business, products and services of the Company and its Subsidiaries are highly specialized and that it is essential that they be protected. Accordingly, Employee agrees to be bound by the terms and conditions set forth on Attachment II, which is incorporated herein by reference, including all rules, procedures, policies and requirements that the Company may promulgate consistent with Attachment II.

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10.Compliance with Securities Laws.  The Company will not be required to deliver any shares of Common Stock pursuant to this Agreement if, in the opinion of counsel for the Company, such issuance would violate the Securities Act of 1933, as amended, or any other applicable federal or state securities laws or regulations or the laws of any other country.  Prior to the issuance of any shares of Common Stock pursuant to this Agreement, the Company may require that Employee (or Employee’s legal representative upon Employee’s death or Disability) enter into such written representations, warranties and agreements as the Company may reasonably request in order to comply with applicable securities laws or with this Agreement.

11.Limitation of Rights.  Nothing in this Agreement or the Plan may be construed to:

(a)give Employee or any other person or entity any right to be awarded any further Performance Share Units (or other form of stock incentive awards) other than in the sole discretion of the Committee;

(b)give Employee or any other person or entity any interest in any fund or in any specified asset or assets of the Company (other than the Performance Share Units); or

(c)confer upon Employee or any other person or entity the right to continue in the employment or service of the Company or any Subsidiary.

12.Definitions.    

(a)“Agreement” is defined in the introduction.

(b)“Clawback Policy” is defined in Section 13(i).

(c)“Committee” is defined in Section 2(a).

(d)“Common Stock” is defined in Section 1.

(e)“Company” is defined in the introduction.

(f)“Detrimental Activity” means activity that is determined by the Committee in its sole and absolute discretion to be detrimental to the interests of the Company or any of its Subsidiaries, including but not limited to any breach of Attachment II or any situations where Employee: (i) divulges trade secrets, proprietary data or other confidential information relating to the Company or to the business of the Company or any Subsidiaries; (ii) enters into employment with or otherwise provides services to (A) any company listed, as of the date of Employee’s Termination of Employment, on the Philadelphia Oil Service Sector Index (or any successor index) or (B) any affiliate of any such listed company, in either case under circumstances suggesting that Employee will be using confidential information or unique or special knowledge gained as a Company employee or Subsidiary employee with the effect of competing with the Company or its Subsidiaries; (iii) enters into employment with or otherwise provides services to any Direct Competitor (as defined in Section 12(g) below); (iv) engages or employs, or solicits or contacts with a view to the engagement or employment of, any employee of the Company or its Subsidiaries; (v) canvasses, solicits, approaches or entices away or causes to be canvassed, solicited, approached or enticed away from the Company or its Subsidiaries any customer of any of such entities during the Performance Period and up to and including the subsequent Vesting Date; (vi) is determined to have engaged (whether or not prior to termination of employment) in either gross misconduct or criminal activity that is, or that could reasonably be expected to be, harmful to the Company or a Subsidiary; or (vii) takes any action that otherwise harms, or that could reasonably be expected to harm, the business interests, reputation, or goodwill of the Company or its Subsidiaries. The Committee may delegate, to an officer of the Company or to a subcommittee of the Committee, its authority to determine whether Employee has engaged in “Detrimental Activity,” and any such determination by the Committee or its delegate will be final and binding on all parties.

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(g)“Direct Competitor” means any of the following: (i) Halliburton Company, Weatherford International plc, and Baker Hughes, a GE company, and any other oilfield equipment and services company; and (ii) any entity engaged in seismic data acquisition, processing and reservoir geosciences services to the oil and natural gas industry, including in all cases in (i) and (ii) above, any and all of their parents, subsidiaries, affiliates, joint ventures, divisions, successors, or assigns.

(h)“Disability” means such disability (whether physical or mental impairment) which totally and permanently incapacitates Employee from any gainful employment in any field which Employee is suited by education, training, or experience, as determined by the Committee in its sole and absolute discretion.

(i)“Employee” is defined in the introduction.

(j)“Fair Market Value” means, with respect to a share of Common Stock on a particular date, the mean between the highest and lowest composite sales price per share of the Common Stock, as reported on the consolidated transaction reporting system for the New York Stock Exchange for that date, or, if there is no such reported prices for that date, the reported mean price on the last preceding date on which a composite sale or sales were effected on one or more of the exchanges on which the shares of Common Stock were traded will be the Fair Market Value.

(k)“Grant Date” is defined in the introduction.

(l)“initial Vesting Date” is defined in Section 2(a).

(m)“Performance Period” is defined in Section 2.

(n)“Performance Share Units” is defined in Section 1.

(o)“Plan” is defined in the introduction.

(p)“Qualifying Termination” means a Termination of Employment due to Employee’s death, Disability, Retirement or Special Retirement.

(q)“Retirement” means either: (i) Employee’s voluntary election to retire from employment with the Company and its Subsidiaries at any time after Employee has reached both the age of 60 and 25 years of service, or (ii) Employee’s voluntary election to retire from employment with the Company and its Subsidiaries at any time after Employee has reached both the age of 55 and 20 years of service, subject, however, to the approval of either (A) the Committee, if Employee is an executive officer of the Company at the time of Employee’s election to retire, or (B) the Retirement Committee, if Employee is not an executive officer of the Company at the time of Employee’s election to retire, which approval under clauses (A) or (B) may be granted or withheld in the sole discretion of the Committee or the Retirement Committee, as applicable.

(r)“Retirement Committee” means a committee consisting of the Company’s Vice President of Human Resources, the Director of HR Operations and the HR Director of Compensation & Benefits. 

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(s)“Settlement Date” is defined in Section 3.

(t)“Special Retirement” means the Termination of Employment of Employee with the Company and all Subsidiaries at or after (i) age 55 or (ii) age 50 and completion of at least 10 years of service with the Company and any of its Subsidiaries.

(u)“subsequent Vesting Date” is defined in Section 2(a).

(v)“Subsidiary” means (i) in the case of a corporation, a “subsidiary corporation” of the Company as defined in Section 424(f) of the Internal Revenue Code and (ii) in the case of a partnership or other business entity not organized as a corporation, any such business entity of which the Company directly or indirectly owns 50% or more of the voting, capital or profits interests (whether in the form of partnership interests, membership interests or otherwise).

(w)“Tax Date” is defined in Section 7(b).

(x)“Tax-Related Items” is defined in Section 7(a).

(y)“Termination of Employment” means the termination of Employee’s employment with the Company and its Subsidiaries; provided, however, that temporary absences from employment because of illness, vacation or leave of absence and transfers among the Company and its Subsidiaries will not constitute a Termination of Employment.

(z)“Transfer” is defined in Section 5(a).

13.Miscellaneous.

(a)Employee hereby acknowledges that he or she is to consult with and rely upon only Employee’s own tax, legal, and financial advisors regarding the consequences and risks of this Agreement and any award of Performance Share Units.

(b)This Agreement will bind and inure to the benefit of and be enforceable by Employee, the Company and their respective permitted successors or assigns (including personal representatives, heirs and legatees).  Employee may not assign any rights or obligations under this Agreement except to the extent, and in the manner, expressly permitted herein.  

(c)The invalidity or unenforceability of any provision of this Agreement will not affect the validity or enforceability of any other provision of this Agreement.

(d)This Agreement may not be amended or modified except by a written agreement executed by the Company and Employee or their respective heirs, successors, assigns and legal representatives.  The captions of this Agreement are not part of the provisions hereof and are of no force or effect.

(e)The failure of Employee or the Company to insist upon strict compliance with any provision of this Agreement or the failure to assert any right Employee or the Company may have under this Agreement will not be deemed to be a waiver of such provision or right or any other provision or right herein.

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(f)Employee and the Company agree to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of this Agreement. 

(g)This Agreement, including all Attachments hereto, and the Plan (i) constitute the entire agreement among Employee and the Company with respect to the subject matter hereof and this Agreement supersedes all prior agreements and understandings, both written and oral, with respect to the subject matter hereof; and (ii) are not intended to confer upon any other Person any rights or remedies hereunder.  Employee and the Company agree that (A) no other party (including its agents and representatives) has made any representation, warranty, covenant or agreement to or with such party relating to the Performance Share Units other than those expressly set forth herein or in the Plan, and (B) such party has not relied upon any representation, warranty, covenant or agreement relating to the Performance Share Units, other than those referred to in clause (A) above.  All references herein to “Agreement” will include all Attachments hereto.

