EXHIBIT 10.32
CONFIDENTIAL SETTLEMENT AGREEMENT
This CONFIDENTIAL SETTLEMENT AGREEMENT (this "Settlement"), dated as
of June 25, 2003, by and among JDS UNIPHASE CORPORATION, a Delaware corporation
("JDSU" or "Claimant"), and IPG PHOTONICS CORPORATION, a Delaware corporation
("IPG" or "Respondent");
WITNESSETH:
A. IPG and JDSU's predecessor in interest, SDL Inc., a Delaware
corporation ("SDL"), entered into a purchase and sale agreement entitled IPG
Photonics Corporation Purchase and Sale Agreement No. 1-99, dated May 11, 1999,
which was subsequently amended by the parties on or about May 18, 2000 and
amended a second time on or about November 15, 2000 (collectively, the
"Agreement"); and
B. a dispute arose between IPG and SDL's successor in interest, JDSU,
concerning the parties' performance, rights, and obligations under the
Agreement; and
C. JDSU has commenced an arbitration proceeding against IPG before the
American Arbitration Association, entitled JDS Uniphase Corporation against IPG
Photonics Corporation, AAA Number 74 181 01636 02, now pending before the AAA
San Xxxx Regional Office (the "Arbitration"), alleging that IPG has breached the
Agreement and now owes JDSU in excess of $10 million;
D. JDSU also commenced a proceeding against IPG in Massachusetts state
court, entitled JDSU Uniphase Corp. v. IPG Photonics Corp., No. 02-1780, now
pending before the Superior Court of the Commonwealth of Massachusetts
requesting, among other things, equitable relief in the form of an attachment of
IPG's assets in Massachusetts (the "State Court Action").
E. IPG has asserted counterclaims against JDSU and SDL in the
Arbitration and the State Court Action sounding in breach of contract, unfair
competition and violation of federal and state laws governing anti-trust and
unfair competition;
F. Both parties have denied the others' operative allegations
contained in the Arbitration claim filed by JDSU and the counterclaims filed by
IPG; and
G. IPG and JDSU each believes that it will be best served by ending
the disputes reflected in the Arbitration and the State Court Action and that
the continued prosecution of the Arbitration and the State Court Action will
entail the expenditure of substantial legal fees and management time for both
IPG and JDSU over the course of several years, resources that each of them
believes would be better spent in pursuit of such business interest; and
H. Subject to the terms of this Settlement and the other instruments
and documents to be entered into by it pursuant hereto, JDSU is therefore
willing to dismiss the claims it has asserted against IPG in the Arbitration and
the State Court Action, and IPG is willing to dismiss the counterclaims that it
has asserted against JDSU in the Arbitration and the State Court Action; and
I. Accordingly, the parties hereto desire to settle their disputes
reflected in the Arbitration and the State Court Action on the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual representations, warranties
and covenants set forth herein, the parties hereto hereby agree as follows:
1. Representations and Warranties.
Both IPG and JDSU hereby represent and warrant to the other that:
A. It has the corporate power and authority to enter into this Settlement
and the other instruments and documents to be entered into by it
pursuant hereto and to observe and perform its obligations hereunder
and thereunder;
B. The execution and delivery of this Settlement and the other
instruments and documents to be executed and delivered by it pursuant
hereto, and the consummation of the transactions contemplated hereby
and thereby, have been duly authorized by all necessary corporate
action;
C. This Settlement and each other instrument and document to be executed
and delivered by it pursuant hereto has been or, when executed and
delivered, will have been, duly executed and delivered, and this
Settlement and each such other instrument and document constitutes or,
when executed and delivered by it, will constitute, a valid and
binding agreement, enforceable against it in accordance with its terms
(except insofar as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, or by principles governing the
availability of equitable remedies);
D. None of the execution, delivery or performance of this Settlement and
the other instruments and documents to be executed and delivered by it
pursuant hereto, nor the consummation of the transactions contemplated
hereby and thereby, nor compliance by it with the terms hereof and
thereof, will: (i) conflict with or result in a breach of any of the
provisions of its charter, by-laws, or equivalent governing documents;
(ii) require any filing by it with, or any permit, authorization or
consent from, any court, administrative agency, or other governmental
or regulatory authority, foreign or domestic, or from any third party,
except any filings or reports required to be made under and pursuant
to applicable securities laws or the rules and regulations of any
applicable stock exchange or market quotation system; (iii) result in
a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default under, any note, bond, mortgage,
indenture, lease, license, franchise, permit or other instrument or
agreement to which it is a party or by which it is bound or any of its
assets is affected; or (iv) violate any order, writ, injunction,
decree, statute or ordinance applicable to it; and,
E. It has not relied on any representation or warranty, written or oral,
that is not set forth herein or in any of the instruments or documents
executed pursuant hereto in entering into this
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Settlement and each other instrument and document to be executed and
delivered by it pursuant hereto; it has entered into this Settlement
and such other instruments and documents voluntarily and without
duress, threat or undue influence; it has been represented in
negotiations relating to and in the preparation of this Settlement by
independent counsel of its own choosing, it has reviewed this
Settlement and such other instruments and documents and each such
document has been explained to it by its counsel, it is fully aware of
its terms and provisions and of its legal effect; and it has conducted
whatever investigation it has deemed necessary or appropriate prior to
entering into this Settlement or any such other document.
F. Notwithstanding anything to the contrary in clauses B, C and D of this
Section 1, IPG shall make the representations and warranties in such
clauses B, C and D with respect to the Equity Documents (as
hereinafter defined) at the time of and conditioned on the Closing (as
hereinafter defined).
2. Stay and Dismissal of the Arbitration Claims with Prejudice.
A. Concurrently with the execution of this Settlement, IPG and JDSU shall
cause their respective attorneys to execute a Stipulation and Order to
Stay the Arbitration ("Stipulation and Order To Stay Arbitration"),
for a thirty (30) day period.
B. Upon the Closing, IPG and JDSU shall cause their respective attorneys
to execute a Stipulation and Order of Dismissal for the dismissal with
prejudice of the Arbitration ("Stipulation and Order of
Dismissal-Arbitration"), subject only, as stated therein, to the terms
and conditions of this Settlement.
C. Upon the Closing, IPG and JDSU shall cause their respective attorneys
to execute a Stipulation and Order of Dismissal to dismiss the action
entitled JDS Uniphase Corp. v. IPG Photonics Corp., No. 02-1780,
currently pending in the Superior Court of the Commonwealth of
Massachusetts ("Stipulation and Order of Dismissal-State Court
Action"), and vacating the attachment of assets to which the parties
have previously stipulated in that action.
D. Each of the parties hereto shall, promptly after the execution and
delivery of this Settlement, return any and all materials in its
possession to the party that provided such materials, if and to the
extent required by any confidentiality agreements executed by such
parties or protective orders governing the return of such materials.
3. Structured Cash Payment to JDSU.
A. Promissory Note.
Concurrently with the execution of this Settlement, IPG shall execute
a promissory note (the "Note") in favor of JDSU, in the form of
Exhibit A attached hereto in the principal amount of $6,079,472.60
(Six million, seventy nine thousand, four hundred and seventy two
dollars, and sixty cents), which shall be payable by IPG on the
following schedule:
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i. $666,000 shall be paid to JDSU during calendar year 2003 in two
equal installments, pursuant to the terms of the Note;
ii. $2,000,000.00 shall be paid during calendar year 2004 in equal
quarterly installments pursuant to the terms of the Note; and
iii. the balance of the amount to be paid during calendar year 2005 in
equal quarterly installments pursuant to the terms of the Note.
Interest shall accrue on the outstanding balance of the Note at a rate
of 4% (four) per annum commencing on the date of the Closing. Accrued
and unpaid interest under the Note shall be payable at the same times
as payments of principal.
At the Closing, IPG shall pay to JDSU $302,006.30 (which amount
represents a payment to JDSU of $334,000 less $31,993.70 for an
outstanding account payable of JDSU owing to IPG).
B. Attachment: The Note shall be secured by a first priority security
interest in certain IPG's assets set forth in the Security Agreement
(the "Security Agreement") in the form of Exhibit B attached hereto,
and in certain land owned by IPG set forth in the Mortgage (the
"Mortgage") in the form of Exhibit C attached hereto. JDSU and IPG
shall execute the Security Agreement and IPG shall execute the
Mortgage concurrently with the execution of this Settlement.
C. Release of Liens: At or promptly following the Closing, JDSU shall
release its liens and attachment on the assets of IPG under the Writ
of Attachment, dated February 28, 2003 (Superior Court Department of
the Trial Court Civil Action 02-1780C); it being agreed that the
assets subject to such Writ of Attachment shall become the assets
which shall the Note pursuant to the Security Agreement and the
Mortgage.
D. Acceleration. The amounts set forth in Section 3(A) shall be
accelerated and shall become immediately due and payable upon the
occurrence of any of the following events:
i. IPG shall have defaulted in the performance of its obligations
under the Note and shall have failed to cure such default within
thirty (30) days of written notice thereof given by JDSU in
accordance with terms of the Note; and
ii. A Change of Control of IPG, as defined in the Note.
E. Other Prepayments.
i. In the event that IPG engages in an equity financing prior to
repayment and satisfaction of the Note, it shall provide to JDSU
in payment of the Note 10% of any net proceeds raised through
such financing; or
ii. In the event that IPG's commercial bank (BankNorth) releases to
IPG any cash collateral currently held by it, IPG shall
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provide those funds to JDSU in payment of the Note as follows:
iii. If the release occurs during 2003 or 2004, then IPG shall pay
JDSU 50% of such released cash in partial payment of the Note;
and
a. If the release occurs during 2005, IPG shall pay to JDSU 75%
of such released cash in partial payment of the Note, until
such Note is paid in full.
b. All prepayments shall be applied in the reverse order of
principal payments under the Note.
F. Disposition of assets. IPG shall be permitted to sell, transfer or
otherwise dispose of the assets securing the Note from time to time,
provided that (a) the assets are sold for fair value, and (b) that the
net consideration received by IPG in connection with the sale of the
assets are used within five (5) business days of the receipt thereof
to prepay the Note. All payments under this Section F shall be applied
in the reverse order of principal payments under the Note.
4. Commercial Relationship.
A. Concurrently with the execution of this Settlement, IPG and JDSU shall
execute (a) a Master Supply Agreement, in the form of Exhibit D
attached hereto, pursuant to which IPG agrees that it will supply to
JDSU, pulsed Ytterbium fiber laser modules (current and new commercial
versions) that it sells on the merchant market, excluding those fiber
lasers as to which IPG is subject to exclusivity obligations and (b) a
Master Supply Agreement under which JDSU agrees to supply to IPG, and
IPG agrees to purchase from JDSU on the terms and conditions set forth
in Exhibit E, commercially available Laser Diodes and packaged Laser
Diodes that it sells on the merchant market.
5. Investment By JDSU.
Promptly following the execution of this Settlement, IPG and JDSU will negotiate
in good faith to document and effectuate the general terms set forth below
governing the terms of a new series of convertible preferred stock of IPG (the
"Series D Preferred") and a convertible note (the "Convertible Note") to be to
be issued to JDSU at the Closing. The parties hereto agree that IPG shall
provide to JDSU drafts of the principal documents incorporating the terms of the
Series D Preferred and Convertible Note (collectively, the "Equity Documents")
to JDSU not later than three business days following the execution of this
Settlement. It is the goal of the parties hereto to execute and deliver the
Equity Documents (including obtaining all necessary approvals and consents,
which IPG agrees to request in good faith) not later than three weeks following
the execution of this Settlement. The terms of the Equity Documents shall
reflect the following:
A. IPG would provide a new series of convertible preferred stock, the
Series D Preferred, having a $5,100,000 liquidation preference. IPG
would issue the Series D Preferred representing 5% of IPG outstanding
shares (fully diluted, including accounting for weighted average
ratchet and warrant positions) to JDSU.
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i. The liquidation preference and price per share would be $1.90 per
share (equal to $5,100,000);
ii. Series D Preferred rights and preferences would be substantially
similar to Series A Preferred and Series B Preferred stock of IPG
currently outstanding (except for ratchet and warrants,
participating rights after payment of full liquidation
preference, and process control rights), including same
liquidation preference and weighted average anti-dilution rights.
The Series D Preferred would have no superior rights or
preferences;
iii. IPG would provide to JDSU copies of all financial materials
submitted to its Board of Directors (e.g., balance sheets, income
statements, cash flows), except for strategic marketing or
product pricing materials. JDSU would agree to implement a
"Chinese wall" within its organization to protect disclosure by
the holder of the IPG materials to competing JDSU operating
divisions and personnel; and
iv. This issuance would be subject to reasonable due diligence by
JDSU and subject to reasonable confidentiality limitations on the
material supplied to JDSU.
B. IPG would issue to JDSU the Convertible Note in the principal amount
of $5,100,000, due three years after issuance and convertible, in
whole or in part, at IPG's option, into Series D Preferred.
i. The conversion price for the Convertible Note into Series D
Preferred would be $1.90 per share;
ii. The Series D Preferred shares acquired upon conversion of the
Convertible Note would have a conversion price into common the
same as the then conversion price for outstanding Series D
Preferred shares (i.e., lower of $1.90/share or weighted average
price (accounting for dilutive issuances, splits, reverse splits,
etc.) of the outstanding Series D Preferred); and
iii. The full amount of the Convertible Note would be immediately
payable (or convertible) in the event of a Change in Control of
IPG.
6. Intellectual Property.
A. JDSU represents to its Knowledge (defined below) that no current
product of JDSU violates any currently issued U.S. Patents owned by
IPG for the design, manufacture or conception of fiber lasers or the
components thereof. For purposes of this Settlement, "Knowledge" means
the opinion of JDSU's Vice President of Intellectual Property, formed
after due inquiry, including but not limited to the General Manager of
JDSU's Commercial Lasers division.
B. IPG disclaims any and all rights, interests or ownership in and to any
of the intellectual property used to develop or otherwise contained in
the laser diodes and fiber laser products at issue in the Arbitration.
IPG further agrees that JDSU's products have not
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violated IPG's fiber laser related patents; provided that this
covenant does not affect any of IPG's rights or assets in the future,
except as expressly stated in this Section 6 or in Sections 7B or 10B.
C. IPG covenants that it will not commence an action claiming that JDSU's
or its Affiliates' products infringe any patents owned by IPG or its
Affiliates, or which IPG or its Affiliates have the right to assert,
for any period prior to the Closing. For purposes of this Settlement,
"Affiliate" means an entity which owns or controls, directly or
indirectly, more than 50% of the voting interests in, or more or than
50% of the voting interests of which is owned or controlled, directly
or indirectly, by a party.
D. IPG covenants that, for a period of three years from the date of the
Closing, it will not bring any claims against JDSU or its Affiliates
under any issued patents that exist as of the date of the Closing, or
currently pending patent applications which IPG or its Affiliates own
or have the right to assert. The covenant in the preceding sentence
shall not prevent IPG from asserting patent infringement or
intellectual property-related counterclaims or defenses against JDSU
in a patent infringement lawsuit filed by JDSU against IPG, or for
asserting misappropriation claims against JDSU directly related to the
hiring or retention by JDSU of IPG's employees or consultants and the
use by JDSU of information developed by such former IPG employee or
consultant for or on behalf of IPG or others associated with IPG. In
the event of any finding of liability against JDSU for patent
infringement or violation of intellectual property rights of IPG, the
parties agree to the following additional stipulations:
i. With respect to any existing JDSU fiber laser products, IPG
foregoes recovery of any damages owed by JDSU to IPG for three
years from the date of the Closing; and
ii. With respect to other JDSU products, IPG would be entitled to
recover damages commencing not earlier than the date of the
Closing.
E. Nothing in this Settlement shall be interpreted or construed as a
grant, sale, transfer, assignment or license, directly or indirectly,
by IPG or its Affiliates to JDSU of any intellectual property rights
or properties, including without limitation any patent, copyright,
trade secrets, trademarks or tradenames, of IPG or its Affiliates,
whatsoever.
7. Worldwide Mutual Releases.
A. JDSU Release:
JDSU, on behalf of itself and its direct and indirect subsidiaries,
and other Affiliates, and their respective directors, officers,
employees, agents and representatives, including, without limitation,
its and their attorneys, and their respective predecessors (including
SDL), successors, assigns, heirs and legal representatives, hereby
releases, acquits, and forever absolutely discharges IPG, its direct
and indirect subsidiaries, and its other Affiliates, and its and their
respective directors, officers, employees, agents and representatives,
including, without
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limitation, its and their attorneys, and their respective
predecessors, successors, assigns, heirs and legal representatives, of
and from any and all actions, causes of action, claims, demands,
damages, theories, affirmative defenses, judgments, liens,
indebtedness, losses, expenses (including, without limitation,
attorneys' fees and disbursements) and liabilities of every kind and
character, whether known or unknown, suspected or unsuspected, certain
or speculative, existing or prospective, liquidated or unliquidated,
whether under the laws of the United States or any state thereof or
any other country, which exist as of the date of this Settlement or
may have come into existence at any time prior to the date of this
Settlement.
B. IPG Release.
IPG, on behalf of itself and its direct and indirect subsidiaries, and
other Affiliates, and their respective directors, officers, employees,
agents and representatives, including, without limitation, its and
their attorneys, and their respective predecessors, successors,
assigns, heirs and legal representatives, hereby releases, acquits,
and forever absolutely discharges JDSU, its direct and indirect
subsidiaries, and other Affiliates, and their respective directors,
officers, employees, agents and representatives, including, without
limitation, its and their attorneys, and their respective predecessors
(including SDL), successors, assigns, heirs and legal representatives,
of and from any and all actions, causes of action, claims, demands,
damages, theories, affirmative defenses, judgments, liens,
indebtedness, losses, expenses (including, without limitation,
attorneys' fees and disbursements) and liabilities of every kind and
character, whether known or unknown, suspected or unsuspected, certain
or speculative, existing or prospective, liquidated or unliquidated,
whether under the laws of the United States or any state thereof or
any other country, which exist as of the date of this Settlement or
may have come into existence at any time prior to the date of this
Settlement.
C. No Release of Indebtedness.
Nothing in this Settlement shall be deemed to constitute a release of
indebtedness by JDSU to IPG which obligations existing as of the date
hereof are contained solely in the Note and the related Security
Agreement and Mortgage, and in the Convertible Note, it being agreed
that this Settlement settles and releases all claims and allegations
by the parties against each other regarding obligations and rights
that were in dispute by each of JDSU and IPG in the Arbitration and
the State Court Action.
D. Possession of Claims.
The parties hereto represent and warrant that they are the owners of
the Claims being released pursuant to this Settlement. The parties
hereto further represent and warrant that they have not previously
assigned, transferred, hypothecated, granted a security interest in or
lien upon, or purported to assign, transfer, hypothecate or grant a
security interest in or lien upon, any Claim or portion thereof which
is released hereby to another person or entity which is not a
signatory to this Settlement, and agree to indemnify fully the other
parties hereto for any judgments,
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attorneys' fees or costs incurred which result from the assertion by
any person of any interest in the released Claim due to any purported
agreement or dispute as to ownership of the Claims released pursuant
to this Settlement.
8. California Civil Code Section 1542.
The parties hereto acknowledge familiarity with Section 1542 of the Civil
Code of the State of California, which provides as follows:
A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor.
The parties hereto waive and relinquish any right and benefit which they
have or may have under Section 1542 and any Massachusetts statutory or
common law equivalent or any other similar applicable statutes to the full
extent that they may lawfully waive all such rights and benefits pertaining
to the subject matter of this Settlement as described above.
9. Closing.
The consummation of the transactions and releases contemplated by this
Settlement shall occur at a closing (the "Closing"). It shall be a condition to
Closing that all of the Equity Documents shall be executed and delivered by the
parties hereto in form and substance reasonably satisfactory to both parties
hereto, and that all other documents or filings necessary or reasonably
requested by a party hereto to effectuate the Equity Document and the other
agreements set forth in this Settlement shall be executed and delivered and
shall have been made simultaneously. Subject to satisfaction of the conditions
in this Settlement, each party hereto shall deliver to the other party executed
originals of the Stipulation and Order of Dismissal-Arbitration; the Stipulation
and Order of Dismissal-State Court Action; the Note; the Security Agreement; the
Mortgage; the Master Supply Agreements; and the Equity Documents, including the
Convertible Note and a stock certificate representing the issued shares of
Series D Preferred. IPG shall also pay to JDSU at the Closing $302,006.30
referred to in Section 3(A) above. The covenants, representations and warranties
contained in Sections 6 (Intellectual Property), 7 (Worldwide Mutual Releases),
10 (Future Disputes), and 11 (Termination of Agreement) hereof shall become
effective only upon the consummation of the transactions contemplated by this
Settlement at the Closing.
