TEAMING AGREEMENT
THIS TEAMING AGREEMENT is made and entered into as of
the 19th day of May, 1999 ("Effective Date"), by and between Molex Incorporated,
a Delaware corporation ("Molex Inc."), having its principal place of business at
0000 Xxxxxxxxxx Xxxxx, Xxxxx, Xxxxxxxx 00000 and its subsidiary Molex Fiber
Optics, Inc. ("Molex Fiber"), having its principal place of business at 0000
Xxxxxxx, Xxxxxxx Xxxxx, Xxxxxxxx 00000 and Lumenon Innovative Lightwave
Technology, Inc., a Delaware corporation ("Lumenon Parent") and Lilt Canada
Inc., Lumenon Parent's wholly-owned subsidiary ("LILT"), having a principal
place of business at 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxxx X0X 0X0, Xxxxxx. "Molex"
and "Lumenon" have the meanings specified in Section 1. Hereinafter Molex and
Lumenon are sometimes collectively referred to as the "Parties."
WHEREAS Molex is in the business of manufacturing,
marketing and selling electrical and optical terminals and connectors;
WHEREAS Molex has the exclusive right to various
intellectual property related to its business, which intellectual property has
great value to Lumenon;
WHEREAS Lumenon has developed and acquired technical
knowledge and valuable expertise in development and design of integrated optical
waveguide;
WHEREAS Lumenon has the exclusive, worldwide right
(subject only to a license previously granted to QPS Technology Inc.) by license
between Polyvalor, XxXxxx University and Lumenon Innovative Lightwave
Technology, Inc. of Canada (now Lilt Canada Inc.) to manufacture, produce, sell
and distribute products produced embodying or using the invention disclosed in
U.S. and Canadian patent applications entitled "Solvent-assisted lithographic
process using photosensitive sol-gel derived glass for depositing ridge
waveguides on silicon" filed in the Canadian Patent Office on October 10, 1997
under No. 2,218,273 and in the U.S. Patent and Trademark Office on October 10,
1997 under No. 08/948,511 and all present technical knowledge and accumulated
experience acquired by Licensor and its predecessors under the supervision of
Xxxx X. Xxxxxxx and/or S. Xxxx Xxxxxx;
WHEREAS Molex is interested in investing up to
$2,750,000 in cash and in kind contributions as part of a joint development with
Lumenon for the purpose of developing products for the DWDM market and other
photonics markets for which investment Lumenon is willing to issue to Molex a
certain number of shares in Lumenon Parent as provided for in the Stock
Restriction Agreement;
WHEREAS Molex and Lumenon have entered into a Stock
Purchase Agreement and Stock Restriction Agreement contemporaneously herewith,
wherein the Stock Restriction Agreement provides, among other terms, the right
for Lumenon Parent to raise $3,000,000 during the first twenty-four months after
the Effective Date pursuant to the specific terms and conditions set forth in
the Stock Restriction Agreement; and
WHEREAS Molex, after Lumenon successfully proves out the
DWDM Technology by producing and delivering to Molex Three Device Types in
accordance with the terms and conditions hereinafter set forth, may continue to
support efforts to produce, market and distribute products based on these
Technologies.
In consideration for the mutual agreements set forth
below and other good and valuable consideration set forth in this Agreement,
the Parties agree as follows:
Section 1
DEFINITIONS
"Change of Control" shall have the meaning set forth in the Stock
Restriction Agreement.
"Control" (including, with correlative meanings, the terms
"Controlled by" and "under common Control with"), as used with
respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the
management or policies of such Person, whether through the ownership
of voting securities, by agreement or otherwise.
"DWDM Technology" means all Intellectual Property owned by Lumenon,
either directly or via its shareholders and/or principals, related
to Dense Wavelength Division Multiplexing.
"Execution" means that each Party to this Teaming Agreement has
executed the Teaming Agreement.
"Gross Cost" means the sum of: (1) the cost of raw materials; (2)
direct labor including wages and employee benefits for the direct
labor people; (3) freight and duty for materials or for transfer of
products during the manufacturing process between factories; (4)
variable overhead costs related to volume of production, utilities,
and packing materials; (5) fixed overhead costs including
toolmakers, production engineering, supervisory labor, insurance,
depreciation, property taxes, and other manufacturing related
expenses; (6) administrative costs (at no more than 10% of Gross
Cost); and (7) royalties payable to non-Affiliate third parties for
intellectual property embodied or used in manufacturing the
products. The fixed and variable overhead costs shall be limited to
standard rates within the industry and shall not reflect any
additional costs caused by the nature of a start-up operation.
Depreciation will be based on useful lives as follows: molds (3
years); dies (3 years); assembly equipment (4 years); production
equipment (10 years) and buildings (25 years). Each Party will use
commercially reasonable efforts, subject to its good faith business
judgment, to minimize the elements of the "Gross Cost" within its
control.
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"Initial Lumenon Intellectual Property" means Intellectual Property
that has been acquired, originated, developed, made, conceived,
authored or reduced to practice by Lumenon alone or jointly with
third persons other than Molex, its Affiliates and employees of
Molex and its Affiliates as of the Effective Date.