(h)As Employee may work in various locations and to eliminate potential uncertainty over the governing law, this Agreement (including, for the sake of clarity, all Attachments) will be interpreted and construed exclusively in accordance with the laws of the State of Texas. Employee agrees that Texas, as the Company’s United States headquarters, has a greater legal interest in matters relating to this Agreement than any other state, has a greater public policy interest in matters relating to this Agreement than any other state, and has a greater factual relationship to matters relating to this Agreement than any other state. The sole, mandatory, and exclusive venue for any dispute arising from or related to Employee’s employment with the Company and its Subsidiaries, and this Agreement (including, for the sake of clarity, all Attachments) will lie and be deemed as convenient, in Fort Bend County, Texas, state or federal court without regard to the conflict of law provisions thereof, or, at the Company’s option, any venue in which personal jurisdiction over Employee may be established.  Employee waives any objection he or she may have to the venue of any such proceeding being brought in Fort Bend County, Texas courts and waives any claim that any such action or proceeding brought in the Fort Bend County, Texas courts has been brought in an inconvenient forum.  In addition, Employee irrevocably and unconditionally submits to the exclusive personal jurisdiction of the Fort Bend County, Texas courts in any such suit, action or proceeding.  Employee acknowledges and agrees that a judgment in any such suit, action or proceeding brought in the Fort Bend County, Texas courts will be conclusive and binding on Employee and may be enforced in any other courts to whose jurisdiction the Company or Employee is or may be subject to, by suit upon such judgment.  Employee consents to the choice of law, jurisdiction and venue provisions of this Agreement and agrees that Employee will not contest these provisions in any future proceeding(s). EMPLOYEE AND THE COMPANY HEREBY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION ARISING OUT OF THIS AGREEMENT OR ANY ATTACHMENT THERETO.

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(i)Clawback Policy. The Company’s policy on recoupment of performance-based bonuses, as amended from time to time (its “Clawback Policy”), will apply to the Performance Share Units, any shares of Common Stock delivered hereunder, and any profits realized on the sale of such shares, to the extent that Employee is covered by the Clawback Policy. Employee acknowledges that if Employee is covered by such policy, the policy may result in the recoupment of Performance Share Units awarded, any shares of Common Stock delivered hereunder and profits realized on the sale of such shares either before, on or after the date on which Employee becomes subject to such policy.

14.Acceptance of Award.  Employee is deemed to accept the award of Performance Share Units under this Agreement and to agree that such award is subject to the terms and conditions set forth in this Agreement and the Plan unless Employee provides the Company written notification not later than 30 days after Employee’s receipt of this Agreement of Employee’s rejection of this award of Performance Share Units (in which case such awards will be forfeited and Employee will have no further right or interest therein as of such date). Employee hereby accepts such terms and conditions, subject to the provisions of the Plan and administrative interpretations thereof.  Employee further agrees that such terms and conditions will control this Agreement, notwithstanding any provisions in any employment agreement or in any prior awards.

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ATTACHMENT I

Performance Conditions

Subject to the provisions of the Agreement and this Attachment I, vesting of the Performance Share Units is conditioned upon the delta between:

(a)Schlumberger’s average annual return on capital employed (as further described below, “ROCE”) over the three-year performance period beginning on January 1, 2019 and ending on December 31, 2021 (the “Performance Period”), and 

(b)the average annual ROCE of the following companies taken together (collectively, the “ROCE Peer Group”) over the Performance Period: Halliburton Company, Weatherford International plc, National Oilwell Varco, TechnipFMC and Baker Hughes, a GE company, in each case with appropriate adjustments for mergers, acquisitions and dispositions, as well as any adjustment for the Company’s relative total shareholder return (as further described below). 

“ROCE” is equal to the sum of (i) income from continuing operations, before charges and credits, and (ii) the after-tax impact of net interest expense, divided by the sum of (x) the average quarterly equity, including noncontrolling interests, and (y) the average quarterly net debt.

Schlumberger’s “average annual ROCE” means the average of the three annual ROCE achievements during the Performance Period. The ROCE Peer Group’s “average annual ROCE” means the average of the three annual ROCE achievements during the Performance Period for the ROCE Peer Group as a whole.

The number of Performance Share Units that will vest will be equal to the product of (i) the target Performance Share Units and (ii) the Payout Factor (with any fractional shares rounded up to the next whole share).

The average annual ROCE achieved by the Company over the Performance Period, and the average annual ROCE achieved by the ROCE Peer Group over the Performance Period, will be certified by the Committee. The Committee is authorized to vest the number of Performance Share Units at the Payout Factor based on the chart below, subject to adjustment as set forth below. The Payout Factor for ROCE achievement levels between points on this chart will be determined by linear interpolation between the values listed.  The maximum payout of Performance Share Units is 250% of the Target Performance Share Units.

 

	
ROCE Delta (bps)
	
Payout Factor for Vested Performance

Share Units

(before Relative TSR Adjustment)

	
Less than or equal to -600 bps
	
0% of Target

	
Equal to 0 bps
	
100% of Target

	
Greater than or equal to 600 bps
	
250% of Target

 

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Adjustment for Relative TSR during Performance Period

 

At the conclusion of the Performance Period, the Committee will certify the Company’s cumulative shareholder return (“TSR”) over the Performance Period, determine the percentile ranking of the Company’s TSR relative to the cumulative TSR of the companies comprising the Philadelphia Oil Service Sector Index (or any successor index) as of the first day of the Performance Period (the “OSX Index”) (the “Relative TSR Performance”), and determine the amount, if any, by which the Payout Factor will be adjusted (the “Relative TSR Modifier”).  If the Company’s Relative TSR Performance during the Performance Period is in the bottom 33rd percentile relative to the cumulative TSR of the companies comprising the OSX Index over the same period, the number of shares earned according to the Payout Factor will be reduced by 25 percentage points (e.g., if the Payout Factor from the table above was 110%, the reduced Payout Factor would be 85%). The Relative TSR Modifier will only reduce the number of shares earned under a PSU award, but will not increase the number of shares otherwise earned. 

 

TSR for the Company or any other member of the Index means the annualized rate of return reflecting price appreciation plus reinvestment of dividends (calculated monthly) and the compounding effect of dividends paid on reinvested dividends.  The Committee will utilize Standard & Poor’s Compustat Database (or any successor database), or such other database or method as the Committee determines is appropriate in its discretion, to calculate any company’s TSR. 

 

In the event that any member of the OSX Index ceases to be publicly-traded during the Performance Period or is otherwise removed from the OSX Index prior to the end of the Performance Period, then such member will be removed from the OSX Index for purposes of the Relative TSR Performance calculation. No company that was not a member of the OSX Index as of the first day of the Performance Period will be added to the Index for purposes of the Relative TSR Performance calculation.  

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ATTACHMENT II

Confidential Information, Intellectual Property,

and Non-Compete Agreement

1.Definitions.  

(a)“Affiliate” means any entity that now or in the future directly or indirectly controls, is controlled by, or is under common control with the Company, where “control” in relation to a company means the direct or indirect ownership of at least fifty percent of the voting securities or shares.

(b)“Company Confidential Information” is any and all information in any form or format relating to the Company or any Affiliate (whether communicated orally, electronically, visually, or in writing), including but is not limited to technical information, software, databases, methods, know-how, formulae, compositions, drawings, designs, data, prototypes, processes, discoveries, machines, inventions, well logs or other data, equipment, drawings, notes, reports, manuals, business information, compensation data, clients lists, client preferences, client needs, client designs, financial information, credit information, pricing information, information relating to future plans, marketing strategies, new product research, pending projects and proposals, proprietary design processes, research and development strategies, information relating to employees, consultants and independent contractors including information relating to salaries, compensation, contracts, benefits, inceptive plans, positions, duties, qualifications, project knowledge, other valuable confidential information, intellectual property considered by the Company or any of its Affiliates to be confidential, trade secrets, patent applications, and related filings and similar items regardless of whether or not identified as confidential or proprietary. For the purposes of this Attachment II, Company Confidential Information also includes any type of information listed above generated by the Company or any of its Affiliates for client or that has been entrusted to the Company or any of its Affiliates by a client or other third party.

(c)“Company Intellectual Property” is all Intellectual Property that was authored, conceived, developed, or reduced to practice by Employee (either solely or jointly with others), in the term of his/her employment: (a) at the Company’s expense or the expense of any Affiliate; (b) using any of the Company’s materials or facilities or the materials or facilities of any Affiliate; (c) during Employee’s working hours; or (d) that is applicable to any activity of the Company or any of its Affiliates, including but not limited to business, research, or development activities. Company Intellectual Property may be originated or conceived during the term of Employee’s employment but completed or reduced to practice thereafter. Company Intellectual Property will be deemed a “work made for hire” as that term is defined by the copyright laws of the United States. Company Intellectual Property includes any Pre-existing Intellectual Property assigned, licensed, or transferred to the Company, and any Pre-existing Intellectual Property in which the Company has a vested or executory interest. 

(d)“Intellectual Property” is all patents, trademarks, copyrights, trade secrets, Company Confidential Information, new or useful arts, ideas, discoveries, inventions, improvements, software, business information, lists, designs, drawings, writings, contributions, works of authorship, findings or improvements, formulae, processes, product development, manufacturing techniques, business methods, information considered by the Company to be confidential, tools, routines and methodology, documentation, systems, enhancements or modifications thereto, know-how, and developments, any derivative works and ideas whether or not patentable, and any other form of intellectual property. 

(e)“Pre-existing Intellectual Property” is all Intellectual Property that was authored, conceived, developed, or reduced to practice by Employee before the term of Employee’s employment with the Company or any Affiliate began. 

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2.Codes of Conduct.  Employee agrees to comply with all of the Company’s policies and codes of conduct as it may promulgate from time to time, including those related to confidential information and intellectual property. Nothing in those policies will be deemed to modify, reduce, or waive Employee’s obligations in this Attachment II. In the event of any conflict or ambiguity, this Attachment II prevails. 