10. Future Disputes.
A. Attempts To Resolve.
If, after the date of this Settlement, either IPG or JDSU (the
"Alleging Party") believes it has a claim (a "New Dispute") against
the other, the Alleging Party shall give notice to the other party of
the New Dispute, setting forth, in reasonable detail, the nature and
basis for the New Dispute. The parties, for a period of thirty (30)
days (or such other longer period as determined by mutual consent of
the Disputing Parties), shall use their best efforts to resolve such
New Dispute between themselves and neither party shall commence any
such action during such thirty (30) day period.
B. IPG's Assertion of Defenses.
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In the event JDSU brings an action against IPG for breach of any term
or obligation of this Settlement and the other instruments and
documents to be entered into by it pursuant hereto, IPG agrees that it
will not assert as a counterclaim or defense in that action, any
claims contending that JDSU has engaged in unfair competition or other
claims brought under the anti-trust laws of the United States, any of
its states, or a foreign country. To the extent that IPG wishes to
pursue any of the foregoing claims against JDSU, IPG shall be
permitted to assert those claims in a separate and unrelated action
but only to the extent that the basis for the claim is not JDSU's
assertion of a breach of any term or obligation of this Settlement and
the other instruments and documents to be entered into by it pursuant
hereto.
11. Termination of Agreement.
Upon execution of this Settlement, the Agreement between IPG and JDSU shall
terminate and neither party shall have any further rights or obligations
thereunder.
12. Confidentiality.
The terms of this Settlement are strictly confidential and none of the
parties hereto shall, nor shall it or he permit any of its or his subsidiaries
or affiliates, counsel, auditors, financial advisors or other representatives or
agents to, disclose the terms of this Settlement to the public generally or to
any third party except as required by applicable law or regulation or the rules
of any governing stock exchange or market quotation system. Notwithstanding the
foregoing, (A) any party hereto may disclose the fact that this Settlement has
been entered into among the parties hereto (but without disclosing its terms)
and represents a full settlement of all claims in the Arbitration, (B) any party
hereto may disclose this Settlement to any attorney, accountant, investors,
public relations advisor, insurance carrier or other consultant engaged by such
party in the ordinary course of business, in connection with tasks assigned to
such person or persons, so long as such attorney, investor, accountant, public
relations advisor, insurance carrier or other consultant is bound, subject to
the requirements of applicable law, to confidentiality, (C) any party may
disclose the existence and the terms of this Settlement if and to the extent
(but only to the extent) it is required to do so by an order of a court of
competent jurisdiction or by a subpoena or any other demand for discovery made
in an action or proceeding pending in a court or governmental agency of
competent jurisdiction, provided that, in the case of such a subpoena or other
demand for discovery, the party receiving such process shall notify each other
party to this Settlement of such receipt, together with delivery of a copy
thereof and, in such case, any such notified party shall have the right to
object, at its own cost, to compliance with any such subpoena or other demand
based on the confidentiality of this Settlement.
13. Further Cooperation.
The parties hereto agree to execute and deliver any and all additional
papers, documents and other assurances and shall do any and all acts or things
reasonably necessary in connection with the performance of their obligations
hereunder to implement the provisions of this Settlement.
14. Costs and Fees.
Each party shall bear its own attorneys' fees and costs incurred in
connection with the Arbitration and State Court Action, and with respect to
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the negotiation, execution and delivery of this Settlement and each document
required to be delivered hereunder.
15. Miscellaneous.
A. Notices.
All notices, consents, waivers, and other communications under this
Settlement and under each instrument or document executed and
delivered pursuant hereto must be in writing and will be deemed to
have been duly given when (i) delivered by hand (with written
confirmation of receipt), or (ii) when received by the addressee, if
sent by a nationally recognized overnight delivery service (receipt
requested), in each case to the appropriate addresses and facsimile
numbers set forth below (or to such other addresses and facsimile
numbers as a party may designate by written notice to the other
parties):
JDSU: JDS Uniphase Corporation
0000 Xxxxxxxxxx Xxxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
with a copy to: Xxxx Xxxx Xxxx & Freidenrich, LLP
0000 Xxxxxxxxxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx Xxxxxxxx
Facsimile No.: (000) 000-0000
IPG: IPG Photonics Corporation
00 Xxx Xxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx
Facsimile No.: (000) 000-0000
with copies to: Winston & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx XxXxxxxxxxx
Facsimile No.: (000) 000-0000
B. Successors and Assigns; Rights of Third Parties.
Except as otherwise expressly provided herein, all covenants and agreements
contained in this Settlement by or on behalf of the parties hereto shall be
binding on and inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and assigns. Nothing
expressed or implied in this Settlement is intended or shall be construed
to confer upon or give any person other than the parties hereto any rights
or remedies under this Settlement, except only that each Releasee shall be
entitled to enforce the releases granted hereunder in its favor.
C. Severability.
Whenever possible, each provision of this Settlement and of each instrument
and document entered into pursuant hereto shall be
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interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Settlement or of any such other
instrument or document is held to be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder hereof
or thereof, and any such prohibited or invalid provision shall be deemed to
be amended to the extent necessary such that, as so amended, it will be
valid and enforceable to the fullest extent possible under applicable law.
D. Governing Law.
All claims and matters arising under or in connection with, or relating to,
this Settlement shall be governed by and construed in accordance with the
laws of the State of New York, without giving effect to its conflicts of
laws rules.
E. Modifications, Waivers and Amendments.
No amendment, change, waiver, modification, cancellation or termination of
this Settlement or any part thereof, shall be valid unless expressly set
forth in a written document signed by the party or parties against whom
enforcement of the amendment, change, waiver, modification, cancellation or
termination is sought. No waiver of any provision of this Settlement shall
be deemed, or shall constitute, a waiver of any other provision, whether or
not similar, nor shall any waiver constitute a continuing waiver unless it
specifically so provides.
F. Nature of Settlement.
Neither this Settlement nor any instrument or document executed pursuant
hereto constitutes, nor shall it or any such other instrument or document
be construed as, an admission by any party hereto or thereto of any breach
of contract or other violation by any of them of any right of any such
other party, any harm to any such other party, or any violation by any such
party of any federal, state or local statute, law, ordinance, regulation or
common law duty.
G. No Fraudulent Inducement.
Each party hereto hereby irrevocably and unconditionally waives any and all
claims or defenses to the full performance and enforcement of this
Settlement and each instrument and document executed pursuant hereto or in
connection herewith based on any allegation of fraud in the inducement or
any other similar basis seeking to limit, prevent or obstruct the full
performance and enforcement of this Settlement and each such other
instrument and document.
H. Counterparts.
This Settlement may be executed in two or more counterparts, any one of
which need not contain the signatures of more than one party, but all such
counterparts taken together shall constitute one and the same agreement,
and may be executed and delivered by facsimile followed promptly by the
original, with such execution and delivery by facsimile to be as binding
and effective as delivery of the original.
I. Entire Agreement.
12
This Settlement embodies the complete agreement among the parties and
supersedes and preempts any prior understandings, agreements or
representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way.
J. Descriptive Headings; Interpretation.
The descriptive headings of this Settlement are inserted for convenience
only and do not constitute a Section of this Settlement. The use of the
word "including" in this Settlement and in any instrument and document
executed and delivered pursuant hereto shall be by way of example rather
than by limitation. The terms and provisions of this Settlement are the
result of the mutual efforts of the parties hereto and their respective
attorneys, and no party, nor any of the parties' respective attorneys,
shall be deemed the drafter of this Settlement or of any instrument or
document executed pursuant hereto for purposes of interpreting any
provision hereof in any judicial or other proceeding that may arise between
or among them.
K. Survival of Representations and Warranties.
The representations and warranties contained in this Settlement shall
survive the execution and delivery of this Settlement.
IN WITNESS WHEREOF, the parties hereto have executed this Confidential
Settlement Agreement on the date first written above.
JDS UNIPHASE CORPORATION
By: /s/ Xxxxxxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxxxxxx X. Xxxxxx
Its: Vice President
IPG PHOTONICS CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxxxxx
------------------------------------
Name: Xxxxxxxx X. Xxxxxxxxx
Its: CEO and Chairman
13
EXHIBIT A
SECURED PROMISSORY NOTE
$6,079,472.60 August 13, 0000
Xxxxxx, Xxxxxxxxxxxxx
FOR VALUE RECEIVED, IPG PHOTONICS CORPORATION, a Delaware corporation ("Maker"),
promises to pay to JDS UNIPHASE CORPORATION, a Delaware corporation ("Holder"),
the principal sum of SIX MILLION, AND SEVENTY-NINE THOUSAND, FOUR HUNDRED AND
SEVENTY TWO and 60/100 DOLLARS ($6,079,472.60); with interest from the date of
this Note on the unpaid principal amounts owing from time to time as provided
below. This Note is subject to the following terms and conditions:
1. Maturity
(a) Principal plus all accrued but unpaid interest on the principal amount
outstanding shall be due and payable in the following amounts and on the
following dates:
Principal Amount Date Due
---------------- --------
$333,000 September 30, 2003
$334,000 December 31, 2003
$500,000 March 31, 2004
$500,000 June 30, 2004
$500,000 September 30, 2004
$500,000 December 31, 2004
One-quarter of then unpaid principal amount March 31, 2005
One-quarter of then unpaid principal amount June 30, 2005
One-quarter of then unpaid principal amount September 30, 2005
Remaining of unpaid principal amount December 31, 2005 (the "Maturity
Date")
(b) Maker shall make the following mandatory prepayments to Holder against the
unpaid interest and principal sum, in that order, on this Note within five
business days of Maker's receipt of the cash funds: (i) 50% of all cash
collateral released to Maker by BankNorth, NA or its successor ("BankNorth"), in
calendar years 2003 and/or 2004, which cash collateral, as of the date of the
Note is being held by BankNorth under that certain Construction Loan Agreement,
dated April 28, 2000 between Maker and BankNorth, as amended from time to time
("Construction Loan Agreement"); (ii) 75% of all cash collateral released to
Maker by BankNorth in calendar year 2005, which cash collateral, as of the date
of the Note is being held by BankNorth under the Construction Loan Agreement;
(iii) 10% of the net cash proceeds received by Maker from the issuance of any
securities (including without limitation any securities convertible or
exchangeable into Common Stock), options, warrants, call rights or debt
instruments after the date of this Note, excluding exercises of stock options by
employees, directors, advisors and consultants in the ordinary course; and (iv)
100% of the net cash proceeds received by Maker from any sale of the equipment,
furniture, fixtures, inventory or land pledged to Holder under the Security
Agreement or the Mortgage (each as hereinafter defined); but in no case shall
Maker be required to pay an amount under this Section 1(b) in excess of the
unpaid interest and principal amount of this Note.
(c) On or before the 15th day of April, July, October and January of each year
for so long as there is any unpaid principal amount under this Note, any one of
the Chief Executive Officer, President, or Chief Financial Officer shall send a
written statement to Holder setting forth whether or not any of the events in
Section 1(b) has occurred in the last calendar quarter, giving short description
of any of the events that has occurred in the last calendar quarter and whether
Maker has complied with its prepayment obligations hereunder.
(d) Holder shall apply all mandatory principal prepayments received by Holder
under clause (b) to the payment of accrued and unpaid interest, and then against
required payments in the reverse order of maturity (i.e., applied to latest
payments under Section 1(a) first).
(e) All optional principal prepayments upon this Note shall be applied to the
payment of accrued and unpaid interest, and then against required payments in
the order of maturity (i.e., applied to earliest payments under Section 1(a)
first), it being agreed that an optional repayment of principal shall relieve
the obligation of Maker to make payment of the portion of the principal amount
against which the optional prepayment was applied.
2. Interest
The outstanding principal owing from time to time hereunder will bear interest
at the rate of FOUR PERCENT per annum (compounded annually) until fully paid.
Accrued but unpaid interest shall be payable at such time as the outstanding
principal amount hereof is otherwise due and payable, commencing September 30,
2003. Computations of interest shall be based on a year of 360 days but shall be
calculated for the actual number of days in the period for which interest is
charged.
3. Payments
Maker shall make payments in lawful money of the United States of America and in
immediately available funds. All payments under this Note shall be made to
Holder at JDS Uniphase Corporation, 0000 Xxxxxxxxxx Xxxxxxx, Xxx Xxxx,
Xxxxxxxxxx 00000, ATTN: General Counsel, or at such other address as Holder
shall direct Maker in writing. This Note may be prepaid in whole or in part,
without penalty, at the option of Maker and without the consent of Holder.
4. Breach of Covenants and Bankruptcy
The occurrence of any of the following shall constitute an "Event of Default"
hereunder:
(a) Failure to Pay. Maker shall fail to pay (i) any principal payment on the
due date hereunder or (ii) any interest or other payment required pursuant
to the terms hereof on the date due and such payment shall not have been
made within thirty days of Maker's receipt of Holder's written notice to
the Maker of such failure to pay; or
(b) Breaches of Covenants. Maker shall fail to observe or perform any covenant,
obligation, condition or agreement contained herein, or in the Security
Agreement or the Mortgage and (i) such failure shall continue for thirty
days after Maker's receipt of Holder's written notice to the Maker of such
failure, or (ii) if such failure is not curable within such thirty-day
period, but is reasonably capable of cure within forty-five days, either
(A) such failure shall continue for forty-five days or (B) Maker shall not
have commenced and continued to prosecute a cure
2
in a manner reasonably satisfactory to Holder within and continuously
during the initial thirty-day period; or
(c) Change of Control. A Change of Control shall have occurred with respect to
Maker. For purposes hereof, the term "Change of Control" means the
occurrence of one or more of the following events: (a) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of IPG and its
subsidiaries, taken as a whole, to any Person or group of related Persons,
as defined in Section 13(d) of the Securities Exchange Act of 1934 (a
"Group"); and (b) any Person or Group (excluding owners of equity
securities as of the date of this Note) shall become the owner, directly or
indirectly, beneficially or of record, of shares representing more than 50%
of the aggregate ordinary voting power represented by IPG's issued and
outstanding voting stock or any successor to all or substantially all of
the Company's assets.
(d) Voluntary Bankruptcy or Insolvency Proceedings. Maker shall (i) apply for
or consent to the appointment of a receiver, trustee, liquidator or
custodian of itself or of all or a substantial part of its property; (ii)
admit in writing its inability, to pay its debts generally as they mature;
(iii) make a general assignment for the benefit of its or any of its
creditors; (iv) be dissolved or liquidated in full or in part; or (iv)
commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts pursuant
to any bankruptcy, insolvency or other similar law now or hereafter in
effect or consent to any such relief or to the appointment of or taking
possession of its property by any official in an involuntary case or other
proceeding commenced against it; or
(e) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the
appointment of a receiver, trustee, liquidator or custodian of the Maker or
of all or a substantial part of the property thereof, or an involuntary
case or other proceedings seeking liquidation, reorganization or other
relief with respect to the Maker or the debts thereof pursuant to any
bankruptcy, insolvency or other similar law now or hereafter in effect
shall be commenced and an order for relief entered or such proceeding shall
not be dismissed or discharged within ninety days of commencement.
5. Rights of Holder upon Default
Upon the occurrence or existence of any Event of Default, and at any time
thereafter during the continuance of such Event of Default, Holder may, by
written notice to the Maker, declare all outstanding obligations payable by the
Maker hereunder to be immediately due and payable without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived; except that upon the occurrence or existence of any Event of Default set
forth in Sections 4(c), (d) or (e) herein, all of the outstanding obligations
payable by the Maker hereunder shall automatically become immediately due and
payable without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived. No delay or omission by Holder in
exercising any right shall operate as a waiver of such right or any other right
under this Note; a waiver on any one occasion shall not be construed as a bar to
or waiver of any right on any future occasion. In addition to the foregoing
remedies, upon the occurrence or existence of any Event of Default, Holder may
exercise any other right, power or remedy granted to it hereunder or pursuant to
applicable law. The Maker agrees to pay all taxes levied or assessed upon the
outstanding principal against any holder of this Note. The prevailing party in
any action (i) to collect payment on this
3
Note, (ii) in connection with any dispute that arises as to its enforcement,
validity, or interpretation, whether or not legal action is instituted or
prosecuted to judgment, or (iii) to enforce any judgment obtained in any related
legal proceeding, shall be entitled to all costs and expenses incurred,
including attorney fees.
6. Governing Law
This Note shall be governed by the laws of the State of New York, excluding its
conflict of law rules.
7. Amendments and Waivers
Any term of this Note may be amended or waived only with the written consent of
the Maker and the Holder. Any amendment or waiver effected in accordance with
this Section 7 shall be binding upon the Maker, the Holder and each transferee
of the Note; however, no such waiver shall affect or impair the rights of Holder
to require observance, performance, or satisfaction, either of that term or
condition as it applies on a subsequent occasion or of any other term or
condition of this Note. Notwithstanding the foregoing, Maker expressly agrees
that this Note or any payment under this Note may be extended by Holder in
writing from time to time without in any way affecting the liability of Maker.
8. Transfer, Successors and Assigns
The terms and conditions of this Note shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties. Neither this
Note nor any of the rights, interests or obligations hereunder may be assigned,
by operation of law or otherwise, in whole or in part, by the Maker without the
prior written consent of Holder.. This Note may not be sold or assigned by
Holder without prior written consent of Maker except in the event of a merger,
consolidation, or acquisition of Holder or any business unit thereof and Holder
may pledge this Note to any financial institution as collateral upon written
notice to Maker.
9. Notices
Any notice required or permitted by this Note shall be in writing and shall be
deemed sufficient upon delivery, when delivered personally or by a
nationally-recognized delivery service (such as Federal Express or UPS), or five
days after being deposited in the U.S. mail, as certified or registered mail,
with postage prepaid, addressed to the party to be notified at such party's
address as set forth below or as subsequently modified by written notice.
10. Severability
If any provision or any word, term, clause, or part of any provision of this
Note shall be invalid for any reason, the same shall be ineffective, but the
remainder of this Note and of the provision shall not be affected and shall
remain in full force and effect.
11. Holder's Security Interest and Mortgage
THIS NOTE IS SECURED BY A SECURITY INTEREST IN CERTAIN ASSETS OF MAKER MORE
FULLY DESCRIBED IN (I) THE SECURITY AGREEMENT DATED THE SAME DATE AS THIS NOTE
BETWEEN MAKER, AS DEBTOR, AND HOLDER, AS SECURED PARTY ("SECURITY AGREEMENT")
AND (II) THE MORTGAGE DATED THE SAME DATE AS THIS NOTE MADE BY MAKER, AS DEBTOR,
AS MORTGAGOR, AND HOLDER, AS MORTGAGEE ("MORTGAGE").
4
IN WITNESS WHEREOF, the Maker has caused this Secured Promissory Note to be
issued as of the date first written above.
MAKER: IPG PHOTONICS CORPORATION
Name: /s/ Xxxxxxxx X. Xxxxxxxxx
-------------------------------
Title: Xxxxxxxx X. Xxxxxxxxx
Address: 00 Xxx Xxxxxxx Xxxx
Xxxxxx, XX 00000
Attn: General Counsel
AGREED TO AND ACCEPTED:
HOLDER: JDS UNIPHASE CORPORATION
Name: /s/ Xxxxxxxxxxx X. Xxxxxx
-------------------------------
Title: Xxxxxxxxxxx X. Xxxxxx
Address: 0000 Xxxxxxxxxx Xxxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attn: General Counsel
5
EXHIBIT B
THIS SECURITY AGREEMENT, dated August 13, 2003 by and between IPG PHOTONICS
CORPORTATION, a Delaware corporation ("DEBTOR"), and JDS UNIPHASE CORPORATION, a
Delaware corporation ("SECURED PARTY").
