JDS Uniphase Corporation
- and -
EMCORE Corporation
JOINT DEVELOPMENT, MANUFACTURING & MARKETING AGREEMENT
FOR HIGH SPEED ARRAY TRANSCEIVERS
This Agreement is made the 16th day of June 2000.
By and Between
(1) EMCORE Corporation, a New Jersey corporation having its principal offices
at 394 Elizabeth Avenue, Somerset, New Jersey (hereinafter referred to as
"EMCORE"); and
(2) JDS Uniphase Corporation, a California corporation having its principal
offices at 210 Baypointe Parkway, San Jose, California acting through its
Transmission Group located at 305 East Drive, Melbourne, Florida
(hereinafter referred to as "JDSU")
WHEREAS
(A) EMCORE is the beneficial owner of certain intellectual property rights
and possesses valuable technical information and know-how relating to
vertical cavity surface-emitting lasers ("VCSEL"), circuit design, optics
and detectors, optical links, and fiberoptic communication systems and
possesses or has access to valuable commercial know-how relating to
marketing such systems.
(B) JDSU possesses or has access to valuable commercial know-how and
information relating to the world-wide promotion, distribution and
marketing of fiberoptic communication systems and is the beneficial owner
of certain intellectual property rights and possesses valuable technical
information and know-how relating to the optical packaging, assembly,
applications engineering and testing of fiberoptic communication systems.
(C) EMCORE and JDSU have agreed to collaborate in the design, development,
production, marketing and sale of a family of fiberoptic array
transceivers in accordance with the terms and conditions herein
contained.
Now therefor it is hereby agreed as follows
1. Interpretation
1.1 The following provisions have effect for the interpretation of this
Agreement including the Recitals and Schedules.
1.2 The following words and expressions shall, unless the context otherwise
requires, have the following meanings:
"Agreement" means this Joint Development, Manufacturing and Marketing
Agreement.
"Affiliate" means in relation to either Party, a corporation or other
business entity in which the Party, either directly or
indirectly, owns more than 50% of the outstanding voting
stock (as measured by the ability of such stock to vote in
elections for the board of directors of such controlled
entity) for so long as such greater than 50% ownership shall
continue.
"Background" means in respect of each Party the Intellectual Property
owned by or otherwise in the possession of that Party
relating to the Products at the Effective Date.
"Cancellation
Costs" means the {redact} for all Products which are subject to a
Guaranteed Purchase Forecast but which are cancelled by JDSU
or a customer prior to shipment and which are not recovered
by either (i) the sale of the Products affected to other
parties within a reasonable time, or (ii) the exercise by
EMCORE, in a commercially reasonable manner, of other
mitigation measures.
"Commercial
Launch
Date" means for a Product, the earlier of (i) the first date
upon which JDSU makes sales of such Product to third party
customers other than low volume sales for evaluation
purposes or (ii) the date of Steering Committee sign-off of
a Product Release Checklist for such Product.
"Company
Informa-
tion" means a Party's proprietary information or materials which
are provided to the other Party, whether oral or written,
tangible or intangible, whether furnished before or after
the execution of this Agreement, in relation to the research
and development of, and promotion, marketing, distribution
and sale of Products hereunder, including, without
limitation, the information or materials on substances,
formulations, techniques, technology, equipment, data,
reports, Know-How, sources for supply, patent position and
business plans.
"Develop-
ment Cost
Difference" means the amount, if any, by which the actual development
costs of EMCORE (as reduced by any payments (other than
interest) to EMCORE by JDSU as to such Product pursuant to
Section 5.5(b) below) for a given Product, other than an
EMCORE Developed Product, exceeds the actual development
cost of JDSU for such Product (as increased by any payments
(other than interest) to EMCORE by JDSU as to such Product
pursuant to Section 5.5(b) below). For purposes of this
calculation, a Party's actual development costs shall be
determined on a per project basis in accordance with US GAAP
(taking into account the collateral benefit of such
development to other products or activities of the Party)
and in a manner that is consistent with the manner in which
such Party determines such costs for its other development
projects for the purpose of its publicly released financial
statements.
"EMCORE Developed Product" means a Product for which EMCORE is
primarily responsible for the development and includes,
without limitation, the Initial Product.
"Estimated
Develop-
ment Cost" means for each Product a Party's estimated cost for
developing such Product, as the same may be adjusted from
time to time by the Steering Committee pursuant to Section
4.4.2. A Party's estimated development costs shall be
determined on a per project basis in accordance with US GAAP
(taking into account the collateral benefit of such
development to other products or activities of the Party)
and in a manner that is consistent with the manner in which
such Party determines such costs for its other development
projects for the purpose of its publicly released financial
statements.
"Effective
Date" means the date hereof.
"Force
Majeure
Event" means any cause affecting the performance of this Agreement
or the obligations of either Party arising from or
attributable to any acts or events or failures beyond the
reasonable control of the affected Party including, without
limitation, strikes, lock-outs, industrial action, civil
commotion, riot, invasion, war, threat of or preparation for
war, fire, explosion, storm, flood, earthquake, subsidence,
epidemic or other natural physical disaster, omissions or
delays in acting by any governmental authority or the
political interference with the normal operations of either
Party.
"Fore-
ground" means all Intellectual Property generated in the course of
performance by a Party of its development obligations under
a Statement of Work pursuant to this Agreement.
"Future
Products" means any product that the Steering Committee agrees to make
subject to this Agreement pursuant to Section 5.3 below and
shall include, without limitation, each Identified Future
Product, following a determination to make such Identified
Future Product subject to this Agreement pursuant to Section
5.3(a) hereof.
"Gross
Margin" means a Party's gross margin measured as a percentage of the
gross profit as to the revenue received with respect to
sales of Products from EMCORE to JDSU hereunder (in the case
of EMCORE) or by JDSU to third parties (in the case of
JDSU), which shall be determined in accordance with US GAAP
and in a manner that is consistent with the manner in which
such Party determines revenue, gross profit and gross margin
for the purpose of its publicly released statement of
operations.
"Gross
Revenue" means a Party's gross revenue with respect to sales of
Products to third parties in accordance with US GAAP, which
shall include, without limitation, gross revenue of EMCORE
from sales of Products to JDSU.
"High Vol-
ume Oppor-
tunity" means a purchase order, series of related purchase orders
from a single customer or a long term supply agreement with
a customer for purchases in excess of {redact} million.
"Identified
Future
Product(s)" means the following four array transceiver products:
{redact}.
"Initial
Product" means that certain 12 channel, 1.25 Gb/s/ch, 15 Gb/s net
array transceiver product.
"Initial
Program" means the development work to be performed by each Party
with respect to the Initial Product as set forth in the
Statement of Work for such Product.
"Initial
Statement
of Work" means that certain detailed statement of work attached
hereto as Exhibit A to be carried out by the Parties as the
Initial Program, which: (i) may be modified from time to
time in accordance with the terms of this Agreement; (ii)
sets forth the design, development and manufacturing
objectives of the Parties as to the Initial Product; and
(iii) includes the Specifications for the Initial Product.
"Intel-
lectual
Property" means all United States and foreign patents, copyrights
trade and service marks and design rights (whether
registered or not and all applications for any of the
foregoing), rights in computer software, internet domain
names and databases and all rights in the Know-How
whensoever and howsoever arising for the full term thereof
and all renewals and extensions thereof.
"Know-How" means information, data, know-how, trade secrets or
experience whether patentable or not including, without
limitation, all design or manufacturing techniques,
operating instructions, machinery designs, raw materials or
products specifications, drawings, blue prints, and any
other technical and commercial information relating to
research, design, development, manufacture, assembly, use or
sale.
"Minimum
Volume" means for a Product that level of sales of such Product for
a six (6) month period that is determined by the Parties
pursuant to Sections 2.5 and 4.4.4 hereof to be equal to
{redact} percent ({redact}%) of the TAM for such Product
during that six (6) month period.
"Parties" means EMCORE and JDSU collectively and Party means either of
them individually.
"Products" means the Initial Product and any Future Products that the
Parties shall agree to make subject to this Agreement
pursuant to Section 5.3 hereof and shall thereafter develop.
"Product
Release
Checklist" means a checklist created by the Steering Committee pursuant
to Section 4.4.8 following completion of successful
development of such Product pursuant to the applicable
Statement of Work and containing tasks that must be
completed to the satisfaction of the Steering Committee
prior to the first commercial sale of a Product. The tasks
shall include, but need not be limited to, the following:
(i) intellectual property review (including non-infringement
analysis), (ii) approval of sales and marketing literature
and rollout plan (iii) receipt of all necessary regulatory
approvals and (iv) additional items as set forth in Section
4.4 (warranty, manufacturability, Minimum Volumes QA/QC) and
Section 8.1 (initial pricing).