3.Confidential Information.

(a)The Company does not wish to receive from Employee any confidential or proprietary information of a third party to which Employee owes an obligation of confidence. Employee will not disclose to the Company or any of its Affiliates or use while employed by the Company or any of its Affiliates any information for which he or she is subject to an obligation of confidentiality to any former employer or other third party. Employee represents that his or her duties as an employee of the Company and Employee’s performance of this Attachment II do not and will not breach any agreement or duty to keep in confidence information, knowledge, or data acquired by Employee outside of Employee’s employment with the Company or any of its Affiliates. 

(b)During Employee’s term of employment, the Company or, if applicable its Affiliate, will provide Employee and Employee will receive access to Company Confidential Information that is proprietary, confidential, valuable, and relates to the Company’s business. 

(c)Other than in the proper performance of Employee’s duties for the Company or any of its Affiliates, Employee agrees not publish, disclose or transfer to any person or third party, or use in any way other than in the Company’s business or that of or any of its Affiliates, any confidential information or material of the Company or any of its Affiliates, including Company Confidential Information and Company Intellectual Property, either during or after employment with the Company. 

(d)Except as required in performing Employee's duties for the Company or any of its Affiliates, Employee agrees not remove from the Company premises or its control any Company Confidential Information including but not limited to equipment, drawings, notes, reports, manuals, invention records, software, customer information, well logs or other data, or other material, whether produced by Employee or obtained from the Company. This includes copying or transmitting such information via personal digital devices, mobile phones, external hard drives, USB “flash” drives, USB storage devices, FireWire storage devices, floppy discs, CD’s, DVD’s, personal email accounts, online or cloud storage accounts, memory cards, Zip discs, and any other similar media or means of transmitting, storing or archiving data outside systems supported by the Company or its Affiliate.

(e)Employee agrees to deliver all Company Confidential Information and materials to the Company immediately upon request, and in any event upon termination of employment. If any such Company Confidential Information has been stored on any personal electronic data storage device, including a home or personal computer, or personal email, online or cloud storage accounts, Employee agrees to notify the Company and its Affiliates and make available the device and account to the Company for inspection and removal of the information. 

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(f)Employee will not destroy, modify, alter, or secret any document, tangible thing, or information relating to Company Intellectual Property or Company Confidential Information except as occurs in the ordinary performance of Employee’s employment. 

4.Disclosure of Intellectual Property.  

(a)Employee agrees to promptly disclose in writing to Company all Company Intellectual Property conceived, developed, improved or reduced to practice by Employee during Employee’s employment with the Company and its Affiliates, by completing and submitting an IP Disclosure Form. Employee must complete and submit an IP Disclosure Form at conception of the invention, any derivative ideas or works, and any improvements or changes to existing knowledge or technology, or as soon as possible thereafter. Employee has a continuing obligation to update the IP Disclosure Form to maintain the form’s completeness and correctness. Employee may obtain an IP Disclosure Form from the Intellectual Property Department. Employee will submit the completed form to the Intellectual Property Department. If desired, Employee may request waiver any time after submitting the IP Disclosure Form.

(b)Employee will disclose to the Company Employee’s complete written record of any Company Intellectual Property, including any patent applications, correspondence with patent agents and patent offices, research, written descriptions of the technology, test data, market data, notes, and any other information relating to Company Intellectual Property. Employee will also identify all co-inventors, co-authors, co-composers, partners, joint venture partners and their employees, assistants, or other people to whom the Company Intellectual Property was disclosed in whole or in part, who participated in developing the Company Intellectual Property, or who claim an interest in the Company Intellectual Property. Employee’s disclosure will conform to the policies and procedures in place at the time governing such disclosures. 

(c)The Company’s receipt or acceptance of an IP Disclosure Form does not constitute an admission or agreement to any responses contained therein, does not waive or modify any terms of any agreement between Employee and the Company, and does not obligate or bind the Company.  

(d)Employee must retain and prevent destruction of any material referenced in the IP Disclosure Form, including and not limited to photographs, drawings, schematics, diagrams, figures, testing and development logs, notes, journals, and results, applications to, correspondence with, or registrations from, any patent office, trademark office, copyright office, customs office, or other authority, contracts, licenses, assignments, liens, conveyances, pledges, or other documentation potentially affecting your ownership rights, marketing materials, web sites, press releases, brochures, or other promotional or informational material, any materials evidencing or related to reduction to practice, and other related documentation. 

(e)During and after employment with the Company, Employee will assist the Company in establishing and enforcing intellectual property protection, including obtaining patents, copyrights, or other protections for inventions and copyrightable materials, including participating in, or, if necessary, joining any suit (for which Employee’s reasonable expenses will be reimbursed), or including completing and any signing documents necessary to secure such protections, such contracts, assignments, indicia of ownership, agreements, or any other related documents pertaining to Company Intellectual Property which the Company may, in its sole discretion, determine to obtain. 

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5.Assignment of Intellectual Property.

(a)Employee agrees to assign and hereby assigns to the Company all Company Intellectual Property including any and all rights, title, and ownership interests that Employee may have in or to Company Intellectual Property patent application, including copyright and any tangible media embodying such Company Intellectual Property, during and subsequent to Employee’s employment. The Company has and will have the royalty-free right to use or otherwise exploit Company Intellectual Property without any further agreement between the Company and Employee. Company Intellectual Property remains the exclusive property of the Company whether or not deemed to be a “work made for hire” within the meaning of the copyright laws of the United States. For clarity, Employee does not hereby assign or agree to assign any Pre-existing Intellectual Property to the Company. 

(b)Employee is hereby notified that certain statutes in some U.S. states relate to ownership and assignment of inventions.  At relevant locations and in accordance with those statutes, the Company agrees that this Attachment II does not apply to an invention developed by Employee entirely on his or her own time without use of the Company Group’s equipment, supplies, facilities, systems, or confidential information, except for inventions that relate to the Company Group’s business, or actual or anticipated research or development of the Company Group or work performed by Employee for the Company Group. For this purpose, the “Company Group” means the Company and all Affiliates.

(c)The Company may, in its sole discretion, waive the automatic assignment provisions of Section 5(a) using such criteria as the Company, in its sole discretion, may decide to use. No waiver of the automatic assignment provision is effective unless in a writing signed by a person authorized by the Company. 

(d)No waiver of the automatic assignment provision of any Company Intellectual Property relating to the business of the Company or arising out of Employee’s employment with the Company will be effective without the submission of a complete and correct IP Disclosure Form. No waiver of the automatic assignment provision is effective if Employee’s IP Disclosure Form is incomplete, incorrect, otherwise defective, or if any misrepresentation has been made. Employee is estopped from asserting waiver, and any waiver will be void and/or voidable, if the waiver is obtained in violation of this Attachment II, or obtained through fraud, negligence, failure to disclose, or incorrect, incomplete, or defective information on an IP Disclosure Form.

6.Non-Competition.

(a)During the term of employment with the Company or any of its Affiliates, Employee agrees not to engage, as an employee, officer, director, consultant, partner, owner or another capacity, in any activity or business competitive to that of the Company or any of its Affiliates. 

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(b)Employee recognizes and acknowledges that Company Confidential Information constitutes protectable information belonging to the Company and its Affiliates, including deemed trade secrets defined under applicable laws. In order to protect the Company and its Affiliates against any unauthorized use or disclosure of Company Confidential Information and in exchange for the Company's promise to provide Employee with access to Company Confidential Information and other consideration during employment with the Company and its Affiliates, Employee agrees that for a period of one year following the end of employment with the Company, Employee will not within the Restricted Territory directly or indirectly work for or assist (whether as an owner, employee, consultant, contractor or otherwise) any business or commercial operation whose business directly or indirectly competes with any area of the Company’s business in which Employee was employed by the Company. Moreover, Employee agrees that the Company may provide a copy of this Attachment II to any entity for whom Employee provides services in the one-year period following the date of termination of Employee's employment with the Company and its Affiliates. In the event of breach by Employee, the specified period will be extended by the period of time of the breach. 

Employee recognizes and acknowledges that the business, research, products, and services of the Company and its Affiliates are by nature worldwide in scope, and that the Company and its Affiliates are not required to maintain a physical location in close proximity to its customers. Employee agrees that in order to protect Company Confidential Information, business interests and goodwill, the “Restricted Territory” includes any county, parish, borough, or foreign equivalent: (1) in which the Company has customers or service assignments about which Employee received or obtained Company Confidential Information during his/her employment with the Company; (2) in which Employee had a customer or service assignment for the Company in the one-year period preceding Employee's termination; or (3) in which the Company had a work site, job site, facility, or office, at which Employee had a work activity for the Company in the one-year period preceding Employee’s termination. With respect to competitive activities in Louisiana, the Restricted Territory will be limited to the following parishes: Acadia, Allen, Bossier, Caddo, Calcasieu, Cameron, Claiborne, De Soto, Evangeline, Iberia, Jefferson, Lafayette, Lafourche, Orleans, Ouachita, Plaquemines, Red River, Sabine, St. Charles, St. Landry, St. Mary’s, Tangipahoa, Terrebonne, Union, Vermillion, and West Baton Rouge.