1. Background and Purpose
Debtor and Secured Party have entered into a Confidential Settlement Agreement,
dated the dated hereof (the "Settlement Agreement"), pursuant to which Debtor
agreed to execute and delivered a Secured Promissory Note dated the date hereof
in favor of Secured Party in the face amount of $6,076,284.66 (the "Note"). As a
condition precedent to the consummation of the Settlement Agreement, Secured
Party has required Debtor to grant, and Debtor has agreed to grant, to Secured
Party a continuing first priority security interest in and to the Collateral (as
hereinafter defined) of Debtor to secure its obligations to Secured Party under
the Note.
2. Grant of Security Interest
To secure Debtor's Obligations (as defined in Xxxxxxxxx 0 xxxxx), Xxxxxx grants
to Secured Party a security interest in the Collateral (as defined in Paragraph
4 below).
3. Obligations
For purposes of this Agreement, "Obligations" means any and all debts,
obligations, and liabilities of Debtor to Secured Party arising out of, or
relating in any way to the Note, and any obligations of Debtor to Secured Party
pursuant to this Agreement, whether existing or arising after the date of this
Agreement, whether voluntary or involuntary or whether absolute or contingent
and whether or not from time to time increased, decreased, extinguished,
created, or incurred.
4. Collateral
For purposes of this Agreement, "Collateral" means:
(a) All inventory listed on Schedule A attached hereto ("Inventory"); and
(b) All equipment, furniture and fixtures listed on Schedule A attached
hereto ("Equipment"); and
(c) In addition to the collateral described above, Debtor grants to
Secured Party a security interest in any and all proceeds of the
Inventory and Equipment, in any and all additions and accessions to,
insurance or condemnation proceeds of, and documents covering
Collateral, in all property received, in whole or in part, in trade or
exchange for Collateral, in all rents, revenues, issues, profits, and
proceeds arising from sale, lease, license, encumbrance, collection,
or any other temporary or permanent disposition of the Collateral, or
in any interest on Collateral.
5. Representations and Warranties
Debtor represents and warrants to Secured Party as follows:
5.1 Title. Debtor is the owner of all right, title, and interest in the
Collateral free and clear of all liens, encumbrances, and security
interests, except the security interest created by this Agreement.
5.2 Truth. All information that Debtor has provided to Secured Party concerning
the Collateral is true and correct in all material respects.
5.3 Defenses. No defenses, offsets, claims, or counterclaims exist against
Debtor that may be asserted against Secured Party in any proceeding to
enforce Secured Party's rights in the Collateral.
5.4 Conflict. The execution, delivery, and performance of this Agreement by
Debtor is not in violation of any applicable law or regulation or
contractual obligation of Debtor.
5.5 First Priority Lien. The liens granted to Secured Party under this
Agreement will constitute a first priority lien on the Collateral on the
filing of a UCC-1 Financing Statement.
5.6 Good Standing. Debtor is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Delaware.
5.7 Due Authorization. Debtor has been duly authorized to execute and deliver
this Agreement, which is a valid and binding obligation of Debtor.
6. Covenants of Debtor
6.1 Protection of Security Interest. Contemporaneously with the execution of
this Agreement, Debtor shall properly execute and deliver to Secured Party
one or more UCC-1 Financing Statements to enable Secured Party to perfect
Secured Party's security interest in the Collateral. Debtor agrees also to
execute, file, and record such other statements, notices, and agreements,
take such action and obtain such certificates and documents, in accordance
with all applicable laws, statutes, and regulations as may be necessary or
advisable to perfect, evidence, and continue Secured Party's security
interest in the Collateral.
6.2 Transactions Involving Collateral. Debtor shall not, without the prior
written consent of Secured Party, (a) sell or otherwise transfer the
Collateral, except that assets may be sold or transferred for fair value
and Debtor shall repay the net cash proceeds from the sale or transfer to
Secured Party pursuant to the terms of the Note, or (b) pledge, mortgage,
encumber, or otherwise permit the Collateral to be subject to any lien,
security interest, or charge, other than the security interest created by
this Agreement; except for the following liens: the attachment under Writ
of Attachment dated February 28, 2003 covering the Collateral in favor of
Secured Party; liens for taxes, assessments, or other government charges
not yet due or those which are being contested in good faith by appropriate
proceedings; and liens of mechanics, materialmen or other workmen incurred
in the ordinary course of business and not materially detracting from the
value of the property or assets.
6.3 Compliance with Laws. Debtor shall comply in all material respects with all
laws, statutes, and regulations pertaining to the Collateral.
6.4 Taxes, Assessments, and Liens. Debtor shall pay when due all taxes,
assessments, and liens with regard to the Collateral. Debtor may withhold
any such payment or may elect to contest any lien if Debtor is conducting
appropriate proceedings in good faith to contest the obligation to pay and
so long as Secured Party's interest is not jeopardized.
6.5 Notification of Change in Name or Location. The Debtor shall notify Secured
Party in writing of a change in Debtor's name or corporate
2
structure or jurisdiction of incorporation within five business days prior
to the change. The Debtor shall also cooperate with Secured Party to enable
Secured Party to file either a new UCC-1 Financing Statement or an
amendment to the existing UCC-1 Financing Statement to reflect the change
and to continue Secured Party's security interest in the Collateral.
6.6 Insurance. The Debtor shall maintain and keep in force insurance of the
types and in amounts customarily carried in lines of business similar to
that of Debtor, and shall deliver to Secured Party from time to time at
Secured Party's request schedules setting forth all insurance covering the
Collateral then in effect.
6.7 Maintenance. The Debtor shall cause the Collateral to be maintained and
preserved in good condition, repair and working order, excepting ordinary
wear and tear.
6.8 Inspection. The Debtor shall furnish to Secured Party from time to time
statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as Secured Party
may reasonably request, and will permit independent external certified
professional accountants acceptable to Debtor and Secured Party (subject to
execution by such accountants of a reasonable non-disclosure agreement),
upon reasonable written notice to the Debtor during the Debtor's usual
business hours, to inspect and/or conduct audits with respect to the
Collateral.
6.9 Impairment. The Debtor shall give prompt written notice to Secured Party of
any casualty or loss which has impaired in any material respect the useful
live, value or operation of the Collateral.
7. Authorized Action by Secured Party
Debtor irrevocably appoints, only after an Event of Default, Secured Party as
Debtor's attorney in fact to do any act that Debtor is obligated to do pursuant
to this Agreement to preserve or protect the Collateral and to preserve,
protect, or establish Secured Party's lien on the Collateral. Debtor further
irrevocably appoints Secured Party to exercise such rights and powers as Debtor
might exercise with respect to the Collateral following an Event of Default, as
defined below. These powers shall include without limitation the right to:
(a) Collect by legal proceedings or otherwise, and endorse, receive, and
receipt all dividends, interest, payments, proceeds, and other sums
and property now or after the date of this Agreement payable on
account of the Collateral;
(b) Transfer the Collateral to Secured Party's own or Secured Party's
nominee's name; and
(c) Make any compromise or settlement and take any action Secured Party
deems advisable with respect to the Collateral. Debtor agrees to
reimburse Secured Party on demand for any reasonable out of pocket
costs and expenses, including without limitation reasonable external
attorney fees, which Secured Party may incur while acting as Debtor's
attorney in fact under this Agreement, all of which costs and expenses
are included in the Obligations secured by this Agreement. Secured
Party shall have no obligation to act pursuant to this paragraph and
shall not be required to make any presentment, demand, or protest, or
give any notice or
3
take any action to preserve any rights against any other person in
connection with the Collateral.
8. Defaults and Remedies
8.1 Event of Default. Any of the following events or conditions shall
constitute an Event of Default by Debtor under this Agreement:
(a) An "Event of Default" shall occur as defined in the Note;
(b) Debtor shall fail to observe or perform any covenant, obligation,
condition or agreement contained in this Security Agreement or the
Note and (i) such failure shall continue for thirty days after
Debtor's receipt of Secured Party's written notice to the Debtor of
such failure, or (ii) if such failure is not curable within such
thirty-day period, but is reasonably capable of cure within forty-five
days, either (A) such failure shall continue for forty-five days or
(B) Debtor shall not have commenced and continued to prosecute a cure
in a manner reasonably satisfactory to Secured Party within and
continuously during the initial thirty-day period;
(c) A breach of any representation or warranty of Debtor contained in this
Agreement; or
(d) Any levy or proceeding against the Collateral or Debtor's interest in
the Collateral, except if Debtor is conducting appropriate proceedings
in good faith to contest the levy or proceeding.
8.2 Remedies. On the occurrence of an Event of Default as defined in this
Agreement, Secured Party:
(a) Shall have and may exercise all rights and remedies accorded to
Secured Party by the Massachusetts Uniform Commercial Code;
(b) May declare all unperformed Obligations, in whole or in part, of
Debtor immediately due and payable in accordance with the terms of the
Note; and
(c) May require Debtor to take any and all action necessary to make the
Collateral available to Secured Party.
8.3 Remedies Cumulative. All of Secured Party's rights and remedies, whether
evidenced by this Agreement or by any other writing, shall be cumulative
and may be exercised singularly or concurrently. Election by Secured Party
to pursue any remedy shall not exclude pursuit of any other remedy.
9. Waiver of Hearing
Debtor expressly waives any constitutional or other right to a judicial hearing
prior to the time Secured Party takes possession or disposes of the Collateral
on an Event of Default as provided in Paragraph 8 above.
10. Waiver
Secured Party shall not be deemed to have waived any rights under this Agreement
unless such waiver is in writing and signed by Secured Party. No delay or
omission on the part of Secured Party in exercising any right shall operate as a
waiver of such right or any other right.
4
11. Additional Documentation; Cooperation
Each party shall, on the request of the other, execute, acknowledge, and deliver
to the other any instrument that may be required to accomplish the intent of
this Agreement. Each party agrees to cooperate to effectuate the intent of this
Agreement and shall take all appropriate action necessary or useful in doing so.
Secured Party shall release its security interest on Collateral which Debtor may
sell or otherwise transfer provided that Maker shall comply with the terms of
the Note.
12. Miscellaneous
12.1 Successors and Assigns. Subject to the provisions otherwise contained in
this Agreement, this Agreement shall inure to the benefit of and be binding
on the successors and assigns of the respective parties.
12.2 Notices. Any notice required or permitted by this Security Agreement shall
be in writing and shall be deemed sufficient upon delivery, when delivered
personally or by a nationally-recognized delivery service (such as Federal
Express or UPS), or five days after being deposited in the U.S. mail, as
certified or registered mail, with postage prepaid, addressed to the party
to be notified at such party's address as set forth below or as
subsequently modified by written notice.
12.3 Amendment. The provisions of this Agreement may be modified at any time by
written agreement of the parties. Any such agreement made after the date of
this Agreement shall be ineffective to modify this Agreement in any respect
unless in writing and signed by Debtor and Secured Party.
12.4 Attorney Fees; Prejudgment Interest. If the services of an attorney are
required by Secured Party to secure the performance of this Agreement or
otherwise on the breach or default of this Agreement, or if any judicial
remedy or arbitration is necessary to enforce or interpret any provision of
this Agreement or the rights and duties of any person in relation to this
Agreement, Secured Party shall be entitled to reasonable external attorney
fees, costs, and other out of pocket expenses, in addition to any other
relief to which Secured Party may be entitled. Any award of damages
following judicial remedy or arbitration as a result of the breach of this
Agreement or any of its provisions shall include an award of prejudgment
interest from the date of the breach at the maximum amount of interest
allowed by law.
12.5 Post-Judgment Attorney Fees. If the services of an attorney are required by
any party to enforce a judgment rendered in connection with this Agreement,
the judgment creditor shall be entitled to reasonable external attorney
fees, costs, and other out of pocket expenses, and such fees, costs, and
expenses shall be recoverable as a separate item. This provision shall be
severable from all other provisions of this Agreement, shall survive any
judgment, and shall not be deemed merged into the judgment.
12.6 Captions. All paragraph captions are for reference only and shall not be
considered in construing this Agreement.
12.7 Severability. If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid or unenforceable, the remainder of
5
the Agreement that can be given effect without the invalid provision shall
continue in full force and effect and shall in no way be impaired or
invalidated.
12.8 Governing Law. The rights and obligations of the parties and the
interpretation and performance of this Agreement shall be governed by the
law of the State of New York, excluding its conflict of laws rules.
12.9 Entire Agreement. This document and its Schedule constitute the entire
agreement between the parties, all oral agreements being merged in this
Agreement, and supersede all prior representations. There are no
representations, agreements, arrangements, or understandings, oral or
written, between or among the parties relating to the subject matter of
this Agreement that are not fully expressed in this Agreement or its
Schedule.
[END OF PAGE]
6
IN WITNESS WHEREOF, the parties hereto have executed this Security
Agreement on the date first written above.
SECURED PARTY: JDS UNIPHASE CORPORATION
By: /s/ Xxxxxxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxxxxxx X. Xxxxxx
Title: Vice President
Address: 0000 Xxxxxxxxxx Xxxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attn: General Counsel
DEBTOR: IPG PHOTONICS CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxxxxx
---------------------------------
Name: Xxxxxxxx X. Xxxxxxxxx
Title: CEO & Chairman of the Board
Address: 00 Xxx Xxxxxxx Xxxx
Xxxxxx, XX 00000
Attn: General Counsel
7
SCHEDULE A TO SECURITY AGREEMENT BETWEEN IPG PHOTONICS CORP. AND JDS UNIPHASE
CORPORATION
POS DESCRIPTION MAKE/MODEL ASSET NUMBER QTY
--- ----------- ---------- ------------ -----
1 Parallel seam sealing system Model 2300DLL3 100412 1
2 Blue M Oven, drybox and Chamber -- -- 4
3 Digital ball bonder Model: K&S 4524-D 100504 1
4 Mask Aligner Model SUSS MA6 Mask Aligner 100935 1
5 Flip chip aligner/bonder with options Model 410 1999 100968 1
6 Xxxxxxx and film expander Model LSD-105 Xxxxxxx, 7550-0069 100940 1
7 SEGI Sputtering system Fully automated system 101023 1
8 Sputtering System Xxxxxx Xxxxx Model 4410 101063 1
9 Automatic dicing saw Model DAD321 100923 1
10 Goniometric Radiometer Model LD8900/In GaAS 100552 1
11 Programmable furnace Model MV-2200 100967 1
12 Wafer Polisher, lapper, bonder Model LP50 Prec 100938 1
13 Spin photo resist coater and spray Model 5110-C/PD-LV,BDC,PP CAB 100970 1
developer
14 Gold plating hood Model SQFFH-600-P 101064 1
15 Lapping/polishing hood Model WPS-SQFFH-800-P 100976 1
16 Heatpulse Model 610 100944 1
17 Tencor alpha step profiler Model Tencor AS-200 101065 1
18 ACID 1-2-3 hood -- 100962 6
19 Scrapping hood -- 100964 1
20 Xxxxxxx Breaker Model 4100-0027 100941 1
21 Channel power supply Model PMC104-.5-1.5 100713 1
22 Vacuum evaporator Model CHA SE-600 100937 1
23 Fine-Leak Detector Model DGC 1001/PPM 95/GD -- 1
24 Temperature test chamber Model S-8C 100973 1
25 Blue M Ovens -- 100933 3
26 Cleanroom furniture Model 1P61-1000-K-STR ESD CL-1000 100919 38
8
27 High vacuum pump Model Tribodyn 30/120 100922 1
28 Shelving -- 100630 231
29 Ellipsometer, Etcher/stripper Model Xxxxxxx Auto EL III, Branson 2000 100969 1
30 Laser module Model PLM-100 100961 1
31 Goniometric Radiometer Model LD8900/In GaAs 100743 1
32 ECV profiler and hall system -- 100883 1
33 Supplied air systems Model Survivair 30 100912 2
34 Spectrophotometer Model V-570 UV/VIS 100934 1
35 Supplied air systems Model Survivair Sigma 30 100913 2
36 Digital hot plate Model HP993 Digital 7P 120V 100715 1
37 Digital hot plate Model SP992 Digital 7P 120V 100716 1
38 Digital hot plate Model HP993 Digital 7P 120V 100910 1
39 Microscope Model Olympus BH2 100942 10
40 Microscope Model Olympus BH2 100943 2
41 Descicators Model Series 100 SS 100994 15
42 Dual photodiode meter and sourcemeter -- 100799 1
43 Scanning electron microscope Model DS-130C 100792 1
44 Scanning electron microscope -- 100986 --
45 Storage refrigerator Model VWR 21.OCF 100975 1
46 Supplied air systems Xxxxx Xxxxxxxxx Xxxxxxx 000000 4
47 Ultrasonic Cleaner Model 3510, Branson -- 1
48 Turbomolecular pumping cart Model EXP 101321 1
49 Diesel generator Model 150ROX-150KW, Kohler 100794 1
50 UPS Model 360-480-NEMA, Best 100842 1
51 Heated viewport Model HVP-275-275TH-110-FR 100801 1
52 Sniff Leak Detector Model Gascheck 5000 101032 1
53 X-Ray Analyzer Model RD-100 101254 1
54 X-Ray Analyzer -- 101323 --
55 Recirculators Models HX+150 D2 CP55; HX+300R D2 CP75 101120 1
9
56 Recirculators Models HX+150 D2 CP55; HX+300R D2 CP75 101095 1
57 GEN 111/MBE -- 101253 --
58 Molecular Beam Epitaxy of III-V Model: III-V 100995 1
59 Optical Spectrum Analyzer AQ-6331/0/0 100654 1
60 Applied EPI Gen-III MBE System -- -- 1
61 PECVD Plasma Chemical Vapor Deposition SC100M -- 1
System
62 Die Bonder 410X -- 1
63 MRSI 505 -- 1
65 1550 nm Double Stage Isolators 3,600
66 1550 nm Single Stage Isolators 3,100
* Notes(s): Location is IPG Photonics Corporation, 00 Xxx Xxxxxxx Xxxx,
Xxxxxx, XX 00000
10
EXHIBIT C
After recording, please return to:
Office of General Counsel
Attn: Xxxxxxx Xxxxxxx
JDS Uniphase Corporation
0000 Xxxxxxxxxx Xxxxxxx
Xxx Xxxx, XX 00000
MORTGAGE
IPG PHOTONICS CORPORATION, a Delaware corporation having a usual place of
business at 00 Xxx Xxxxxxx Xxxx, Xxxxxx, Xxxxxxxxx Xxxxxx, Xxxxxxxxxxxxx 00000
("Mortgagor"), for consideration paid, grants to JDS UNIPHASE CORPORATION, a
Delaware corporation having a place of business at 0000 Xxxxxxxxxx Xxxxxxx, Xxx
Xxxx, Xxxxxxxxxx 00000 ("Mortgagee")
with mortgage covenants to secure the payment of SIX MILLION, AND SEVENTY-NINE
THOUSAND, FOUR HUNDRED AND SEVENTY TWO and 60/100 DOLLARS ($6,079,472.60) with
interest thereon as provided in a Secured Promissory Note ("Note") of even date
given by Mortgagor to Mortgagee
the land in Oxford, Worcester County, Massachusetts, described on Exhibit A
attached hereto and made a part hereof (sometimes hereinafter referred to as the
"Collateral").
The Mortgagor, for itself, its successors and assigns, covenants with Mortgagee
and its successors and assigns that it is lawfully seized in fee simple of the
mortgaged premises; that it is free from all encumbrances (other than an
attachment in favor of Mortgagee pursuant to that certain Writ of Attachment
dated February 28, 2003); that Mortgagor has good right to sell and convey the
same; and that it will, and its successors and assigns shall warrant and defend
the same to Mortgagee and its successors and assigns forever against the lawful
claims and demands of all persons; and that Mortgagor and its successors or
assigns, in case a sale shall be made under the power of sale, will, upon
request, execute, acknowledge and deliver to the purchaser or purchasers a deed
or deeds of release confirming such sale; and that Mortgagee and its successors
and assigns are appointed and constituted the attorney or attorneys irrevocable
of the said Mortgagor to execute and deliver to the said purchaser a full
transfer of all policies of insurance on the buildings upon the land covered by
the mortgage at the time of such sale.