"Pro-
gram(s)" means the Initial Program for development of the Initial
Product as detailed in the Initial Statement of Work and any
further program for the development of Future Products as
agreed by the Parties pursuant to Section 4.4.1 of this
Agreement.
"Program
Manager" means the person appointed by each Party to manage the
Program on its behalf pursuant to Section 4.6.
"Specifica-
tions" means those performance and other specifications for the
operation, form and other material characteristics of a
Product as determined by the Parties in accordance with this
Agreement.
"Statement
of Work" means any detailed program of development work to be
performed under this Agreement by the Parties, as modified
from time to time in accordance with the terms of this
Agreement, and includes without limitation, the Initial
Statement of Work.
"Steering
Committee" means the steering committee established in accordance with
Section 4.
"TAM" means the total available market measured over a six (6)
month period for all array transceiver products that compete
with a Product as determined in accordance with Section 2.4
hereof by the Steering Committee pursuant to Section 4.4.3
below on the basis of the "VCSEL Transceiver Global Market
Forecast" published by ElectroniCast Corporation as updated
from time to time or as reported by such other
internationally recognized market forecasting company as the
Parties may agree.
"Terri-
tory" means the World.
"Very
Short
Reach" means distances of 400 meters or less.
"Work
Report" means the report prepared by each Party in accordance with
Section 3.3.
1.3 Reference to a Party hereto shall include such Party's Affiliates and
such Party's permitted assignees.
1.4 Reference to any statute or statutory provision or order or regulation
made thereunder include that statute, statutory provision, order or
regulation as amended, modified, re-enacted or replaced from time to time
whether before or after the date hereof.
1.5 References to persons shall include bodies corporate, unincorporated,
associations, partnerships and individuals. References to the singular
shall include the plural and vice-versa.
1.6 Headings to Sections are for information only and shall not form part of
the operative provisions of this Agreement or the Exhibits and shall be
ignored in construing the same.
1.7 References to Recitals, Sections or Exhibits are to recitals to, Sections
of or exhibits to this Agreement.
2. Scope of Agreement and Roles of the Parties
2.1 This Agreement sets down the terms on which the Parties shall collaborate
in the design, development, production, marketing and sale of the Initial
Product and any Future Products that the Parties determine to make
subject to this Agreement pursuant to Section 5.3 below. The Parties
perceive that the immediate market demand for the Initial Product and the
Identified Future Products is for low cost, high speed (>10Gb/s)
fiberoptic data links tailored for Very Short Reach distances. The
primary target application is close to moderate proximity interconnection
between equipment racks for system manufacturers. Primary target
customers include, but are not limited to, {redact}.
2.2 During the term of this Agreement, EMCORE will direct its resources and
capabilities to the manufacture of high-quality VCSEL arrays, the design
of gigabit speed control circuits, photodetectors, optical links, and
electronics and shall provide for manufacture and QA/QC testing of the
Initial Product and any Future Products made subject to this Agreement by
the Parties pursuant to Section 5.3 hereof. Consistent with the Initial
Statement of Work, EMCORE shall be primarily responsible for the design,
development and manufacture of the Initial Product.
2.3 During the term of this Agreement, JDSU will provide for all marketing,
worldwide sales, application support and customer service and
distribution functions for the Initial Product and any Future Products
made subject to this Agreement by the Parties pursuant to Section 5.3
hereof and will provide technical support for the design and development
of such Initial Product and Future Products (including, to the extent
requested by EMCORE, assistance with the optical packaging, active
alignment, lens arrays and testing of such Products).
2.4 During the term of this Agreement and subject to Sections 2.5, 2.6 and
2.7 below, {redact} neither Party shall be prohibited from designing,
developing, marketing or selling product components (including, without
limitation, components used in Products) to third parties; provided that
such Party is not paid or compensated other than for the sale of said
components and for the design and development of said components. The
Parties acknowledge that either Party may acquire third parties (each an
"Acquired Company") that have expertise, intellectual property, and/or
carry on business relating to the Products (collectively the "Business").
{redact}
2.5 Notwithstanding Section 2.4 above, EMCORE shall have the right to
terminate its {redact} obligations under said Section 2.4 as to any
Product subject to this Agreement (but not this Agreement itself) for
which JDSU fails to sell the Minimum Volume of such Product as provided
in this Section 2.5 during any six month period (the first such six (6)
month period for each Product to commence three (3) months after the
Commercial Launch Date for that Product); provided that purchases for
resale pursuant to Section 8.2 shall be counted as sales. JDSU shall be
credited for sales towards the Minimum Volume in any six (6) month period
for the sum of that number of Product units purchased by JDSU for resale,
sold by JDSU and that number of Product units ordered for shipment by
JDSU during that six (6) month period in accordance with this Agreement
that EMCORE failed to timely ship during that six (6) month period. JDSU
shall be required either to purchase for resale or sell such Minimum
Volume amounts to maintain EMCORE's {redact} obligations under said
Section 2.4, but shall not be deemed in breach of any of its obligations
hereunder solely for failure to purchase for resale or sell such Minimum
Volume amounts.
2.6 Notwithstanding Section 2.4 hereof, JDSU shall have the right to
terminate its non-compete obligations pursuant to Section 2.4 above as to
any Product subject to this Agreement (but not this Agreement itself) as
follows:
(a) Should EMCORE fail to ship that quantity of units of a Product
subject to the Customer Commitment in accordance with Section 6.2
hereof that constitute {redact} percent ({redact}%) of the
aggregate units of such Product subject to the Customer Commitment
(other than a failure to ship caused by JDSU's failure to supply
or delay in supplying parts used in the Product) during any six
(6) month period (such six (6) month period to commence three (3)
months after the Commercial Launch Date for that Product) during
the term of this Agreement, JDSU shall have the right to terminate
the {redact} provisions as to such Product on not less than sixty
(60) days notice to EMCORE, which shall have the right to cure
such delinquency during that sixty (60) day period by the shipment
of all units in arrears and the timely shipment of all additional
units of such Product subject to the Customer Commitment that have
shipment dates within that thirty (30) day period; or
(b) Should EMCORE ship units of a Product to a third party customer or
JDSU that have warranty return rates in excess of {redact} percent
({redact}%) (other than as a result parts supplied by JDSU) during
any six (6) month period (such six (6) month period to commence
three (3) months after the Commercial Launch Date for that
Product), JDSU shall have the right to terminate the {redact}
provisions as to such Product on not less than sixty (60) days
notice to EMCORE, which shall have the right to cure such warranty
failure problem by: (i) creating a corrective action plan
regarding such warranty failure problem, which plan is reasonably
acceptable to JDSU, and (ii) shipping replacement Products to the
third party customer or JDSU, as applicable, during that sixty
(60) day period that have a warranty failure rate of less than
{redact} percent ({redact} %); provided, however, that EMCORE
shall not be deemed in breach of any of its obligations hereunder
solely for failure to meet its obligations under (a) or (b) above.
2.7 In the event that either EMCORE or JDSU shall exercise its rights under
Section 2.5 or 2.6 above to terminate its {redact} obligations under
Section 2.4 above as to a Product, the {redact} obligations of the other
Party shall also be terminated as to such Product. At any time that the
Parties are not subject to the {redact} obligations set forth in Section
2.4 above with respect to a particular Product, commissions shall be
payable to JDSU only with respect to units of that Product sold through
JDSU in accordance with this Agreement. {redact}, this Agreement shall
not serve to restrict either Party as to the development, manufacture or
sale of any other products that they may elect to pursue during the term
of this Agreement.
3. Collaboration and Initial Work of the Parties
3.1 The Parties shall collaborate in good faith under the Agreement and
shall, subject to the confidentiality restrictions imposed hereunder,
provide to the other Party such Company Information as the disclosing
Party determines in good faith is reasonably required for the performance
of its obligations under the Agreement.