(c)The Company has attempted to place the most reasonable limitations on Employee’s subsequent employment opportunities consistent with the protection of the Company’s and its Affiliates’ valuable trade secrets, Company Confidential Information, business interests, and goodwill. Employee acknowledges that the limitations contained herein, especially limitations as to time, scope, and geography, are reasonable. In order to accommodate Employee in obtaining subsequent employment, the Company and its Affiliates may, in their discretion, grant a waiver of one or more of the restrictions on subsequent employment herein. A request for a waiver must be in writing and must be received by the Company at least 45 days before the proposed starting date of the employment for which Employee is seeking a waiver. The request must include the full name and address of the organization with which Employee is seeking employment; the department or area in which Employee proposes to work; the position or job title to be held by Employee; and a complete description of the duties Employee expects to perform for such employer. The decision to grant a waiver will be in the Company’s discretion. If the Company decides to grant a waiver, the waiver may be subject to such restrictions or conditions as the Company may impose and will not constitute a waiver of any other term. 

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7.Non-Solicitation.

(a)While employed by the Company and its Affiliates, and during the 18-month period or after employment with the Company and its Affiliates ends, Employee will not directly nor indirectly, on Employee’s own behalf or on behalf of any person or entity, recruit, hire, solicit, or assist others in recruiting, hiring, or soliciting any person, who is, at the time of the recruiting, hiring, or solicitation, an employee, consultant, or contractor of the Company to leave the Company and its Affiliates, diminish their relationship with the Company and its Affiliates, or work for a competing business. This restriction will be limited to persons: (1) with whom Employee had contact or business dealings while employed by the Company and its Affiliates; (2) who worked in Employee’s business unit (Group); or (3) about whom Employee had access to confidential information. In the event of breach by Employee, the specified period will be extended by the period of time of the breach. 

(b)While employed by the Company and its Affiliates, and during the 18-month period after employment with the Company and its Affiliates ends, Employee will not, directly or indirectly, on behalf of himself or others, contact for business purposes, solicit or provide services to clients, or entities considered prospective clients, of the Company and its Affiliates for the purpose of selling products or services of the types for which Employee had responsibility or knowledge, or for which Employee had access to Company Confidential Information while employed by the Company and its Affiliates. This restriction applies only to clients of the Company and its Affiliates and entities considered prospective clients by the Company and its Affiliates with whom Employee had contact during the two years prior to the end of his/her employment with the Company and its Affiliates. 

8.Remedies for Employee’s Breach.

(a)Employee acknowledges that the Company has agreed to provide Employee with Company Confidential Information during Employee's employment with the Company and its Affiliates. Employee further acknowledges that, if Employee was to leave the employ of the Company and its Affiliates for any reason and use or disclose Company Confidential Information, that use or disclosure would cause the Company and its Affiliates irreparable harm and injury for which no adequate remedy at law exists. Therefore, in the event of the breach or threatened breach of the provisions of this Attachment II by Employee, the Company and its Affiliates will be entitled to:  (i) recover from Employee the value of any portion of the Award that has been paid or delivered; (ii) seek injunctive relief against Employee pursuant to the provisions of subsection (b) below; (iii) recover all damages, court costs, and attorneys’ fees incurred by the Company or its Affiliates in enforcing the provisions of this Award, and (iv) set-off any such sums to which the Company or any of its Affiliates may be entitled hereunder against any sum which may be owed Employee by the Company and its Affiliates.

(b)Because of the difficulty of measuring economic losses to the Company or Employer as a result of a breach of the foregoing covenants, and because of the immediate and irreparable damage that could be caused to the Company or its Affiliates for which it would have no other adequate remedy, Employee agrees that the foregoing covenants may be enforced by the Company or its Affiliates in the event of breach by him/her by injunction relief and restraining order, without the necessity of posting a bond, and that such enforcement will not be the Company’s or its Affiliates’ exclusive remedy for a breach but instead will be in addition to all other rights and remedies available to the Company or any Affiliate. 

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(c)Each of the covenants in this Attachment II will be construed as an agreement independent of any other provision in this Attachment II, and the existence of any claim or cause of action of Employee against the Company or any Affiliate, whether predicated on this Attachment II or otherwise, will not constitute a defense to the enforcement by the Company or any Affiliate of such covenants or provisions.

(d)Employee acknowledges that the remedies contained in the Attachment II for violation of this Attachment II are not the exclusive remedies that the Company or an Affiliate may pursue. 

9.Waiver.  Waiver of any term of this Attachment II by the Company will not operate as a waiver of any other term of this Attachment II. A failure to enforce any provision of this Attachment II will not operate as a waiver of the Company’s right to enforce any other provision of this Attachment II. 

10.Miscellaneous.  

(a)Employee represents and warrants that Employee is not a party to any other agreement that will interfere with Employee’s full compliance with this Attachment II or that otherwise may restrict Employee’s employment by the Company or its Affiliates or the performance of Employee’s duties for the Company or its Affiliates. Employee agrees not to enter into any agreement, whether oral or written, in conflict with this Attachment II.  

(b)This Attachment II may be enforced by, will inure to the benefit of, and be binding upon the Company, its successors, and assigns. This Agreement will also inure to the benefit of, and may be enforced by, the Company’s Affiliates. This Attachment II is binding upon Employee’s heirs and legal representatives. 

(c)Nothing in this Attachment II prohibits Employee from reporting possible violation of federal law or regulation to any governmental agency or entity, or making disclosures that are protected under a “whistleblower” provision of federal law or regulation. 

(d)If Employee is employed by an Affiliate of the Company or by accepting a transfer to an Affiliate of the Company, Employee agrees to the automatic application of all of the terms of this Attachment II to said Affiliate contemporaneously with the acceptance of such transfer, subject to subsequent agreements, if any, executed by Employee and the Affiliate of the Company or the Company, and to the fullest extent allowed by law. 

(e)Should any portion of this Attachment II be held invalid, unenforceable, or void, such holding will not have the effect of invalidating or voiding the other portions of this Attachment II. The parties hereby agree that any portion held to be invalid, unenforceable, or void will be deemed amended, reduced in scope or deleted to the extent required to be valid and enforceable in the jurisdiction of such holding. The parties agree that, upon a judicial finding of invalidity, unenforceability, or void, the court so finding may reform the agreement to the extent necessary for enforceability, and enter an order enforcing the reformed Attachment II. No court ordered reformation or amendment will give rise to a finding of knowing, willful, or bad faith unreasonableness against the Company regarding this Attachment II. 

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(f)The terms and conditions of this Attachment II supersedes any previous agreement, oral or written, between Employee and the Company relating to the subject matter thereof[; provided, however, that nothing herein will limit Employee’s obligations to the Company or any Affiliate under any prior agreement containing restrictions related to intellectual property, confidential information, solicitation or competition.]1

	
	 

	
1 
	
 NTD: Consider whether we want to supersede agreements signed at commencement of employment regarding invention assignment, confidentiality, etc.

Page 19 of 19Exhibit

Exhibit 10.4

AMENDED AND RESTATED
SUPPLY AGREEMENT
This SUPPLY AGREEMENT (“Agreement”) is made and entered into effective as of March 2l, 2017 (the “Effective Date”), by and between XPEL Technologies Corp., a Nevada corporation, having a place of business at 618 W. Sunset Road, San Antonio, Texas 78216 (“Purchaser”), and entrotech, inc., an Ohio corporation, having a place of business at 1245 Kinnear Road, Columbus, Ohio 43212 (“Seller”). Purchaser and Seller may be referred to individually as a “Party” and collectively as the “Parties.”
RECITALS
A.    The parties hereto entered into a Supply Agreement on February 12, 2013, and now desire to amend and restate that Agreement as set forth below;
B.    Purchaser is a leading supplier of automotive protective films;
C.    Seller is a technological leader in developing and manufacturing advanced material solutions for a variety of high-tech industries and has developed innovative subject matter related to protective films and application thereof in the automotive industry(the “Field”):
D.    Purchaser and Seller desire to solidify a business relationship, whereby Purchaser will commercialize, market, distribute and sell technology and products relating to protective films for application in the Field, with Purchaser having exclusive rights to commercialize, market, distribute and sell such products within a subset of the Field defined to be the automotive aftermarket, which specifically includes automotive dealerships (the “Exclusive Field”), and Seller will supply Product (as defined below) to Purchaser:
E.    Outside of the Exclusive Field, Purchaser understands that Seller will retain all rights to Seller’s technology and products relating to protective films for any application;
F.    Purchaser understands that Seller will also retain all rights to commercialize, market, distribute and sell technology and products with respect to any solution-cast core layer product useable or used within such protective films, including the rights to manufacture and sell solution-cast core layer product (not assembled by Seller as a multi-layer automotive paint protection film);
G.    Purchaser desires to purchase certain Product from Seller for the period described herein; and
H.    Seller possesses certain manufacturing capabilities, facilities, equipment, technology, know-how and expertise to manufacture the Product and desires to supply the Product to Purchaser on the terms set forth herein.