The Mortgagor shall pay when due and payable all taxes, charges and assessments
to whomsoever and whenever laid or assessed, whether on the mortgaged premises
or on any interest therein or on the debt or obligation secured hereby; shall
keep the buildings on said premises insured against fire in a sum not less than
the amount secured by the mortgage or as otherwise provided therein for
insurance for the benefit of Mortgagee and its successors and assigns, in such
form and at such insurance offices as they shall approve, and, at least two days
before the expiration of any policy on said premises, shall deliver to it a new
and sufficient policy to take the place of the one so expiring, and shall not
commit or suffer any strip or waste of the mortgaged premises or any breach of
any covenant contained in the mortgage.
In addition to and in furtherance of the foregoing covenants, Mortgagor
represents, warrants, and covenants as follows:
1. Title. Mortgagor is the owner of all right, title, and interest in the
Collateral free and clear of all liens, encumbrances, and security interests,
except an attachment in favor of Mortgagee pursuant to that certain Writ of
Attachment dated February 28, 2003, and the lien created by this Mortgage.
2. Truth. All information that Mortgagor has provided to Mortgagee concerning
the Collateral is true and correct in all material respects.
3. Defenses. No defenses, offsets, claims, or counterclaims exist against
Mortgagor that may be asserted against Mortgagee in any proceeding to enforce
Mortgagee's rights in the Collateral.
4. Conflict. The execution, delivery, and performance of this Mortgage by
Mortgagor is not in violation of any applicable law or regulation or contractual
obligation of Mortgagor.
5. Good Standing. Mortgagor is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Delaware.
6. Due Authorization. Mortgagor has been duly authorized to execute and deliver
this Mortgage, which is a valid and binding obligation of Mortgagor.
7. Transactions Involving Collateral. Mortgagor shall not, without the prior
written consent of Mortgagee, (a) sell or otherwise transfer the Collateral,
except that assets may be sold or transferred for fair value and Mortgagor shall
repay the net cash proceeds from the sale or transfer to Mortgagee pursuant to
the terms of the Note, or (b) pledge, mortgage, encumber, or otherwise permit
the Collateral to be subject to any lien, security interest, or charge, other
than the security interest created by this Mortgage and except for the following
liens: the attachment under Writ of Attachment dated February 28, 2003 covering
the Collateral in favor of Mortgagee; liens for taxes, assessments, or other
government charges not yet due or those which are being contested in good faith
by appropriate proceedings; and liens of mechanics, materialmen or other workmen
incurred in the ordinary course of business and not materially detracting from
the value of the property or assets.
8. Compliance with Laws. Mortgagor shall comply in all material respects with
all laws, statutes, and regulations pertaining to the Collateral.
9. Taxes, Assessments, and Liens. Mortgagor shall pay when due all taxes,
assessments, and liens with regard to the Collateral. Mortgagor may withhold any
such payment or may elect to contest any lien if Mortgagor is conducting
appropriate proceedings in good faith to contest the obligation to pay and so
long as Mortgagee's interest is not jeopardized.
10. Notification of Change in Name or Location. The Mortgagor shall notify
Mortgagee in writing of a change in Mortgagor's name or corporate structure or
jurisdiction of incorporation within five business days prior to the change. The
Mortgagor shall also cooperate with Mortgagee to enable Mortgagee to file either
a new mortgage or an amendment to this mortgage to reflect the change and to
continue Mortgagee's security interest in the Collateral.
11. Insurance. The Mortgagor shall maintain and keep in force insurance of the
types and in amounts customarily carried in lines of business similar to that of
Mortgagor, and shall deliver to Mortgagee from time to time at Mortgagee's
request schedules setting forth all insurance covering the Collateral then in
effect.
2
12. Maintenance. The Mortgagor shall cause the Collateral to be maintained and
preserved in good condition.
13. Inspection. The Mortgagor shall furnish to Mortgagee from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Mortgagee may reasonably
request, and will permit independent external certified professional accountants
acceptable to Mortgagor and Mortgagee (subject to execution by such accountants
of a reasonable non-disclosure agreement), upon reasonable written notice to
Mortgagor during Mortgagor's usual business hours, to inspect and/or conduct
audits with respect to the Collateral.
14. Impairment. The Mortgagor shall give prompt written notice to Mortgagee of
any casualty or loss which has impaired in any material respect the useful live,
value or operation of the Collateral.
15. Breach of Covenants and Bankruptcy. The occurrence of any of the following
shall constitute an "Event of Default" hereunder:
(a) Failure to Pay. Mortgagor shall fail to pay (i) any principal payment on
the due date under the Note or (ii) any interest or other payment required
pursuant to the terms of the Note on the date due and such payment shall
not have been made within thirty days of Mortgagor's receipt of Holder's
(as defined in the Note) written notice to Mortgagor of such failure to
pay; or
(b) Breaches of Covenants. Mortgagor shall fail to observe or perform any
covenant, obligation, condition or agreement contained in this Mortgage or
the Note and (i) such failure shall continue for thirty days after
Mortgagor's receipt of Holder's written notice to Mortgagor of such
failure, or (ii) if such failure is not curable within such thirty-day
period, but is reasonably capable of cure within forty-five days, either
(A) such failure shall continue for forty-five days or (B) Mortgagor shall
not have commenced and continued to prosecute a cure in a manner reasonably
satisfactory to Holder within and continuously during the initial
thirty-day period; or
(c) Change of Control. A Change of Control shall have occurred with respect to
Mortgagor. For purposes hereof, the term "Change of Control" means the
occurrence of one or more of the following events: (a) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of Mortgagor and
its subsidiaries, taken as a whole, to any Person or group of related
Persons, as defined in Section 13(d) of the Securities Exchange Act of 1934
(a "Group"); and (b) any Person or Group (excluding owners of equity
securities as of the date of the Note) shall become the owner, directly or
indirectly, beneficially or of record, of shares representing more than 50%
of the aggregate ordinary voting power represented by Mortgagor's issued
and outstanding voting stock or any successor to all or substantially all
of Mortgagor's assets.
(d) Voluntary Bankruptcy or Insolvency Proceedings. Mortgagor shall (i) apply
for or consent to the appointment of a receiver, trustee, liquidator or
custodian of itself or of all or a substantial part of its property; (ii)
admit in writing its inability, to pay its debts generally as they mature;
(iii) make a general assignment for the benefit of its or any of its
creditors; (iv) be dissolved or liquidated in full or in part; or (iv)
commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts pursuant
to any bankruptcy, insolvency
3
or other similar law now or hereafter in effect or consent to any such
relief or to the appointment of or taking possession of its property by any
official in an involuntary case or other proceeding commenced against it;
or
(e) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the
appointment of a receiver, trustee, liquidator or custodian of Mortgagor or
of all or a substantial part of the property thereof, or an involuntary
case or other proceedings seeking liquidation, reorganization or other
relief with respect to Mortgagor or the debts thereof pursuant to any
bankruptcy, insolvency or other similar law now or hereafter in effect
shall be commenced and an order for relief entered or such proceeding shall
not be dismissed or discharged within ninety days of commencement.
16. Rights of Holder Upon Default. Upon the occurrence or existence of any Event
of Default, and at any time thereafter during the continuance of such Event of
Default, Holder may, by written notice to Mortgagor, declare all outstanding
obligations payable by Mortgagor hereunder and under the Note to be immediately
due and payable without presentment, demand, protest or any other notice of any
kind, all of which are hereby expressly waived; except that upon the occurrence
or existence of any Event of Default set forth in Sections 15(c), (d) or (e)
herein, all of the outstanding obligations payable by Mortgagor hereunder or
under the Note shall automatically become immediately due and payable without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived. No delay or omission by Holder in exercising any right
shall operate as a waiver of such right or any other right under the Note; a
waiver on any one occasion shall not be construed as a bar to or waiver of any
right on any future occasion. In addition to the foregoing remedies, upon the
occurrence or existence of any Event of Default, Holder may exercise any other
right, power or remedy granted to it hereunder, under the Note or pursuant to
applicable law. The Mortgagor agrees to pay all taxes levied or assessed upon
the outstanding principal against any holder of the Note. The prevailing party
in any action (i) to collect payment on the Note, (ii) in connection with any
dispute that arises as to its enforcement, validity, or interpretation, whether
or not legal action is instituted or prosecuted to judgment, or (iii) to enforce
any judgment obtained in any related legal proceeding, shall be entitled to all
costs and expenses incurred, including attorney fees.
This mortgage is upon the STATUTORY CONDITION, for any breach of which Mortgagee
shall have the STATUTORY POWER OF SALE.
[The next page is the signature page]
4
IN WITNESS WHEREOF, the said IPG Photonics Corporation has caused its corporate
seal to be hereto affixed and these presents to be signed, acknowledged and
delivered in its name and behalf by Xxxx X. Xxxxxx, its President, and Xxxxx
Xxxxx, its Treasurer, hereto duly authorized, this 13th day of August, 2003.
IPG PHOTONICS CORPORATION
By: /s/ Xxxx X. Xxxxxx
------------------------------------
Xxxx X. Xxxxxx, President
By: /s/ Xxxxx Xxxxx
------------------------------------
Xxxxx Xxxxx, Treasurer
COMMONWEALTH OF MASSACHUSETTS
Worcester, ss. August 13, 2003
Then personally appeared the above-named Xxxx X. Xxxxxx, President, and
Xxxxx Xxxxx, Treasurer, and acknowledged the foregoing instrument to be their
free act and deed and the free act and deed of IPG Photonics Corporation, before
me
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxxx, Notary Public
My commission expires: 11/13/09
5
EXHIBIT A
Tract 1
the land in the southerly part of Oxford, Worcester County, Massachusetts,
containing 22 acres, more or less, being the same premises described in deed of
Buduo Diversified, Inc. to IPG Photonics, Inc. dated October 30, 2000, recorded
in Worcester District Registry of Deeds Book 23152, Page 255.
Tract 2
the land in Oxford, Worcester County, Massachusetts, containing an area of 6.638
acres, more or less, in Plan Book 493, Plan 19, and being the same premises
described in deed of Xxxxxx Xxxxxxxx and Xxxxxx X. Xxxxxx, Trustees of Elmar
Realty Trust, to IPG Photonics Corporation dated February 14, 2001, recorded in
Worcester District Registry of Deeds Book 2
6
EXHIBIT D
Information marked below by a [***] has been omitted pursuant to a request for
confidential treatment filed separately with the Commission.
IPG SUPPLY AGREEMENT
THIS MASTER IPG SUPPLY AGREEMENT is made effective as June 30, 2003 ("Effective
Date") between IPG PHOTONICS CORPORATION, having offices at 00 Xxx Xxxxxxx Xxxx,
Xxxxxx, XX 00000, on behalf of itself and its subsidiaries, (collectively,
"Supplier") and JDS Uniphase Corporation, having offices at 0000 Xxxxxxxxxx
Xxxxxxx, Xxx Xxxx, XX 00000, on behalf of itself and its subsidiaries
("Customer").
WHEREAS Supplier is a manufacturer and supplier of fiber laser modules;
AND WHEREAS Customer desires to from time to time order, purchase and take
delivery of pulsed Ytterbium fiber laser modules from Supplier;
AND WHEREAS Supplier desires to sell and deliver to Customer fiber laser
modules;
NOW THEREFORE, in consideration of the mutual covenants herein contained, and
for good and valuable consideration the receipt and sufficiency of which is
hereby acknowledged, Supplier and Customer agree as follows:
1.0 INTERPRETATION
1.1 Definitions. In this Agreement, the below terms shall have the following
respective meanings:
(a) "Delivery Date" means the delivery date, as determined in accordance with
this Agreement, for the Product to arrive at Customer's delivery location set
forth the applicable Purchase Order (as later defined).
(b) "Effective Date" shall have the meaning set forth in the first paragraph of
this Agreement.
(c) "Initial Term" shall have the meaning set forth in Section 2.0.
(d) "Products" shall have the meaning set forth in Section 5.1 and also means
any pulsed Ytterbium fiber laser modules as set forth and described in Exhibit
A, as may be amended from time to time by the agreement of Supplier and
Customer, in writing.
(e) "Purchase Order" means a purchase order issued to Supplier by Customer, in
written or electronic form, for the purchase of Products pursuant to this
Agreement, which states inter alia the Product, agreed upon unit price, unit
quantities per Product, requested delivery dates and Customer delivery location.
(f) "Renewal Term" shall have the meaning set forth in Section 2.0.
(g) "Rolling Forecast" means a rolling six (6) month non-binding written
forecast of Customer's anticipated requirements for each Product.
(h) "Specifications" means the specifications for the Products described in
Exhibit A, as may be amended from time to time by the agreement of Supplier and
Customer, in writing.
(i) "Taxes" means any and all taxes and other charges (exclusive of taxes on the
net income of Supplier), howsoever designated, levied or based on this Agreement
or the Products delivered hereunder, including without limitation all federal
(Canadian or U.S.), provincial, state and local sales, use and excise taxes,
customs and duties, licenses, fees, tariffs and other similar expenses, whether
now or subsequently in effect.
(j) "Term" means the Initial Term and Renewal Term.
1.2 Headings. The division of this Agreement into Sections, Subsections and
Exhibits and the insertion of headings are for ease of reference only and shall
not affect its construction or interpretation.
2.0 TERM
This Agreement shall commence as of the Effective Date and shall, unless
otherwise terminated in accordance with the terms and conditions of this
Agreement, remain in full force and effect for until the earlier of five (5)
years or the date on which Customer has paid Supplier Eight Million Three
Hundred Thousand United States Dollars (US$8,300,000.00) for Product (the
"Initial Term"). Thereafter, this Agreement shall renew automatically for one
period of three (3) years (the "Renewal Term"), subject to termination in
accordance with the terms and conditions of this Agreement.
3.0 COMMITMENTS
3.1 Customer Commitment to Purchase/ Supplier Commitment to Sell. Except to the
extent Customer is required to compensate Supplier for the cancellation of
Purchase Orders pursuant to Section 5.6 (Cancellation and Cancellation Costs),
Section 5.7 (Rescheduling) and for termination costs pursuant to Section 12.2
(Termination Costs), there is no commitment by Customer to purchase Products
from Supplier. Except to the extent otherwise prohibited by exclusivity
agreements with its customers existing as of the Effective Date for current
pulsed Ytterbium lasers and to the extent with customers for exclusivity in the
future with respect to new/future custom developed pulsed Ytterbium lasers,
Supplier agrees to sell Products to Customer in accordance with this Agreement.
3.2 Supplier MFN Commitment. Supplier represents, warrants and agrees that
Customer shall at all times during the Term receive lead-time, manufacturing
capacity allocation, warranty support, shipment and ordering treatment which is
equal to, or better than, that provided to another customer. For the purposes of
this Section 3.2, "another customer" shall mean any and all other customers of
Products and products similar thereto from Supplier purchasing similar amounts.
For greater certainty and the avoidance of doubt: (i) Lead-Times offered to
Customer shall be equal to or less than those provided to another customers;
(ii) in the event of a manufacturing capacity shortage, Customer's orders shall
be satisfied with the same or better priority as another customer; (iii) in the
case of RMAs and warranty support, Customer's RMAs will be processed/satisfied
with the same or better priority as another customer; and (iv) with respect to
shipping Product (and products similar thereto), Customer's orders will with the
same or better priority as another customer.
2
4.0 FORECASTS
During the first seven (7) calendar days of each month during the Term, Customer
shall provide Supplier a Rolling Forecast. A Rolling Forecast is an estimate of
projected Product requirements based on the information then available to
Customer and is not a commitment by Customer to purchase Product nor a
commitment of Supplier to manufacture, deliver or sell Product. Supplier shall
use Rolling Forecasts for internal material planning requirements.
5.0 PRODUCTS AND PURCHASE ORDERS
5.1 Products. Any pulsed Ytterbium fiber laser module offered for sale by
Supplier on the merchant market, but subject to exclusivity obligations of
Supplier described in Section 3.1, and ordered by, taken delivery of or paid for
by Customer from Supplier shall be a "Product" hereunder. The parties shall seek
to complete and update Exhibit A from time to time in respect of each such
Product.
5.2 Issuance. Customer shall from time to time issue Purchase Orders. Customer
shall only use the Products for incorporation into its systems/products and for
warranty purposes related to same, and not for resale without incorporation in
systems/products.
5.3 Acknowledgement. As soon as reasonably possible (and in no event later than
three (3) business days) immediately following the receipt of each Purchase
Order, Supplier shall acknowledge receipt of such Purchase Order.
5.4 Acceptance and Delivery Dates. As soon as reasonably possible (and in no
event later than five (5) business days) immediately following the receipt of
each Purchase Order, Supplier shall accept any Purchase Order having delivery
dates consistent the applicable lead-time for such Product as set forth in
Exhibit A or, in the case of Exhibit A not being complete, as from time to time
provided by Supplier to Customer (collectively, "Lead-Time") and the delivery
dates set forth in such Purchase Order acceptance shall be deemed the Delivery
Dates for such Products.
To the extent that the delivery dates set forth in a Purchase Order are not
consistent with the applicable Lead-Time, Supplier shall accept such Purchase
Order and use commercially reasonable efforts to provide delivery dates for
Products ordered thereunder. To the extent that Supplier does not provide
delivery dates, Supplier shall use commercially reasonable efforts to provide
Customer with delivery dates as soon thereafter as reasonably possible. In
either case, the delivery dates provided by Supplier shall be deemed the
Delivery Dates for such Products, unless Customer rejects same by written notice
thereof on or before five (5) business days immediately following Supplier's
provision of such Delivery Dates, in which case the parties shall acting
reasonably and in good faith promptly negotiate mutually acceptable Delivery
Dates. Thereafter, and to the extent that Supplier and Customer do not agree
upon mutually acceptable Delivery Dates, either party may, by providing written
notice to the other party, forthwith terminate the applicable Purchase Order
with respect to Product for which there is no Delivery Date.
5.5 Changes. Except as otherwise provided for in this Agreement, Customer shall
not cancel or terminate, reschedule or delay a Purchase Order, or applicable
Delivery Dates thereunder, in whole or in part, without the prior written
consent of Supplier.
3
5.6 Cancellation and Cancellation Costs. Subject to compensating Supplier in
accordance with this Section, Customer may cancel a Purchase Order, in whole or
part and without cost or penalty, by providing notice to Supplier prior to the
applicable Delivery Date. In the event that Customer provides Supplier with a
notice of cancellation four (4) weeks or less prior to the applicable Delivery
Date, Customer may not cancel and Customer must take and pay for all Product
delivered on or before the Delivery Date or within two (2) weeks thereafter. In
the event that Customer provides Supplier with a notice of cancellation more
than four (4) weeks (but less than the then current Lead-Time for the applicable
Product) prior to the applicable Delivery Date, Customer shall pay or reimburse
Supplier for the reasonable out of pocket or direct costs incurred by Supplier
relating to such canceled Product at the time of cancellation, including without
limitation with respect to work in process and raw materials, to the extent that
Supplier cannot (using reasonable efforts) mitigate such costs within forty-five
(45) calendar days of such cancellation, it being agreed that Customer shall not
be required to reimburse Supplier for laser diodes manufactured by Customer
which Supplier has in inventory on the Effective Date. This shall be Supplier's
sole and exclusive remedy and Customer's sole and exclusive liability/obligation
to Supplier for any cancellation hereunder by Customer.
5.7 Rescheduling. Provided Customer provides Supplier with at least fifteen (15)
calendar days notice in advance of a Delivery Date for a Product, Customer may
re-schedule such Delivery Date, at no cost or penalty and on a one time basis
only, up to a maximum of sixty (60) calendar days. Thereafter, Customer shall
take delivery of and pay for the Product in accordance with this Agreement.
6. PRICES FOR PRODUCTS
6.1 Prices for Products. Customer shall pay the applicable price for each
Product as set forth in U.S. dollars in Exhibit A (or if not set forth in
Exhibit A, as otherwise agreed by the parties) and as may be amended from time
to time by Supplier and Customer in accordance with this Agreement. All prices
are FCA (Incoterms 2000) Supplier's relevant facility, exclusive of Taxes,
transportation, insurance and brokerage fees.