3.2 EMCORE shall as soon as practicable after the Effective Date commence its
development work pursuant to the Initial Statement of Work. The Steering
Committee shall within sixty (60) days after the Effective Date jointly
prepare a Statement of Work for the first of the Identified Future
Products and on a thirty (30) day schedule for each additional Statement
of Work thereafter, complete preparation of Statements of Work for the
remaining three Identified Future Products within one hundred fifty (150)
days after the Effective Date. Each of the Identified Future Products
shall become subject to this Agreement upon the agreement by the Steering
Committee as to such Statements of Work and the other items set forth in
Section 5.3(a) hereof, and the failure of the Steering Committee to so
agree as to any Identified Future Product shall cause such product to not
become subject to this Agreement. As to the Initial Product and any
Identified Future Product that the Steering Committee agrees shall become
a Product for the purposes of this Agreement pursuant to said Section
5.3(a), each Party agrees to use its reasonable best efforts to complete
its work within the development schedules set forth in the Initial
Statement of Work and the Statements of Work for each such Identified
Future Product made subject to this Agreement. Within ninety (90) days of
the date hereof, the Parties shall prepare a product road map (the
"Product Road Map") containing a five (5) year forecast of fiberoptic
array transceivers contemplated for design and development as potential
Future Products to enable the Parties to extend their relationship beyond
the development and commercialization of the Initial Product and the
Identified Future Products. Such Product Road Map shall not be deemed to
bind either Party as to any Future Product until such time as the Parties
shall have agreed to make such Future Product subject to this Agreement
pursuant to Section 5.3(b). 3.3 During any period in which the Parties
shall be developing a Product pursuant to a Statement of Work undertaken
pursuant to this Agreement, each Party shall prepare and submit to the
Steering Committee its Work Report on a quarterly basis or on some other
timely basis as decided by the Steering Committee setting forth the work
performed by each Party in the previous quarter in furtherance of such
Statement of Work.
3.4 JDSU shall prepare (with input from EMCORE) a world-wide marketing plan
for each of the Products (the "Marketing Plan") on a quarterly basis,
which will be reviewed and approved by the Steering Committee.
3.5 In the event that a Party's development work under a Statement of Work
for a Product is unsuccessful, the Parties shall either modify such
Statement of Work (or Specifications) for that Product through the
Steering Committee, or, in the absence of an agreement by the Steering
Committee as to such modification, terminate development of such Product
and cause such Product to cease to be subject to this Agreement. For
purposes of the foregoing sentence, development work of a Party may be
deemed unsuccessful, as determined by the Steering Committee, if: (i) the
period to complete such development is delayed by {redact} % or more
based on the schedule for development set forth in the then effective
Statement of Work; or (ii) the development is not reasonably likely to
result in a Product that meets the then effective Specifications in all
material respects.
4. Management of the Program
4.1 The Parties shall as soon as practicable after the Effective Date, but in
any event within thirty (30) days, establish the Steering Committee to
supervise the performance of the Parties pursuant to this Agreement. The
Steering Committee shall have an equal number of members appointed by
each Party and shall be initially comprised of a total of four (4)
members, and the members of each Party, including any replacement
members, shall be subject to the approval of the other Party, which
approval shall not be unreasonably withheld. The total number of Steering
Committee members may be changed by the Steering Committee from time to
time as appropriate provided that in all cases it will be comprised of an
equal number of members from each Party. Each Party may substitute its
representatives from time to time (subject to approval of the other Party
as provided above) and the substitution is effective upon notice to the
other Party.
4.2 The Steering Committee shall meet as often as required to ensure the
effective operation of this Agreement but in no event less than quarterly
on such date and at such place as to be agreed upon between the Parties;
provided that members of the Steering Committee will be permitted to
attend such meetings by electronic or telephonic means. The meetings of
the Steering Committee may be held in person or in any other reasonable
manner, including, without limitation, by telephone, video conference or
e-mail. Each of the Steering Committee members shall have one vote and
other than decisions requiring unanimous approval all decisions must be
made by a majority vote. It is contemplated that additional
representatives of the Parties may attend and participate in the Steering
Committee meetings, however, such additional representatives will not be
entitled to participate in the voting process.
4.3 As a first order of business, the Steering Committee will draft
procedures which will govern the operation of the Steering Committee and
its decision making process and the specific criteria to be used in the
determinations set forth in Section 4.4.
4.4 The Steering Committee or its designees shall be responsible for:
4.4.1 reviewing, approving and, as necessary, modifying, Statements of
Work and Specifications for each of the Initial Product and any
Identified Future Products or Future Product made subject to this
Agreement pursuant to Section 5.3 hereof;
4.4.2 reviewing and, if necessary, adjusting the Estimated Development
Costs for each Product; 4.4.3 reviewing and approving EMCORE's
manufacturing capabilities for each Product to ensure a consistent
supply and appropriate quality assurance and quality control
("QA/QC") compliance as to that Product;
4.4.4 determining the Minimum Volumes for each Product for each
successive six (6) month period following the Commercial Launch
Date of such Product (provided that the first such six (6) month
period for each Product shall commence three (3) months after the
Commercial Launch Date for purposes of Section 2.5 hereof),
reviewing and approving the Marketing Plan, and reviewing the
progress of JDSU in fulfilling the objectives set forth therein on
a quarterly basis;
4.4.5 reviewing the quarterly Work Reports submitted by each Party;
4.4.6 approving the Product Trademarks selected by the Parties in
accordance with Section 4.5;
4.4.7 establishing and, on a quarterly basis, reviewing JDSU's
commissions and pricing between the Parties for the Initial
Product and any Future Products as provided in Sections 8.1 and
8.2;
4.4.8 establishing a Product Release Checklist for the Initial Product
and any Future Products;
4.4.9 reviewing and approving the applicable royalty rate each Party
shall be obligated to pay for use of the other Parties'
Intellectual Property as provided in Section 9.5 hereof;
4.4.10 reviewing the Parties' accounting methodologies and Internal
Accounts;
4.4.11 reviewing and approving the development budget for Shared Research
and Development Expenditures (as defined in Section 5.4) and
determining amounts, if any, owed from one Party to the other;
4.4.12 establishing a warranty policy for each Product; and
4.4.13 reviewing and approving the Product Road Map.
If the Steering Committee cannot agree pursuant to Section 4.4.2 above as
to an adjustment to a Party's Estimated Development Cost for a Product
and such Party determines in good faith that its actual development cost
will exceed its then effective Estimated Development Cost by {redact}% or
more, such Party shall have the option, exercisable on thirty (30) days
written notice to the other Party, to terminate development of such
Product and cause such Product to no longer be subject to this Agreement.
4.5 Within a reasonable time so as to permit an expeditious commercial launch
of the Initial Product and those Identified Future Products that the
Steering Committee determines to make subject to this pursuant to Section
5.3(a), the Parties shall select the trademarks to be used in connection
with the Products (the "Product Trademarks"). The Product Trademarks
shall be approved by a unanimous vote of the Steering Committee.
Application to register the Product Trademarks so selected shall be made
by JDSU at its own expense and once registered the Product Trademark
shall be maintained by JDSU at its own expense and shall be owned solely
by JDSU during and after the term of this Agreement; provided, however,
that EMCORE shall be granted a fully paid-up, royalty free, perpetual,
exclusive (except as to JDSU) license to commercialize Products under the
Product Trademarks (which for purposes of such license shall not include
the name JDS Uniphase or any tradenames or trademarks that include or
otherwise use of the JDS Uniphase name or general logo(s)) which license
shall terminate earlier in the event of an uncured material breach of
this Agreement by EMCORE. To the extent practicable, during the term of
the Agreement, Product labels and packaging shall bear the Product
Trademarks and the trademarks and logos of each of the Parties.
4.6 Each Party shall appoint a suitably qualified and experienced Program
Manager to manage the Program, who shall be responsible for the day to
day operations and obligations under the Agreement of the Party that
appointed him. The Program Managers shall be jointly responsible for the
preparation of the Statement of Work and the Work Reports required on a
quarterly basis. The Program Managers shall also be responsible for
regular and periodic updates of the Product Road Map to enable it to be
used as a rolling five (5) year forecast of Future Product development.
4.7 The initial Program Managers shall be:
for EMCORE - {redact}
for JDSU - {redact}
4.8 In the event that the Steering Committee is unable to make a decision on
any particular matter due to a deadlock, it shall submit the matter for
joint resolution to the Chief Executive Officers of the Parties (or their
senior officer designees). In the event that the matter so submitted
remains unresolved after 30 days either Party may submit it for
resolution in accordance with Section 21. Notwithstanding the foregoing,
the failure of the Steering Committee to agree as to any of the following
items shall not give rise to the dispute resolution provisions of this
Section 4.8 or Section 21 below:
(i) a determination pursuant to Section 5.3 hereof to make any product
(including, without limitation, any Identified Future Product)
subject to this Agreement, in which case such product shall not
become subject to this Agreement;
(ii) the Statement of Work, Specifications or Estimated Development
Cost for any Product or product that is proposed to be made
subject to this Agreement, in which case such product shall not
become subject to this Agreement;
(iii) any proposed adjustment to a Party's Estimated Development Cost,
in which case such Party shall have the option provided in Section
4.4 hereof; and
(iv) JDSU's commission, the price for a Product (other than the Initial
Product) or Minimum Volumes for a Product, in which case Section
2.4 shall cease to apply as to such Product and Sections 8.1 or
8.2, as applicable, shall apply.