AGREEMENT
NOW, THEREFORE. in consideration of the mutual covenants set forth below and for other good and valuable consideration, the receipt and sufficiency of which the Parties hereby acknowledge, the Parties agree as follows:
l.    Definitions.
(a)    “Affiliate”  means, with regard to any Party, any individual who or Entity (as defined below) that in whatever country organized or resident directly or indirectly through or one or more intermediaries, is Controlled by, or is under common Control with, or Controls such Party (“Control” and “Controlled” being defined herein below).
(b)    “Confidential Information”  means: (i) confidential and/or proprietary information and materials, including tangible samples, disclosed orally or in writing or otherwise provided to the receiving Party by the disclosing Party or an Affiliate thereof; (ii) all information set forth in Exhibit A to this Agreement; and (iii) the terms of this Agreement. All customer lists developed or used in connection with any sales of the Product pursuant to this Agreement shall be Purchasers Confidential Information for purposes of this Agreement and Purchaser shall own all right, title and interest therein.
(c)    “Control” or “Controlled”  as used herein mean with respect to any specified individual or Entity the possession, directly or indirectly, of the power to direct or cause the direction or the management and policies of such individual or Entity, whether through ownership of securities, by contract or otherwise.
(d)    “Cost of Goods”  means the direct costs and expenses, including but not limited to material, tooling manufactured or purchased solely to enable Seller to manufacture a Product, labor, packaging, and transportation costs and expenses (including all freight, insurance, duties, landing charges, taxes, tariffs or other related expenses, whether incurred before or at arrival of the Product at the Delivery Location), actually incurred by Seller or its designated Affiliate with respect to its manufacturing and supply of Product to Purchaser hereunder, all of which shall be reasonable, documented, and calculated in accordance with U.S. generally accepted accounting principles.
(e)    ·”Delivery Location”  means, unless otherwise specified in a Purchase Order (as referenced herein below), 618 N. Sunset Road, San Antonio, Texas 78216.
(f)    ·”Developed Product”  means a product related to protective films for application in the Exclusive Field that one or both of Seller and Purchaser, directly or indirectly through one or more of their Affiliates, may develop during the Term of this Agreement.
(g)    ·”Entity”  means any corporation, firm, partnership, limited liability company, proprietorship, or other form of business organization.
(h)    “Exclusive Field”  has the meaning set forth in the Recitals.
(i)    “Field”  has the meaning set forth in the Recitals.

(j)    “Territory”  means the entire world.
(k)    “Patent Right”  has the meaning set forth in Section 26.
(l)    “Losses”  means any loss, liability, cost damage, expense (including costs of investigation and defense and reasonable attorneys’ fees and expenses), judgment, or royalties paid to a third party (without giving effect to any materiality qualification or any similar qualification contained or incorporated directly or indirectly in any representation or warranty for purposes of determining the dollar amount of Losses).
(m)    “Product”  refers to one or more of the surface protection films developed or manufactured by Seller, including, without limitation, as described in Exhibit A attached hereto (as amended hereafter by mutual written agreement of the Parties or in accordance with Section Section 25(a)) or any similar or next-generation products developed or manufactured by Seller. Unless explicitly set forth otherwise in this Agreement, any change in Exhibit A shall be reduced to writing and agreed to by the Parties.
(n)    “Specifications”  means the Product information and requirements, if any, set forth in a Purchase Order (as hereinafter defined).
2.    Supplv and Minimum Requirement.  During the Term (as defined below), Seller agrees to supply Purchaser (as set forth below) the type and amount of Product ordered by Purchaser from time to time pursuant to a purchase order or other written document for the purchase of Product (each, a “Purchase Order”). During the Term, Purchaser will purchase and Seller will sell a minimum of $20,000,000 of Product per annum (the “Minimum Requirement”). In meeting its obligations hereunder in regards to the Minimum Requirement, Purchaser will use commercially reasonable efforts to purchase a minimum of $5,000,000 of Product quarterly. Each Purchase Order shall contain instructions concerning quantity, delivery schedule and other relevant information. In the event of any conflict between the terms of this Agreement and the terms of a Purchase Order, this Agreement shall govern. Except as otherwise expressly provided for herein. Seller shall bear the sole responsibility for all Cost of Goods.
3.    Purchase Price.  The purchase price for Product supplied hereunder (the “Purchase Price”) shall be as indicated on Exhibit A attached hereto. Payment terms are net sixty (60) days from receipt of invoice; provided, however, that if Purchaser pays within thirty (30) clays of receipt of invoice then Purchaser shall receive a five percent (5%) discount on the Product set forth in such invoice.
4.    Shipment and Delivery.  Unless otherwise specified in the applicable Purchase Order, shipments of Product will be made FOB Seller’s dock. Seller shall ship all Product in accordance with the instructions in Purchasers Purchase Order. In the absence of contrary shipping instructions in a Purchase Order, Seller shall ship the Product FOB Sellers dock to the default Delivery Location specified in Section l.
5.    Term.  This Agreement shall continue for a term of three (3) years from the Effective Date (the “Initial Term”) and automatically renew for successive two (2) year periods thereafter (each successive period a “Renewal Term,” and collectively with the Initial Term, the “Term”), unless earlier terminated in accordance with the terms hereof.

6.    Co-Exclusive/Exclusive Rights.  Seller shall sell the Product to Purchaser and, at Seller’s sole discretion, to any other person or Entity for application within the Field, except the Exclusive Field. Within the Exclusive Field, Seller shall exclusively sell the Product to Purchaser and shall not directly or indirectly, through an Affiliate or third party, market, sell, offer to sell, give, lend, transfer, consign, or provide Product, or any derivative thereof, to any other person or Entity for application within the Exclusive Field. Purchaser will exclusively purchase the Product from Seller and will not market, sell, give, lend, transfer, consign, make, have made, export, or provide the Product, or any derivative thereof, to any person or Entity for application in the Field except for Product purchased from Seller. In the event Seller is contacted by any third party soliciting the purchase of Product for use in the Exclusive Field, Seller shall promptly refer such third party to Purchaser.
7.    Specifications.  Any material change or modification to the Specifications shall be mutually agreed upon in writing, except that Purchaser’s consent may not be unreasonably withheld in the event that a raw material supplier goes out of business, goes bankrupt, ceases production or ceases sales to Seller. For any such change or modification in the Specifications that results in an increased cost to Seller of supplying the Product hereunder, there shall be a corresponding upward adjustment to the Purchase Price for the Product; provided, however, that Purchaser shall have the right to terminate this Agreement effective immediately upon notice to Seller in the event that the Purchase Price for the Product increases by an aggregate of 10 percent (10%) or more in any given calendar year during the Term, for any reason other than as a result of changes to the Specifications requested by Purchaser.
8.    Warranties and Representations.
(a)    Compliance with Law.  Each Party represents, warrants and covenants to the other Party that it is and will remain in material compliance with all applicable law as it may apply to this Agreement and such Party’s performance under this Agreement, non-compliance with which would have a material adverse effect upon either Party.
(b)    Authorization.  Each Party represents and warrants for itself that (i) it is duly incorporated and validly existing and in good standing under the laws of the jurisdiction of its incorporation, (ii) it has the full right, power, and authority to execute and perform this Agreement, (iii) this Agreement does not conflict with or otherwise result in a breach of any agreement to which such Party is a party or to which it is bound, and (iv) this Agreement represents a valid, legally binding obligation of it, enforceable against it in accordance with its terms.
(c)    Warranty of Noninfringement.  Seller represents and warrants that no intellectual property right in any country, which is owned by, controlled by, or licensed to any third party, has been or would be infringed or misappropriated by the practice of Patent Rights or export, offer for sale, or sale of Product by Purchaser.
(d)    No Warranty Regarding Scope and Validity of Patent Rights.  Purchaser acknowledges that Seller provides no representation or warranty that Seller’s Patent Rights will include any patents, including patents of sufficient scope to deter competitors, nor that any such patents would be valid and enforceable.