6.2 Product Pricing Structure.
(i) The parties agree and acknowledge that this Agreement is being
executed by the parties as part of a settlement arrangement to resolve
various outstanding issues between the parties, including the
settlement of various contractual payments to be made by Supplier to
Customer under a prior supply agreement between the parties. As
partial consideration to Customer of its execution of a settlement and
other related agreements, Supplier agrees to provide Customer with
Product pricing, as follows:
During the Initial Term, the pricing shall be based upon Supplier's
standard (market) non-distributor Product pricing for the given level
of committed purchases (as mutually agreed upon by the parties).
Supplier shall invoice to Customer such purchase price which shall be
broken down into [***] and [***] (in each case as defined below). For
the purposes of this Section and subject to Exhibit B, the [***] shall
be [***] as mutually agreed upon by the parties [***] and the [***]
shall be the difference between Supplier's invoiced
4
prices for Products and the [***] as mutually agreed upon by the
parties [***]. Notwithstanding any other term or condition of this
Agreement, Customer's sole and exclusive payment obligation in respect
of the purchase price for a Product shall be to pay the [***] in
accordance with the applicable terms and conditions of this Agreement
and, notwithstanding any other term or condition of this Agreement, in
no event shall Customer have any obligation to make any payments in
respect of the [***]. The [***] shall represent additional
consideration paid by Supplier to Customer under the above mentioned
settlement arrangement, and shall be satisfied (and are hereby deemed
to be satisfied) by Customer by its acceptance of such amounts as
additional consideration paid by Supplier to Customer under the above
mentioned settlement arrangement which acceptance is hereby provided.
For greater certainty and the avoidance of doubt, [***], as noted
above, shall be determined in accordance with GAAP.
(ii) Renewal Term: During the Renewal Term, the prices for Products shall
be mutually agreed upon by the parties. Supplier represents, warrants
and agrees that, in all cases, Supplier shall offer to, and charge,
Customer prices for Products which are equal to, or less than, the
lowest price offered or charged to any other purchaser or customer
(excluding bone fide distributors in the normal course of Supplier's
business) purchasing the Products or similar products (for marking
systems or for other applications that Customer actually is currently
in or in the future enters into and in respect of which Customer
provides notice to Supplier) in the same or similar quantities
(collectively, "Similar Purchaser"). If Supplier offers a lower price
for the Product or similar product to any Similar Purchaser, then
Supplier shall offer such pricing to Customer retroactively as of the
date first offered to such Similar Purchaser.
6.3 Taxes. Except to the extent that applicable exemptions are available,
obtained and documented for Supplier, Customer shall pay all Taxes and shall
promptly reimburse Supplier for any Taxes which Supplier pays directly to any
taxing authority. Supplier's invoices to Customer are payable in full without
deduction for any Taxes, including without limitation withholding taxes.
7.0 INVOICING AND PAYMENT
During the Initial Term only, Supplier invoices shall set forth a Supplier
determined market price for each Product, the amount of the applicable Cash
Payment determined in accordance with Section 6.2(i) and the Contract Payment
determined in accordance with Section 6.2(i). For greater certainty and the
avoidance of doubt the cash amount to be paid for a Product during the Initial
Term shall always be the Cash Payment determined in accordance with Section
6.2(i). Supplier may issue an invoice as soon as the time of Product shipment
from Supplier's relevant facility, and Customer shall pay such invoice for the
Cash Payment within thirty (30) calendar days thereof. To the extent that
Customer that a proposed shipment to Customer exceeds the credit limits set by
Supplier for Customer in accordance with its ordinary practice, Supplier
reserves the right to require alternative payment terms including, without
limitation, letter of credit or payment in advance. If at any time Customer is
delinquent in the payment of any invoice or is otherwise in breach
5
of this Agreement, Supplier may, at its discretion, stop performance of services
or withhold shipment (including partial shipments) of any order and may, at its
option, require Customer to pre-pay for further performance or shipments. All
payments not received when due shall be subject to an additional interest charge
at an annual rate of 10% (.83% per month), or such lower interest rate as may be
otherwise permitted at law, of the unpaid amount until the date of payment,
without prejudice to any other rights, remedies or recourses which Supplier may
have under this Agreement, at law or in equity. The right of Supplier to any
payment provided for under this Agreement shall not be subject to any abatement,
reduction, set off, defense, counterclaim or recoupment of any amount due or
alleged to be due by reason of any past, present or future claims of Customer.
8.0 PRODUCT DELIVERY
8.1 Delivery Date. Except as provided for in this Agreement or otherwise
mutually agreed upon by the parties, in writing, Supplier shall use commercially
reasonable efforts to ship Products on the applicable Delivery Date.
8.2 Delay in Shipment. Supplier shall use commercially reasonable efforts to
notify Customer in a timely manner of any delay in Delivery Dates, stating the
reasons for the delay. Supplier shall use commercially reasonable efforts to
minimize delays in Delivery Dates and, upon occurrence of any such delay, shall
use commercially reasonable efforts to remedy same in a timely manner.
8.3 Shipping. All shipments are FCA (Incoterms 2000) Supplier's relevant
facility. Supplier may ship partial orders provided Supplier notifies Customer
prior to shipment. Customer shall specify the carrier or means of transportation
or routing on the Purchase Order. In the event that Customer fails to specify
shipping instructions on the Purchase Order, Supplier shall select the best
available carrier on a commercially reasonable basis.
8.4 Packaging. Supplier shall package and label all Product in accordance with
Supplier's then current packaging practices and suitable for shipment under
normal circumstances without damage and in accordance with applicable law.
8.5 Title. Title to Product shall pass to Customer upon Supplier's tender of the
relevant Product to the shipping carrier at Supplier's facility.
9.0 WARRANTIES
9.1 Product Warranty. Notwithstanding any provision to the contrary other than
Sections 10.2 and 10.3, Supplier's sole and exclusive obligation to the Customer
for any Product made by Supplier and sold hereunder is to repair returned
Product or provide a replacement Product, at Supplier's sole option, for any
Product which has been returned to Supplier under the RMA procedure set forth in
Section 9.2 and which is defective in workmanship, material or not in compliance
with the applicable Specifications and has in fact failed under normal use on or
before twenty-four (24) months from the date of original shipment of the
Product. All Product, which are experimental Products, prototypes or Products
used in field trials, are not warranted and are provided to Customer on an "as
is" basis. All Product or parts thereof supplied by third parties and sold by
Supplier carry only the original manufacturer's warranty to the extent
applicable to Customer. Supplier shall only accept for repair, replacement or
credit under warranty Products made by third parties, if expressly authorized to
do so by the
6
relevant third party. Any Product repaired or replaced under warranty is only
warranted for the period of time remaining in the original warranty for the
Product. The warranty excludes and does not cover any Product or parts thereof
which has been accidentally damaged, disassembled, modified, misused, damaged in
transit, used in applications which exceed the Product specifications or
ratings, neglected, improperly installed or otherwise abused or is used in
hazardous activities, or which fails as a result of Customer software or
interfacing; improper installation, site preparation or maintenance; or
Customer's failure to use the Product in accordance with the information and
precautions contained in the applicable Product manual provided by Supplier.
Customer must claim under the warranty in writing not later than thirty (30)
calendar days after the claimed defect is discovered. The Customer must make all
claims under this warranty and no claim shall be accepted from any third party.
9.2 Return Material Authorization. Except as otherwise provided in this
Agreement, Supplier's then current RMA procedure shall apply to Supplier's
repair or replacement of both in-warranty and out-of-warranty Products. Supplier
shall only accept returns of Product for which an approved RMA number has been
issued by Supplier and which are accompanied by an itemized statement of
defects. Such Products shall be returned prepaid and insured to Supplier at the
address stipulated by Supplier. All Products which have been returned to
Supplier with an RMA number, but to which the warranty in Section 9.1 does not
apply, shall be subject to Supplier's standard examination charge in effect at
the time, which shall be invoiced by Supplier and paid by Customer in accordance
with this Agreement. All Products returned to Supplier without an RMA number or
which are not accompanied by an itemized statement of defects, may be returned
to Customer, at Customer's expense, and Supplier shall have no obligation to
evaluate such Products.
9.3 DISCLAIMER OF WARRANTIES. SUBJECT TO SECTIONS 10.2 AND 10.3, THE WARRANTY
SET FORTH IN SECTION 9.1 AND THE OBLIGATIONS AND LIABILITIES OF SUPPLIER
THEREUNDER ARE ACCEPTED BY CUSTOMER TO BE EXCLUSIVE AND IN LIEU OF, AND CUSTOMER
HEREBY WAIVES, RELEASES AND RENOUNCES ALL OTHER REMEDIES, WARRANTIES,
GUARANTEES, OBLIGATIONS, REPRESENTATIONS OR LIABILITIES, EXPRESS OR IMPLIED, OF
SUPPLIER WITH RESPECT TO EACH PRODUCT OR PART THEREOF, PRODUCT DOCUMENTATION OR
SERVICE DELIVERED OR PROVIDED UNDER THIS AGREEMENT, WHETHER ARISING IN FACT, IN
LAW, IN CONTRACT (INCLUDING FUNDAMENTAL BREACH), IN TORT (INCLUDING NEGLIGENCE),
OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY, CONDITION OR
REPRESENTATION (A) OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
SATISFACTORY QUALITY, OR ARISING FROM COURSE OF PERFORMANCE, DEALING, USAGE OR
TRADE PRACTICE; (B) THAT THE PRODUCTS WILL BE FREE FROM INFRINGEMENT OR
VIOLATION OF ANY RIGHTS, INCLUDING INTELLECTUAL PROPERTY RIGHTS, OF THIRD
PARTIES; OR (C) OR THAT THE OPERATION OF ANY SOFTWARE DELIVERED HEREUNDER WILL
BE UNINTERRUPTED OR ERROR FREE. THIS SECTION AND THE LIMITATIONS SET FORTH
HEREIN, SHALL APPLY IRRESPECTIVE OF THE NATURE OF THE CAUSE OF ACTION, DEMAND OR
CLAIM, INCLUDING BUT NOT LIMITED TO, BREACH OF CONTRACT, NEGLIGENCE, TORT OR ANY
OTHER LEGAL THEORY, AND SHALL SURVIVE A FUNDAMENTAL BREACH OR BREACHES AND/OR
FAILURE OF THE ESSENTIAL PURPOSE OF THE AGREEMENT OR OF ANY REMEDY CONTAINED
HEREIN.
9.4 LIMITATION OF LIABILITY. EXCEPT FOR DAMAGES OR LIABILITY ARISING PURSUANT TO
SECTION 10.3 (PRODUCT LIABILITY) OR FROM A BREACH OF SECTION 14.7 (CONFIDENTIAL
INFORMATION), SUPPLIER SHALL NOT BE LIABLE TO CUSTOMER, OR ANY THIRD PARTY, FOR
ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, EXEMPLARY OR INDIRECT COSTS OR DAMAGES,
INCLUDING WITHOUT LIMITATION, LITIGATION COSTS, INSTALLATION AND REMOVAL COSTS,
LOSS OF DATA, PRODUCTION, SAVINGS OR PROFIT OR ANY
7
OTHER COMMERCIAL OR ECONOMIC LOSS OF ANY KIND (INCLUDING WITHOUT LIMITATION
BUSINESS INTERRUPTION OR LOSS OF BUSINESS) ARISING FROM ANY CAUSE WHATSOEVER,
REGARDLESS OF THE FORM OF ACTION, INCLUDING WITHOUT LIMITATION IN CONTRACT
(INCLUDING FUNDAMENTAL BREACH), TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR
OTHERWISE, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH COSTS OR DAMAGES OR SAME
WERE REASONABLY FORESEEABLE OR EVEN IF SUCH COSTS OR DAMAGES ARE ALLEGED TO
ARISE FROM NEGLIGENT ACTS, OMISSIONS, OR CONDUCT OF SUPPLIER OR ITS DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS, REPRESENTATIVES OR SUBCONTRACTORS. EXCEPT FOR
DAMAGES OR LIABILITY ARISING PURSUANT TO SECTION 10.3 (PRODUCT LIABILITY) OR
FROM A BREACH OF SECTION 14.7 (CONFIDENTIAL INFORMATION), IN NO EVENT SHALL
SUPPLIER'S TOTAL CUMULATIVE LIABILITY (WHICH FOR GREATER CERTAINTY IS NOT ON A
PER INCIDENT BASIS) TO CUSTOMER IN CONTRACT (INCLUDING FUNDAMENTAL BREACH), TORT
(INCLUDING NEGLIGENCE) OR OTHERWISE EXCEED THE AMOUNT PAID BY SELLER FOR
PRODUCTS FROM WHICH SUCH LIABILTY AROSE DURING THE TWELVE (12) MONTH PERIOD
IMMEDIATELY PRECEDING THE DATE OF THE MOST RECENT CLAIM. FOR THE PURPOSES OF
THIS SECTION, CUSTOMER INCLUDES CUSTOMER'S DIRECTORS, OFFICERS, EMPLOYEEES,
AGENTS, REPRESENTATIVES AND SUBCONTRACTORS. THIS SECTION AND THE LIMITATIONS SET
FORTH HEREIN, SHALL APPLY IRRESPECTIVE OF THE NATURE OF THE CAUSE OF ACTION,
DEMAND OR CLAIM, INCLUDING BUT NOT LIMITED TO, BREACH OF CONTRACT, NEGLIGENCE,
TORT OR ANY OTHER LEGAL THEORY, AND SHALL SURVIVE A FUNDAMENTAL BREACH OR
BREACHES AND/OR FAILURE OF THE ESSENTIAL PURPOSE OF THE AGREEMENT OR OF ANY
REMEDY CONTAINED HEREIN.
10.0 INTELLECTUAL PROPERTY AND INDEMNITIES
10.1 Intellectual Property Rights. Unless otherwise provided for in this
Agreement, nothing in this Agreement shall be construed as a sale, transfer or
assignment of the intellectual property rights, including without limitation any
patent, copyright, trade secrets, trademarks or tradenames, of Supplier
whatsoever, including without limitation with respect to the Products,
Specifications or related information and documentation. All right, title and
interest in and to any inventions, discoveries, improvements, methods, ideas,
computer and other apparatus programs and related documentation, other works of
authorship fixed in any tangible medium of expression, mask works, or other
forms of intellectual property, whether or not subject to statutory protection,
which are made, created, developed, written, conceived or first reduced to
practice by Supplier solely, jointly or on its behalf, in the course of, arising
out of, or as a result of work performed hereunder, and any related tooling,
set-up, fitting-up and preparation, shall belong to and be the sole and
exclusive property of Supplier.
10.2 Intellectual Property Indemnity. Supplier agrees to defend or settle, at
its sole option, and shall reimburse Customer for all costs and damages assessed
by final judgement against Customer, and any reasonable expenses (including
legal expenses), incurred at the written request of Supplier directly resulting
from any claim alleging that any Products or the use, operation, sale or offer
for sale thereof, infringe upon, misappropriate or violate any third party's
intellectual property rights (including without limitation patents or
copyrights) in member countries of the EU, countries in North America, Norway,
Switzerland, Japan, New Zealand, China and Australia. Customer shall have no
authority to settle any claim on behalf of Supplier.
In the event of such a claim of infringement of third party, Supplier shall have
the right to discontinue further deliveries of the Product and shall use
commercially reasonable efforts, at its expense, to: (a) obtain necessary rights
required to permit the sale
8
or use of the Products by Customer and its customers; or (b) modify or replace
such Products to make them non-infringing (and extend this indemnity thereto),
provided that any such replacement or modified Products comply with the
applicable Specifications. For the protection of Supplier and Customer, at the
request and expense of Supplier, Customer agrees to exercise, and to the extent
permitted sub-license Supplier, its have-made rights under any intellectual
property license agreements it has with third parties, to the extent it has the
right to do so. In the event Supplier is unable to achieve either of the options
set forth above within a reasonable period of time or, in the reasonable opinion
of Supplier, Supplier is unlikely to achieve such options within a reasonable
period of time, Supplier shall have the right to immediately terminate
Supplier's obligations to Customer under this Agreement with respect to the
particular Product and promptly refund to Customer the invoiced purchase price.
Supplier's obligations specified in this Section shall be conditional on and
subject to Customer notifying Supplier promptly in writing of the claim and
giving Supplier full authority, information and assistance for the defense and
settlement thereof. Supplier shall have no liability for, and Customer shall
indemnify Supplier against, any claim based upon: (a) the combination,
operation, or use of any Product supplied hereunder with equipment, devices, or
software not supplied by Supplier; (b) alteration or modification of any Product
supplied hereunder; or (c) Supplier's compliance with Customer's designs,
specifications or instructions or (d) infringement of an application patent.
Notwithstanding any other provisions hereof, Supplier shall not be liable for
any claim based on Customer's use of the Products as shipped after Supplier has
informed Customer of modifications or changes in the Products required to avoid
such claims and offered to implement those modifications or changes, if such
claim would have been avoided by implementation of Supplier's suggestions.
10.3 Personal Injury and Property Damage Indemnity. Supplier shall indemnify,
defend and hold harmless Customer and its employees, officers, directors and
agents, from and against any third party claims, demands, loss, damage or
expense relating to bodily injury or death of any person or damage to real
and/or tangible personal property to the extent directly caused by a Product and
directly resulting from a breach of the warranty contained in Section 9.1 or the
negligence or willful misconduct of Supplier. Supplier shall have no indemnity
obligation hereunder for claims resulting from Product misuse, neglect, failure
to follow normal Product safety procedures and recommended precautions in the
Product manual or negligence of the operator.
11.0 PRODUCT CHANGES AND DISCONTINUATION
11.1 Customer Changes. In the event Customer desires an engineering or
Specification change for any of the Products, Customer may submit such proposed
engineering or Specification change to Supplier. Supplier and Customer acting
reasonably and in good faith shall negotiate whether such change shall be made
and if so, shall work with each other on the implementation of such change.
Customer acknowledges that such changes may result in additional non-recurring
engineering charges for Customer and may alter the price of the Products, in
which case, this Agreement shall be amended, in writing, to reflect same.
11.2 Supplier Permitted Changes. Supplier may at any time make any changes,
improvements, additions or enhancements to the Products
9
that do not materially affect the form, fit or function of a Product ("Permitted
Change") without notice to, or the consent of, Customer. Permitted changes shall
be made at no additional charge to Customer.
11.3 Supplier Material Changes. In the event that Supplier at any time makes any
changes, improvements, additions or enhancements to the Products that materially
affect the form, fit or function of a Product ("Material Change"), Supplier
shall provide ninety (90) calendar days prior written notice to Customer of such
Material Change, outlining the nature of the Material Change and any applicable
non-recurring costs or impact on Delivery Dates or Product pricing. Customer
shall approve or reject a Material Change within fifteen (15) calendar days from
receipt of Supplier's notice, failing which the Material Change shall be deemed
accepted by Customer. In the event of acceptance of any such Material Change,
this Agreement shall be amended, in writing, to reflect any applicable
non-recurring engineering costs or impact on Delivery Dates or Product pricing.
11.4 Rejection of Material Changes. In the event Customer rejects any Material
Change, Supplier shall continue to supply unchanged Product in accordance with
Section 11.7, in which case the date of Customer's rejection of such Material
Change shall be deemed the date on which (i) a Supplier notice of
discontinuation for the relevant Product shall be deemed to be provided to
Customer and (ii) the Discontinuance Period (as defined in Section 11.7 below)
shall be deemed to commence.
11.5 Required Changes. Notwithstanding any other term or condition in this
Section 11.0, in the event that any changes, improvements, additions or
enhancements of a Product, including Material Changes, are required by any law
or governmental regulation or requirement or interpretation thereof by any
governmental agency having jurisdiction or is required, in the discretion of
Supplier acting reasonably and in good faith, to address Product safety,
liability or performance ("Required Change"), Supplier shall provide sixty (60)
calendar days prior written notice (or such shorter period of notice as may be
reasonable in the circumstances) to Customer of such Required Change, outlining
the nature of the Required Change and any applicable non-recurring costs or
impact on Delivery Dates or Product pricing. Customer shall approve or reject a
Required Change within five (5) calendar days from receipt of Supplier's notice,
failing which the Required Change shall be deemed accepted by Customer. In the
event of acceptance of any such Required Change, this Agreement shall be
amended, in writing, to reflect any applicable non-recurring engineering costs
or impact on Delivery Dates or Product pricing. In no event shall Supplier be
required to manufacture, supply or sell a Product to which a Required Change is
applicable.