5. Future Products; Product Research and Development
5.1 Consistent with each Statement of Work, EMCORE shall use its reasonable
best efforts to provide, or shall procure from a third party, sufficient
engineering support and assistance to design and develop the Initial
Product (and any Future Products as approved by the Steering Committee
from time to time) to a stage where the Products meet the Specifications.
It is agreed that for purposes of this Section 5.1 and Section 5.2 below,
neither Party shall be deemed to provide any guarantee or assurance that
their development work as to any Product will be successful in achieving
the Specifications or any targeted manufacturing cost for the Product,
and each Party's obligations as to such development work shall be limited
to its reasonable best efforts through expenditure of its Estimated
Development Cost for such Product to complete such development work as
provided in the applicable Statement of Work.
5.2 Consistent with each Statement of Work, JDSU shall use its reasonable
best efforts to provide sufficient mechanical and optical engineering
support and assistance, including optical alignment of the arrays and
mechanical designs of interfaces, to support production of the Initial
Product (and any Future Products as approved by the Steering Committee
from time to time) in finished and packaged form in accordance with the
Specifications.
5.3 (a) The Parties acknowledge that, in marketing the Initial Product, the
Parties have determined that potential customers have an interest in
assuring that the Parties intend to develop the Identified Future
Products. The Steering Committee, shall within the times set forth in
Section 3.2 hereof, meet to jointly determine in good faith the following
with respect to each of the four Identified Future Products: (i)
Specifications, (ii) a Statement of Work, (iii) the initial Estimated
Development Cost and (iv) JDSU's commission and the initial pricing for
such Product as determined in accordance with Sections 8.1 and 8.2
hereof. Once the Steering Committee has agreed as to clauses (i)-(iii)
with respect to any given one of the four Identified Future Products, the
Parties shall, subject to the other terms of this Agreement, be obligated
to develop, manufacture and market such Product. Neither Party, through
its representatives on the Steering Committee or otherwise, shall be
deemed to have any obligation to make an Identified Future Product
subject to this Agreement if such Party determines in good faith that the
pricing over the estimated life of such Product cannot reasonably be
expected to provide such Party with at least a {redact} % Gross Margin as
provided in Section 8.2 hereof or, in JDSU's case, it determines in good
faith that it will not receive a reasonable commission as provided in
Section 8.1 hereof. In the absence of such agreement by the Steering
Committee as to any of the Identified Future Products, such Identified
Future Products shall not be deemed a Product for purposes of this
Agreement.
(b) During the term of this Agreement, the Parties shall, by mutual
written agreement through the Steering Committee, determine those Future
Products (other than the Identified Future Products) that shall be
subject to this Agreement. A Future Product (other than the Identified
Future Products) shall only be made subject to this Agreement upon the
written agreement of the Steering Committee as to each of the following:
(i) Specifications, (ii) a Statement of Work, and (iii) the initial
Estimated Development Cost and (iv) JDSU's commission and the initial
pricing for such Future Product as determined in accordance with Sections
8.1 and 8.2 hereof. The Parties acknowledge that, upon agreement by the
Steering Committee as to the Specifications, Statement of Work and
Estimated Development Cost for a Future Product (including, without
limitation, any of the Identified Future Products), a determination of
Minimum Volumes, commission and initial pricing for such Future Product
may not be then practicable and shall not be the then required to cause
such Future Product to become subject to this Agreement. Prior to
Commercial Launch Date for a Future Product, the Steering Committee shall
determine in good faith the Minimum Volumes for such Future Product (as
provided in Section 4.4.4 hereof), JDSU's commission and the initial
pricing for such Future Product (as provided in Sections 8.1 and 8.2
hereof). In the event that the Steering Committee cannot agree as to
Minimum Volumes, JDSU's commission or initial pricing, such Product shall
remain subject to this Agreement as provided in Sections 8.1 and 8.2
hereof but not be subject to Section 2.4 hereof.
5.4 Each Party shall share bear its own share of the research and development
costs and expenses incurred by it in connection with the design,
development and manufacture of the Products. The Parties shall {redact}
share, {redact}, those costs that are approved in writing by the Steering
Committee and that relate to certain capital expenditures including, but
not limited to, non-recurring engineering expenses, application specific
integrated circuits and capital equipment (collectively the "Shared
Research and Development Expenditures"). The Parties' respective
contributions in connection with the Shared Research and Development
Expenditures shall be taken into account by the Steering Committee when
setting JDSU's commission.
5.5 (a) {redact} Other than the Shared Research and Development Expenditures,
each Party shall bear its own expenses in connection with the research
and development relating to the Initial Product. To permit EMCORE to
recover the Development Cost Difference, if any, relating to a Future
Product (other than an EMCORE Developed Product) made subject to this
Agreement pursuant to Section 5.3 hereof, JDSU agrees to accept a reduced
commission until such time as EMCORE has recovered the Development Cost
Difference plus {redact}% from three (3) months prior to the Commercial
Launch Date of such Product.
(b) In the event that JDSU orders a Product from EMCORE for resale to
customers in accordance with Section 8.2, to permit EMCORE to recover the
Development Cost Difference for such Product (other than an EMCORE
Developed Product), if any, plus {redact}% from three (3) months prior to
the Commercial Launch Date, JDSU will remit to EMCORE quarterly, within
thirty (30) days following the end of the quarter, percent ({redact} %)
of the gross revenue (defined to exclude VAT and other applicable sales
tax) received by JDSU or its Affiliates in the preceding quarter through
sale of (i) any one of the {redact} Identified Future Products made
subject to this Agreement pursuant to Section 5.3(a) and (ii) Future
Products made subject to this Agreement pursuant to Section 5.3(b) (the
"R&D Off-Set"). For purposes of this Section 5.5, the actual development
cost of a Party for a Product for the purpose of calculating the
Development Cost Difference for such Product shall not be deemed to
exceed {redact} % of the Estimated Development Cost of that Party, as the
same may be adjusted from time to time by the Steering Committee. To
assist EMCORE in the development of Future Products, JDSU may advance the
estimated Development Cost Difference at any time during the performance
by EMCORE of its Statement of Work as to such Future Product as the
Parties may agree in writing.
5.6 Each Party shall ensure that all the work conducted by it under this
Agreement shall be carried out in accordance with generally accepted
standards of good practice at the time applicable to such work (including
but without limiting the generality of the foregoing all relevant
statutory safety standards from time to time in force) and each Party
will be responsible for the implementation of and compliance with all
applicable safety and other legislative requirements.
5.7 Each Party will procure that such facilities, materials and equipment as
are reasonably required for the proper execution of the Statement of Work
are made available by it. Should JDSU elect to contribute alignment
equipment to EMCORE for development and manufacturing of the Product,
JDSU will continue to own the equipment, and, for so long as EMCORE is in
possession of the equipment, EMCORE shall be responsible for maintaining,
repairing and insuring the equipment.
6. Forecasts and Orders and Shipping Procedures for Products
6.1 Each potential purchase order from a customer for which JDSU will receive
a commission shall be subject to EMCORE's prior approval regarding price,
cancellation penalties and shipping terms. All purchase orders accepted
by JDSU and EMCORE shall specify:
(a) Products (including EMCORE and JDSU part numbers, and Product
specification reference) and quantities being ordered;
(b) the applicable unit price for the Products;
(c) shipping instructions, including requested shipment dates;
(d) cancellation penalties; and
(e) distribution point of the Products and the invoicing location.
Terms and conditions on customer purchase orders and EMCORE's sales
acknowledgments, other than those agreed to between the customer and
EMCORE, shall be of no effect. Within ten (10) business days after
EMCORE's receipt of a purchase order, EMCORE will issue a written
acknowledgment, which will recite this Agreement reference, Product type
number, shipping instructions, the Product quantities being sold, the
Product's applicable unit price and the estimated shipment dates. In the
event of a conflict between this Agreement and EMCORE's written sales
acknowledgment or a purchase order, this Agreement shall prevail.