(e)    Information Acquired Subsequent to Effective Date.  If, subsequent to the Effective Date, a Party obtains information that affects, conflicts with, or is inconsistent with any representation made or warranty given by that Party in this Agreement, then that Party covenants to promptly advise the other Party of such information acquired subsequent to the Effective Date. However, the provision of such information shall not affect the scope of any representation or warranty given by a Party under this Agreement.
9.    Relationship of the Parties.  The Parties acknowledge that they are independent contractors and no other relationship, including partnership, joint venture, employment, franchise, master/servant or principal/agent is intended by this Agreement. Neither Party shall have the right to bind or obligate the other or represent itself in any manner, whether written, verbal or otherwise, as the other Party.
10.    Delivery Terms and Risk of Loss.  All deliveries to Purchaser shall be FOB Seller’s dock. Risk of loss or damage shall pass to Purchaser at the time a delivery arrives at the Delivery Location.
11.    Taxes.  Seller’s pricing includes all applicable taxes (including but not limited to, income, sales, use, excise, value-added, and other similar taxes), duties, and charges. Seller is solely responsible for collection and payment of all such taxes, duties, and charges resulting from this Agreement or as a result of Seller’s performance hereunder, whether now or hereafter imposed, levied, collected, withheld, or assessed. In no event will Purchaser be liable for taxes payable by Seller.
12.    Packing.  Seller will pack Product shipped to Purchaser in accordance with commercially reasonable general packing practices.
13.    Delays.
(a)    Force Majeure.  Except for payment obligations, neither Party will be liable to the other Party for any failure to meet its obligations due to any Force Majeure Event. If the inability to perform continues for longer than thirty (30) days, either Party may terminate this Agreement by providing written notice to the other Party, and Purchaser will pay Seller for Product delivered and services performed prior to termination. For purposes of this Section 13, “Force Majeure Event” means a cause for non-performance that is beyond the non-performing Party’s reasonable control, including without limitation, those arising from: (i) government embargoes; (ii) blockades; (iii) seizure or freezing of assets; (iv) delays or refusals to grant an export license or the suspension or revocation thereof; (v) any other acts of any government that would limit the ability for contract performance; (vi) fires, earthquakes, floods, or severe weather conditions; (vii) any other acts of God; (viii) quarantines or regional medical crises; (ix) labor strikes or lockouts; (x) riots, strife, insurrection, civil disobedience, armed conflict, acts of piracy, terrorism or war, declared or not (or impending threat of any of the foregoing, if such threat might reasonably be expected to cause injury to people or property); and (xi) inability or refusal by Purchaser’s directed third party suppliers, if any, to provide Seller parts, services, manuals, or other information necessary for Product to be provided by Seller under this Agreement.

(b)    Order Adjustment.  If a Force Majeure Event causes a delay, then the date of performance will be extended by the period of time that the non-performing Party is actually delayed or for any other period as the Parties may agree to in writing.
14.    Inspection and Acceptance.  Unless other acceptance criteria have been agreed to by the Parties under this Agreement, Purchaser will inspect Product within a reasonable period, not to exceed thirty (30) calendar days, after delivery. Product will be presumed accepted unless Seller receives written notice of rejection explaining the basis for rejection within such timeframe. Seller will replace rejected Product by shipping the applicable replacement Product to Purchaser within ten (10) calendar days following its receipt of Purchaser’s written notice of rejection. Seller assumes shipping costs in an amount not to exceed normal surface shipping charges to Seller’s designated facility for the return of properly rejected Product. As to all properly rejected Product, Seller will bear the risk of loss or damage to Product in transit.
15.    Product Warranty.  Seller represents and warrants to Purchaser that Product shall, at the time of delivery, (a) be free from any material defects in materials, workmanship or design, and (b) be delivered to Purchaser free and clear from any security interest, lien or other encumbrance. EXCEPT AS OTHERWISE EXPLICITLY SET FORTH HEREIN, EACH PARTY EXPRESSLY DlSCLAIMS TO THE OTHER PARTY ANY EXPRESS OR IMPLIED WARRANTY, INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. ARISING OUT OF ITS PERFORMANCE OR ATTEMPTED DEVELOPMENT, MANUFACTURE, OR SUPPLY OF A PRODUCT PURSUANT TO THIS AGREEMENT.
16.    Compliance with Law: Product Complaints and Recalls.
(a)    Compliance with Law.  Seller will, at its sole expense, ensure that the manufacture and supply of the Product, including all facilities and processes used to manufacture the Product and all labeling and packaging of the Product, comply fully with any applicable laws, rules, regulations, order of any jurisdiction or any other requirement of any governmental, regulatory or administrative agency or authority or court or tribunal.
(b)    Product Complaints / Reports.  Purchaser shall handle all complaints and inquiries related to the Product made by users of the Product and any reporting requirements related thereto. Each Party shall reasonably cooperate with the other in sharing any information that may constitute a complaint related to the Product. Seller will reimburse Purchaser for all direct expenses reasonably related to complaints related to materially defective Product.
(c)    Recalls.  In the event Seller or Purchaser believe a recall or similar corrective action may be necessary pursuant to any Product provided under this Agreement, the Party believing there is a need for such recall or corrective action shall immediately notify the other in writing. If such recall or corrective action is necessary, each Party shall provide all necessary cooperation and assistance to the other in taking such action. Seller will not act to initiate a recall or take similar corrective action without the express prior written approval of Purchaser. Purchaser will not act to initiate a recall or take similar corrective action without first consulting with Seller in good faith, unless such consultation would be impracticable under the circumstances. The responsibility to conduct and the cost of any recall or similar corrective action will be borne 

by Seller, and Seller agrees to reimburse Purchaser for all direct expenses reasonably related to such recall or corrective action.
17.    Indemnification.
(a)    By Purchaser.  Purchaser shall indemnify, defend and hold Seller and any of its officers, directors, Affiliates, employees, agents, successors and permitted assigns (each, a “Seller Indemnified Party”) harmless from and against any and all third party claims, causes of action, and liabilities for any Losses arising out or or resulting from: (i) any Purchaser breach of a representation, warranty, covenant or obligation in this Agreement; or (ii) any gross negligence, recklessness or wrongful intentional acts or omissions of Purchaser or another Purchaser Indemnified Party (as defined in the following sub-paragraph (b)) in connection with the activities contemplated under this Agreement; but only in each case to the extent not due to the gross negligence, recklessness or wrongful intentional acts or omissions of a Seller Indemnified Party.
(b)    By Seller.  Seller shall indemnify, defend and hold Purchaser and any of its officers, directors, Affiliates, employees, sales agents, successors and permitted assigns (each, a “Purchaser Indemnified Party”) harmless from and against any and all third party claims, causes of action, and liabilities for any Losses arising out of or resulting from: (i) any Seller breach of a representation, warranty, covenant or obligation in this Agreement; (ii) any gross negligence, recklessness or wrongful intentional acts or omissions of Seller or another Seller Indemnified Party in connection with the activities contemplated under this Agreement; or (iii) any alleged infringement of any patent, trademark, copyright, trade secret or other intellectual property rights by any Product furnished to Purchaser by Seller (excluding claims arising from any specifications provided by Purchaser, hereafter agreed to in writing by the Parties), and the use thereat: and any services and deliverables provided by Seller hereunder; but only in each case to the extent not due to the gross negligence, recklessness or wrongful intentional acts or omissions or a Purchaser lndemnified Party.
(c)    Procedure.  A Party who receives service of process or the receipt of actual notice of a claim with regard to which such Party desires to seek indemnification hereunder shall promptly notify the other Party (the “Indemnifying Party”) of the receipt of such notice or service of process for which such indemnification is sought. The Indemnifying Party shall promptly assume full responsibility for the defense of any such suit, claim or proceedings. The Party seeking indemnification shall cooperate in such defense at the expense of the Indemnifying Party. Failure to give timely notice of any claims which may give rise to an indemnification claim under this Agreement shall not affect the rights of the Party seeking indemnification to collect indemnification from the Indemnifying Party so long as such failure does not materially and substantially adversely affect the Indemnifying Party’s ability to defend such claim against a third party. Each Party seeking indemnification agrees that it will offer reasonable assistance to the Indemnifying Party in defending, prosecuting or resolving, any claim, action, charge, or compliant.
18.    Termination.
(a)    By Seller.  Seller shall have the right, but not the obligation, to terminate this Agreement prior to the expiration of the Term: (i) effective immediately on written notice to 

Purchaser if any of the following occurs: (1) failure of Purchaser to pay the Purchase Price within the sixty (60) day period specified in Section 3 above, which failure continues for a period of ten (l0) business days after Seller gives written notice thereof to Purchaser, (2) Seller’s or Purchaser’s sale of Product violates any applicable law or legal right of a third party, and such violation is reasonably likely to materially and adversely affect Seller, or (3) Purchaser does not have a material permission, permit, or license necessary to perform any activity required by this Agreement, including any permission, permit, or license from any local, state, or federal government agency or other public or private authority necessary to operate its businesses, or any such permission, permit, or license is suspended, withdrawn, or revoked, and Purchaser fails to cure such failure, suspension, withdrawal, or revocation within sixty (60) days following written notice thereof, and such failure, suspension, withdrawal or revocation, if not cured, is reasonably likely to materially and adversely affect Seller; (ii) effective immediately on written notice to Purchaser if Purchaser terminates its existence, discontinues business, has a receiver appointed for any of its property, makes any assignment for the benefit of creditors, or has any proceedings under any bankruptcy, reorganization, or similar laws commenced by or against it; (iii) effective immediately on written notice to Purchaser if Purchaser commits any material breach of this Agreement and fails to cure the breach, if it is capable of being cured, within sixty (60) days following written notice of the breach: or (iv) effective upon expiration of the then current Term if written notice of the same is provided to Purchaser at least two (2) months prior to such expiration.
(b)    By Purchaser.  Purchaser shall have the right, but not the obligation, to terminate this Agreement prior to the expiration of the Term: (i) effective immediately on written notice to Seller if any of the following occurs: (1) Purchaser’s or Seller’s sale of Product violates any applicable law or legal right of a third party and such violation is reasonably likely to materially and adversely affect Purchaser, or (2) Seller does not have a material permission, permit, or license necessary to perform an) activity required by this Agreement, including any permission, permit, or license from any local, state, or federal government agency or other public or private authority necessary to operate its businesses, or any such permission, permit, or license is suspended, withdrawn, or revoked, and Seller fails to cure such failure, suspension, withdrawal, or revocation within sixty (60) days following written notice thereof, and such failure, suspension, withdrawal or revocation, if not cured, is reasonably likely to materially and adversely affect Purchaser: (ii) effective immediately on written notice to Seller if Seller terminates its existence, discontinues business, has a receiver appointed for any of its property, makes any assignment for the benefit of creditors, or has any proceedings under any bankruptcy, reorganization, or similar laws commenced by or against it; (iii) effective immediately on written notice to Seller if Seller commits any material breach of this Agreement and fails to cure the breach, if it is capable of being cured, within sixty (60) days following written notice of the breach; or (iv) effective upon expiration of the then current Term if written notice of the same is provided to Seller at least two (2) months prior to such expiration.
(c)    Effect of Termination.  Upon termination or expiration of this Agreement for any reason, nothing herein shall be construed to release either Party from any obligation, which matured prior to the effective date of such expiration or termination. Without limitation of the foregoing, expiration or termination of this Agreement shall not relieve Purchaser’s obligation to pay all fees and other amounts that are owed by Purchaser as of or after the elate of expiration or termination.