11.6 Rejection of Required Changes. In the event Customer rejects any Required
Change referred to in Section 11.5, this Agreement shall be terminated with
respect to the applicable Product and amended, in writing, to delete such
Product from Exhibit A. Thereafter, Supplier shall have no further obligation to
supply or sell such Product to Customer and Customer shall have no further
obligation to take delivery of or purchase such Product.
11.7 Product Discontinuation. In the event Supplier intends to discontinue the
manufacture and sale of any Product, Supplier shall give at least six (6) months
prior written notice to Customer. At any time during such six (6) month period
(the "Discontinuance Period"), Customer may place a last time Purchase Order for
Product, provided the requested delivery dates are in compliance with the
10
applicable Product Lead-Time and the last requested delivery date for such
Product is not more than six (6) months after the end of such Discontinuance
Period.
12.0 TERMINATION
12.1 Rights of Termination. Upon the occurrence of any of the following events,
a party may forthwith terminate this Agreement:
(a) the other party materially breaches or defaults any of its material
obligations, duties or responsibilities hereunder (including, in the
case of Customer, a failure to pay any amount owing when due), which
breach or default has not been remedied within forty-five (45)
calendar days (or fifteen (15) calendar days, in the case of
Customer's failure to pay) after written notice is given by the party
not in default, specifying the breach or default; or
(b) Other party shall (i) apply for or consent to the appointment of a
receiver, trustee, liquidator or custodian of itself or of all or a
substantial part of its property; (ii) admit in writing its inability,
to pay its debts generally as they mature; (iii) make a general
assignment for the benefit of its or any of its creditors; (iv) be
dissolved or liquidated in full or in part; or (iv) commence a
voluntary case or other proceeding seeking liquidation, reorganization
or other relief with respect to itself or its debts pursuant to any
bankruptcy, insolvency or other similar law now or hereafter in effect
or consent to any such relief or to the appointment of or taking
possession of its property by any official in an involuntary case or
other proceeding commenced against it; or
(c) Proceedings for the appointment of a receiver, trustee, liquidator or
custodian of the other party or of all or a substantial part of the
property thereof, or an involuntary case or other proceedings seeking
liquidation, reorganization or other relief with respect to the other
party or the debts thereof pursuant to any bankruptcy, insolvency or
other similar law now or hereafter in effect shall be commenced and an
order for relief entered or such proceeding shall not be dismissed or
discharged within ninety (90) days of commencement.
12.2 Termination Costs. In the event of termination of this Agreement by
Supplier pursuant to Section 12.1, Customer shall compensate Supplier for any
losses or damage resulting from such termination, including without limitation,
the price of Products shipped, manufactured, or held separately for Customer and
any incurred costs (including without limitation with respect of work in process
and raw materials), and a reasonable allocation of general and administrative
expenses relating to the Products. Notwithstanding any other term or condition
of this Agreement, the foregoing amounts shall be due and payable by Customer
immediately upon receipt of the applicable Supplier invoice.
13.0 DELAYS IN PERFORMANCE
13.1 Excusable Delay. In the event of a delay on the part of Supplier in the
performance of any of its obligations or responsibilities under the terms and
conditions of this Agreement due directly or indirectly to unforeseen
circumstances or a cause which is beyond the reasonable control or without the
fault or
11
negligence of Supplier (an "Excusable Delay"), Supplier shall not be liable for,
nor be deemed to be in default under or breach of this Agreement on account of
such delay and the time fixed or required for the performance of any such
obligation or responsibility shall be extended for a period equal to the period
during which any such delay persists. Excusable Delay shall be deemed to
include, without limitation, delays occasioned by the following causes:
(a) force majeure or acts of God;
(b) war, warlike operations, act of the enemy, armed aggression, civil
commotion, insurrection, riot or embargo;
(c) fire, explosion, earthquake, lightning, flood, draught, windstorm or
other action of the elements or other catastrophic or serious
accidents;
(d) epidemic or quarantine restrictions;
(e) any legislation, act, order, directive or regulation of any
governmental or other duly constituted authority;
(f) strikes, lock-out, walk-out, and/or other labour troubles causing
cessation, slow-down or interruption of work;
(g) a Required Change; or
(h) any default in or breach of this Agreement by Customer or any delay of
Customer in the performance of its obligations or responsibilities
under the terms and conditions of this Agreement.
13.2 Indefinite Delay and Termination. If Supplier reasonably concludes, based
on its reasonable appraisal of the facts and normal scheduling procedures, that
due to an Excusable Delay delivery of any Product will be delayed for more than
six (6) months after the applicable Delivery Date or any revised date agreed to
by the parties, in writing, Supplier shall promptly notify Customer, in writing,
and either party may then terminate this Agreement, including any Purchase
Orders, with respect to the affected Product by giving written notice to the
other party within thirty (30) calendar days after receipt by Customer of
Supplier's notice.
If, due to an Excusable Delay, delivery of any Product is delayed for more than
six (6) months after the applicable Delivery Date, either party may terminate
this Agreement, including any Purchase Orders, with respect to the affected
Product by giving written notice to the other within thirty (30) calendar days
after the expiration of such six (6) month period.
12
14.0 GENERAL
14.1 Product Specific Terms and Conditions. The Products governed by this
Agreement may be supplied by various Supplier companies and divisions located in
several different jurisdictions. From time to time the supply of an individual
Product may require terms and conditions specific to such Product which terms
and conditions shall be set forth in Exhibit A for the relevant Product.
14.2 Audits. To the extent Supplier's records may be relevant in determining
whether Supplier is complying with its commitments under Section 3.1 and 3.2
(Commitments) and Section 6.2 (Price Structure), Customer shall have the right
during the Term, through independent external certified professional accountants
acceptable to both Supplier and Customer, to examine and inspect such records as
may contain information bearing solely on whether Supplier is in compliance
therewith, subject to the other terms of this Section 14.2. Such an audit shall
take place under a reasonable confidentiality agreement, on reasonable notice to
Supplier and during normal Supplier business hours. The auditor shall disclose
to Customer only whether it found a discrepancy, and, if so, the amount/extent
of that discrepancy. The auditor shall deliver a copy of any report to Supplier
within ten (10) days of disclosure to Customer, and Supplier shall have an
opportunity to rebut any discrepancy in any audit report. Customer may exercise
its audit right not more than once per year. Solely with respect to compliance
of Customer during the Renewal Term, the audit rights shall terminate following
the date that Customer becomes a publicly traded company in the U.S.A. or is
acquired by a publicly traded company in the U.S.A., provided that Customer, in
lieu of the audit, shall deliver to Supplier a compliance statement, signed by a
then current officer of Customer, certifying compliance by Customer with its
obligations under Sections 3.1, Section 3.2 and 6.2(ii) hereof. All audits under
this Section 14.2 shall be completed prior to the first anniversary of the
expiration date of the Term.
14.3 Export Restrictions. Customer shall not transmit, export or re-export,
directly or indirectly, separately or as part of any system, the Products or any
technical data (including processes and services) received from Supplier,
without first obtaining any license required by the applicable government,
including without limitation, the United States Government and/or any other
applicable competent authority. Customer also certifies that none of the
products or technical data supplied by Supplier under this Agreement shall be
sold or otherwise transferred to, or made available for use by or for, any
entity that is engaged in the design, development, production or use of nuclear,
biological or chemical weapons or missile technology. Customer shall indemnify
and hold Supplier harmless for any violation or alleged violation by Customer of
the foregoing.
14.4 Notices. Any notice, demand or other communication required or permitted to
be given pursuant to this Agreement by either party shall be in writing and
shall be either:
(a) Personally delivered to the other party; or
(b) Sent by prepaid overnight courier; or
13
(c) Sent by facsimile transmission or similar method of recorded
communication, charges prepaid, confirmed by prepaid overnight
courier.
Any notice, demand or other communication given in accordance with subparagraphs
(a), (b) and (c) above shall be delivered or sent to the intended recipient at
its address below:
If to JDS Uniphase Corporation:
To: Legal Department
JDS Uniphase Corporation
0000 Xxxxxxxxxx Xxxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
And To: Associate General Counsel &
Director Business Development
JDS Uniphase Corporation
0000 Xxxxxxxx Xxxx
Xxxxxx (Xxxxxx), Xxxxxxx
Xxxxxx X0X 0X0
Fax: (000) 000-0000
If to Customer:
To: Vice President - R&D
IPG Photonics Corporation
00 Xxx Xxxxxxx Xxxx
Xxxxxx, XX 00000
Fax: 000-000-0000
And To: General Counsel
IPG Photonics Corporation
00 Xxx Xxxxxxx Xxxx
Xxxxxx, XX 00000
Fax: 000-000-0000
Any party may from time to time change its address by written notice to the
other party given in accordance with the provisions hereof.
Any notice, demand or other communication delivered in accordance with paragraph
(a) or (b) above shall be deemed to have been received on the day of its
delivery and if sent in accordance with paragraph (c) above, it shall be deemed
to have been received on the first business day following the date of its
transmission by facsimile or similar method of recorded communication
(confirmation copy by registered or certified mail).
14.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to the
provisions thereof relating to conflicts of laws or without regard to the United
Nations Convention on Contracts for the International Sale of Goods. Supplier
and Customer hereby irrevocably and unconditionally submit to the courts of the
State of New York and all courts competent to hear appeal therefrom.
14.6 Dispute Resolution. In the event of any dispute, claim, question, or
disagreement arising from or relating to this Agreement
14
or the breach thereof, the parties hereto shall use reasonable efforts to settle
the dispute, claim, question, or disagreement. To this effect, the parties shall
involve executives not involved with administration of this Agreement and
internal counsel and shall consult and negotiate with each other in good faith
and, recognizing their mutual interests, attempt to reach a just and equitable
solution satisfactory to both parties.
14.7 Severability. If any term or provision of this Agreement is found by a
court of competent jurisdiction to be invalid, illegal or otherwise
unenforceable, the same shall not affect the other terms or provisions hereof or
the whole of this Agreement, but such term or provision shall be deemed modified
to the extent necessary in the court's opinion to render such term or provision
enforceable, and the rights and obligations of the parties shall be construed
and enforced accordingly, preserving to the fullest permissible extent the
intent and agreements of the parties herein set forth.
14.8 Confidential Information. The parties hereby agree that the terms and
conditions of the Non-Disclosure Agreement between the parties, executed on June
17, 2003, continue to apply and extend to all Confidential Information (as that
term is defined in the Non-Disclosure Agreement) exchanged between the parties
in connection with this Agreement. This Section, and the terms and conditions of
the Non-Disclosure Agreement, shall survive the expiration or earlier
termination of this Agreement.
14.9 Independent Contractors. The relationship of the parties hereto is that of
independent contractors. Under no circumstances shall any employees of one party
be deemed to be the employees of the other for any purpose. Each party shall pay
all wages, salaries, and other amounts due its respective employees relative to
this Agreement and shall be responsible for all obligations respecting them
relating to income tax withholdings, unemployment insurance premiums, workers'
compensation, health care and pension plan contributions and other similar
responsibilities. Neither party has the right nor authority to assume or to
create any obligation or responsibility on behalf of the other party, except as
may from time to time be provided by written instrument signed by both parties.
Nothing contained herein shall be construed as creating an agency or joint
venture, consortium or partnership between the parties.
14.10 Survival. The parties agree that the respective rights, obligations and
duties under Section 1.0 (Interpretation), Section 6.1 and 6.2 (Prices for
Products and Taxes), Section 7.0 (Invoicing and Payment), Section 9.0
(Warranties), Section 10.0 (Intellectual Property and Indemnities), Section 12.2
(Termination Costs) and Sections 14.2, 14.3, 14.4, 14.5, 14.6, 14.7, 14.8, 14.9,
14.10, 14.12 and 14.14 (General) and any outstanding payment obligations of
Customer, shall survive expiration or earlier termination of this Agreement.
14.11 Assignment. This Agreement shall be binding on and inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
Neither party may assign this Agreement or any of their rights or obligations
hereunder to a third party without the express prior written consent of the
other party, which consent shall not be unreasonably withheld or delayed;
provided however that Supplier may delegate performance to any Supplier selected
independent contractor, provided that prior to any such assignment, such
independent contractor shall become qualified by Customer using the same
criteria as Customer used in qualifying Supplier for the same Product being
assigned (it being understood that in either case Supplier shall not be relieved
of any of its duties, obligations or
15
responsibilities hereunder by use of such affiliates or independent
contractors); and provided further that, without notice to or consent of
Customer, Supplier may at any time assign any payment to be made to Supplier
hereunder. Any purported assignment contrary to this agreement shall be null and
void.
14.12 Entire Agreement. This Agreement and its Exhibits express the entire
understanding and agreement for both Supplier and Customer with respect to the
subject matter covered by this Agreement and supersedes any and all previous
agreements, except any existing non-disclosure agreement between both parties,
with reference to the subject matter contained in this Agreement. All terms and
conditions on any Purchase Orders and all provisions on Supplier's documents
delivered in response to a Purchase Order shall be deemed deleted and superceded
by the terms and conditions of this Agreement, except for information provided
for administrative purposes only such as Purchase Order number, Product
identifier, quantity, pricing, shipping dates, shipping instructions and
delivery location.
14.13 Amendment and Waiver. No amendment or waiver of this Agreement shall be
binding unless executed in writing by both parties. No waiver of any of the
provisions of this Agreement shall constitute a waiver of any other provision
(whether or not similar) nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.
14.14 Counterparts. This Agreement may be executed in any number of
counterparts, including by facsimile, with the same effect as if Supplier and
Customer had each signed the same document. All counterparts shall be construed
together and shall constitute one and the same original Agreement.
IN WITNESS HEREOF, Supplier and Customer have executed this Agreement in
duplicate originals by their duly authorized officials.
JDS UNIPHASE CORPORATION IPG PHOTONICS CORPORATION
By: /s/ Xxxxxxxxxxx X. Xxxxxx By: /s/ Xxxxxxxx X. Xxxxxxxxx
--------------------------------- ------------------------------------
Name: Xxxxxxxxxxx X. Xxxxxx Name: Xxxxxxxx X. Xxxxxxxxx
Title: Vice President Title: CEO and Chairman of the Board
Date: June 24, 2003 Date: June 24, 2003
16
EXHIBIT A
PRODUCT SCHEDULE
1. Product Name (Product Class)/ [***] Lasers Modules (OEM Units) average
Description power to [***]
2. Customer Part No. [***]
3. Supplier Part No. [Insert Supplier Part No.]
4. Product Specification [Insert Specification Reference][to be
agreed upon after Effective Date]
5. Lead-Time Six-weeks ARO (subject to agreed upon
specification and a reasonable ramp up
period)
6. Unit Price ($U.S.) [Insert Unit Price or Step Pricing, if
applicable]
7. Unique Provisions Central wavelength emission [***]
The Cash Payment in respect of this
Product shall be Determined in
accordance with Section 6(i), subject to
Exhibit B.
For illustration purposes only and
without binding either party, IPG
provides [***] for this Product in
Exhibit A
- Part B.
For greater certainty the "Comments"
section of the Exhibit do not apply -
other than with respect to the
applicability of the June 17, 2003 NDA
between the parties.
17
EXHIBIT A - PART 2
[***]
SEE ATTACHMENTS
18
EXHIBIT B
([***] Write-Downs and Permitted Cash Payment Changes)
- IPG represents that as of the Effective Date there is no present event that
will result in a write-down of [***] and there is no pending write-down of
the [***] under consideration by it or, to its knowledge, its auditors.
- The below only applies to the extent that [***] write downs result from
GAAP for [***] accounting as applied consistently by IPG prior to the
Effective Date, and not to the adoption of new or different [***]
accounting practices.
- Note: Product Price = [***], as defined in the Agreement and [***] means
[***]
- In Months 1-6, all changes in inventory costs reduces [***].
Months 7-12 Year 2 Year 3 Year 4 Year 5
----------- ------ ------ ------ ------
[***] [***] [***] [***] [***] [***]
[***] [***] [***] [***] [***] [***]
EXHIBIT E
JDSU SUPPLY AGREEMENT
THIS MASTER JDSU SUPPLY AGREEMENT is made effective as June 30, 2003 ("Effective
Date") between JDS Uniphase Corporation, having offices at 0000 Xxxxxxxxxx
Xxxxxxx, Xxx Xxxx, XX 00000, on behalf of itself and its subsidiaries
(collectively, "Supplier") and IPG Photonics Corporation, on behalf of itself
and its subsidiaries, having offices at 00 Xxx Xxxxxxx Xxxx, Xxxxxx, XX 00000
("Customer").
WHEREAS Supplier is a manufacturer and supplier of laser diodes and packaged
laser diodes;
AND WHEREAS Customer desires from time to time to order, purchase and take
delivery of laser diodes and packaged laser diodes from Supplier;
AND WHEREAS Supplier desires to sell and deliver to Customer laser diodes and
packaged laser diodes;
NOW THEREFORE, in consideration of the mutual covenants herein contained, and
for good and valuable consideration the receipt and sufficiency of which is
hereby acknowledged, Supplier and Customer agree as follows:
1.0 INTERPRETATION
1.1 Definitions. In this Agreement, the below terms shall have the following
respective meanings:
(a) "Delivery Date" means the delivery date, as determined in accordance with
this Agreement, for the Product to arrive at Customer's delivery location set
forth the applicable Purchase Order (as later defined).
(b) "Effective Date" shall have the meaning set forth in the first paragraph of
this Agreement.
(c) "Products" shall have the meaning set forth in Section 5.1 and also means
any laser diodes, packaged laser diodes as set forth and described in Exhibit A,
as may be amended from time to time by the agreement of Supplier and Customer,
in writing.
(d) "Purchase Order" means a purchase order issued to Supplier by Customer, in
written or electronic form, for the purchase of Products pursuant to this
Agreement, which states inter alia the Product, agreed upon unit price, unit
quantities per Product, requested delivery dates and Customer delivery location.
(e) "Rolling Forecast" means a rolling six (6) month non-binding written
forecast of Customer's anticipated requirements for each Product.
(f) "Specifications" means the specifications for the Products described in
Exhibit A, as may be amended from time to time by the agreement of Supplier and
Customer, in writing.
(g) "Taxes" means any and all taxes and other charges (exclusive of taxes on the
net income of Supplier), howsoever designated,
levied or based on this Agreement or the Products delivered hereunder, including
without limitation all federal (Canadian or U.S.), provincial, state and local
sales, use and excise taxes, customs and duties, licenses, fees, tariffs and
other similar expenses, whether now or subsequently in effect.
(h) "Term" has the meaning set forth in Section 2.0.
1.2 Headings. The division of this Agreement into Sections, Subsections and
Exhibits and the insertion of headings are for ease of reference only and shall
not affect its construction or interpretation.
2.0 TERM
This Agreement shall commence as of the Effective Date and shall, unless
otherwise terminated in accordance with the terms and conditions of this
Agreement or extended by the mutual agreement of the parties, remain in full
force and effect for a period of five (5) years (the "Term").
3.0 CUSTOMER COMMITMENTS
3.1 Purchase Commitment. Except to the extent Customer is required to purchase
laser diodes and packaged laser diodes under this Section 3.1, Section 5.6
(Cancellation and Cancellation Costs), Section 5.7 (Rescheduling) or for
termination costs pursuant to Section 12.2 (Termination Costs), there is no
commitment by Customer to purchase Products from Supplier. During each year of
the first three (3) years of the Term, Customer agrees to issue Purchase Orders
for, take delivery of, and pay for no less than seventy percent (70%) of its
external requirements of any laser diodes and packaged laser diodes. During each
year of the fourth and fifth years of the Term, Customer agrees to issue
Purchase Orders for, take delivery of, and pay for no less than thirty-five
percent (35%) of its external requirements of any laser diodes and packaged
laser diodes. Compliance with this commitment shall be measured as a percentage
of Customer's total external purchases of laser diodes plus packaged laser
diodes on an annual basis as of each anniversary of the Effective Date and shall
exclude laser diodes and packaged laser diodes of the type that Supplier does
not sell on the merchant market. For greater certainty and the avoidance of
doubt, the term "external requirements" shall not include laser diodes and
packaged laser diodes manufactured or assembled by Customer. To the extent that:
(i) Supplier's prices for laser diodes and/or packaged laser diodes are ten
percent (10%) or more greater than the prices of substantially the same
products, which have been qualified by Customer and which meet the minimum
specifications of Customer, offered by another supplier having the ability
to supply such products in the quantities and timeframes required by
Customer and Customer purchases such products from such other supplier; or
(ii) Supplier is not able to supply laser diodes and/or packaged laser
diodes (a) that meet the minimum specifications of Customer; or (b) that
are qualified by Customer; or (c) in the quantities and timeframes required
by Customer (in each case as required by Customer of its other suppliers)
and Customer purchases such products from such other supplier,
such products purchased from another supplier in accordance with the above shall
be deemed to have been purchased from Supplier solely
2
for the purpose of determining Customer's compliance with the foregoing
commitments.