6.2 Six (6) months prior to the Commercial Launch Date, as estimated by the
Steering Committee, of the Initial Product and every three months
thereafter for so long as this Agreement shall remain in force, JDSU
shall provide EMCORE with a rolling {redact} month forecast (such period
commencing upon such Commercial Launch Date) of its projected sales for
the Products that are subject to Section 2.4 of this Agreement (each a
"Forecast"), which Forecast will be prepared so as to be consistent with
the Marketing Plan to the extent reasonably practicable. The Forecast
shall specify the number and type of Products which JDSU anticipates
selling and the expected delivery dates. JDSU agrees to include as part
of the Forecast {redact}. The quantities specified in the Forecast (i) in
respect of the first {redact} month period ("Agreed Shipment Period")
shall constitute a guaranteed purchase forecast (a "Guaranteed Purchase
Forecast") as to the type and quantity of Products, delivery dates
specified therein, and (ii) in respect of the remaining portion of the
{redact} period covered thereby, shall constitute a non-binding estimate
of projected sales and delivery dates. The remaining portion of each
Forecast for periods beyond the Agreed Shipment Period shall be deemed an
advisory forecast, which shall not be binding on either Party; provided,
however, that (i) the Guaranteed Purchase Forecast for an Agreed Shipment
Period shall not be more than {redact} percent ({redact} %) higher or
lower than the immediately preceding Forecast for that period without
EMCORE's prior written consent and (ii) the Forecast for any given Agreed
Shipment Period shall not be more than {redact} percent {redact}( %)
higher or lower than the initial Forecast for such period without
EMCORE's prior written consent. Each Forecast shall be accompanied by a
purchase order for the Product units subject to the Customer Commitment.
6.3 If JDSU reduces or cancels any portion of a Guaranteed Purchase Forecast
during the Agreed Shipment Period, JDSU shall be responsible for the
Cancellation Costs incurred as a result of such reduction or
cancellation; provided, however, that JDSU's liability with respect to
such costs shall be: {redact} percent ({redact} %) of the Cancellation
Costs if EMCORE receives written notification of cancellation from JDSU
{redact} in advance; {redact} percent ({redact} %) of the Cancellation
Costs if EMCORE receives written notification of cancellation from JDSU
{redact} in advance; {redact} percent ({redact}%) of the Cancellation
Costs if EMCORE receives written notification of cancellation from JDSU
{redact} in advance; and {redact} percent {redact} % of the Cancellation
Costs if EMCORE receives written notification of cancellation from JDSU
{redact} days in advance. Notwithstanding the foregoing, JDSU will not be
liable for Cancellation Costs relating to sales cancellations by JDSU (in
respect of sales directly to JDSU) or by a customer due to Products being
the subject of warranty returns as specified in Section 10 hereof (other
than returns resulting from the failure of {redact}, and JDSU shall be
entitled to return any such Products, which did not meet applicable
Specifications when shipped by EMCORE (other than returns resulting from
the failure of {redact}), for a full refund of amounts paid to EMCORE,
after any applicable commissions to JDSU, for such Products.
6.4 Should JDSU at any time during the term of this Agreement refer an order
for Products in excess of the amount of the applicable Customer
Commitment and which would also exceed EMCORE's (or its contract
manufacturer's) available manufacturing capacity for a given Product as
of the date of the Forecast, the Parties agree to cooperate with each
other and to use all reasonable efforts to fill the Product demand,
including without limitation, sharing the expenses of expanding EMCORE's
manufacturing capacity on such terms as the Parties may agree in writing.
The Parties' respective contributions in connection with such expansion
of EMCORE's manufacturing capacity shall be taken into account by the
Steering Committee when setting JDSU's commission.
6.5 Within {redact} days of execution of this Agreement, JDSU will order
evaluation quantities of the Initial Product in accordance with a
purchase order issued by JDSU in compliance with this Agreement
("Development Purchase Order"). The price per module in the Development
Purchase Order shall be determined by the Steering Committee. The
evaluation quantities of the first of the Initial Product shall be
delivered in accordance with the dates set forth in the Development
Purchase Order and in any event, not earlier than completion of the
Program.
6.6 On commission sales, pursuant to Section 8.1, EMCORE shall be responsible
for processing and invoicing all purchase orders received from customers.
EMCORE will invoice JDSU for the Development Purchase Order and the
Initial Purchase Order upon shipment. All payments owed by JDSU to EMCORE
under this Agreement, including, without limitation, cancellation
charges, agreed price adjustments, and payment for Products purchased,
are payable in U.S. dollars and will be due net {redact} days after the
date of the invoice.
6.7 Delivery of the Products shall be {redact} EMCORE's manufacturing
facility as per International Chamber of Commerce (ICC) Incoterms 2000
edition.
6.8 EMCORE shall be permitted to make engineering changes to the Products
during the term of this Agreement that affect such Product's performance
or reliability, or form, fit and function; provided, that any such
engineering change provides a cost, performance or other material benefit
or is reasonably required to minimize environmental, health or safety
risks or is mandated by law. EMCORE shall give JDSU notice regarding any
such engineering changes to the Product, and the Parties shall thereafter
use reasonable efforts to develop, within four (4) weeks, a mutually
acceptable qualification plan for Product containing such engineering
changes. JDSU shall not unreasonably reject a qualification plan proposed
by EMCORE. JDSU shall not be obligated to accept such engineering change
for Product supplied to JDSU if such Product has not been qualified as
described in the immediately preceding sentence or approved by JDSU
customers. Until the Product has been so qualified, EMCORE will continue
to manufacture Product ordered pursuant to this Agreement without
incorporating the engineering changes that are in the process of being
qualified. JDSU shall accept supply of all Product containing such
engineering change that have been qualified in accordance with the
foregoing qualification plan. In addition, EMCORE may issue mandatory
engineering changes such as those required to minimize environmental,
health or safety risks or as mandated by law provided that JDSU shall not
be obligated to purchase for its own account or sell any Products that
fail to conform materially with performance, reliability or form, fit and
function of the agreed specifications.
6.9 JDSU shall be permitted to request changes to the Specifications during
the term of this Agreement by giving EMCORE notice regarding any such
Performance Specification change. The parties shall thereafter use
reasonable efforts to develop, within four (4) weeks, a development
program to implement such Performance Specification change and a mutually
acceptable qualification plan for Product containing such Performance
Specification change. EMCORE shall not unreasonably reject a Performance
Specification plan proposed by JDSU provided such Specification change is
technically practicable and such Specification change will not adversely
affect the economic benefits and obligations of EMCORE pursuant to this
Agreement. Until the Specification change has been implemented and the
Product incorporating such revised Specification has been so qualified,
EMCORE will continue to manufacture and JDSU will continue either to
purchase for its own account or sell Product ordered pursuant to this
Agreement without incorporating any such JDSU requested Specification
change that is in the process of being qualified.
7. Sales and Marketing
7.1 Subject to oversight by the Steering Committee, JDSU shall be solely
responsible for all Product marketing and sales related activities
including, but not limited to, providing account management for each
account, preparing and coordinating all advertising and promotional
efforts, training and deploying qualified sales representatives,
maintaining a competent customer service and support facility for the
Products consistent with JDSU's other products and systems and
maintaining appropriate press and media relations. In addition, JDSU
shall provide EMCORE with application engineering support as reasonably
required.
7.2 EMCORE, at its sole cost, shall provide small quantities of sample
Products to JDSU from time to time to facilitate promotional activities,
subject to the review and approval of the Steering Committee.
8. Commissions; Pricing; Minimum Volumes.
8.1 EMCORE shall pay JDSU a commission on the sale of all Products that are
subject to Section 2.4 of this Agreement and for which EMCORE receives
sales revenue directly from the customer. JDSU's commission shall be set
by the Steering Committee on the basis of the average selling price for
such Product and shall be payable from the gross revenue received by
EMCORE from sales to third party customers. The Steering Committee shall
review the commission payable to JDSU for each Product at its quarterly
meetings; provided, however, that the Steering Committee shall only
adjust JDSU's commission if (i) the average selling price of a Product
has decreased; (ii) EMCORE has experienced a material ({redact}) increase
or decrease in its manufacturing costs, or (iii) JDSU has experienced a
material ({redact}) increase or decrease in its sales, marketing and
support costs. In the event that the Steering Committee cannot agree on
JDSU's commission for a particular Product at any time during the term of
the Agreement, the Parties agree that: (i) any {redact} obligations of
the Parties set forth in Section 2.4 above shall not apply until the
Parties agree on commission; and (ii) existing commissions shall continue
to apply for the remaining term of the Agreement (or until the Parties
agree on alternative commissions) with respect to all sales of such
Product made through JDSU (it being understood that no commissions shall
be payable to JDSU for sales not made through JDSU); provided that the
Party wishing to invoke this provision shall give the other Party
{redact} days prior written notice. The Parties agree that at least with
respect to the Initial Product, JDSU shall conduct all marketing and
sales on a commission basis.
