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EXHIBIT 10.4
SECOND AMENDED AND RESTATED
DISTRIBUTORSHIP AGREEMENT
THIS SECOND AMENDED AND RESTATED DISTRIBUTORSHIP AGREEMENT, effective
as of March 31, 1998 (as amended, modified or supplemented from time to time,
the "Agreement"), by and between EMCORE CORPORATION, a corporation duly
organized and existing under the laws of New Jersey, having its principal place
of business at 394 Elizabeth Avenue, Somerset, New Jersey 08873 ("Emcore"), and
HAKUTO CO. LTD., a corporation duly organized and existing under the laws of
Japan, having its principal place of business at 1-13, Shinjuku, 1-chome,
Shinjuku-ku, Tokyo 160, Japan ("Hakuto"), amends, restates, replaces and
supersedes that certain Amended and Restated Distributorship Agreement, dated as
of January 20, 1998, retroactively effective as of July 12, 1995, by and between
Emcore and Hakuto (the "Amended Distributorship Agreement").
W I T N E S S E T H:
WHEREAS, Emcore is engaged in the business of manufacturing technical
and industrial products; and
WHEREAS, Hakuto is engaged in the business of, among other things,
marketing and selling products throughout the world; and
WHEREAS, the parties heretofore entered into the Amended and Restated
Distributorship Agreement pursuant to which Hakuto distributed certain Emcore
products in defined markets, and the parties desire to revise the terms of the
Amended and Restated Distributorship Agreement in accordance with which revised
terms Hakuto will continue to serve as Emcore's distributor.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, Emcore and Hakuto do hereby agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall have
the following meanings:
"CHANGE OF CONTROL" means: (1) the acquisition by any party,
or any group acting in concert (other than a group consisting exclusively of
current directors and/or officers of
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Emcore), of 50% or more of the issued and outstanding capital stock of Emcore;
or (2) the sale by Emcore of assets that significantly reduces Emcore's ability
to produce Mode Items, Pegasus Items or E2M Items.
"EQUIPMENT" means any or all items listed in Part 1 of Exhibit
A attached hereto and made a part hereof, including all Modifications and
Improvements thereto.
"E2M ITEMS" means any or all items listed in Part 2 of Exhibit
A attached hereto and made a part hereof, including all Modifications and
Improvements thereto.
"MODE ITEMS" means any or all items listed in Part 3 of
Exhibit A attached hereto and made a part hereof, including all Modifications
and Improvements thereto.
"MODIFICATION" AND "IMPROVEMENT" means any and all
alterations, whether patentable or not, or copyrightable or not, to the Products
or the name or designation thereof, or of the method of manufacture, design,
construction, installation, maintenance or sale of products.
"NEW CONTROL PARTY" means any party that acquires 50% or more
of the outstanding capital stock of Emcore in a Change of Control, or any party
that acquires assets of Emcore in a Change of Control.
"NON-JAPAN AGREEMENTS" means, collectively, the Amended and
Restated Distributorship Agreement, dated as of March 31, 1998, by and between
Emcore and S&T Enterprises Ltd., a Hong Kong company, and the Amended and
Restated Distributorship Agreement, dated as of January 20, 1998, by and between
Emcore and S&T Enterprises (Singapore) Pte. Ltd., a Singapore company.
"PEGASUS ITEMS" means any or all items listed in Part 4 of
Exhibit A attached hereto and made a part hereof, including all Modifications
and Improvements thereto.
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[*] CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERICKS DENOTE SUCH OMISSIONS.
"PRODUCTS" means, collectively, Equipment, Mode Items, Pegasus
Items and E2M Items.
[*]
"TERRITORY" means the country of Japan, provided, however, if
Hakuto develops a business prospect or prospective customer in the Philippines,
Hakuto shall advise Emcore forthwith of such business prospect and request that
the Philippines be made a part of Hakuto's exclusive territory. Upon receipt of
such request, Emcore shall give first priority to Hakuto to act as Emcore's
exclusive distributor in the Philippines, and the Philippines shall thereupon be
added to this Agreement as part of the Territory.
2. EXCLUSIVE DISTRIBUTORSHIP.
2.1 APPOINTMENT AND ACCEPTANCE. Emcore hereby appoints Hakuto as the
sole and exclusive distributor of the Products in the Territory and Hakuto
accepts such appointment, all in accordance with the terms and conditions set
forth in this Agreement. Without limiting the foregoing, Emcore shall refer to
Hakuto: (1) all inquiries concerning the Products from parties in the Territory
or parties outside the Territory who may deliver, or cause to be delivered,
Products in the Territory; and (2) orders for Products from customers or
potential customers in the Territory, or orders originating outside the
Territory that may require intermediate or ultimate delivery or use of Products
in the Territory. During the term of this Agreement, Emcore shall not appoint or
designate, directly or indirectly, any distributor of the Products in the
Territory other than Hakuto and shall not itself, directly or indirectly, sell
any of the Products in the Territory.
2.2 COMPENSATION TO HAKUTO. As indicated in SECTION 2.7 of this
Agreement, the relationship between Emcore and Hakuto is that of seller and
purchaser, respectively, and Hakuto
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[*] CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERICKS DENOTE SUCH OMISSIONS.
shall be compensated for Hakuto's ultimate sale of the Products to Hakuto's
customers through [*]; provided, however, that, given the global market and
expected competitive pressures on the prices of the Products in the Territory,
from time to time Hakuto and Emcore shall consult regarding the pricing of the
Products, and, to the extent that Hakuto cannot be compensated to Hakuto's
satisfaction by the [*], Hakuto shall receive, for all sales of Mode Items, E2M
Items and Pegasus Items in the Territory, at least [*] of the total amount
invoiced to Hakuto's customer in connection with any such sale. Without limiting
the foregoing, Emcore shall pay to Hakuto [*] of the total invoice amount in
connection with all sales outside the Territory of Mode Items, Pegasus Items and
E2M Items that are designed in the Territory but produced or further designed
outside the Territory and the territories specified in the Non-Japan Agreements.