3.2 Design In Commitment. On or before sixty (60) calendar days immediately
following the Effective Date, Customer shall meet with Supplier to discuss
Customer's external requirements of laser diodes and packaged laser diodes. For
this meeting, Customer shall provide Supplier with specifications to the extent
Customer has external requirements. Customer and Supplier shall enter into good
faith discussions and cooperate to determine whether and how to implement
Supplier laser diodes and packaged laser diodes into Customer's products. These
discussions and cooperation are intended to result in Customer's satisfaction of
its commitments in Section 3.1. Supplier shall respond to Customer's requests
for proposals and quotation on Customer specifications in a reasonably prompt
manner, but no longer than the response time for other customers purchasing
similar quantities.
3.3 Business Reviews. In addition to the meetings provided for in Section 3.2,
the parties (business and technical personnel, as appropriate) shall meet at
least once per calendar year during the Term to conduct good faith discussions
and cooperate to determine whether and how to continue or further implement
Supplier laser diodes and packaged laser diodes into Customer's products,
subject to Section 3.1. At least thirty (30) calendar days prior to each such
annual business review, Customer shall provide Supplier with its specifications
for its external requirements of laser diodes and packaged laser diodes to the
extent previously provided specifications have changed or new specifications
have been created or are being created. In addition to the annual meetings,
technical personnel from the parties shall confer by telephone or video
conference at least once per calendar quarter ("QBR") during the Term for the
same purposes as the annual meetings. These discussions and cooperation are
intended to result in Customer's satisfaction of its commitments in Section 3.1.
Any other issues or opportunities relating to the parties' relationship shall
also be discussed at QBRs.
Customer agrees to provide external requirement specifications to JDSU's Active
Components Business Unit ("ACBU") under the NDA referenced in Section 14.8 and
consult ACBU to determine whether and how to implement JDSU products in IPG
systems. The goal shall be for both parties to be cooperative and work in good
faith to implement JDSU solutions in IPG systems. If requested, IPG shall meet
in person with JDSU to discuss implementing the JDSU solutions in IPG systems.
4.0 FORECASTS
During the first seven (7) calendar days of each month during the Term, Customer
shall provide Supplier a Rolling Forecast. A Rolling Forecast is an estimate of
projected Product requirements based on the information then available to
Customer and is not a commitment by Customer to purchase Product nor a
commitment of Supplier to manufacture, deliver or sell Product. Supplier shall
use Rolling Forecasts for internal material planning requirements.
PRODUCTS AND PURCHASE ORDERS
5.1 Products. Any laser diode or packaged laser diode ordered by, taken delivery
of or paid for by Customer from Supplier shall be a "Product" hereunder. The
parties shall seek to complete and update Exhibit A from time to time in respect
of each Products and Exhibit A shall contain or reference the Specifications for
each Product.
3
5.2 Issuance. Customer shall from time to time issue Purchase Orders to Supplier
to meet its commitments pursuant to Section 3.1.
5.3 Acknowledgement. As soon as reasonably possible (and in no event later than
three (3) business days) immediately following the receipt of each Purchase
Order, Supplier shall acknowledge receipt of such Purchase Order.
5.4 Acceptance and Delivery Dates. As soon as reasonably possible (and in no
event later than five (5) business days) immediately following the receipt of
each Purchase Order, Supplier shall accept any Purchase Order having delivery
dates consistent the applicable lead-time for such Product as set forth in
Exhibit A or, in the case of Exhibit A not being complete, as from time to time
provided by Supplier to Customer (collectively, "Lead-Time") and the delivery
dates set forth in such Purchase Order acceptance shall be deemed the Delivery
Dates for such Products.
To the extent that the delivery dates set forth in a Purchase Order are not
consistent with the applicable Lead-Time, Supplier shall accept such Purchase
Order and use commercially reasonable efforts to provide delivery dates for
Products ordered thereunder. To the extent that Supplier does not provide
delivery dates, Supplier shall use commercially reasonable efforts to provide
Customer with delivery dates as soon thereafter as reasonably possible. In
either case, the delivery dates provided by Supplier shall be deemed the
Delivery Dates for such Products, unless Customer rejects same by written notice
thereof on or before five (5) business days immediately following Supplier's
provision of such Delivery Dates, in which case the parties shall acting
reasonably and in good faith promptly negotiate mutually acceptable Delivery
Dates. Thereafter, and to the extent that Supplier and Customer do not agree
upon mutually acceptable Delivery Dates, either party may, by providing written
notice to the other party, forthwith terminate the applicable Purchase Order
with respect to Product for which there is no Delivery Date.
5.5 Changes. Except as otherwise provided for in this Agreement, Customer shall
not cancel or terminate, reschedule or delay a Purchase Order, or applicable
Delivery Dates thereunder, in whole or in part, without the prior written
consent of Supplier.
5.6 Cancellation and Cancellation Costs. Subject to compensating Supplier in
accordance with this Section, Customer may cancel a Purchase Order, in whole or
part and without cost or penalty, by providing notice to Supplier prior to the
applicable Delivery Date. In the event that Customer provides Supplier with a
notice of cancellation four (4) weeks or less prior to the applicable Delivery
Date, Customer may not cancel and Customer must take and pay for all Product
delivered on or before the Delivery Date or within two (2) weeks thereafter. In
the event that Customer provides Supplier with a notice of cancellation more
than four (4) weeks (but less than the then current Lead-Time for the applicable
Product) prior to the applicable Delivery Date, Customer shall pay or reimburse
Supplier for the reasonable out of pocket or direct costs incurred by Supplier
relating to such canceled Product at the time of cancellation, including without
limitation with respect to work in process and raw materials, to the extent that
Supplier cannot (using reasonable efforts) mitigate such costs within forty-five
(45) calendar days of such cancellation. This shall be Supplier's sole and
exclusive remedy and Customer's sole and exclusive
4
liability/obligation to Supplier for any cancellation hereunder by Customer.
5.7 Rescheduling. Provided Customer provides Supplier with at least fifteen (15)
calendar days notice in advance of a Delivery Date for a Product, Customer may
re-schedule such Delivery Date, at no cost or penalty and on a one time basis
only, up to a maximum of sixty (60) calendar days. Thereafter, Customer shall
take delivery of and pay for the Product in accordance with this Agreement.
6. PRICES FOR PRODUCTS
6.1 Prices for Products. Customer shall pay the applicable price for each
Product as set forth in U.S. dollars in Exhibit A (or if not set forth in
Exhibit A, as otherwise agreed by the parties) and as may be amended from time
to time by Supplier and Customer in accordance with this Agreement. All prices
are FCA (Incoterms 2000) Supplier's relevant facility, exclusive of Taxes,
transportation, insurance and brokerage fees.
6.2 Taxes. Except to the extent that applicable exemptions are available,
obtained and documented for Supplier, Customer shall pay all Taxes and shall
promptly reimburse Supplier for any Taxes which Supplier pays directly to any
taxing authority. Supplier's invoices to Customer are payable in full without
deduction for any Taxes, including without limitation withholding taxes.
7.0 INVOICING AND PAYMENT
Supplier may issue an invoice as soon as the time of Product shipment from
Supplier's relevant facility, and Customer shall pay such invoice within thirty
(30) calendar days thereof. To the extent that a proposed shipment to Customer
exceeds the credit limits set by Supplier for Customer in accordance with its
ordinary business practice, Supplier reserves the right to require alternative
payment terms including, without limitation, letter of credit or payment in
advance. If at any time Customer is delinquent in the payment of any invoice or
is otherwise in breach of this Agreement, Supplier may, at its discretion, stop
performance of services or withhold shipment (including partial shipments) of
any order and may, at its option, require Customer to pre-pay for further
performance or shipments. If Customer cannot comply with the alternative payment
terms imposed by Supplier under the two immediately preceding sentences after
using commercially reasonable business efforts to comply with the alternative
payment terms requested, Customer's purchases of laser diodes or packaged laser
diodes from another supplier shall be deemed to have been purchased from
Supplier solely for purposes of determining Customer's requirements with Section
3.1. Customer shall, however, prior to purchasing from such other supplier
provide JDSU with an opportunity to promptly match the payment terms of such
other supplier in order to maintain the benefits of Section 3.1. All payments
not received when due shall be subject to an additional interest charge at an
annual rate of 10% (.83% per month), or such lower interest rate as may be
otherwise permitted at law, of the unpaid amount until the date of payment,
without prejudice to any other rights, remedies or recourses which Supplier may
have under this Agreement, at law or in equity. The right of Supplier to any
payment provided for under this Agreement shall not be subject to any abatement,
reduction, set off, defense, counterclaim or recoupment of any amount due or
alleged to be due by reason of any past, present or future claims of Customer.
8.0 PRODUCT DELIVERY
5
8.1 Delivery Date. Except as provided for in this Agreement or otherwise
mutually agreed upon by the parties, in writing, Supplier shall use commercially
reasonable efforts to ship Products on the applicable Delivery Date.
8.2 Delay in Shipment. Supplier shall use commercially reasonable efforts to
notify Customer in a timely manner of any delay in Delivery Dates, stating the
reasons for the delay. Supplier shall use commercially reasonable efforts to
minimize delays in Delivery Dates and, upon occurrence of any such delay, shall
use commercially reasonable efforts to remedy same in a timely manner.
8.3 Shipping. All shipments are FCA (Incoterms 2000) Supplier's relevant
facility. Supplier may ship partial orders provided Supplier notifies Customer
prior to shipment. Customer shall specify the carrier or means of transportation
or routing on the Purchase Order. In the event that Customer fails to specify
shipping instructions on the Purchase Order, Supplier shall select the best
available carrier on a commercially reasonable basis.
8.4 Packaging. Supplier shall package and label all Product in accordance with
Supplier's then current packaging practices and suitable for shipment under
normal circumstances without damage, and in accordance with applicable law.
8.5 Title. Title to Product shall pass to Customer upon Supplier's tender of the
relevant Product to the shipping carrier at Supplier's facility.
9.0 WARRANTIES
9.1 Product Warranty. Notwithstanding any provision to the contrary other than
Sections 10.2 and 10.3, Supplier's sole and exclusive obligation to the Customer
for any Product made by Supplier and sold hereunder is to repair returned
Product or provide a replacement Product, at Supplier's sole option, for any
Product which has been returned to Supplier under the RMA procedure set forth in
Section 9.2 and which is defective in workmanship, material or not in compliance
with the applicable Specifications and has in fact failed under normal use on or
before twelve (12) months from the date of original shipment of the Product. In
the event that during the Term Supplier's standard terms and conditions of sale
are amended to provide for a warranty period in excess of twelve (12) months,
such longer warranty period shall apply to Products ordered, taken delivery of
and paid for by Customer after the effective date of such change. All Product,
which are experimental Products, prototypes or Products used in field trials,
are not warranted and are provided to Customer on an "as is" basis. All Product
or parts thereof supplied by third parties and sold by Supplier carry only the
original manufacturer's warranty to the extent applicable to Customer. Supplier
shall only accept for repair, replacement or credit under warranty Products made
by third parties, if expressly authorized to do so by the relevant third party.
Any Product repaired or replaced under warranty is only warranted for the period
of time remaining in the original warranty for the Product. The warranty
excludes and does not cover any Product or parts thereof which has been
accidentally damaged, disassembled, modified, misused, damaged in transit, used
in applications which exceed the Product specifications or ratings, neglected,
improperly installed or otherwise abused or is used in hazardous activities or
which fails as a result of Customer software or interfacing, improper site
preparation or maintenance or Customer's failure to use the Product in
accordance with the information and precautions contained in the applicable
Product manual provided by Supplier. Customer must claim
6
under the warranty in writing not later than thirty (30) calendar days after the
claimed defect is discovered. The Customer must make all claims under this
warranty and no claim shall be accepted from any third party.
9.2 Return Material Authorization. Except as otherwise provided in this
Agreement, Supplier's then current RMA procedure shall apply to Supplier's
repair or replacement of both in-warranty and out-of-warranty Products. Supplier
shall only accept returns of Product for which an approved RMA number has been
issued by Supplier and which are accompanied by an itemized statement of
defects. Such Products shall be returned prepaid and insured to Supplier at the
address stipulated by Supplier. All Products which have been returned to
Supplier with an RMA number, but to which the warranty in Section 9.1 does not
apply, shall be subject to Supplier's standard examination charge in effect at
the time, which shall be invoiced by Supplier and paid by Customer in accordance
with this Agreement. All Products returned to Supplier without an RMA number or
which are not accompanied by an itemized statement of defects, may be returned
to Customer, at Customer's expense, and Supplier shall have no obligation to
evaluate such Products.
9.3 DISCLAIMER OF WARRANTIES. SUBJECT TO SECTIONS 10.2 AND 10.3, THE WARRANTY
SET FORTH IN SECTION 9.1 AND THE OBLIGATIONS AND LIABILITIES OF SUPPLIER
THEREUNDER ARE ACCEPTED BY CUSTOMER TO BE EXCLUSIVE AND IN LIEU OF, AND CUSTOMER
HEREBY WAIVES, RELEASES AND RENOUNCES ALL OTHER REMEDIES, WARRANTIES,
GUARANTEES, OBLIGATIONS, REPRESENTATIONS OR LIABILITIES, EXPRESS OR IMPLIED, OF
SUPPLIER WITH RESPECT TO EACH PRODUCT OR PART THEREOF, PRODUCT DOCUMENTATION OR
SERVICE DELIVERED OR PROVIDED UNDER THIS AGREEMENT, WHETHER ARISING IN FACT, IN
LAW, IN CONTRACT (INCLUDING FUNDAMENTAL BREACH), IN TORT (INCLUDING NEGLIGENCE),
OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY, CONDITION OR
REPRESENTATION (A) OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
SATISFACTORY QUALITY, OR ARISING FROM COURSE OF PERFORMANCE, DEALING, USAGE OR
TRADE PRACTICE; (B) THAT THE PRODUCTS WILL BE FREE FROM INFRINGEMENT OR
VIOLATION OF ANY RIGHTS, INCLUDING INTELLECTUAL PROPERTY RIGHTS, OF THIRD
PARTIES; OR (C) OR THAT THE OPERATION OF ANY SOFTWARE DELIVERED HEREUNDER WILL
BE UNINTERRUPTED OR ERROR FREE. THIS SECTION AND THE LIMITATIONS SET FORTH
HEREIN, SHALL APPLY IRRESPECTIVE OF THE NATURE OF THE CAUSE OF ACTION, DEMAND OR
CLAIM, INCLUDING BUT NOT LIMITED TO, BREACH OF CONTRACT, NEGLIGENCE, TORT OR ANY
OTHER LEGAL THEORY, AND SHALL SURVIVE A FUNDAMENTAL BREACH OR BREACHES AND/OR
FAILURE OF THE ESSENTIAL PURPOSE OF THE AGREEMENT OR OF ANY REMEDY CONTAINED
HEREIN.
9.4 LIMITATION OF LIABILITY. EXCEPT FOR DAMAGES OR LIABILITY ARISING PURSUANT TO
SECTION 10.3 (PRODUCT LIABILITY) OR FROM A BREACH OF SECTION 14.7 (CONFIDENTIAL
INFORMATION), SUPPLIER SHALL NOT BE LIABLE TO CUSTOMER, OR ANY THIRD PARTY, FOR
ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, EXEMPLARY OR INDIRECT COSTS OR DAMAGES,
INCLUDING WITHOUT LIMITATION, LITIGATION COSTS, INSTALLATION AND REMOVAL COSTS,
LOSS OF DATA, PRODUCTION, SAVINGS OR PROFIT OR ANY OTHER COMMERCIAL OR ECONOMIC
LOSS OF ANY KIND (INCLUDING WITHOUT LIMITATION BUSINESS INTERRUPTION OR LOSS OF
BUSINESS) ARISING FROM ANY CAUSE WHATSOEVER, REGARDLESS OF THE FORM OF ACTION,
INCLUDING WITHOUT LIMITATION IN CONTRACT (INCLUDING FUNDAMENTAL BREACH), TORT
(INCLUDING NEGLIGENCE), STRICT LIABILITY OR OTHERWISE, EVEN IF ADVISED OF THE
POSSIBILITY OF SUCH COSTS OR DAMAGES OR SAME WERE REASONABLY FORESEEABLE OR EVEN
IF SUCH COSTS OR DAMAGES ARE ALLEGED TO ARISE FROM NEGLIGENT ACTS, OMISSIONS, OR
CONDUCT OF SUPPLIER OR ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS,
REPRESENTATIVES OR SUBCONTRACTORS. EXCEPT FOR DAMAGES OR LIABILITY ARISING
PURSUANT TO SECTION 10.3 (PRODUCT LIABILITY) OR FROM A BREACH OF SECTION 14.7
7
(CONFIDENTIAL INFORMATION), IN NO EVENT SHALL SUPPLIER'S TOTAL CUMULATIVE
LIABILITY (WHICH FOR GREATER CERTAINTY IS NOT ON A PER INCIDENT BASIS) TO
CUSTOMER IN CONTRACT (INCLUDING FUNDAMENTAL BREACH), TORT (INCLUDING NEGLIGENCE)
OR OTHERWISE EXCEED THE AMOUNT PAID BY SELLER FOR PRODUCTS FROM WHICH SUCH
LIABILTY AROSE DURING THE TWELVE (12) MONTH PERIOD IMMEDIATELY PRECEDING THE
DATE OF THE MOST RECENT CLAIM. FOR THE PURPOSES OF THIS SECTION, CUSTOMER
INCLUDES CUSTOMER'S DIRECTORS, OFFICERS, EMPLOYEEES, AGENTS, REPRESENTATIVES AND
SUBCONTRACTORS. THIS SECTION AND THE LIMITATIONS SET FORTH HEREIN, SHALL APPLY
IRRESPECTIVE OF THE NATURE OF THE CAUSE OF ACTION, DEMAND OR CLAIM, INCLUDING
BUT NOT LIMITED TO, BREACH OF CONTRACT, NEGLIGENCE, TORT OR ANY OTHER LEGAL
THEORY, AND SHALL SURVIVE A FUNDAMENTAL BREACH OR BREACHES AND/OR FAILURE OF THE
ESSENTIAL PURPOSE OF THE AGREEMENT OR OF ANY REMEDY CONTAINED HEREIN.
10.0 INTELLECTUAL PROPERTY AND INDEMNITIES
10.1 Intellectual Property Rights. Unless otherwise provided for in this
Agreement, nothing in this Agreement shall be construed as a sale, transfer or
assignment of the intellectual property rights, including without limitation any
patent, copyright, trade secrets, trademarks or tradenames, of Supplier
whatsoever, including without limitation with respect to the Products,
Specifications or related information and documentation. All right, title and
interest in and to any inventions, discoveries, improvements, methods, ideas,
computer and other apparatus programs and related documentation, other works of
authorship fixed in any tangible medium of expression, mask works, or other
forms of intellectual property, whether or not subject to statutory protection,
which are made, created, developed, written, conceived or first reduced to
practice by Supplier solely, jointly or on its behalf, in the course of, arising
out of, or as a result of work performed hereunder, and any related tooling,
set-up, fitting-up and preparation, shall belong to and be the sole and
exclusive property of Supplier.