8.2 In order to meet its Minimum Volume Requirement and for sales of Future
Products, JDSU may purchase Product directly from EMCORE for resale to
customers. The price of the Initial Product for sales to JDSU {redact}
shall be set by the Steering Committee. The wholesale and retail prices
for each of the Initial Product and any Future Products, when set by the
Steering Committee, shall remain fixed for a period of three (3) months
and shall be established, to the extent reasonably practicable, {redact}.
The Steering Committee shall review the pricing for each Product at its
quarterly meetings; provided, however, that the Steering Committee shall
only adjust the {redact} pricing {redact}. In the event that the Steering
Committee cannot agree on pricing at any time during the term of the
Agreement, the Parties agree that (other than with respect to the Initial
Product): (i) existing pricing shall continue to apply for the remaining
term of the Agreement (or until the Parties agree on alternative
pricing); and (ii) any {redact} obligations of the Parties set forth in
Section 2.4 above shall not apply until the Parties agree on pricing;
provided that the Party wishing to invoke this provision shall give the
other Party {redact} days prior written notice.
8.3 Any withholding or other taxes that a Party is required by law to
withhold or pay on behalf of the other Party shall be deducted from any
payments owed to such Party provided, however, that in regard to any tax
so deducted the remitting Party shall furnish the other Party with proper
evidence of the taxes paid on its behalf and will furnish the other Party
with appropriate documents to secure application of the most favorable
rate of withholding tax under applicable law.
8.4 Each Party shall initially apply its internal accounting principles and
methodology in determining its Gross Margins, Gross Revenues and product
costs and expenses relating to the Shared Research and Development
Expenditures. These internal accounting principles and methodology must
be consistent with U.S. Generally Accepted Accounting Principles,
consistently applied ("GAAP") and shall be reviewed by the Steering
Committee prior to the Commercial Launch Date of the Initial Product. If
the Steering Committee disagrees as to the accounting principles or
methodology adopted by a Party, it shall request such Party to make
necessary changes or adjustments. If the Party objects to such changes or
adjustments, it may request that an independent accounting firm be
chosen, at its own expense, by both Parties to make the final decision.
The accounting principles and methodology of any Party approved by the
Steering Committee or decided by an independent accounting firm, as the
case may be, shall be consistently applied during the term of this
Agreement. The internal accounts (the "Internal Accounts") prepared by
each Party applying its internal accounting principles and methodology,
as reviewed by the Steering Committee, must be submitted to the Steering
Committee for review on a quarterly basis after the Commercial Launch
Date as to each Product. If a Party objects to any changes to its
Internal Accounts proposed by the Steering Committee the matter shall be
resolved pursuant to the dispute resolution provisions of Section 4.8 and
Section 21.
8.5 Each Party shall maintain complete and accurate books and records in
connection with its research and development expenditures and its costs
and expenses in connection with manufacture and sale of the Product,
including relating to the design, development, promotion, marketing,
distribution and selling of the Products. Upon a reasonable written
request of one Party, the other Party shall permit the first Party to
inspect or to use an independent accounting firm to audit, in each case
at the first Party's own expense, the books and records of the second
Party to evaluate whether its reporting {redact} are accurate. Should a
discrepancy be found that resulted in an underpayment to the inspecting
Party of greater than {redact} percent ({redact} %), the entire cost of
the audit will be paid by the audited Party in addition to any amounts
owed by the audited Party but which were unpaid.
9. Intellectual Property
9.1 All Background shall remain the absolute unencumbered property of the
owner of such rights at the Effective Date. No Party will make any
representation or do any act which may be taken to indicate that it has
any right title or interest in or to the ownership or use of any of the
Background of the other Party except under the terms of this Agreement,
and each Party acknowledges that nothing contained in this Agreement
shall give it any right, title or interest in or to the Background of the
other Party save as granted hereby.
9.2 All Foreground generated by a Party (or by a Party and a third party in
the course of a research project funded by such Party) shall remain the
absolute unencumbered property of such Party.
9.3 Each Party hereby grants to the other Party a non-exclusive, royalty free
license to use that Party's Background and Foreground for the purposes of
performing its share of work under any Program. JDSU hereby grants EMCORE
a non-exclusive, royalty free license to use its Background and
Foreground for the purpose of manufacturing and having manufactured the
Products in the Territory. EMCORE hereby grants JDSU a non-exclusive,
royalty free license to use its Background and Foreground for the purpose
of marketing and selling Products in the Territory (but not to import,
manufacture or have manufactured for sale in the Territory). Each Party
agrees that, subject to Section 9.4, it will not use the Background
and/or Foreground of the other Party for any purpose other than the
performance of its obligations hereunder.
9.4 Upon termination of this Agreement or if at any time during the term of
this Agreement the collaboration between the Parties becomes {redact} by
virtue of Sections 2.5, 2.6 or 2.7 hereof and subject to the payment of
royalties as provided in Section 9.5 below, each Party shall be entitled
to a royalty bearing, non-transferable right and license under the
Intellectual Property (including Background and Foreground) and Company
Information (including all marketing information and customer lists) of
the other Party to manufacture, have manufactured, promote, market,
distribute and sell Products throughout the world; provided that, where
the Agreement is terminated by reason of breach of one Party then that
Party shall not be entitled to any license as aforesaid; and provided
further that JDSU shall not be entitled to any right or license under any
Intellectual Property of EMCORE relating to VCSEL or MOCVD technology and
shall not be entitled to a license to manufacture or have manufactured an
EMCORE Developed Product. As a condition to the exercise of any right of
a Party hereunder to have a third party manufacture any portion of a
Product, such third party shall be bound by a written confidentiality
agreement as to any confidential information of the licensing party that
is no less restrictive in any material respect than the restrictions
contained in Section 11 hereof.
9.5 Royalties payable under the licenses granted in accordance with Section
9.4 shall be based on net sales, shall be applied on a Product-by-Product
basis and shall be set at a fair market value rate. No royalty shall be
payable under any such license until the licensee under the license has
first recouped through profits obtained by sales of licensed Products,
its research and development costs incurred under this Agreement.
9.6 The Parties shall, when appropriate, execute a formal license or licenses
for the purpose of registering the licenses granted pursuant to Sections
9.3 or 9.4 above in such form as may be necessary to give effect to this
Agreement in any part of the Territory and to conform with any existing
laws. Such license or licenses shall be subject to all the terms and
conditions of this Agreement.
9.7 Where Foreground is generated jointly by one or more employees of each
Party or by employees of a third party on their behalf pursuant to a
research project approved by the Steering Committee and funded as part of
the Shared Research and Development Expenditures, it shall vest in and be
the property of EMCORE and JDSU jointly unless in any particular case the
Parties shall otherwise agree. Subject to the rights of the Parties in
any Background, each Party shall have the irrevocable right, subject to
the restrictions contained in Section 2.4, to use such joint Foreground
independently of the other and without accounting and, to the extent
necessary for such use, is hereby granted a royalty free license under
all jointly held Intellectual Property.
9.8 EMCORE and JDSU shall decide through the mechanism of the Steering
Committee which of the Parties shall be responsible for filing and
prosecuting of any joint patent applications in connection with any
jointly owned Foreground and of maintaining any patents granted thereon
in all countries and shall, unless otherwise agreed, share equally all
costs involved.
9.9 In the event that either Party becomes aware of an infringement of any of
the Intellectual Property licensed under this Section 9 or of any action
by a third person for a declaration that any of the Intellectual Property
is invalid or unenforceable or of any infringement of a Party's right to
sell hereunder, it shall promptly notify the other Party in writing. The
Parties shall cooperate in determining the appropriate action to be taken
against the third party. The Parties shall cooperate with each other and
provide all necessary and reasonable assistance in any of such actions.
EMCORE shall select the outside counsel to represent the Parties in an
infringement or other action. Each Party may also retain its own outside
counsel at its own expense. If any infringement or other appropriate
action is jointly instituted pursuant to this Section, the Parties each
shall bear its own-out-pocket expenses and share litigation costs and
legal fees equally. In the event of such a joint action, the Parties will
share equally in any recovery of damages or amount paid in settlement. In
the event that either Party institutes action independently pursuant to
this Section, such Party shall be entitled to retain all recoveries or
settlements in connection therewith.