2.3 LICENSE ROYALTY FEES. Emcore shall promptly pay to Hakuto [*] of
all license royalties, fees and other compensation accruing, directly or
indirectly, to or received by Emcore in connection with Emcore's technology
sharing arrangements (including, but not limited to, licensing and leasing) of
Mode Items: (1) in the Territory or (2) to any customer procured by Hakuto but
relating to arrangements outside of the Territory and the territories specified
in the Non-Japan Agreements (the "Licensing Royalty Fee").
2.4 REVIEW OF COMPENSATION AND LICENSING ROYALTY FEE. Hakuto and Emcore
shall: (1) review compensation and Licensing Royalty Fee on the second
anniversary of the effective date of this Agreement and on every other
anniversary date thereafter; and (2) alter such compensation and Licensing
Royalty Fee, if agreed to by both Hakuto and Emcore.
2.5 FEES PAYABLE TO EMCORE. In consideration of the distribution rights
granted by Emcore to Hakuto in this Agreement and in the Non-Japan Agreements,
Hakuto shall pay to Emcore [*] as follows: (1) [*] upon execution of this
Agreement; and (2) an additional [*] will be due in four equal installments,
such installments equaling [*] for each [*] in sales orders (for
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which Hakuto and any of its affiliates under the Non-Japan Agreements is
compensated hereunder) for Mode Items, Pegasus Items and E2M Items generated in
the Territory or in the territories specified in the Non-Japan Agreements.
2.6 BEST EFFORTS. Hakuto shall exert its best efforts to sell the
Products in the Territory. Specifically, and not in limitation hereof, if
Emcore, based on its independent market research, believes that certain of the
Products should be targeted to specific customers in the Territory, Emcore shall
convey its findings to Hakuto forthwith, whereupon Hakuto shall promptly exert
its full and best efforts to address these markets and Hakuto will confer with
Emcore regarding the best marketing strategies to promote sales of the Products,
and Hakuto will otherwise fully coordinate its sales efforts with Emcore. Hakuto
shall not market, distribute, sell or advertise for sale within the Territory
any products that are competitive with the Products.
2.7 NO AGENCY. The relationship between Emcore and Hakuto shall not be
that of a principal and agent, but shall be that of a seller and purchaser, each
acting as an independent contractor. Neither Hakuto nor Emcore shall have the
right or authority to incur, assume or create, in writing or otherwise, any
warranty, liability or obligation of any kind, express or implied, in the name
of or on behalf of the other party.
2.8 SUBDISTRIBUTORS. Hakuto shall not appoint any subdistributor or
subagent to perform any of its obligations under this Agreement without the
prior written consent of Emcore. Nothing herein, however, shall prohibit Hakuto
from assigning certain parts of the Territory, or certain customers in the
Territory, to its subsidiaries and affiliates. If Hakuto makes any such
assignment to a subsidiary or affiliate, Hakuto and Emcore shall nevertheless be
responsible for the obligations created hereunder.
2.9 MARKETING. Notwithstanding the exclusive sales rights granted to
Hakuto, Emcore may at its own expense and from time to time dispatch to the
Territory its personnel to engage in market research, Product promotion, and
other marketing activities, provided that all such activities shall at all times
be coordinated with Hakuto, conducted with full disclosure to and knowledge of
Hakuto, and provided further that any potential sale of any Products resulting
from
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[*] CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERICKS DENOTE SUCH OMISSIONS.
such activities of Emcore shall be referred to and channeled exclusively through
Hakuto, pursuant to the terms of this Agreement.
2.10 PRODUCT MODIFICATION, IMPROVEMENT AND DISCONTINUANCE. Emcore shall
have the right to make Modifications and Improvements, and to discontinue
production of any or all of the Products in its sole discretion, provided, that:
(1) Emcore shall give Hakuto not less than ninety (90) days' notice prior to the
discontinuance, Modification or Improvement of any Product; and (2) any
Modification or Improvement by Emcore of any Product shall be deemed to be added
to Exhibit A hereto by reference.
3. ORDERS AND PRICE TERMS.
3.1 PRODUCTS. Hakuto may submit to Emcore from time to time requests
for quotations with respect to any Products. Each such request for a quotation
shall identify Hakuto's prospective customer and shall set forth detailed
specifications for the Products required, including all optional features.
Emcore may respond to any such request by submitting a quotation on Emcore's
standard form setting forth the sales price to Hakuto for such Products.
3.2 EQUIPMENT; AND EQUIPMENT SPARE PARTS. At Hakuto's specific request,
Emcore will include in its quotations for Equipment: (1) a firm price for
Emcore's installation or assistance in installing the Equipment; and/or (2) a
firm price for Emcore's assistance in the start-up of the Equipment and a
demonstration of basic material specifications, provided that, in each case,
such request contains sufficiently detailed information regarding the nature of
the installation or assistance required or the material specifications to be
demonstrated. Hakuto may submit to Emcore from time to time purchase orders with
respect to spare parts or components included as Equipment under this Agreement
("Spare Parts"), setting forth the quantity and desired delivery date of such
Spare Parts. The price for any Spare Part shall be [*]. Emcore reserves the
right to
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[*] CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERICKS DENOTE SUCH OMISSIONS.
change its Spare Parts price list from time to time upon not less than ninety
(90) days' prior written notice to Hakuto.
3.3 OTHER TERMS. The terms and conditions on purchase orders issued by
Hakuto and quotations issued by Emcore shall be deemed to be a part of this
Agreement as a supplement hereto, provided that any provision in such purchase
order or quotation which is inconsistent with or contrary to the provisions of
this Agreement shall be deemed to be deleted from the purchase order or
quotation and of no force or effect unless the parties shall have specifically
agreed in writing that said provision in the purchase order or provision is
intended to supersede the inconsistent provision of this Agreement, in which
case the provisions of the purchase order or quotation shall prevail solely with
respect to such purchase order. All prices quoted by Emcore shall be F.O.B.