19.    Audit and Inspection Rights.  Either Party and its agents shall have the right, upon five (5) business days· notice to the other Party and during regular business hours, to examine at its sole cost and expense such other Party’s records and systems related to this Agreement or the Product, provided that such audits shall not occur more than once in any six-month period and shall be conducted by the examining Party in a manner that minimizes any disruption to the normal business operations of the other Party. The provisions of this Section 19 will survive any expiration or termination of this Agreement for a period of five (5) years.
20.    Insurance.  Seller shall, at its own expense, obtain and maintain throughout the Term commercial general liability insurance including coverage for product liability/completed operations against any claims, suits, Losses or damages arising as a result of this Agreement. Seller shall, at its own expense, obtain and maintain throughout the Term workers compensation insurance with a minimum coverage that is consistent with state statutory limits. If and when requested, Seller shall provide to Purchaser insurance certificates showing compliance with this Section 20.
21.    Mediation.  Except as required in the course of legal process, before proceeding to legal action, all disputes between the Parties relating to this Agreement shall first be submitted to non-binding mediation with a mediator and at a location mutually agreed upon by the Parties. The mediation shall be conducted before a single mediator to be agreed upon by Purchaser and Seller. Such mediation shall be concluded within forty-five (45) days following the initial request by either Party to commence such mediation, and if not concluded within such time period, either Party may proceed directly to legal action.
22.    Compliance With Import and Export Laws.  Each Party shall be responsible for compliance with all import and export control laws and regulations. Each Party will obtain any import, export, and re-export approvals and licenses required for goods, transfers, services and technical data delivered by that Party and will retain documentation to support compliance with those laws and regulations.
23.    Confidential Information.
(a)    Obligations.  For the term of this Agreement plus five (5) years thereafter, each Party and its Affiliate(s) will protect the confidentiality of the Confidential Information disclosed by the other Party with no less care than it protects the confidentiality of its own proprietary and confidential information and materials of like kind, but in no event will the Party receiving Confidential Information protect such Confidential Information with less than a reasonable standard of care. During this time period, each Party and its Affiliate(s) will protect the existence and terms of this Agreement by, for example, not advertising the fact that Seller is supplying Product for Purchaser according to this Agreement in order to fulfill an objective inconsistent with this Agreement. A Party receiving tangible samples embodying Confidential Information agrees not to analyze such tangible samples (for composition or structure) without the written consent of the disclosing Party. Each Party receiving Confidential Information will take (and, to the extent it is able, will cause its Affiliates, employees, and agents to take) any reasonable steps required to comply with the obligations of this is sub-paragraph (a).

(b)    Exceptions.  The obligations of the preceding sub-paragraph shall not apply when and to the extent such information: (i) was known to the receiving Party or its Affiliates(s) prior to receipt from the transmitting Party or its Affiliate, as documented in written records or publications that lawfully are in the possession of the receiving Party or its Affiliate(s) or known to them prior to such receipt; (ii) was lawfully available to the trade or to the public prior to receipt from the transmitting Party or its Affiliates(s): (iii) through no act on the part of the receiving Party or its Affiliate(s) thereafter becomes lawfully available to the trade or to the public; (iv) is independently developed by an employee or agent of the receiving Party or its Affiliate(s), subsequent to receipt of such information from the transmitting Party or its Affiliate(s); or (v) is required to be disclosed a part or any state or federal securities filing, (vi) is required to be disclosed to a third party by law or legal process, provided that the Party required to make such disclosure takes reasonable steps to inform the transmitting Party of such disclosure before it takes place and provides the transmitting Party an opportunity to object or otherwise act.
(c)    Return of Confidential Information.  The Parties agree to return or destroy all extant Confidential Information (including tangible products or materials) received from the other Party at that other Party’s request. The receiving Party may retain in the office of its legal counsel one copy of written Confidential Information for record purposes only.
(d)    Prior Confidential Disclosure Agreement.  Unless indicated otherwise herein, the terms of this Agreement supersede those of the Confidential Disclosure Agreement between the Parties effectively dated June 1, 2010. As such, the Parties hereby terminate the Confidential Disclosure Agreement dated June 1, 2010, including, without limitation, any provision thereof implying survivability.
24.    Non-Solicitation of Employees.
(a)    Each Party agrees that during the period beginning on the Effective Date and ending one (1) year following the termination of this Agreement (the “Protected Period”), such Party (the “Restricted Party”) will not directly or indirectly solicit, or contact for the purpose of soliciting, any employee(s) of the other Party (the “Protected Party”) (i) to terminate their employment, contractual, or other relationship with the Protected Parry to work for any business, individual, partnership, firm, corporation, or other entity, or (ii) to work for the Restricted Party or its Affiliate: provided, however, that the foregoing restrictions and prohibitions shall not apply to advertisements in newspapers or other widely distributed publications, media, or mail, including Internet websites. For purposes of this Section 24, employee(s) of a Protected Party shall include any individual who has been retained by such Protected Party as an employee, consultant or contractor to provide services to or on behalf of such Protected Party within the preceding twenty-four (24) months or, in the event this Agreement is terminated, within the twenty-four (24) months prior to the date of such termination, in each case regardless of whether the relationship of such person with the Protected Party has been subsequently terminated.
(b)    Each Party agrees that the covenants contained in this Section 24 are appropriate and reasonable when considered in light of the nature and extent of the business conducted by the Parties. Each Party further agrees that the periods of time during which such Party is prohibited from engaging in the business practices contemplated by this Section 24 shall be extended by any length of time during which such Party is in breach of any of such covenants.

(c)    The Parties hereby acknowledge and agree that money damages would not be a sufficient remedy for any breach of this Agreement by either Party, and each Party shall be entitled to seek injunctive or other equitable relief to remedy any such breach or threatened breach by the other Party. Such remedy shall not be deemed to be the exclusive remedy for any breach of this Agreement, but shall be in addition to all other rights and remedies available at law or in equity.
25.    Product Development.
(a)    During Term 1 of Agreement.  Exhibit A shall be automatically amended to include any film-based Developed Product. Each Party shall promptly advise the other Party in writing of any Developed Product developed solely by such Party and/or that Party’s Affiliate(s).
(b)    Costs.  Each party shall be responsible for its own costs associated with development of Developed Product.
(c)    Devotion of Resources.  Any obligations  regarding a duty to devote resources and efforts to the development of Developed Product are contained in this Agreement. There is no implied obligation to devote any other level of resources or effort,
(d)    Risk of Failure.  The Parties recognize and assume the risks associated with designing, developing, and manufacturing Developed Product, including the risk that such Developed Product will not fulfill market expectations or customer demands.
26.    Patent Rights.
(a)    Definition of Patent Rights.
(i)    “Patent Right”  means all United States and foreign patents that have issued or may in the future issue (including utility, utility model and design patents, supplementary protection certificates, certificates of invention and the like), all patent applications (including applications for utility, utility model and design patents supplementary protection certificates, certificates or invention and the like), and all divisionals, continuations, continuations-in-part, reissues, reexaminations, renewals, extensions or additions to any such patents and patent applications, heretofore or hereafter filed or having legal force in any country of the world.
(ii)    “Invention” means all inventions and improvements disclosed in the Patent Rights.
(iii)    “Purchaser Patent Rights” means those Patent Rights solely owned by, or directed to an Invention conceived solely by employees, agents, and/or consultants of, Purchaser or its Affiliate(s) without reference to Seller’s Confidential Information.
(iv)    “Seller Patent Rights” means those Patent Rights solely owned by, or directed to an Invention conceived solely by employees, agents, and/or consultants of, Seller or its Affiliate(s) without reference to Purchaser’s Confidential Information.
(b)    Ownership.  Ownership of Patent Rights directed to Inventions conceived 

during the Term of this Agreement shall be owned as follows:
(i)    Ownership by Seller.  Seller or its designated Affiliate shall own all right, title, and interest in Seller Patent Rights.
(ii)    Ownership by Purchaser.  Purchaser or its designated Affiliate shall own all right, title, and interest in Purchaser Patent Rights.
(c)    Handling of Patent Rights.  The Parties desire that a mechanism be established to handle their respective rights and responsibilities for the filing, prosecution, issuance, maintenance and licensing of all Patent Rights under this Agreement.
(i)    Right to File on a Party’s Patent Rights.  Each Party or its designated Affiliate shall have the exclusive right in the first instance, and at that Party’s sole expense, to file, prosecute, issue, maintain, license (to the extent not inconsistent with this Agreement), enforce, and defend that Party’s sole Patent Rights. Each Party shall have no liability to the other Party or its Affiliate(s) for that Party’s acts or failure to act with respect to such Patent Rights.
(ii)    Enforcement of Patent Rights.  Seller shall diligently enforce Seller Patent Rights at its sole cost and expense, and Purchaser will join and reasonably cooperate with Seller in such enforcement action. Any damages or other recovery, whether by settlement or otherwise, from an action hereunder to enforce such Patent Rights shall first be applied pro rata to each Party to pay such Party’s costs and expenses of litigation in such action. Any amounts from damages or other recovery remaining after payment of costs and expenses (the “Net Proceeds”) shall be allocated to Purchaser. Seller may not settle any such enforcement action without Purchaser’s written approval, 11 Seller fails to timely or reasonably enforce any such Patent Rights, then Purchaser (A) may, at its sole discretion and expense from that time forward, individually pursue and resolve such enforcement action for such Patent Rights, (B) will solely own such Patent Rights, and Seller will be deemed to have assigned all right, title and interest therein to Purchaser, and (C) may retain all damages or other recovery, whether by settlement or otherwise, from its action to enforce such Patent Rights.
(d)    Notification After Patent Filing.  Within a reasonable period of time after a Party or its designated Affiliate files any patent application during or after the Term of this Agreement that claims any Patent Rights, the Party or its designated Affiliate filing such an application shall provide the other Party with a copy of the application. The Party receiving the copy of the application shall then have thirty (30) days to notify the filing Party (the “Patent Notice”) as to whether it believes that any Confidential Information disclosed by that Party is disclosed in the application. In the event that within fifteen (15) days after receipt of a Patent Notice, the Parties are unable to agree as to whether or not the application contains Confidential Information, the Parties agree to submit the dispute to arbitration in Columbus, Ohio pursuant to the Rules of American Arbitration Association. If the application contains any such Confidential Information, then the filing Party shall take all necessary steps to cause withdrawal of such application (without retaining a residual right to claim priority) before any publication thereof, unless the filing Party is given  the permission of the Party disclosing such Confidential Information, which permission shall only be withheld if disclosure of such Confidential Information has a significant adverse impact upon the interests of the Party owning such 

Confidential Information.
(e)    Licenses.
(i)    License Granted by Purchaser. Purchaser hereby grants to Seller a non-exclusive license continuing until the end of the Term of this Agreement under Purchaser Patent Rights to make, have made, use, import, sell, offer for sale or otherwise transfer Product exclusively for Purchaser throughout the Exclusive Territory in accordance with purposes of this Agreement. This grant includes the right for Seller to grant sublicenses of this scope to one or more of Seller’s Affiliates.
(ii)    License Granted by Seller.  Seller hereby grants to Purchaser an exclusive license continuing until the end of the Term of this Agreement under Seller Patent Rights to make, have made, use, import, sell, offer for sale or otherwise transfer Product in the Exclusive Field throughout the Exclusive Territory in accordance with the purposes of this Agreement. This grant includes the right for Purchaser to grant sublicenses of this scope to one or more of Purchaser’s Affiliates. Upon any breach of the Minimum Requirement  by Purchaser which remains uncured after 90 days’ written notice from Seller to Purchaser, the exclusive license granted to Purchaser under this sub-paragraph shall be automatically converted to a non-exclusive license of the same scope.
27.    Miscellaneous Provisions.
(a)    Severability.  If any provision of this Agreement is determined to be illegal, invalid, or unenforceable, the validity and enforceability of the remaining, provisions of this Agreement will not be affected and, in lieu of such illegal, invalid, or unenforceable provision, there will be added as part of this Agreement one or more provisions as similar in terms as may be legal, valid, and enforceable under applicable law.
(b)    Waiver.  The failure of either Party to enforce at any time any of the provisions or this agreement shall not be construed to be a continuing waiver of any provisions hereunder nor shall any such failure prejudice the right of such Party to take any action in the future to enforce any provision, hereunder.
(c)    Set-off.  Purchaser may set-off or recoup invoiced amounts or any portion thereof against sums that are due or may become due from Seller.
(d)    Succession.  This Agreement and the rights and obligations granted and undertaken hereunder shall be binding upon and inure to the benefit of the Parties hereto, and their successors, trustee(s) or receiver(s) in bankruptcy and permitted assigns.
(e)    Guarantee of Performance.  Each Party hereby guarantees the performance of its Affiliates under this Agreement.
(f)    Negotiation  and Drafting.  This Agreement was negotiated among the Parties, each of whom had the opportunity to consult with legal counsel during the negotiation, drafting, and execution of this Agreement, and the Parties agree that this Agreement shall not be construed against any Party as the drafter. 

(g)    Representations and Warranties.  No Party has relied on any representation or warranty of any kind in entering into this Agreement, or as an inducement to enter into this Agreement, except for those representations and warranties expressly set forth herein.
(h)    Authority.  Each Party represents and warrants that the person or persons executing this Agreement on its behalf are duly authorized and empowered to do so.
(i)    Notices.  Every notice between the Parties relating to the performance or administration of this Agreement shall be made in writing and if to Purchaser, to Purchaser’s authorized representative or, if to Seller, to Seller’s authorized representative. All notices required under this Agreement shall be deemed received either three (3) calendar days after mailing by certified mail, return receipt requested and postage prepaid, or one (1) business day after deposit for next day delivery with a commercial overnight carrier, and shall be sent to the following addresses:
If to Seller:
entrotech, Inc.
1245 Kinnear Road
Columbus, Ohio 43212
Attn. President
To Purchaser:
XPEL Technologies Corp.
618 W. Sunset Road
San Antonio, Texas 78216
Attn. Chief Executive Officer
(j)    Applicable Law and Forum.  This Agreement will be governed by the laws of the State of Ohio and the United States of America, without regard to conflicts of law principles, with the federal and or state courts located in Columbus, Ohio having exclusive jurisdiction to adjudicate any dispute arising out of or related to this Agreement.
(k)    Attorneys’ Fees and Expenses.  If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing Party in an adjudicated action shall be entitled to reasonable attorneys’ fees, costs and necessary disbursements in addition to any other relief to which such Party may be entitled.
(l)    Assignment.  Neither Party will assign any rights or obligations under this Agreement without the advance written consent of the other Party, provided that notwithstanding the foregoing, either Party may assign this Agreement in connection with (i) a merger or change in control of such Party or (ii) the sale or transfer of all or substantially all of the assets of the business to which it pertains. Any attempt to otherwise assign or delegate in violation of this sub-paragraph will be void. 

(m)    Entire Agreement.  This Agreement and the exhibits hereto contain the entire agreement between Purchaser and Seller. No other agreement or understanding purporting to add to or modify the terms and conditions hereof shall be binding upon Purchaser or Seller or their Affiliates unless agreed to by both Parties in writing on or subsequent to the date of this Agreement.
(n)    Survival.  The obligations of Parties undertaken pursuant to Sections 8, 11, 13, 15, 16, 17, 18, 19, 21, 22, 23, 24, and 25, as well as the definitions of any term used in those Sections, shall survive any expiration or termination of this Agreement.
(o)    No Implied Licenses Granted.  Except as expressly provided in this Agreement, a Party does not acquire any license to any Confidential Information or intellectual property rights of the other Party or its Affiliate(s).
(p)    Counterparts.  This Agreement may be executed in one or more counterparts, all of which taken together will constitute one and the same instrument.
(q)    Headings.  Section headings used in this Agreement are for convenience only and form no part or in any way modify or define the text or meaning of any provision of this Agreement.
(r)    Construction.  Except where the context requires otherwise, whenever used in this Agreement, the singular includes the plural, the plural includes the singular, the use of any gender is applicable to all genders and the word “or” has the inclusive meaning represented by the phrase “and/or.” The words “include” and “including” and variations thereof, shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the words “without limitation.”

[SIGNATURES TO FOLLOW]

IN WITNESS WHEREOF. the Parties hereto have executed this Agreement through their duly authorized representatives as of the date first written above.
	
		
	SELLER

	 
	 

	ENTROTECH, INC.,

	an Ohio corporation

	 
	 

	/s/ James E. McGuire, Jr.

	By:
	James E. McGuire, Jr.

	Its:
	President

	
		
	PURCHASER

	 
	 

	XPEL TECHNOLOGIES CORP.

	a Nevada corporation

	 
	 

	/s/ Ryan L. Pape

	By:
	Ryan L. Pape

	Its:
	President & Chief Executive Officer

EXHIBIT A

1576
1607
1620
1643
1626
1154
1191
1207
1297
1325
1502
1579
1624
1273
1156
1313
1130
1190
1208
1320
1785
1794
176l
1714
1819
1832

All Pricing on P.O. Basis

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