9.10 Upon termination of this Agreement, other than by reason of breach, or if
at any time during the term of this Agreement the collaboration between
the Parties becomes {redact} by virtue of Sections 2.5, 2.6 or 2.7
hereof, each Party agrees, to the extent it has available capacity, to
supply to the other Party any Products (other than an EMCORE Developed
Product) and any components or parts manufactured by that Party that are
used in the manufacture of Products (other than an EMCORE Developed
Product), and, for a {redact} period commencing on the date of such
termination or {redact}, such supply shall be on a {redact} basis as
provided in this Section 9.10 for so long as that Party continues to
manufacture such Product or components or parts in commercial quantities
for resale to third parties. {redact} terms shall be based only on actual
sales by a Party to a third party of the same or equivalent components or
parts and shall not be applied retroactively to any components or parts
previously shipped by a Party to another Party. A Party purchasing any
component or part on {redact} terms pursuant to this Section 9.11 shall
be required to purchase equivalent quantities and accept all material
commercial terms as such third party {redact}.
10. Warranties and Indemnities
10.1 JDSU shall provide customer service and Product support services,
including the handling of warranty claims for the Products. JDSU shall
have the sole right to determine the level of customer service and
Product support services necessary; provided that JDSU shall perform such
services in a {redact}. The Steering Committee shall be responsible for
establishing a warranty policy, which policy shall generally conform to
{redact}.
10.2 EMCORE warrants to JDSU that Products furnished pursuant to this
Agreement will be {redact}. These warranties {redact} shall extend until
the end of the warranty period determined by the Steering Committee as
provided in Section 10.1. In addition, if Product furnished contains one
or more manufacturer's warranties, EMCORE hereby assigns such warranties
to JDSU. EMCORE warrants that {redact} All warranties shall survive
inspection, acceptance and payment. {redact}
10.3 To the extent that JDSU supplies components or parts to EMCORE for the
manufacture of Products, JDSU warrants that {redact}. The warranty period
for such components and parts shall be coterminous with the warranty
period of the Products.
10.4 EMCORE's warranty does not apply if {redact}
10.5 {redact}
10.6 INTENTIONALLY OMITTED.
10.7 EMCORE shall, at its expense, indemnify and hold JDSU harmless from
{redact}
10.8 JDSU shall at its expense, indemnify and hold EMCORE harmless from
{redact}
10.9 In the event that a claim of infringement of any patent, trademark,
copyright, trade secret or mask work right is made against either Party
during the Term of this Agreement, {redact}.
10.10 IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR CONSEQUENTIAL DAMAGES,
ANTICIPATED OR LOST PROFITS, INCIDENTAL DAMAGES, SPECIAL DAMAGES,
PUNITIVE DAMAGES OR LOSS OF TIME INCURRED, DIRECTLY OR INDIRECTLY, IN
CONNECTION WITH THE USE OF THE PRODUCT. THE FOREGOING IS EACH PARTY'S
ENTIRE OBLIGATION AND EXCLUSIVE REMEDY FOR ALL CLAIMS OF INFRINGEMENT
ARISING HEREUNDER, AND IS IN LIEU OF ANY OTHER OBLIGATIONS OR WARRANTIES,
EXPRESS OR IMPLIED.
10.11 Each of EMCORE and JDSU hereby represents and warrants to the other Party
that on the date hereof such Party is duly incorporated and validly
existing and/or registered as applicable under the laws of the relevant
jurisdiction and that it has the full power and authority to own and
operate its properties and to conduct its business as described in its
articles of association and to execute, deliver and perform this
Agreement.
10.12 Each of EMCORE and JDSU hereby represents and warrants to the other Party
that on the date hereof such Party has taken all requisite actions and
obtained all consents, approvals, authorizations and permits necessary
for the execution, delivery and performance of this Agreement. This
Agreement constitutes the legal, valid and binding obligation of each of
EMCORE and JDSU enforceable against such Party in accordance with its
terms. The execution, delivery and performance of this Agreement will not
violate such Party's articles of incorporation, any other agreements or
obligations of such Party or any currently effective laws, regulations or
decrees.
10.13 Each of EMCORE and JDSU represents and warrants to the other Party that
it owns or has a valid right to license all the Intellectual Property
licensed by it pursuant to Section 9 and to its best knowledge, there are
no actual or threatened claims by a third party against its ownership of,
or proprietary rights to any Intellectual Property licensed hereunder.
10.14 EXCEPT AS EXPRESSLY SET FORTH HEREIN, NEITHER PARTY MAKES ANY EXPRESS OR
IMPLIED WARRANTIES, STATUTORY OR OTHERWISE, CONCERNING THE VALUE,
ADEQUACY, FREEDOM FROM FAULT OF, OTHER QUALITY, EFFICIENCY,
CHARACTERISTICS OR USEFULNESS OF OR MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OF ANY PRODUCTS, COMPONENTS OR SUBCOMPONENTS THEREOF
OR ANY INFORMATION, MATERIALS OR RIGHTS PROVIDED HEREUNDER, PROVIDED,
HOWEVER, THAT NOTHING IN THIS ARTICLE SHALL BE DEEMED A WAIVER OF OR
DEEMED TO LIMIT THE OBLIGATIONS OF EACH PARTY HEREUNDER OR UNDER ANY
OTHER AGREEMENT BETWEEN THE PARTIES.
11. Confidentiality
11.1 Each Party acknowledges that all the Company Information, Background and
Foreground provided by the other Party is confidential and proprietary to
the other Party and further that the information developed by either or
both Parties during the term of this Agreement, which relates to the
research, development, marketing or sales of a Product shall be treated
as confidential information and agrees to maintain such information in
confidence during the term of this Agreement and for a period of five (5)
years thereafter and to use such information solely for the purpose of
performing its respective obligations hereunder. The obligation set forth
above shall be satisfied by each Party through the exercise of the same
degree of care used to restrict disclosure and use of its own information
of like importance, but in any event at least a reasonable degree of
care.
11.2 Each of EMCORE and JDSU covenants that it shall not disclose any such
information to a third party except to its employees, agents or any other
person under its authorization, on a need to know basis, provided such
employees, agents or person under its authorization are subject in
writing to the same confidentiality obligations as either EMCORE or JDSU,
as the case may be.
11.3 Notwithstanding anything provided above, the restrictions provided in
this section shall not apply to the information that is:
11.3.1 already in the public domain as of the date of execution of this
Agreement, or thereafter enters the public domain through no fault
of the receiving Party;
11.3.2 known to the receiving Party without restriction when received;
11.3.3 received by either EMCORE or JDSU on an unrestricted basis whereby
the receiving Party has no duty of confidence to the Party
providing such information; or
11.3.4 is required to be disclosed to a governmental or other regulatory
authority to the extent that such is required by applicable laws,
regulations or court orders of the applicable jurisdiction, in
which case the disclosing Party shall promptly notify the other
Party of such disclosure.
11.4 Each Party acknowledges that damages resulting from unauthorized
disclosure of the Company Information, Foreground or Background would be
an inadequate remedy and that in the event of any such disclosure, the
other Party shall be entitled to seek injunctive relief or other
equitable relief in addition to any and all remedies available at law or
in equity, including the recovery of damages and reasonable attorneys'
fees.
11.5 Upon termination of this Agreement, each Party shall cease use of the
Company Information, Foreground and Background received from the other
Party (other than as expressly permitted hereby), and shall destroy all
copies of same with written certification of destruction. Alternatively,
at the request of the originating Party, the receiving Party shall return
all such information and copies to the originating Party.
12. No Assignment, Sub-Licenses and Sub-Contracts
12.1 Except for the right of the Parties to assign to their parent corporation
or wholly owned Affiliate and except for the delegation of duties
expressly permitted hereby, neither EMCORE nor JDSU may assign this
Agreement or any of its rights, interests, duties or obligations
hereunder without prior written consent of the other Party.
Notwithstanding the foregoing, either Party, may, without obtaining the
prior written consent of the other Party, assign or transfer this
Agreement or delegate any rights or obligations hereunder in connection
with merger, reorganization, transfer, sale of assets or product lines,
or change of control or ownership of such Party, or its permitted
successors, assigns or transferees; provided, however that, prior to such
assignment or transfer, such Party shall provide the other Party hereto
with reasonable assurances that the performance of all of such Party's
obligations hereunder shall continue after such assignment or transfer.
Such assurances shall include, without limitation, reasonable assurances,
form EMCORE that JDSU shall continue to receive its supply of Products
hereunder, or reasonable assurances from JDSU that EMCORE shall continue
to receive timely payments as required under any purchase orders. This
Agreement shall be binding upon and inure to the benefit of the
successors and permitted assigns of EMCORE and JDSU.