Emcore's plant in Somerset, New Jersey or, in the case of Mode Items, F.O.B.
Emcore's plant in Albuquerque, New Mexico. The quotations issued by Emcore for
Products shall be valid for not less than ninety (90) days (unless otherwise
specified in writing by Emcore). To be effective, all purchase orders must be
accepted in writing by Emcore at its plant in Somerset, New Jersey.
4. PAYMENT TERMS.
4.1 EQUIPMENT. Hakuto shall pay for Equipment purchased under this
Agreement as follows: [*] either (a) not later than one hundred eighty (180)
days prior to the scheduled delivery date of the Equipment, or (b) within thirty
(30) days after issuance of Hakuto's purchase order or Hakuto's letter of intent
if delivery of the Equipment is scheduled thereafter sooner than one hundred
eighty (180) days after the date of the purchase order or letter of intent. Any
payment accompanying a letter of intent shall be refundable to Hakuto in the
event that the anticipated purchase order is not issued by reason of the
customer's change of plans or the
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[*] CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERICKS DENOTE SUCH OMISSIONS.
customer's other business decision; and (2) [*] after shipment of the Equipment
by Emcore and delivery of a bill of a lading evidencing such shipment.
4.2 SPARE PARTS. Hakuto shall remit payment in full to Emcore for all
Spare Parts purchased under this Agreement within thirty (30) days after
shipment by Hakuto to Hakuto's customer.
4.3 MODE ITEMS; PEGASUS ITEMS; E2M ITEMS. Hakuto shall remit payment in
full to Emcore for all Mode Items, Pegasus Items and E2M Items purchased under
this Agreement within sixty (60) days after delivery to Hakuto.
4.4 NO ADJUSTMENTS OR DEDUCTIONS. All payments for Products shall be in
U.S. dollars without adjustment for any currency exchange or conversion rate
changes and without deduction for any taxes at any time levied by any
governmental authority.
5. SHIPMENT.
5.1 TAXES AND COSTS. All Products shall be shipped via carrier
designated in the purchase order, F.O.B. Emcore's plant in Somerset, New Jersey
or, in the case of Mode Items, F.O.B. Emcore's plant in Albuquerque, New Mexico.
Hakuto shall bear and pay for all taxes of any nature (except for taxes assessed
upon or due in connection with Emcore's income) imposed by any taxing authority
after delivery to the carrier at the F.O.B. point. Hakuto shall also bear and
pay for all charges for freight, shipping, consular fees, customs duties, and
all costs and expenses incurred after delivery of the Products to the carrier at
the F.O.B. point. Hakuto shall bear all risk of loss or damage to the Products
after delivery to the carrier at the F.O.B. point.
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5.2 SHIPPING DATES. Shipping dates, even though accepted by Emcore,
shall be understood only as best estimates. Emcore shall attempt to respect all
shipping dates, but, except as set provided in SECTION 7.5, shall not be liable
to Hakuto for damages arising from any delay in shipment or delivery, however
caused, except as otherwise expressly agreed by Emcore in writing on a
case-by-case basis. If Emcore experiences shipping or production delays, Emcore
shall not allocate Products to parties other than Hakuto, unless Hakuto is
allocated Products on a pro-rata basis with such other parties.
5.3 SHORTAGE OR DEFECT. Except as provided in SECTION 7.5, Emcore shall
not be liable for any obvious shortage of Products or for any patently obvious
defect in Products discoverable by visual inspection with respect to any
shipment received by Hakuto, unless Hakuto notifies Emcore in writing of such
obvious shortage or patently obvious defect, prior to the earlier to occur of:
(1) the expiration of sixty (60) days after receipt of such shipment by Hakuto;
or (2) the expiration of twenty (20) days after Hakuto ships such Products to
Hakuto's customer. Upon receipt of such notice, together with evidence that such
obvious shortage or patently obvious defect exists, and subject to the
provisions of SECTION 7.5, Emcore reserves the right, at its election, to
replace Products found to be defective or short in quantity, to issue a credit
to Hakuto for the prorated invoice amount relating to such shortage or defect,
or to repair Products found to be defective, all such remedial action to be
taken by Emcore promptly without material adverse effect upon Hakuto or its
customer.
6. EQUIPMENT INSTALLATION AND SERVICE.
6.1 GENERAL. Except as set forth below with respect to warranty
service, and except as provided in SECTION 7.5 and otherwise expressly provided
in quotations for Equipment issued by Emcore, Hakuto shall be responsible at its
own expense for the installation and service of all Equipment purchased under
this Agreement. Hakuto shall maintain trained personnel and shall purchase and
maintain an inventory of Spare Parts sufficient in volume and assortment to
promptly and efficiently perform necessary installation and service functions
for all Equipment in the Territory. Hakuto shall give due consideration to
Emcore's suggested minimum inventories for various Spare Parts.
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[*] CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERICKS DENOTE SUCH OMISSIONS.
6.2 INITIAL AND POST-INSTALLATION SERVICE FEES. Emcore shall make
certain personnel available to assist Hakuto in the initial installation of
Equipment at the customer's facility as well as in servicing Equipment after
installation until such time as Hakuto personnel are fully trained and are
capable, in Emcore's reasonable judgment, to perform such functions. The costs
of initial installation shall be borne by Emcore (i.e., included in the sale
price of the Equipment) unless other fee arrangements are agreed between Emcore
and Hakuto on a specific transaction. Hakuto shall pay Emcore for
post-installation servicing at the rate of [*] per person per day for field
service engineers and [*] per person per day for material process engineers,
plus travel and living expenses. Said reimbursement rates are based on the U.S.
Consumer Price Index in effect on the effective date of this Agreement and shall
be subject to adjustment on an annual basis to conform to any increase or
decrease in said U.S. Consumer Price Index as of each anniversary date of this
Agreement.
