License Agreement Overview

Summary of the major commitments of both parties to the License Agreement.

Machine Pricing and License Fee

• REELEX Packaging Solutions agrees to sell the licensee all REELEX machines at a price equal to its cost of materials, labor and overhead. There is no profit margin included in the sale price of the REELEX machines.
  
• The licensee agrees to pay a one-time License Fee plus Annual Fees described in Schedule D which is appended to the Agreement. The licensee has the right to use all future improvements, patents and know-how without increasing future annual fees (except for inflation).
  

Terms of the Agreement

• The Agreement will be in force as long as REELEX Packaging Solutions owns unexpired patents relating to REELEX, or until one or the other parties to the Agreement cancels it.
  
• REELEX Packaging Solutions agrees not to cancel the Agreement so long as the licensee continues to live up to its part of the Agreement. The licensee is free to cancel the Agreement at any time without specifying a cause.
  
• Upon cancellation of the Agreement, REELEX Packaging Solutions agrees to repurchase all the REELEX machines the licensee previously purchased at the original cost of the machine depreciated by 10% per year, declining balance basis. The licensee is permitted to sell the machine(s) to a third party provided the purchaser agrees to accept the terms of a REELEX License Agreement.
  
• If the licensee cancels during the first 18 months of the Agreement, half of the License Fee is refunded.
  

Services and Warranties

• REELEX Packaging Solutions warrants that all REELEX machines meet the published specifications and will service them, including the repair or replacement of all parts free of charge for one year after delivery, assuming there has been no negligence on the part of the licensee.
  
• After the first year, REELEX Packaging Solutions will continue to service the machines; however, the licensee will pay for labor and for replacement parts. (Experience has shown that most service problems can be handled over the telephone or email without any labor charge.)
  
• REELEX Packaging Solutions agrees to provide 10 man days for training the licensee’s personnel free of charge during the first 120 days after the purchase of the licensee’s first machine. After 120 days, the licensee will pay for labor and expense costs to provide the service.
  
• REELEX Packaging Solutions agrees to assist new and existing licensees in all package development without cost.
  
• The licensee agrees to perform all required routine and preventive maintenance on the machines as prescribed in the manual provided, and will not alter the machine in any way without first consulting with REELEX Packaging Solutions, at the risk of voiding the machine warranty.
  

  Technical Information and Future Improvements
  

• REELEX Packaging Solutions agrees to provide the licensee with all pertinent proprietary information essential to the optimal performance of the licensee’s REELEX machine(s). The licensee will also be entitled to all future improvements in REELEX technology, regardless of the source of that improvement. Some improvements may require machine modifications that the licensee can purchase at cost.
• The licensee agrees that it will not divulge any proprietary information related to the REELEX System to any third party not currently a licensee, and that if the licensee gains patents on any improvement to the REELEX System, REELEX Packaging Solutions and all of its licensees will be able to use that improvement without charge.
  

Most Favored Licensee

• REELEX Packaging Solutions guarantees that all competing licensees are offered the same terms and that no one licensee will be offered amended terms without offering them to all other licensees.
• The preceding summary of the License Agreement only presents a selection of its significant terms. For the complete terms, refer to a copy of the actual REELEX License Agreement.
  

   

Policy on Payment and Termination

Policy on Annual Fees

• All REELEX customers sign a License Agreement with REELEX Packaging Solutions, Inc. that defines obligations between REELEX and the Licensee. Section III of the License Agreement obligates the Licensee to pay Annual Fees in accordance with Schedule D of the Agreement.
  
• The Annual Fees are payable regardless of market conditions or of the actual use of each REELEX machine. There is no provision in the License Agreement for partial utilization of machines and subsequent partial payment of fees.
  
• Other than adjustments for inflation, Annual Fee levels have not changed in over twenty years and do not fluctuate, up or down, depending on overall business levels.
• Each machine is either available for use by the Licensee and the full amount of fees are payable, or it can be disabled or returned and fees will cease to accrue.
  
• Except in cases where the REELEX machine is disabled by removal of a circuit board or the machine is returned to REELEX, the full amount of Annual Fees is payable by the Licensee.
  

Return of Machines to REELEX

• In cases where the Licensee has chosen to cease selling product in REELEX packages, machines can be returned to REELEX. REELEX will credit the Licensee a depreciated price for the machine. Once the machine is returned to REELEX, fees will cease to accrue.
  
• If a Licensee chooses to return a machine to REELEX, they should contact REELEX with the Machine Model and Serial Number. REELEX will provide a list of buy back prices that vary by month. The prices quoted will be CIF, Patterson, NY, USA. The credit amount will be determined by the month in which the machine is actually received at the REELEX factory. The amount of credit given may be reduced after receipt and inspection due to missing parts or damage beyond normal wear and tear.
  

Return of Circuit Boards

• Machines can be disabled by removing a critical circuit board. Contact REELEX for the identification of the critical circuit board for each machine model. Once the circuit board is returned to either REELEX or REELEX’ local representative, fees will cease to accrue.
  
• When the Licensee chooses to resume REELEX production, they can request the return of the circuit board. Once the circuit board is returned to the Licensee, fees will again accrue.
  

Cash Payments

• Due to the ongoing business recession, cash payments will not be made to Licensees for returned equipment or unused Fees. Credit memos will be issued to Licensees that they may use to offset other invoices owed to REELEX, present or future.
  
• If a returned machine is subsequently sold to another customer, the Licensee that returned the machine will be given the option of a cash payment for any unused credit.