13. Term and Termination
13.1 This Agreement shall, subject to earlier termination as provided herein,
remain in force from the Effective Date for a period of {redact}, which
term can be extended upon the written agreement of the Parties for an
additional term of {redact} or such shorter period as the Parties shall
agree.
13.2 A Party shall have the right to terminate this Agreement forthwith at any
time by notice in writing to the other upon the happening of any of the
following events:
13.2.1 if the other commits a material breach of any of the terms of this
Agreement and does not within forty-five (45) days of receipt of
notice of the breach (if the same be capable of remedy) repair
such breach;
13.2.2 if the other shall make an assignment for the benefit of
creditors, admits its insolvency, is adjudicated bankrupt or
insolvent by any court of competent jurisdiction, any trustee or
receiver is appointed for it or for any of its property, or such
Party files any involuntary petition under any bankruptcy or
similar law providing for its reorganization, dissolution,
liquidation or winding-up.
13.3 Either Party shall have the right to terminate this Agreement if the
Commercial Launch Date for the Initial Product does not occur by
{redact}.
13.4 Termination of this Agreement for all or any part of the Territory shall
be without prejudice to any rights of either Party against the other
which may have accrued up to the date of such termination, including the
right to claim damages or pursue injunctive relief.
13.5 In particular, termination of this Agreement for any reason shall not
bring to an end the rights and obligations of the Parties under Sections
8.4, 9, 10 (as to Products shipped prior to termination), 11 and 21, each
of which shall survive any termination of this Agreement except as
otherwise expressly provided herein.
14. Force Majeure
14.1 If either Party to this Agreement is prevented or delayed in the
performance of any of its obligations under this Agreement by a Force
Majeure Event and if such Party gives written notice thereof to the other
Party specifying the matters constituting the Force Majeure Event
together with such evidence as it reasonably can give and specifying the
period for which it is estimated that such prevention or delay will
continue then the Party so prevented or delayed shall be excused the
performance as from the date of such notice for so long as such cause or
delay shall continue provided that the Party giving notice shall use all
reasonable efforts to mitigate the adverse consequences of any such Force
Majeure Event.
14.2 If the Force Majeure Event continues to have effect for a period of more
than ninety 90 days the Party not claiming relief under this Section 14
shall have the right to terminate this Agreement upon giving thirty 30
days' written notice of such termination to the other Party, but such
notice shall not take effect if the Party claiming relief gives notice
within that period that the cause has ceased to prevent the operation of
this Agreement.
15. Notice
15.1 All notices, requests, demands and other communications hereunder shall
be given in writing and shall be personally delivered; sent by
telecopier, facsimile transmission or other electronic means of
transmitting written documents which provides an answer back proving
receipt; or sent to the Parties at their respective addresses indicated
herein by registered or certified U.S. mail, return receipt if requested
and postage prepaid, or by private overnight mail courier service.
Notices shall be effective upon receipt by the Party to which they are
addressed. The respective addresses to be used for all such notices,
demands or requests are as follows:
(a) If to EMCORE, to:
MicroOptical Devices
5741 Midway Park Place NE
Albuquerque, NM 87109
Attention: {redact}
Telephone: {redact}
Facsimile: {redact}
with a copy to:
EMCORE Corporation
394 Elizabeth Avenue
Somerset, NJ 08873
Attention: {redact}
Telephone: {redact}
Facsimile: {redact}
or to such other person or address as EMCORE shall furnish to JDSU in
writing.
(b) If to JDSU, to:
JDS Uniphase Corporation
305 East Drive
Melbourne, Florida 32904
Attention: {redact}
Telephone: {redact}
Facsimile: {redact}
With a copies to:
{redact}
{redact}
210 Baypointe Parkway
San Jose, CA 95134
Telephone: {redact}
Facsimile: {redact}
And
{redact}
or to such other person or address as JDSU shall furnish to EMCORE in
writing.
16. Public Announcements
16.1 Each Party shall seek the prior written approval of the other at least
ten (10) days prior to the release of items of publicity of any kind,
including, without limitation, new releases, articles, brochures,
advertisements, prepared speeches, external company reports and other
information concerning the terms of this Agreement, the relations between
the Parties, the joint development undertaken hereunder or the Products.
16.2 The restrictions contained in Section 16.1 above shall not be construed
to limit either Party's disclosure of such information as required in
such Party's good faith judgment to satisfy the requirements of Federal
or State securities laws or regulations, regulations of the Nasdaq
National Market or other nationally recognized securities exchange on
which such Party lists its securities, the order of a court of competent
jurisdiction, or as required to meet such Party's credit and financing
arrangements.
17. Severability
17.1 If any provision herein shall be held invalid or unenforceable by a court
of competent jurisdiction or other authority, the remainder of the
provisions herein shall remain in full force and effect and shall not be
affected thereby.
18. Entire Agreement, Variation and Waiver
18.1 This Agreement represents the entire understanding and agreement between
the Parties and supersedes any and all prior agreements, previous
understandings both written and oral with respect to the subject matter
hereof.
18.2 This Agreement may not be amended, varied, supplemented or otherwise
modified except by an instrument in writing signed by both Parties.
18.3 The failure of either Party to insist in any one or more instances upon
the performance of any provisions of this Agreement shall not be
construed as a waiver or relinquishment of that Party's rights to future
performance of such provision and the other Party's obligation respect of
such future performance shall continue in full force and effect.
19. No Third Party Beneficiary
19.1 Nothing herein expressed or implied is intended to or shall be construed
to confer upon or give to any person or entity other than the Parties and
their successors and permitted assigns any rights or remedies under or by
reason of this Agreement.
20. No Joint Venture or Partnership
20.1 Nothing in this Agreement shall create a partnership or joint venture
between the Parties and save as expressly provided in this Agreement
neither Party shall enter into or have authority to enter into any
engagement or make any representation or warranty on behalf of or pledge
the credit of or otherwise bind or oblige the other Party hereto.
21. Disputes and Governing Law
21.1 The Agreement shall be governed by the laws of the State of New York,
without regard to the conflict of laws thereof.
21.2 In the event of any dispute under this Agreement, including, without
limitation, any arising out of the operation of the Steering Committee
under Section 4, not being resolved by the negotiation between the Chief
Executive Officers within thirty (30) days upon the written request of
either Party, the Parties agree to endeavour to settle the dispute in an
amicable manner by mediation administered by the American Arbitration
Association under its Commercial Mediation Rules, before resorting to
arbitration. Thereafter, any unresolved controversy or claim arising out
of or relating to this Agreement, or breach thereof, shall be settled by
binding arbitration administered by the American Arbitration Association
in accordance with its International Arbitration Rules, and judgment upon
an award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. The number of arbitrators shall be three, one
chosen by each Party with the third, who shall be the chairman, chosen by
the two Arbitrators chosen by the Parties. If possible, the arbitrators
will have experience with and knowledge of fiberoptic, VCSEL and/or data
communication technology as well as accounting and business law. The
place of arbitration shall be New York, New York and the language of the
proceeding shall be English.
21.3 All submissions and proceedings held pursuant to this Section 21 shall be
confidential and neither Party nor the mediator or arbitrators may
disclose the existence, content, or results of any mediation or
arbitration hereunder without the prior written consent of both Parties
unless otherwise required by law to do so. All negotiations held pursuant
to Section 4.8 shall be treated as compromise and settlement negotiations
for purposes of the Federal Rules of Evidence and state rules of
evidence.
21.4 NEITHER PARTY SHALL BE LIABLE FOR ANY INCIDENTAL, CONSEQUENTIAL, SPECIAL
OR PUNITIVE DAMAGES, NOR FOR ANY LOST PROFITS, ARISING OUT OF THIS
AGREEMENT OR ANY OBLIGATION ARISING THEREFROM OR OTHERWISE, WHETHER
LIABILITY IS ASSERTED IN CONTRACT OR TORT (INCLUDING NEGLIGENCE AND
STRICT PRODUCT LIABILITY), AND IRRESPECTIVE OF WHETHER IT HAS ADVISED OR
BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS OR DAMAGE.
22. Originals
22.1 EMCORE and JDSU shall execute two (2) originals of this Agreement. Each
Party hereto shall retain one original. Each original shall be equally
valid.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed
by their respective representatives on the day and year first above written.
EMCORE CORPORATION JDS UNIPHASE CORPORATION
By: By:
--------------------------------- ------------------------------------
Name: Name:
Title: Title: