EXHIBIT 10.19
[FIBERCORE INC. GRAPHIC]
OPTICAL FIBER SUPPLY AGREEMENT
This Optical Fiber Supply Agreement (the "Agreement") dated as of April
25, 2001 is by and between Optical Cable Corporation, a corporation ("Buyer ")
and FIBERCORE, INC., a Nevada corporation, and its subsidiaries and affiliates
(collectively "FiberCore").
BACKGROUND STATEMENT
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The parties desire to establish the terms, conditions and procedures
pursuant to which FiberCore shall agree to supply to Buyer, and Buyer shall
agree to purchase from FiberCore single and/or multimode optical fiber during
the Term (as defined in SECTION 2 below).
AGREEMENT
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Now, therefore, the parties hereto agree for themselves, their successors
and permitted assignees as follows:
1. PURCHASE AND SUPPLY COMMITMENT; PRODUCTS.
1.1 During the term of this Agreement and subject to the terms hereof,
FiberCore agrees to supply OCC's needs for single and multimode optical fiber,
as described on Appendix A (the "Products") in accordance with the quantities
and delivery schedule set forth on Appendix B. The terms and conditions of this
Agreement shall apply to each sale by FiberCore to Buyer of the Product during
the term hereof. The parties may add additional products to Appendix A by mutual
written agreement, and such additional products shall be considered "Products"
hereunder and subject to the terms and conditions hereof. Buyer agrees that
Products purchased under this Agreement are for its own manufacturing use.
1.2 The current specifications for the Products are set forth on Appendix
B (the "Quantities and Specifications"). The Specifications may be amended from
time to time upon the agreement of both parties to address new functional and
market requirements. However, any substantial modifications to the
Specifications, as agreed to in writing, may result in a per kilometer price
increase or decrease (as agreed by the parties in writing) for the year of such
adjustment and for any subsequent period hereunder. For maximum responsiveness
to competitive fiber product offerings, FiberCore reserves the right, in its
sole discretion, to make any changes it deems desirable in the design or
manufacture of the Products; provided that that Products, as modified, meet the
then current Specifications and the requirements that pertain to the ability of
Buyer to manufacture cable.
1.3 FiberCore shall deliver the quantity of the Product ordered on the
delivery schedule set forth on Appendix B and in conformity to the
Specifications.
2. TERM. The initial term of this Agreement is four (4) years, commencing
on January 1, 2001. Upon expiration of the initial term, this Agreement shall
automatically renew for consecutive three (3) year renewal terms (or any other
mutually acceptable renewal term), unless either party gives notice of
non-renewal and a request to renegotiate to the other party pursuant to SECTION
20 at least six (6) months prior to the expiration of the then current term or
any renewal term.
3. DELIVERY SCHEDULE. Appendix B sets forth the monthly shipping schedule
for the Products. Buyer may request reasonable changes in the shipping schedule.
All requests must be received sixty (60) days prior to the requested change(s)
and approved by FiberCore in writing, which approval shall not be unreasonably
delayed or withheld.
4. PRICING.
4.1 Effective as of the date hereof, prices for the Products shall be
determined as set forth on Appendix D attached hereto and incorporated herein.
Prices for multimode optical fiber shall be effective as of January 1, 2001.
Prices for single-mode optical fiber shall be effective as of January 1, 2001.
Appendix C, together with SECTION 4.4 hereof, establishes maximum prices for the
Products.
4.2 In each calendar year subsequent to 2001 during which this Agreement
is in effect, the parties shall meet in September of the preceding year to
review and discuss pricing, with the objective of ensuring that the price being
charged to Buyer for the Products is competitive and no more than the average
price Buyer would pay during such subsequent year to "Primary Producers" for
similar quantities of the Products (the "Market Price"). For purposes of this
Agreement, the term "Primary Producers" shall include Alcatel, Lucent, Corning,
and Draka.
4.3 After Product pricing has been fixed for a calendar year, Appendix C
shall be amended accordingly and the agreed Product pricing for a calendar year
shall remain fixed for the duration of that calendar year, subject to the right
of Buyer or FiberCore to request a semi-annual pricing review with the objective
of ensuring that the price being charged to Buyer for the Products is
competitive and reflects market conditions. FiberCore's raw material costs shall
also be considered at each semi-annual review. Adjustments to the Market Price
determined in 4.2 above, if any, shall be subject to a maximum increase or
decrease of 3% per semi-annual period.
4.4 The prices to be paid by Buyer for Products hereunder shall not at any
time be greater than the price paid by any of FiberCore's other customers for
the same type and similar quantity of Products. Buyer may request that FiberCore
certify that it is not selling Products of the same type and similar quantity to
any of FiberCore's other customers at a price that is lower than that paid by
Buyer.
4.5 Buyer may request FiberCore to consider project-specific pricing for
any Buyer project that reasonably requires a different pricing arrangement for
the Products. FiberCore shall consider any such request in good faith and shall
work cooperatively with Buyer in seeking to negotiate a mutually acceptable
pricing arrangement for any such project. Buyer will make a good faith effort to
provide reasonable evidence of the need for alternative pricing.
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5. SHIPMENT TERMS. Shipment terms are delivered duties paid ("DDP") from
shipping origin of either Brazil, Jena, or US to destination Buyer/location.
These terms constitute a fully landed cost door to door with all expenses paid
by FiberCore. Buyer may, at its option (a) physically pick up Product at
FiberCore's factory loading dock upon reasonable notice, (b) arrange for pick up
via common carrier at FiberCore's factory loading dock upon reasonable notice,
or (c) request that FiberCore act as Buyer's agent to arrange delivery of
Product. If Buyer requests that FiberCore act as Buyer's agent, then FiberCore
shall have the right to designate the method of transportation, carrier and
route of shipment. Title and risk of loss shall pass to Buyer at the DDP point
set forth above.
6. PAYMENT TERMS; "TAKE OR PAY". Buyer agrees to purchase, and FiberCore
agrees to sell the quantities set forth on Appendix B per the delivery schedules
set forth on Appendix B. FiberCore will issue invoices in accordance with the
delivery schedule set forth on Appendix B (or such other mutually agreed
delivery schedule), and such invoices will be due within thirty (30) days from
Buyer's receipt of such invoice. Payment shall be made by any payment method
approved by both parties to an account designated by FiberCore. If Buyer fails
to purchase the specified quantities on an annual basis, then Buyer agrees to
pay FiberCore an amount equal to the "remaining dollar value" of this Agreement,
multiplied by one hundred percent (100%) for 2002, seventy-five percent (75%)
for 2003 and sixty (60%) for 2004. For purposes of this Agreement, the term
"remaining dollar value" shall equal the quantity of Products set forth on
Appendix B not purchased under this Agreement, multiplied by the last price of
Products shipped by FiberCore. EXAMPLE: if Buyer chooses to cancel the last year
of this agreement, than Buyer would be responsible for 60% only of the quantity
listed in Appendix B multiplied by the last price of Product shipped.
6.1 MULTIMODE FIBER: quantities listed in Appendix B are subject to the
terms of section 6 (Payment Terms: "Take or Pay").
6.2 SINGLEMODE FIBER (STANDARD): quantities listed in Appendix B under
"Singlemode Fiber Standard" are subject to the terms of section 6
(Payment Terms: "Take or Pay").
6.3 SINGLEMODE FIBER FOR ASIA: in the event that this initiative does
not occur, than the quantities listed in Appendix B under
"Singlemode Fiber for Asia" will not subject to the terms of section
6 (Payment Terms: "Take or Pay").
7. ORDER TERMS. Any terms of any forecast, purchase order, order
confirmation, invoice or acknowledgment, if any, of either party that are in
addition to the terms of this Agreement shall be effective only if accepted by
the other party in writing.