7. WARRANTY, INSURANCE AND INDEMNIFICATION.
7.1 WARRANTIES RELATING TO EQUIPMENT.
7.1.1 MATERIAL AND QUALITY. Subject to the disclaimers,
limitations and exclusions set forth below, and subject to the
provisions of SECTIONS 7.5 and 10.5, Emcore warrants to Hakuto and to
the end user customer of the Equipment that the Equipment shall be free
from defects in design, materials and quality. This warranty shall
become effective upon delivery of the Equipment to the end user
customer of Hakuto, and shall extend for a period of one (1) year from
the date of acceptance of the Equipment by the end user customer.
Hakuto shall notify Emcore from time to time of the installation
completion and customer acceptance date of Equipment. With respect to
any non-conforming Products as to which Emcore shall have received
notification of such non-
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conformance within twenty (20) days after discovery of same, Emcore
shall, subject to the provisions of SECTIONS 7.5 and 10.5, at its
election repair the same or provide a replacement Product at no cost to
Hakuto or the end user. Subject to SECTIONS 7.5 and 10.5, Emcore shall
not be liable for the cost of any labor or transportation charges
incurred in the repair or replacement of any non-conforming Products,
other than: (1) labor costs incurred by Emcore for Product repairs
performed in the United States; (2) cost of transportation incurred by
Emcore in the United States; and (3) upon Emcore's express written
instructions only, costs of transportation by Hakuto to Emcore of
Products to be repaired by Emcore in the United States.
7.1.2 WARRANTY AS TO SPECIFICATIONS. Emcore warrants that all
Products shall conform to the published specifications of Emcore or the
specifications of an end user customer approved and accepted by Emcore.
With respect to any non-conforming Product under this warranty, Emcore
shall perform all necessary re-engineering, rework or other procedures
necessary to conform the Product to the agreed specifications.
Specifically, Emcore shall be responsible for labor, travel and living
costs of Emcore personnel whether incurred in the United States or in
Japan.
7.1.3 EXCLUSIONS AND DISCLAIMER. Emcore's warranties set forth
in SECTIONS 7.1.1 and 7.1.2 do not apply to expendable items, including
those items listed in Exhibit B attached hereto. Also excluded from
Emcore's foregoing warranties are any components identified by Emcore
to Hakuto as being the subject of manufacturer's or licensor's
warranties, which warranties shall be deemed assigned to Hakuto at the
time title to the goods passes to Hakuto. With respect to all such
components, subject to the provisions of SECTIONS 7.5 and 10.5,
Hakuto's remedy shall be limited to the warranty and remedy provided by
the manufacturer or the licensor of said components, and Emcore's
liability obligation shall be limited to the exercise of its best
efforts to assist Hakuto in obtaining the benefit of such
manufacturer's or licensor's warranties. The foregoing limitation with
respect to components shall not apply to Emcore manufactured or
designed components.
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THE FOREGOING IS IN LIEU OF AND EXCLUDES ALL OTHER WARRANTIES,
EXPRESSED OR IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE AND, SUBJECT TO THE PROVISIONS OF
SECTIONS 7.5 AND 10.5, SHALL CONSTITUTE THE SOLE REMEDY OF HAKUTO AND
LIABILITY OF EMCORE WITH RESPECT TO ANY PRODUCTS DELIVERED PURSUANT TO
THIS AGREEMENT. EXCEPT AS PROVIDED IN SECTIONS 7.5 AND 10.5, IN NO
EVENT SHALL EMCORE BE LIABLE FOR DAMAGES OF ANY KIND OR NATURE
RESULTING FROM IMPROPER OR NEGLIGENT USE OR OPERATION OF PRODUCTS,
IMPROPER PREVENTATIVE MAINTENANCE, MODIFICATIONS FROM THE ORIGINAL
SYSTEM CONFIGURATION OR REPAIR BY PERSONNEL OTHER THAN THOSE IN THE
EMPLOY OF EMCORE, OR THOSE IN THE EMPLOY OF HAKUTO WHO HAVE BEEN
TRAINED AND APPROVED BY EMCORE. EXCEPT AS PROVIDED IN SECTIONS 7.5 AND
10.5, IN NO EVENT SHALL EMCORE BE LIABLE FOR CONSEQUENTIAL DAMAGES,
ANTICIPATED OR LOST PROFITS, INCIDENTAL DAMAGES OR LOSS OF TIME OR
OTHER LOSSES OR EXPENSES INCURRED BY HAKUTO OR ANY END USER CUSTOMER,
DIRECTLY OR INDIRECTLY, IN CONNECTION WITH THE SALE, HANDLING OR USE OF
THE PRODUCTS COVERED BY EMCORE'S WARRANTY.
7.2 WARRANTIES RELATING TO MODE ITEMS, PEGASUS ITEMS AND E2M
ITEMS.
7.2.1 MATERIAL, QUALITY AND SPECIFICATIONS. Subject to the
provisions of SECTIONS 7.5 and 10.5, Emcore warrants to Hakuto and to
the end user customer that for a period beginning upon delivery of the
Applied Products to Hakuto or to the end user customer and continuing
until the date one (1) year from the date of acceptance by the end user
customer that any Applied Products delivered to Hakuto or the end user
customer shall be free from defects in material, workmanship and
quality and shall meet the specifications set forth in its
specifications sheets or specifications as agreed formally with
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the end user customer or as mutually agreed by Emcore and Hakuto from
time to time hereafter.
7.2.2 EXCLUSIONS AND DISCLAIMER. THE EXPRESS WARRANTY GRANTED
ABOVE SHALL EXTEND DIRECTLY TO AUTHORIZED DISTRIBUTORS AND, EXCEPT AS
PROVIDED IN SECTIONS 7.5 AND 10.5, IS IN LIEU OF ALL OTHER WARRANTIES,
WHETHER EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR PARTICULAR PURPOSE. Except as provided in SECTION 7.5
and 10.5, Emcore will be liable under this warranty only for
replacement of the defective Product or, at the option of Hakuto or the
customer, credit of the Customer Price of the defective Product.