10.2 Intellectual Property Indemnity. Supplier agrees to defend or settle, at
its sole option, and shall reimburse Customer for all costs and damages assessed
by final judgment against Customer, and any reasonable expenses (including legal
expenses), incurred at the written request of Supplier directly resulting from
any claim alleging that any Products or the use, operation, sale or offer for
sale thereof, infringe upon, misappropriate or violate any third party's
intellectual property rights (including without limitation patents or
copyrights) in member countries of the EU, countries in North America, Norway,
Switzerland, Japan, New Zealand, China and Australia. Customer shall have no
authority to settle any claim on behalf of Supplier.
In the event of such a claim of infringement of third party, Supplier shall have
the right to discontinue further deliveries of the Product and shall use
commercially reasonable efforts, at its expense, to: (a) obtain necessary rights
required to permit the sale or use of the Products by Customer and its
customers; or (b) modify or replace such Products to make them non-infringing
(and extend this indemnity thereto), provided that any such replacement or
modified Products comply with the applicable Specifications. For the protection
of Supplier and Customer, at the request and expense of Supplier, Customer
agrees to exercise, and to the extent permitted sub-license Supplier, its
have-made rights under any intellectual property license agreements it has with
third parties, to the extent it has the right to do so. In the event Supplier is
unable to achieve either of the options set forth above within a reasonable
period of time or, in the reasonable opinion of Supplier,
8
Supplier is unlikely to achieve such options within a reasonable period of time,
Supplier shall have the right to immediately terminate Supplier's obligations to
Customer under this Agreement with respect to the particular Product and
promptly refund to Customer the invoiced purchase price.
Supplier's obligations specified in this Section shall be conditional on and
subject to Customer notifying Supplier promptly in writing of the claim and
giving Supplier full authority, information and assistance for the defense and
settlement thereof. Supplier shall have no liability for, and Customer shall
indemnify Supplier against, any claim based upon: (a) the combination,
operation, or use of any Product supplied hereunder with equipment, devices, or
software not supplied by Supplier; (b) alteration or modification of any Product
supplied hereunder; or (c) Supplier's compliance with Customer's designs,
specifications or instructions or (d) infringement of an application patent.
Notwithstanding any other provisions hereof, Supplier shall not be liable for
any claim based on Customer's use of the Products as shipped after Supplier has
informed Customer of modifications or changes in the Products required to avoid
such claims and offered to implement those modifications or changes, if such
claim would have been avoided by implementation of Supplier's suggestions.
10.3 Personal Injury and Property Damage Indemnity. Supplier shall indemnify,
defend and hold harmless Customer and its employees, officers, directors and
agents, from and against any third party claims, demands, loss, damage or
expense relating to bodily injury or death of any person or damage to real
and/or tangible personal property to the extent directly caused by a Product and
directly resulting from a breach of the warranty contained in Section 9.1 or the
negligence or willful misconduct of Supplier. Supplier shall have no indemnity
obligation hereunder for claims resulting from Product misuse, neglect, failure
to follow normal Product safety procedures and recommended precautions in the
Product manual or negligence of the operator.
11.0 PRODUCT CHANGES AND DISCONTINUATION
11.1 Customer Changes. In the event Customer desires an engineering or
Specification change for any of the Products, Customer may submit such proposed
engineering or Specification change to Supplier. Supplier and Customer acting
reasonably and in good faith shall negotiate whether such change shall be made
and if so, shall work with each other on the implementation of such change.
Customer acknowledges that such changes may result in additional non-recurring
engineering charges for Customer and may alter the price of the Products, in
which case, this Agreement shall be amended, in writing, to reflect same.
11.2 Supplier Permitted Changes. Supplier may at any time make any changes,
improvements, additions or enhancements to the Products that do not materially
affect the form, fit or function of a Product ("Permitted Change") without
notice to, or the consent of, Customer. Permitted changes shall be made at no
additional charge to Customer.
11.3 Supplier Material Changes. In the event that Supplier at any time makes any
changes, improvements, additions or enhancements to the Products that materially
affect the form, fit or function of a Product ("Material Change"), Supplier
shall provide ninety (90) calendar days prior written notice to Customer of such
Material Change, outlining the nature of the Material Change and any applicable
non-recurring costs or impact on Delivery Dates or
9
Product pricing. Customer shall approve or reject a Material Change within
fifteen (15) calendar days from receipt of Supplier's notice, failing which the
Material Change shall be deemed accepted by Customer. In the event of acceptance
of any such Material Change, this Agreement shall be amended, in writing, to
reflect any applicable non-recurring engineering costs or impact on Delivery
Dates or Product pricing.
11.4 Rejection of Material Changes. In the event Customer rejects any Material
Change, Supplier shall continue to supply unchanged Product in accordance with
Section 11.7, in which case the date of Customer's rejection of such Material
Change shall be deemed the date on which (i) a Supplier notice of
discontinuation for the relevant Product shall be deemed to be provided to
Customer and (ii) the Discontinuance Period (as defined in Section 11.7 below)
shall be deemed to commence.
11.5 Required Changes. Notwithstanding any other term or condition in this
Section 11.0, in the event that any changes, improvements, additions or
enhancements of a Product, including Material Changes, are required by any law
or governmental regulation or requirement or interpretation thereof by any
governmental agency having jurisdiction or is required, in the discretion of
Supplier acting reasonably and in good faith, to address Product safety,
liability or performance ("Required Change"), Supplier shall provide sixty (60)
calendar days prior written notice (or such shorter period of notice as may be
reasonable in the circumstances) to Customer of such Required Change, outlining
the nature of the Required Change and any applicable non-recurring costs or
impact on Delivery Dates or Product pricing. Customer shall approve or reject a
Required Change within five (5) calendar days from receipt of Supplier's notice,
failing which the Required Change shall be deemed accepted by Customer. In the
event of acceptance of any such Required Change, this Agreement shall be
amended, in writing, to reflect any applicable non-recurring engineering costs
or impact on Delivery Dates or Product pricing. In no event shall Supplier be
required to manufacture, supply or sell a Product to which a Required Change is
applicable.
11.6 Rejection of Required Changes. In the event Customer rejects any Required
Change referred to in Section 11.5, this Agreement shall be terminated with
respect to the applicable Product and amended, in writing, to delete such
Product from Exhibit A. Thereafter, Supplier shall have no further obligation to
supply or sell such Product to Customer and Customer shall have no further
obligation to take delivery of or purchase such Product.
11.7 Product Discontinuation. In the event Supplier intends to discontinue the
manufacture and sale of any Product, Supplier shall give at least six (6) months
prior written notice to Customer. At any time during such six (6) month period
(the "Discontinuance Period"), Customer may place a last time Purchase Order for
Product, provided the requested delivery dates are in compliance with the
applicable Product Lead-Time and the last requested delivery date for such
Product is not more than six (6) months after the end of such Discontinuance
Period.
12.0 TERMINATION
12.1 Rights of Termination. Upon the occurrence of any of the following events,
a party may forthwith terminate this Agreement:
(a) The other party materially breaches or defaults any of its material
obligations, duties or responsibilities hereunder
10
(including, in the case of Customer, a failure to pay any amount owing
when due), which breach or default has not been remedied within
forty-five (45) calendar days (or fifteen (15) calendar days, in the
case of Customer's failure to pay) after written notice is given by
the party not in default, specifying the breach or default; or
(b) The other party shall (i) apply for or consent to the appointment of a
receiver, trustee, liquidator or custodian of itself or of all or a
substantial part of its property; (ii) admit in writing its inability,
to pay its debts generally as they mature; (iii) make a general
assignment for the benefit of its or any of its creditors; (iv) be
dissolved or liquidated in full or in part; or (iv) commence a
voluntary case or other proceeding seeking liquidation, reorganization
or other relief with respect to itself or its debts pursuant to any
bankruptcy, insolvency or other similar law now or hereafter in effect
or consent to any such relief or to the appointment of or taking
possession of its property by any official in an involuntary case or
other proceeding commenced against it; or
(c) Proceedings for the appointment of a receiver, trustee, liquidator or
custodian of the other party or of all or a substantial part of the
property thereof, or an involuntary case or other proceedings seeking
liquidation, reorganization or other relief with respect to the other
party or the debts thereof pursuant to any bankruptcy, insolvency or
other similar law now or hereafter in effect shall be commenced and an
order for relief entered or such proceeding shall not be dismissed or
discharged within ninety days of commencement.
12.2 Termination Costs. In the event of termination of this Agreement by
Supplier pursuant to Section 12.1, Customer shall compensate Supplier for any
losses or damage resulting from such termination, including without limitation,
the price of Products shipped, manufactured, or held separately for Customer and
any incurred costs (including without limitation with respect of work in process
and raw materials), and a reasonable allocation of general and administrative
expenses relating to the Products. Notwithstanding any other term or condition
of this Agreement, the foregoing amounts shall be due and payable by Customer
immediately upon receipt of the applicable Supplier invoice.
13.0 DELAYS IN PERFORMANCE
13.1 Excusable Delay. In the event of a delay on the part of Supplier in the
performance of any of its obligations or responsibilities under the terms and
conditions of this Agreement due directly or indirectly to unforeseen
circumstances or a cause which is beyond the reasonable control or without the
fault or negligence of Supplier (an "Excusable Delay"), Supplier shall not be
liable for, nor be deemed to be in default under or breach of this Agreement on
account of such delay and the time fixed or required for the performance of any
such obligation or responsibility shall be extended for a period equal to the
period during which any such delay persists. Excusable Delay shall be deemed to
include, without limitation, delays occasioned by the following causes:
(a) force majeure or acts of God;
11
(b) war, warlike operations, act of the enemy, armed aggression, civil
commotion, insurrection, riot or embargo;
(c) fire, explosion, earthquake, lightning, flood, draught, windstorm or
other action of the elements or other catastrophic or serious
accidents;
(d) epidemic or quarantine restrictions;
(e) any legislation, act, order, directive or regulation of any
governmental or other duly constituted authority;
(f) strikes, lock-out, walk-out, and/or other labour troubles causing
cessation, slow-down or interruption of work;
(g) a Required Change; or
(h) any default in or breach of this Agreement by Customer or any delay of
Customer in the performance of its obligations or responsibilities
under the terms and conditions of this Agreement.
13.2 Indefinite Delay and Termination. If Supplier reasonably concludes, based
on its reasonable appraisal of the facts and normal scheduling procedures, that
due to an Excusable Delay delivery of any Product will be delayed for more than
six (6) months after the applicable Delivery Date or any revised date agreed to
by the parties, in writing, Supplier shall promptly notify Customer, in writing,
and either party may then terminate this Agreement, including any Purchase
Orders, with respect to the affected Product by giving written notice to the
other party within thirty (30) calendar days after receipt by Customer of
Supplier's notice.
If, due to an Excusable Delay, delivery of any Product is delayed for more than
six (6) months after the applicable Delivery Date, either party may terminate
this Agreement, including any Purchase Orders, with respect to the affected
Product by giving written notice to the other within thirty (30) calendar days
after the expiration of such six (6) month period.
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14.0 GENERAL
14.1 Product Specific Terms and Conditions. The Products governed by this
Agreement may be supplied by various Supplier companies and divisions located in
several different jurisdictions. From time to time the supply of an individual
Product may require terms and conditions specific to such Product which terms
and conditions shall be set forth in Exhibit A for the relevant Product.
14.2 Audits. To the extent Customer's records may be relevant in determining
whether Customer is complying with its commitment under Sections 3.1, Supplier
shall have the right during the Term, through independent external certified
professional accountants acceptable to both Supplier and Customer, to examine
and inspect such records as may contain information bearing solely on whether
Customer is in compliance therewith, subject to the other terms of this Section
14.2. Such an audit shall take place under a reasonable confidentiality
agreement, on reasonable notice to Customer and during normal Customer business
hours. The auditor shall disclose to Supplier only whether it found a
discrepancy, and, if so, the amount/extent of that discrepancy. The auditor
shall deliver a copy of each report to Customer within ten (10) days of
disclosure to Supplier, and Customer shall have an opportunity to rebut any
discrepancy in any audit report. Supplier may exercise its audit right not more
than once per year. Solely with respect to compliance of Customer during the
fourth and fifth years of the Term, the audit rights shall terminate following
the date that Customer becomes a publicly traded company in the U.S.A. or is
acquired by a publicly traded company in the U.S.A., provided that Customer, in
lieu of the audit, shall deliver to Supplier a compliance statement, signed by a
then current officer of Customer, certifying compliance by Customer with its
obligations under Section 3.1 hereof. All audits under this Section 14.2 shall
be completed prior to the first anniversary of the expiration date of the Term.
14.3 Export Restrictions. Customer shall not transmit, export or re-export,
directly or indirectly, separately or as part of any system, the Products or any
technical data (including processes and services) received from Supplier,
without first obtaining any license required by the applicable government,
including without limitation, the United States Government and/or any other
applicable competent authority. Customer also certifies that none of the
products or technical data supplied by Supplier under this Agreement shall be
sold or otherwise transferred to, or made available for use by or for, any
entity that is engaged in the design, development, production or use of nuclear,
biological or chemical weapons or missile technology. Customer shall indemnify
and hold Supplier harmless for any violation or alleged violation by Customer of
the foregoing.
14.4 Notices. Any notice, demand or other communication required or permitted to
be given pursuant to this Agreement by either party shall be in writing and
shall be either:
(a) Personally delivered to the other party; or
(b) Sent by prepaid overnight courier; or
(c) Sent by facsimile transmission or similar method of recorded
communication, charges prepaid, confirmed by prepaid overnight
courier.
Any notice, demand or other communication given in accordance with subparagraphs
(a), (b) and (c) above shall be delivered or sent to the intended recipient at
its address below:
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If to JDS Uniphase Corporation:
To: Legal Department
JDS Uniphase Corporation
0000 Xxxxxxxxxx Xxxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
And To: Associate General Counsel &
Director Business Development
JDS Uniphase Corporation
0000 Xxxxxxxx Xxxx
Xxxxxx (Xxxxxx), Xxxxxxx
Xxxxxx X0X 0X0
Fax: (000) 000-0000
If to Customer:
To: Chief Executive Officer
IPG Photonics Corporation
00 Xxx Xxxxxxx Xxxx
Xxxxxx, XX 00000
Fax: 000-000-0000
And To: General Counsel
IPG Photonics Corporation
00 Xxx Xxxxxxx Xxxx
Xxxxxx, XX 00000
Fax: 000-000-0000
Any party may from time to time change its address by written notice to the
other party given in accordance with the provisions hereof.
Any notice, demand or other communication delivered in accordance with paragraph
(a) or (b) above shall be deemed to have been received on the day of its
delivery and if sent in accordance with paragraph (c) above, it shall be deemed
to have been received on the first business day following the date of its
transmission by facsimile or similar method of recorded communication
(confirmation copy by registered or certified mail).
14.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to the
provisions thereof relating to conflicts of laws or without regard to the United
Nations Convention on Contracts for the International Sale of Goods. Supplier
and Customer hereby irrevocably and unconditionally submit to the courts of the
State of New York and all courts competent to hear appeal therefrom.
14.6 Dispute Resolution. In the event of any dispute, claim, question, or
disagreement arising from or relating to this Agreement or the breach thereof,
the parties hereto shall use reasonable efforts to settle the dispute, claim,
question, or disagreement. To this effect, the parties shall involve executives
not involved with administration of this Agreement and internal counsel and
shall consult and negotiate with each other in good faith and, recognizing their
mutual interests, attempt to reach a just and equitable solution satisfactory to
both parties.
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14.7 Severability. If any term or provision of this Agreement is found by a
court of competent jurisdiction to be invalid, illegal or otherwise
unenforceable, the same shall not affect the other terms or provisions hereof or
the whole of this Agreement, but such term or provision shall be deemed modified
to the extent necessary in the court's opinion to render such term or provision
enforceable, and the rights and obligations of the parties shall be construed
and enforced accordingly, preserving to the fullest permissible extent the
intent and agreements of the parties herein set forth.
14.8 Confidential Information. The parties hereby agree that the terms and
conditions of the Non-Disclosure Agreement between the parties, executed on June
17, 2003, continue to apply and extend to all Confidential Information (as that
term is defined in the Non-Disclosure Agreement) exchanged between the parties
in connection with this Agreement. This Section, and the terms and conditions of
the Non-Disclosure Agreement, shall survive the expiration or earlier
termination of this Agreement.
14.9 Independent Contractors. The relationship of the parties hereto is that of
independent contractors. Under no circumstances shall any employees of one party
be deemed to be the employees of the other for any purpose. Each party shall pay
all wages, salaries, and other amounts due its respective employees relative to
this Agreement and shall be responsible for all obligations respecting them
relating to income tax withholdings, unemployment insurance premiums, workers'
compensation, health care and pension plan contributions and other similar
responsibilities. Neither party has the right nor authority to assume or to
create any obligation or responsibility on behalf of the other party, except as
may from time to time be provided by written instrument signed by both parties.
Nothing contained herein shall be construed as creating an agency or joint
venture, consortium or partnership between the parties.
14.10 Survival. The parties agree that the respective rights, obligations and
duties under Section 1.0 (Interpretation), Section 6.1 and 6.2 (Prices for
Products and Taxes), Section 7.0 (Invoicing and Payment), Section 9.0
(Warranties), Section 10.0 (Intellectual Property and Indemnities), Section 12.2
(Termination Costs) and Sections 14.2, 14.3, 14.4, 14.5, 14.6, 14.7, 14.8, 14.9,
14.10, 14.12 and 14.14 (General) and any outstanding payment obligations of
Customer, shall survive expiration or earlier termination of this Agreement.
14.11 Assignment. This Agreement shall be binding on and inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
Neither party may assign this Agreement or any of their rights or obligations
hereunder to a third party without the express prior written consent of the
other party, which consent shall not be unreasonably withheld or delayed
provided however that Supplier may delegate performance to any Supplier selected
independent contractor provided that prior to any such assignment, such
independent contractor shall become qualified by Customer using the same
criteria as Customer used in qualifying Supplier for the same Product being
assigned (it being understood that in either case Supplier shall not be relieved
of any of its duties, obligations or responsibilities hereunder by use of such
affiliates or independent contractors); and provided further that, without
notice to or consent of Customer, Supplier may at any time assign any payment to
be made to Supplier hereunder. Any purported assignment contrary to this
agreement shall be null and void.
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14.12 Entire Agreement. This Agreement and its Exhibits express the entire
understanding and agreement for both Supplier and Customer with respect to the
subject matter covered by this Agreement and supersedes any and all previous
agreements, except any existing non-disclosure agreement between both parties,
with reference to the subject matter contained in this Agreement. All terms and
conditions on any Purchase Orders and all provisions on Supplier's documents
delivered in response to a Purchase Order shall be deemed deleted and superceded
by the terms and conditions of this Agreement, except for information provided
for administrative purposes only such as Purchase Order number, Product
identifier, quantity, pricing, shipping dates, shipping instructions and
delivery location.
14.13 Amendment and Waiver. No amendment or waiver of this Agreement shall be
binding unless executed in writing by both parties. No waiver of any of the
provisions of this Agreement shall constitute a waiver of any other provision
(whether or not similar) nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.
14.14 Counterparts. This Agreement may be executed in any number of
counterparts, including by facsimile, with the same effect as if Supplier and
Customer had each signed the same document. All counterparts shall be construed
together and shall constitute one and the same original Agreement.
IN WITNESS HEREOF, Supplier and Customer have executed this Agreement in
duplicate originals by their duly authorized officials.
JDS UNIPHASE CORPORATION IPG PHOTONICS CORPORATION
By: /s/ Xxxxxxxxxxx X. Xxxxxx By: /s/ Xxxxxxxx X. Xxxxxxxxx
--------------------------------- ------------------------------------
Name: Xxxxxxxxxxx X. Xxxxxx Name: Xxxxxxxx X. Xxxxxxxxx
Title: Vice President Title: CEO and Chairman of the Board
Date: June 24, 2003 Date: June 24, 2003
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EXHIBIT A
PRODUCT SCHEDULE
2. Product Name (Product Class)/ Laser Diodes and Packaged Laser Diodes
Description
2. Customer Part No. [Insert Customer Part No.]
3. Supplier Part No. [Insert Supplier Part No.]
5. Product Specification [Insert Specification Reference]
5. Lead-Time [Insert Lead-Time]
6. Unit Price ($U.S.) [Insert Unit Price or Step Pricing, if
applicable]
7. Unique Provisions [Insert Unique Provisions]
17