8. TECHNICAL SUPPORT. During the term hereof, FiberCore shall furnish such
technical support services to Buyer in connection with the Products sold
hereunder, as well as fiber optical cable incorporating the Products and/or any
other products purchased from FiberCore, as Buyer reasonably requests including,
without limitation: (a) technical and quality reviews at least quarterly and (b)
on-site support for Buyer's engineers as requested by Buyer on a reasonable
frequency. Such services shall be provided at FiberCore's expense, unless
otherwise specifically agreed to in writing by the parties.
9. SALES SUPPORT. During the term hereof, FiberCore shall cause its sales
personnel to participate with Buyer on sales calls relating to optical fiber
cable produced using the Products, as reasonably requested by Buyer. FiberCore
shall pay for expenses of it's sales personnel.
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10. WARRANTY.
10.1 Warranty and Warranty Period. FiberCore warrants that the Products
shall comply with the Specifications and shall otherwise be free from defects in
design, materials and workmanship for a period of twelve (12) months as of the
date of delivery under standard conditions of storage at ambient temperature
between 10(degree)C and 30(degree)C and at a rate of humidity between thirty
percent (30%) and eighty percent (80%). Except as otherwise stated in this
Section 10, FiberCore makes no warranties, express or implied, and specifically
disclaims any warranty of merchantability or fitness for any particular purpose
as well as other implied warranties in law or equity.
10.2 Credit or Replacement. If any Product is found to breach any of the
warranties set forth above, FiberCore shall, at its option, either give Buyer
appropriate credit for such defective Product or replace the defective or
non-conforming Product with new Product that conforms to the Specifications and
is free from defects in design, materials and workmanship, at no additional cost
to Buyer , delivered to the same destination as that of the original shipment.
All such replacement Products shall be warranted for the balance of the warranty
period. FiberCore's obligation to credit or replace is conditioned upon (i) the
receipt of proper and timely notice, as specified in Section 10.3 below, (ii) an
examination that reveals the claimed defect actually exists, and (iii) the
Product shall not have had any stage of processing performed on it for cabling.
Samples must be provided for evaluation prior to any Product being returned for
credit and/or replacement. The foregoing warranty does not apply to and
FiberCore makes no warranties with respect to, Product that has been subjected
to misuse, neglect, accident or abuse, or has been stored or maintained
improperly or in material violation of FiberCore's written instructions.
Replaced Product shall become FiberCore's property, and in no event shall
FiberCore be responsible for deinstallation or reinstallation of defective
Product or for the expenses thereof.
10.3 Notice. In order for the foregoing warranty to be effective, Buyer
must notify FiberCore, in writing, within a reasonable time (but in any event
not later than thirty (30) days from the end of the warranty period) of any
defects referred to in SECTION 11.1 hereof. Buyer's sole and exclusive remedy
shall be FiberCore's obligation to issue a credit or replace defective for
non-conforming Product in accordance with the provisions of this warranty which
credit or replacement shall be in full satisfaction of FiberCore's liabilities
arising from the defect..
11. INDEMNITY. FiberCore agrees that it shall, at its own expense and to
the extent hereafter stated, indemnify, defend and hold Buyer harmless in any
dispute, suit or proceeding (including any claim for temporary or permanent
injunctive relief) insofar as the same is based on a claim that any Product
furnished hereunder infringes any United States or foreign patent of any person
throughout the world. FiberCore's obligations are conditioned upon Buyer's
delivery to FiberCore of prompt notice of any such dispute, suit or proceeding
and permission to allow FiberCore through its counsel to defend the same. Buyer
shall cooperate with FiberCore in such defense or settlement negotiations and
shall provide FiberCore with any reasonably requested information and
assistance, at FiberCore's sole expense. Unless FiberCore does not defend, (for
reasons other than described below under which FiberCore has no obligation to
defend) any such suit or proceeding after being given reasonable notice of and
opportunity to defend the same, Buyer shall not make any admission of
infringement or settle the suit or proceeding, without FiberCore's consent.
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If such Product is held in such suit to constitute infringement and the
use of such Product is enjoined, FiberCore shall, at its own expense and option:
(a) secure for Buyer the royalty-free right to continue to use the Product; (b)
replace the same with non-infringing Product that complies with the
Specifications; (c) modify such Product so that it becomes non-infringing, so
long as the Product continues to comply with the Specifications; or (d) remove
said Product and refund the purchase price.
Notwithstanding the foregoing, FiberCore shall have no obligation to
defend or settle any claim for any infringement or violation of any patent or
other intellectual property right: (i) arising from compliance with Buyer's
Specifications; or (ii) relating to use of any Product furnished hereunder in
combination with any other item(s), whether or not furnished by FiberCore, even
is such use if the Product's necessary or inherent use for which the Product is
purchased.
The foregoing states the sole and exclusive remedy and obligation of the
parties hereto for infringement or other violation of any intellectual property
right and is in lieu of all warranties, express, implied or statutory, in regard
thereto
12. LIMITATION OF LIABILITY.
12.1 Exclusion of Consequential Damages. Notwithstanding any provision of
this Agreement to the contrary, FiberCore shall in no event be liable to Buyer
or to any person or company who shall purchase from Buyer or use any goods or
services supplied by FiberCore for any indirect, incidental, special, punitive
or consequential loss, damage or expense which shall include any loss of profit
or revenue, any loss of goodwill, any loss of business opportunity, of any
nature or kind, however arising out of this Agreement or any obligation
resulting from the use or performance of the Products, whether in contract, in
tort or otherwise, even if such party is deemed to be aware of the possibility
of such damages. FiberCore's entire liability for any claim or loss, damage or
expense from any cause whatsoever shall in no event exceed the performance,
replacement cost or purchase price whichever is lower, of the service or item
which directly gives rise to such claim. No action against FiberCore with
respect to any Product may be commenced more than one (1) year after such
Product was delivered to Buyer. This clause shall survive failure of any
exclusive remedy.
12.2 Limitation Valid in All Events. Each party acknowledges that rights
may be conferred upon it or obligations imposed upon it by the laws governing
this Agreement that cannot be excluded by agreement between the parties. To the
extent that such laws are applicable, the terms of this Agreement shall be read
subject to such laws and the parties hereby acknowledge that each party
expressly limits its liability under any such laws to the maximum extent
permitted.
12.3 Maximum Liability. FiberCore's maximum total liability under this
Agreement whether based on breach of contract or in tort (including negligence)
under any warranty or otherwise shall in no event exceed $ 1,000,000.
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13. CONFIDENTIAL INFORMATION. The parties agree not to disclose to any
third party and not to use, except for the purpose of this Agreement, the terms
of this Agreement or any technical or commercial information of a confidential
nature made available to either of the parties by the other party or which
either party may have learned in the course of this Agreement, unless compelled
to disclose such information by judicial or administrative process or by other
requirements of law. All such information shall be returned to the disclosing
party at its request upon termination of this Agreement. The above provision
shall survive any termination of this Agreement and shall continue with respect
to any specific confidential information so long as that information remains
confidential and not available to the public (other than by unauthorized
disclosure by the party to whom such confidential information was disclosed).
14. TERMINATION.
14.1 Either party shall have the right to terminate this Agreement
effective upon written notice to the other party in any of the following events:
(a) If the other party fails to perform any of its material
obligations under this Agreement, which failure is not cured within thirty
(30) days following written notice of such failure from the terminating
party, describing in reasonable detail the circumstances giving rise to
such failure. Such failure would include Buyer's failure to pay any amount
due to FiberCore pursuant to the terms hereof; and
(b) If the other party suspends its business operations or becomes
bankrupt or insolvent, or if a receiver or similar official is appointed
for all or substantially all of its assets.
15. FORCE MAJEURE. Neither party shall be responsible or liable for any
delay or failure to deliver or purchase any and all quantities agreed, if such
delay or failure is caused by an event beyond the reasonable control of the
party, including but not limited to, act of God, fire, flood, war, insurrection,
riot or action of any government agency, inability to secure raw materials for
the manufacture of Product or transportation facilities, strike, or delays in
delivery and installation/commissioning of new equipment required for the
manufacture of Product, provided that this Section 16 shall not relieve the
obligation of either party to make payments due hereunder. In the event of the
occurrence of any such event, FiberCore shall apportion available supplies of
the Products to Buyer, as determined in its sole discretion.
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16. NOTICE. Unless specifically provided otherwise in this Agreement, all
notices required or permitted to be given under this Agreement shall be in
writing and shall be sent (i) by certified or registered mail, return receipt
requested, (ii) by hand delivery, or (iii) by nationally recognized overnight
delivery service, and in each case shall be addressed as follows:
If sent to FiberCore:
000 Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attn: Xxx Xxxxxxx, Vice President Sales and Marketing
Facsimile: 000-000-0000
If sent to Buyer :
With a Copy to:
or at such other addresses as Buyer and FiberCore may designate in writing.
Notice shall be deemed given on the day the return receipt is signed or
presented for signature, on the date delivered if delivered by hand delivery, or
upon confirmation of receipt.
17. SEVERABILITY. In the event that any court or governmental body having
jurisdiction over the parties to this Agreement determines any provision of this
Agreement to be invalid, illegal or unenforceable, the remaining provisions of
this Agreement shall not be affected and the rights and obligations of the
parties shall be construed as if the Agreement did not contain the provision
held to be invalid, illegal or unenforceable, unless such invalid, illegal or
unenforceable provision was a material term of this Agreement in which case the
parties will attempt to negotiate a valid replacement provision failing which
the party who is materially adversely affected may terminate this Agreement.
18. ASSIGNMENT. This Agreement may not be assigned by either party hereto
without the prior written consent of the other party; provided that either party
shall have the right to assign this Agreement to any present or affiliated
subsidiary or affiliated entity which is majority owned, if prompt written
notice of such assignment is given to the non-assigning party. This Agreement
shall be binding on the successors and permitted assigns of the parties hereto.
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19. MODIFICATION OF AGREEMENT; ENTIRE AGREEMENT. Except as herein
otherwise provided, the provisions of this Agreement shall not be extended,
varied, changed, modified or supplemented without the written consent of both
parties, given by an authorized officer. There are no terms, conditions,
representations or understandings governing the rights or obligations of the
parties with respect to the subject matter hereof except as set forth herein.
This Agreement replaces and supersedes all previous agreements, term sheets or
proposals, written or oral, between the parties relating to the supply of
Products from FiberCore to Buyer.
20. GOVERNING LAW; JURISDICTION. This Agreement shall expressly not be
governed by The United Nations Convention for Contracts for the International
Sale of Goods. The laws of New York , notwithstanding its conflict of law rules,
shall govern this Agreement, which shall be construed accordingly. The parties
hereby agree to submit themselves (personal or otherwise) to the jurisdiction
and venue of the courts of New York and the American Arbitration Association in
New York.
21. HEADINGS. The headings used in this Agreement are for the convenience
of the parties only, and shall not be considered in interpreting or applying the
provisions of this Agreement.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed by their authorized officers as of the date first set forth above.
BUYER
By:
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Name:
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Title:
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ATTEST:
By:
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(Corporate Seal)FIBERCORE, INCORPORATED
By:
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Name:
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Title:
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ATTEST:
By:
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------------, ------ Secretary
(Corporate Seal)
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APPENDIX A
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LIST OF PRODUCTS
Single-mode Optical Fiber
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Multimode Optical Fiber
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A-1
APPENDIX B
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PRODUCT QUANTITIES AND SPECIFICATIONS
FY 2001:
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A) 62.5/125/250: 50,000 km (includes balance of existing order). Approximately
4,000 km per month.
Bandwidth: 80% ->= 200/600 MHz-km; 20% - >= 160/500 MHz-km
Length Distribution: 70% - 8.8 km; 20% - 6.6 km; balance 2.2 to 4.4 km
Attenuation: per OCC specification
Note: FiberCore will make available to OCC for first right of refusal any
standard 250 um inventory.
B) 500 UM COATED FIBER:
SINGLEMODE: 5,500 km total. 500 km/month beginning in February (current order
number 3946 is included in this allocation).
50/125/500: 1,100 km total. 100 km/month beginning in February.
62.5/125/500: 6,000 km total. 500 km/month beginning in December.
Note: we can only ship 500 km of 500 um coated fiber in December in order to
complete outstanding orders.
C) SINGLEMODE FIBER:
Specifications per FiberCore standards and OCC modifications.
LENGTH DISTRIBUTION: per FiberCore standards unless otherwise agreed to by
FiberCore.
Notes:
1. Effective July 1st, OCC may substitute 250 um coated fibers in place of
500 um coated fiber. The replacement volume is 2 times the volume of 500
um coated fiber not to exceed 1,000 km in any month. FiberCore would
require a minimum of 45 days advance notice to plan for these changes.
2. OCC will purchase all inventories of 500 um coated fibers that fall within
standard specifications. FiberCore will provide a list of this inventory
monthly.
A-2
FY 2002:
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Multimode Fiber: 60,000 km
Singlemode Fiber (standard): 150,000 m
Singlemode Fiber for Asia: 350,000 km
FY 2003:
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Multimode Fiber: 80,000 km
Singlemode Fiber (standard): 250,000 km
Singlemode Fiber for Asia: 750,000 km
FY 2004:
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Multimode Fiber: 110,000 km
Singlemode Fiber (standard): 400,000 km
Singlemode Fiber for Asia: 1,150,000 km
NOTES:
1. Multimode fiber volumes include both standard and 500 um coated fibers.
OCC will provide FiberCore a shipping schedule or forecast at least six
(6) months prior to the beginning of each fiscal year.
2. OCC shall be allowed to make reductions to the quantity of singlemode
fiber for Asia delivered under this Agreement for FY 2002 - 2004 without
any associated penalty under section 6 ("Take or Pay") clause.
3. OCC shall give a minimum of 6 month notice for singlemode fiber for Asia
to any reductions to deliverable items that exceed 4,000 km per month.
4. Additional singlemode fiber will be made available to OCC for FY 2002,
2003, and 2004. FiberCore would require a minimum of eight (8) months
notice for any additional quantities required in 2002. FiberCore would
also require forecasts for 2003 and 2004 at least six (6) months prior to
the beginning of each fiscal year.
A-3
APPENDIX C
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PRICING
FY 2001:
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250 UM COATED FIBER:
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SINGLEMODE: $ 40.00/km
50/125/250:
400/400 MHz-km: $ 75.00/km
400/800 MHz-km: $ 85.00/km
500/500 MHz-km: $ 85.00/km
62.5/125/250: (80% ->= 200/600 MHz-km; 20% - >= 160/500 MHz-km)
$ 98.00/km until March 31st (balance of current order)
$ 108.00/km effective April 1st - December 31st
100/140/250:
100/200 MHz-km: $ 370.00/km
500 UM COATED FIBER:
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Singlemode: $ 51.00/km
50/125/500: $ 98.00/km
50/125/500 Rad Hard: $ 103.00/km
50/125/500 Rad Hard High NA: $ 123.00/km
62.5/125/500: $ 124.00/km
62.5/125/500 Rad Hard: $ 130.00/km
100/140/500: $ 415.00/km
FY 2002 - 2004 pricing will be negotiated per section 4.2.
A-4