7.3 SPARE PARTS CONSIGNMENT INVENTORY. Emcore shall be responsible for
supplying all Spare Parts necessary to satisfy Emcore's obligations under the
foregoing warranties, and Hakuto shall be responsible for supplying all
installation or service relating to the warranty program except as otherwise
provided in SECTIONS 7.1.1 and 7.1.2 with respect to specification
non-conformance. Emcore agrees to maintain with Hakuto, at such location in the
Territory as Hakuto may designate, a consignment inventory of Spare Parts
("Consignment Inventory") determined by Emcore to be reasonably necessary for
the prompt and efficient delivery of warranty service. Hakuto agrees to provide
to Emcore periodic reports setting forth: (1) with respect to all warranty
claims made during such month, the identity of the end user, the nature of the
claim, the service provided and the Spare Parts used, if any, in providing such
service; and (2) the current levels of all Spare Parts comprising the
Consignment Inventory.
7.4 INSURANCE. Emcore shall maintain in force during the term of this
Agreement, and for a period of five (5) years thereafter, product liability
insurance based on an occurrence basis rather than a claims made basis, with
respect to the Products, in an amount not less than Two Million Dollars
($2,000,000) per person and Two Million Dollars ($2,000,000) per occurrence.
Such insurance policies shall name Hakuto as an additional insured, or shall
contain coverage protecting Hakuto as a vendor of the Products. Emcore shall
furnish Hakuto with properly executed Certificates of Insurance. Such insurance
policies shall include the obligation of the
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insurer to notify Hakuto, not less than thirty (30) days in advance, of any
reduction, non-renewal or cancellation of the foregoing insurance. In the event
that Emcore fails to purchase or maintain in force the above insurance, Hakuto
may purchase such insurance on Emcore's account, and at Emcore's expense, and
nothing herein shall waive Emcore's obligation to purchase and maintain such
insurance.
7.5 INDEMNIFICATION. Emcore shall indemnify and, at its own expense and
with diligence, defend and hold Hakuto, its subsidiaries and affiliates, and
their respective customers, free and harmless from and against any and all
claims, losses, damages, suits, causes of action, obligations and/or liabilities
(and against all associated costs and expenses, including, without limitation,
reasonable attorneys' fees and costs of litigation) whenever and wherever they
may occur, arising directly or indirectly from the sale or use of the Products,
provided, however, Emcore's obligation to indemnify Hakuto under this paragraph
shall not extend to any claims, losses, damages, suits, causes of action,
obligations and/or liabilities arising out of the gross negligence or
intentional wrongful conduct of the claimant.
8. OBLIGATIONS OF HAKUTO.
8.1 GENERAL OBLIGATIONS. In addition to and not in limitation of any
other obligations of Hakuto under this Agreement, Hakuto shall, at its own
expense unless otherwise expressly provided herein:
8.1.1 exert its best efforts to vigorously promote the sale
of the Products in the Territory and to develop a
market demand for the Products in the Territory;
8.1.2 advertise the Products throughout the Territory in
appropriate advertising media and in a manner
insuring proper and adequate publicity for the
Products, provided that Emcore shall be given the
opportunity to review and approve all advertising
prior to release by Hakuto;
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8.1.3 prepare for Emcore's review and approval, and update
not less than quarterly, a detailed marketing plan
for the sale of the Products in the Territory;
8.1.4 establish and maintain within the Territory adequate
business locations, including suitable facilities for
the display, care and storage of the Products and
provide adequate insurance against loss;
8.1.5 maintain within the Territory an inventory of Spare
Parts (in addition to the Consignment Inventory)
sufficient to meet expected demands for service and
upgrading of the Equipment in the Territory;
8.1.6 maintain a trained technical sales force and
sufficient other personnel qualified to promote,
install and service the Equipment in the Territory
and send appropriate personnel to Emcore for one week
training on an annual basis;
8.1.7 offer the Products for sale (including all
advertising and promotional activities) under the
Emcore trademark as manufacturer and Hakuto's
trademark as distributor;
8.1.8 assume full responsibility for the installation of
the Equipment, and the warranty and post-warranty
service and maintenance of the Equipment, in the
Territory;
8.1.9 translate and prepare promotional and technical
literature for use in the Territory;
8.1.10 obtain all import and regulatory approvals necessary
for the promotion and sale of the Products in the
Territory, supply Emcore with necessary customer
import certificates, and otherwise advise and assist
Emcore in
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complying with U.S. regulations and with regulations
and customs applicable in the Territory;
8.1.11 provide Emcore with periodic reports (but not less
often than quarterly) in form and substance
reasonably satisfactory to Emcore, setting forth
detailed information for such period regarding sales,
quotations, promotional efforts made, advertising,
resale prices, competitors, activities in the
Territory, installation and service activities
performed, customer complaints, business trends and
any other information likely to assist Emcore in
evaluating the performance of Hakuto in the
Territory;
8.1.12 establish and maintain complete and accurate records
of all sales and service of the Products in the
Territory;
8.1.13 refrain, without Emcore's prior written consent, from
seeking customers outside the Territory or from
promoting the sale of the Products outside the
Territory;
8.1.14 refrain from purchasing or soliciting orders for
goods which directly compete in any way with the
Products; and
8.1.15 (1) immediately assign a full time sales manager; (2)
within 60 days of the date of this Agreement, appoint
an additional sales person to specialize in the
distribution of Mode Items, Pegasus Items and E2M
Items; and (3) within one year of the date of this
Agreement, form a group to specialize in the
distribution of Mode Items, Pegasus Items and E2M
Items.
8.2 EQUIPMENT MINIMUM PURCHASE OBLIGATION. With respect to Equipment,
Hakuto shall have a minimum purchase obligation during each year of the term of
this Agreement
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[*] CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERICKS DENOTE SUCH OMISSIONS.
("Contract Year"). Hakuto will submit to Emcore purchase orders during each of
the [*]. For each succeeding Contract Year of the Agreement, Hakuto and Emcore
shall mutually agree on a minimum purchase order amount for each such year prior
to commencement of such Contract Year. In computing the value of the minimum
purchase amount for each Contract Year, there shall be included the value of all
Equipment shipped during said Contract Year, the value of orders placed by
Hakuto though not shipped by Emcore during the Contract Year, and the value of
orders procured by Hakuto but canceled by Hakuto's customer by reason of
Emcore's inability to perfect delivery of the Equipment within six (6) months
from date of the order. The value of all of the foregoing orders which exceeds
the minimum purchase commitment for any Contract Year shall be credited to
Hakuto's minimum purchase order commitment for the subsequent Contract Year.
"Contract Year" means the twelve (12) month period commencing on the date of
this Agreement and each twelve (12) month period thereafter during the term of
this Agreement or any renewal term thereafter.
9. OBLIGATIONS OF EMCORE. In addition to and not in limitation of any other
obligations of Emcore under this Agreement, Emcore shall, at its own expense,
provide Hakuto with periodic reports (but not less often than quarterly) in form
and substance satisfactory to Hakuto, setting forth detailed information for
such period regarding production costs and margins with respect to the Products
and any other information likely to assist Hakuto in evaluating pricing options.
10. TRADEMARK AND PATENT RIGHTS.
10.1 LICENSE GRANT. Exhibit C attached hereto and made a part hereof
identifies all registered, recorded or issued material intellectual property,
including registered copyrights and trademarks, issued patents and applications
for any of the foregoing, which have been, or, with respect to applications, may
be issued to or registered by Emcore in the Territory (which listed items,
together with other intellectual property in which Emcore claims a proprietary
interest in
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the Territory such as, inter alia, know-how and common law trademarks shall
hereafter be referred to as "Intellectual Property"). Hakuto is hereby granted a
license and privilege to use all of the Intellectual Property, including any
improvements, modifications or functional equivalents, during the term of this
Agreement in furtherance of the objectives of this Agreement. Hakuto shall not
have the right to sublicense (except to Hakuto's subsidiaries and affiliates)
the Intellectual Property or otherwise permit its use by third parties without
Emcore's prior written consent. If Hakuto is required by law to register its
licenses in Japan or, in its sole discretion, determines that registration
hereof should be effected in order to protect the rights and interests of Hakuto
hereunder, then Emcore shall cooperate with Hakuto to effect the same.
10.2 HAKUTO COOPERATION. Hakuto shall advise Emcore from time to time
of any additional filings, registrations or other actions that may be necessary
or desirable for the protection of Emcore's Intellectual Property in the
Territory. Upon Emcore's request, Hakuto shall assist Emcore in connection with
the issuance or registration of any new Emcore patents, copyrights, trademarks
or other Intellectual Property in the Territory.
10.3 INFRINGEMENT. Hakuto shall at all times respect and protect
Emcore's rights of total ownership of the Intellectual Property in the
Territory. Hakuto shall promptly notify Emcore of any infringements of such
rights of which Hakuto has notice and shall assist Emcore in taking such action
against such infringement as Emcore may elect.
10.4 TERMINATION OF LICENSE. Upon termination of this Agreement for any
reason, Hakuto shall promptly relinquish to Emcore any rights to the use of the
Intellectual Property and shall thereafter refrain from using the same.
10.5 INFRINGEMENT INDEMNIFICATION. If Hakuto or its customers are
served notice of alleged infringement of any patents, designs, copyrights and/or
trademarks arising from the sale or use of any of the Products, Emcore shall, at
its own expense and with diligence, defend and hold Hakuto and its customers
free and harmless from and against any and all claims, loss, damage, suits,
causes of action and/or liability (and against all associated costs and
expenses, including, without limitation, reasonable attorneys' fees and costs of
litigation) whenever and wherever they
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may occur, on account of said alleged infringement; provided, however, that
Emcore shall have no obligation to indemnify Hakuto or its customers to the
extent the alleged infringement is due solely to: (a) a Product modification by
Hakuto or the customer; (b) use of a Product in combination with any other
device or thing; or (c) failure to use the Product in accordance with its
customary use or in conformity with Emcore's instructions and operating
guidelines. If Emcore shall fail or refuse to do so, Hakuto and its customers
may take such action as Hakuto or its customer, or jointly, may deem necessary,
and all costs, attorneys' fees, losses or damages as may be incurred by Hakuto
or its customers shall be the obligation of Emcore to be recovered by Hakuto or
its customers by suit or otherwise.
10.6 QUALITY CONTROL. In connection with any use hereunder by Hakuto of
any registered or unregistered trademark owned by Emcore, Emcore shall have the
right at all times to: (a) establish and require Hakuto's adherence to quality
control standards governing the repair, sale and quality of the Products; and
(b) establish and require Hakuto's adherence to standards governing the manner
of display of any Emcore trademark in promotional, technical and informational
materials. Emcore shall have the right to request, at reasonable intervals,
inspection by Emcore or its designee of Hakuto's operations and of any materials
used or created by Hakuto displaying any Emcore trademark, so that Emcore can
verify to its satisfaction that the Products, services and display of trademarks
conform to the appropriate standard of quality.
11. CONFIDENTIALITY. Each party hereto when receiving information from the other
party (in such case, a "Receiving Party") agrees to use its best efforts to hold
in strict confidence and not to disclose to others or use, for a period of three
years after termination hereof, any technical or business information,
manufacturing technique, process, experimental work, trade secret or other
confidential matter relating to the business of the party in possession of such
information (such party, a "Disclosing Party") or relating to the Products, in
the case of Hakuto, or the other party's business ("Confidential Information"),
except to the extent necessary to further the objectives of this Agreement. This
SECTION 11 shall not apply to: (1) information known to the Receiving Party
prior to disclosure by the Disclosing Party of Confidential Information; (2)
Confidential Information which is, or becomes through no fault of the Receiving
Party, generally known or available to the public; (3) Confidential Information
which is received by the Receiving Party from
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third parties who are not bound by confidentiality obligations; (4) Confidential
Information which the Disclosing Party discloses to a third party who is not
bound by confidentiality obligations, unless such third party is a subsidiary or
affiliate of the Disclosing Party; and (5) information independently developed
by the Receiving Party. The Receiving Party shall, upon request (and upon
termination of this Agreement without request), deliver to the Receiving Party
any and all drawings, notes, documents and materials received from the Receiving
Party.
12. ASSIGNMENT. Neither party shall assign, transfer or otherwise dispose of
this Agreement or any of its rights or obligations hereunder in whole or in part
to any individual, firm or corporation without the prior written consent of the
other party, and any attempted assignment in violation of this provision shall
be null and void.
13. TERM AND TERMINATION.
13.1 TERM. This Agreement shall take effect on the effective date set
forth on the first page hereof and shall remain in effect for a period of ten
(10) years thereafter unless earlier terminated in accordance with the terms
hereof. This Agreement may be terminated by either Party upon the expiration of
the ten (10) year period by giving six (6) months' prior written notice to the
other party of its intent not to extend the Agreement for further periods.
Unless such notice of intent to terminate is given, this Agreement shall
continue to remain in effect after the initial ten (10) year period for further
consecutive periods of one (1) year each, subject, however, to the right of
either party to terminate the Agreement during each such extended one-year
period by giving six (6) months' prior written notice to the other party of its
intent to terminate.
13.2 TERMINATION. In addition to the provisions of SECTION 13.1
above, either party may terminate this Agreement as follows:
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13.2.2 immediately and without prior written notice if
proceedings in bankruptcy or insolvency are
instituted by or against the other party, a receiver
is appointed or any substantial part of the assets of
the other party is the subject of attachment,
sequestration or other similar proceeding, and such
proceeding is not vacated, terminated or stayed
within sixty (60) days after its commencement or
institution; or
13.2.3 immediately upon the occurrence of a default by the
other party in the performance of its obligations
under this Agreement, which default is not cured
within thirty (30) days after receipt by such party
of written notice of the default; or
13.2.4 immediately if either party is unable to obtain or
renew any material permit, license, or other
governmental approval necessary to such party's
performance under this Agreement.
14. CONSEQUENCES UPON TERMINATION. Upon expiration or termination of this
Agreement for any reason:
14.1 REPURCHASE OF SPARE PARTS. Emcore shall repurchase Hakuto's
inventory of new and unused Spare Parts at Emcore's then effective list price
for such Spare Parts or Hakuto's cost therefor, whichever is lower. Hakuto shall
deliver such Spare Parts, together with the Consignment Inventory, at Emcore's
expense, to Emcore at such location, in such manner and at such time as Emcore
may direct.
14.2 RETURN OF MATERIALS. Hakuto shall return to Emcore all proprietary
information and all sales and technical literature relating to the Products, and
Hakuto shall deliver to Emcore Hakuto's list of all customers and prospective
customers for the Products in the Territory, including names, addresses,
telephone numbers and contact persons.
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[*] CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERICKS DENOTE SUCH OMISSIONS.
14.3 NON-COMPETITION; CESSATION OF MARKETING AND USE OF EMCORE NAME.
For a period of [*] after the date of termination of this Agreement, Hakuto
shall not engage in the marketing, sales or distribution of any products which
may be directly competitive with the Products, provided, however, nothing herein
shall prohibit Hakuto from liquidating by sale or otherwise any Products
remaining in Hakuto's inventory on the date of termination and not repurchased
by Emcore. Hakuto shall cease marketing the Products and using Emcore's name and
trademarks in the Territory, provided that all orders for Products accepted by
Emcore prior to expiration or termination of this Agreement shall be completed
in accordance with their terms. Hakuto shall thereafter, for such [*] period,
refer to Emcore any and all inquiries, orders, correspondence and the like,
whether in written or oral form, pertaining to Products in the Territory.
14.4 ASSUMPTION OF WARRANTY OBLIGATIONS. Emcore shall assume,
commencing immediately upon termination of this Agreement, full responsibility
for providing warranty service and post-warranty servicing of the Equipment to
all customers theretofore serviced by Hakuto, and Emcore shall hold Hakuto free
and harmless from all such obligations.
14.5 COMMISSIONS. Emcore shall pay to Hakuto a commission as follows:
(1) with respect to Equipment, a commission equal to [*] purchase price of any
Equipment sold by Emcore (i.e., orders received and approved by Emcore) or with
respect to compensation or fees received by Emcore in connection with technology
sharing arrangements in or for use in the Territory within twelve (12) months
after expiration or termination of this Agreement; (2) with respect to Mode
Items, [*]; (3) with respect to Pegasus Items, [*]; and (4) with respect to E2M
Items, [*].
14.6 LIABILITY FOR TERMINATION. Provided that termination of this
Agreement did not result by reason of the breach of or default under this
Agreement by either party, and except as
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[*] CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERICKS DENOTE SUCH OMISSIONS.
provided in SECTION 15, neither party to this Agreement shall claim from the
other party any indemnity, reimbursement, compensation or damages for alleged
loss of clientele, good will, profits or anticipated sales or on account of
expenditures, investments, leases or other commitments arising from the
expiration or termination of this Agreement, each party acknowledging that it
has made all decisions and investments in full awareness of the possibility of
losses or damages arising from the expiration or termination of this Agreement.
15. CHANGE OF CONTROL. If, during the term of this Agreement, a Change of
Control occurs, then Emcore shall either: (1) pay [*] to Hakuto; or (2) provide
Hakuto with reasonable assurance that the New Control Party will assume the
obligations of this Agreement and that the New Control Party will, or will cause
Emcore to, manufacture and sell, in the Territory and pursuant to the terms of
this Agreement, Mode Items, Pegasus Items and E2M Items at a level satisfactory
to Hakuto.
16. MISCELLANEOUS.
16.1 NOTICES. All notices and other communications in connection with
this Agreement shall be in writing, shall be sent to the respective parties at
the following addresses, or to such other addresses as may be designated by the
parties in writing from time to time, by registered or certified mail, telecopy
or recognized overnight delivery service, and shall be effective upon receipt:
To Emcore: Emcore Corporation
394 Elizabeth Avenue
Somerset, New Jersey 08873
Attention: William J. Kroll
Telephone: 908-271-9090
Fax: 908-271-9686
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To Hakuto: Hakuto Co. Ltd.
1-13 Shinjuku
1-chome, Shinjuku-ku
Tokyo 160, Japan
Attention: A. Nakazawa
Telephone: 3-3225-8910
Fax: 3-3225-9007
With Copy To: Masuda, Funai, Eifert & Mitchell, Ltd.
One East Wacker Drive, Suite 3200
Chicago, Illinois 60601-1802
Attention: Thomas P. McMenamin
Telephone: 312-245-7500
Fax: 312-245-7467
16.2 NO WAIVER. Any failure by any party hereto to enforce at any time
any term or condition under this Agreement shall not be considered a waiver of
that party's right thereafter to enforce each and every term and condition of
this Agreement.
16.3 GOVERNING LAW; ARBITRATION. This Agreement is made and shall be
construed according to the laws of the State of New Jersey, USA. All disputes,
controversies, or differences which may arise between the parties, out of or in
relation to or in connection with this contract, or the breach thereof, shall be
finally settled by arbitration pursuant to the Japan-American Trade Arbitration
Agreement, of September 16, 1952, by which each party hereto is bound. The
arbitration proceeding shall be held in Somerset County, New Jersey, if Hakuto
seeks arbitration and in Tokyo, Japan, if Emcore institutes such proceeding.
Each party shall bear its own costs incurred in such arbitration proceeding.
16.4 MODIFICATION. This Agreement may be modified, amended or revised
only by a written instrument duly executed by the parties hereto.
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16.5 COMPLIANCE WITH LAWS. In the conduct of its business under this
Agreement, Hakuto shall comply with the applicable laws, regulations, orders and
the like prevailing in the Territory.
16.6 ENTIRE AGREEMENT. This Agreement, the exhibits and duly executed
addenda thereto, all approved purchase orders issued pursuant hereto, shall
contain the entire and only agreement between the parties relating to the
subject matter hereof, and any representations, terms or conditions relating
thereto but not incorporated herein shall not be binding upon either party. This
Agreement cancels, voids and supersedes any agreement heretofore entered into
between the parties with respect to the subject matter hereof, except as
otherwise expressly provided herein.
16.7 SEVERABILITY. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions or affecting the validity or
enforceability of any provision in any other jurisdiction.
16.8 SUCCESSORS AND ASSIGNS. Subject to SECTION 12 hereof, all terms
and provisions of this Agreement shall be binding upon and inure to the benefit
of the parties and their respective permitted transferees, successors and
assigns.
16.9 COUNTERPARTS. This Agreement may be executed by duly authorized
representatives of the respective parties hereto in any number of counterparts,
each of which, when fully executed, shall be deemed an original. This Agreement
may be translated into any other language and such translation may be initialed,
but only this Agreement in the English language shall be deemed the original. If
any conflict exists between the English language and any translation thereof,
the English language version shall control.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
EMCORE CORPORATION
By: /s/ WILLIAM J. KROLL
---------------------------------
Name: William J. Kroll
Title: Executive Vice President
HAKUTO CO. LTD.
By: /s/ SHIGEO TAKAYAMA
---------------------------------
Title: President & CEO
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EXHIBIT A
CONFORMED COPY OF EXECUTION ORIGINAL
PART 1: EQUIPMENT
Equipment shall mean the following, including all Modifications and
Improvements and all functional equivalents thereof:
Explorer Reactor with glove box (no load lock) and limited options
Discovery 75
Discovery 125
Discovery 180
Enterprise 200
Enterprise 300
Enterprise 400
Advanced Oxide CVD System Standard
Standard accessory Tools for above Systems
PART 2: E2M ITEMS
All Epitaxial Wafers and all other products of Emcore's Electronic Materials
Division, including all products not yet in existence that are designed,
developed, manufactured or sold by Emcore and that are similar or related to
the above-listed products.
PART 3: MODE ITEMS
All Vertical Cavity Surface Emitting Lasers and all other products of Emcore's
MODE Division, including all products not yet in existence that are designed,
developed, manufactured or sold by Emcore and that are similar or related to
the above-listed products.
PART 4: PEGASUS ITEMS
All MR Sensors and all other products of Emcore's Pegasus Division, including
all products not yet in existence that are designed, developed, manufactured or
sold by Emcore and that are similar or related to the above-listed products.
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EXHIBIT B
CONFORMED COPY OF EXECUTION ORIGINAL
EXPENDABLE ITEMS
NOT COVERED UNDER WARRANTY
1. Pump Fluids - (krytox, mechanical pump fluid)
2. Oil Coalescing Filter Element
3. Oil Backstreaming Filter Element
4. Oil Recirculation Filter Element
5. Graphite Heater Filament
6. Loadlock Heater Bulbs
7. Copper Gaskets
8. Nickel Gaskets
9. Viton-rings VCR Filter Gaskets
10. PD Cell Membrane
11. Reactor Parts:
a. Moly Electrodes
b. Moly Standoff Nuts
c. Moly Screws
d. Vented Screws
e. Diffusion Plate Screen
12. TGA (Activated Carbon)
13. MDA Tape
14. MDA Thermal Print Paper
15. Motor Drive Belt
16. Needle Valve Belt
17. Computer Disks
18. Fuses
19. Loadlock Operation Fluid
20. Stainless Steel Filter Medium
21. Fluorescent Light Bulbs
22. Clean Air Filters
23. Miscellaneous Hardware
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EXHIBIT C
CONFORMED COPY OF EXECUTION ORIGINAL
PATENTS AND TRADEMARKS
APPLICATION DATE REGISTRATION
CATEGORY ITEM COUNTRY NUMBER ISSUED NO.
- -------- ---- ------- ----------- ------ ------------
Patents Modular Gas Handling Apparatus
Gas Treatment Apparatus and
Method Gas Dispersion Device
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Trade Mark Emcore
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Copyrights
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Other Intellectual
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Property Rights
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Applications
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