"Initial Molex Intellectual Property" means Intellectual Property
that has been originated, developed, made, conceived, authored or
reduced to practice by Molex and/or its Affiliates alone or jointly
with third persons other than Lumenon, its Affiliates and Lumenon's
employees or principals as of the Effective Date.
"Intellectual Property" means any and all information, inventions,
innovations, discoveries, improvements, ideas, developments,
methods, designs, reports, charts, drawings, analyses, concepts,
original works of authorship or similar information, including
methods, technology, reports, records, brochures, instructions,
manuals, computer apparatuses and/or software, programs and
manufacturing techniques, whether or not protectable by patent or
copyright.
"Lumenon" means Lumenon Parent and LILT, jointly.
"Marketing Phase" shall mean the commercial production of products
embodying the sol-gel waveguide portion of each of the Three Device
Types as described in Section 4 hereof.
"Molex" means Molex Inc. and Molex Fiber, jointly.
"Person" means any individual, corporation, partnership, limited
liability company, firm, joint venture, association, joint-stock
company, trust, unincorporated organization, governmental or
regulatory body or other entity.
"Services Common Stock Purchase Warrant" means the Services Common
Stock Purchase Warrant to be issued by Lumenon to Molex Inc.
"Sol-Gel Technology" means all Intellectual Property owned by
Lumenon, either directly or via its shareholders and/or principals,
related to sol-gel technology
"Stock Restriction Agreement" means the Stock Restriction Agreement
dated as of the date hereof among Molex Inc., Lumenon Parent and
LILT and other stockholders of Lumenon Parent, which shall include,
among other terms, installation of a Molex Inc. designee and a Molex
Inc. observer on each of the governing boards of Lumenon Parent and
LILT.
"Stock Purchase Agreement" means the Stock Purchase Agreement dated
as of the date hereof between Molex Inc., Lumenon Parent and LILT.
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"Teaming Project" means all joint efforts between Molex and Lumenon
to technologically develop the Three Device Types in accordance with
the terms and conditions of this Teaming Agreement.
"Teaming Project Phase" shall have the meaning given to it in
Section 2.2 of this Teaming Agreement
"Three Device Types" means 8, 16 and 32 channel
multiplexers/demultiplexers.
"Target Specification" means the specification attached hereto as
Exhibit 1 for the Three Device Types.
Section 2
TERM OF TEAMING AGREEMENT
2.1 General Term of Teaming Agreement. The term
of this Teaming Agreement includes a Teaming Project Phase and then, at Molex's
sole option, a Marketing Phase. Molex may exercise its option to enter into the
Marketing Phase, in writing, no later than 60 days after the successful
completion of the Teaming Project Phase. This option period may be extended by a
writing executed by all of the Parties to this Teaming Agreement.
2.2 Term of Teaming Project Phase. The Teaming
Project Phase shall begin on the Effective Date of this Teaming Agreement and
continue for thirteen months or less if Molex determines that the Three Device
Types meets the Target Specification ("Project Completion Date"). The Project
Completion Date shall be extended by (1) written agreement of a management
committee comprised of the project managers from Lumenon and Molex and/or (2)
any aggregate delay caused by Lumenon's failure to timely reach any of the
milestones set forth in the Teaming Project Phase schedule set forth in Exhibit
2 hereto. Successful completion of a milestone shall be reasonably evaluated by
Molex.
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Section 3
TEAMING PROJECT PHASE
3.1 Molex's Indirect Financial Contribution. In
addition to the cash provided to Lumenon in association with the Stock Purchase
Agreement, Molex will indirectly contribute an additional $1,250,000 in services
pursuant to this Agreement. To facilitate management of this indirect
contribution, upon Execution of this Teaming Agreement, Molex shall establish a
Special Account for the benefit of the teaming project. The "Special Account"
shall initially have a balance of zero and shall be used during the Teaming
Project Phase to track the increase of the amount of Molex's indirect financial
contribution. Nothing in this Teaming Agreement shall require Molex to segregate
any specific moneys for this Special Account. The Special Account will be
maintained according to standard accounting practices. In partial consideration
of Molex's performance of the services under this Agreement, Lumenon shall issue
a certain number of shares of Common Stock under the terms set forth in the
Services Common Stock Purchase Warrant.
3.2 Payments from the Molex Financial
Contribution. On a monthly basis, Molex shall submit an invoice to the Molex
Program Coordinator for expenses incurred by Molex during the previous month
with a copy of each invoice being sent to Lumenon. Such invoices shall contain a
breakdown of all expenses. Molex shall make payment or otherwise transfer money
on Molex's books for all acceptable expenses. To the extent they are associated
with the Teaming Project, acceptable expenses include: (a) reasonable
compensation for Teaming Project employees (including all federal, state, local
or foreign income, employment, social security and other taxes); (b) travel; (c)
food & lodging for Molex employees while in Canada; (d) additional equipment;
(e) supplies; and (f) rental of the Molex clean room facility (@ $250/day). All
invoiced expenses will be capable of substantiation.
3.3 Personnel. Lumenon and Molex shall assign
competent personnel in the performance of the work hereunder and will provide
each other a list of persons assigned to the teaming project phase with their
respective responsibilities, background and experience. The assignments shall
include the positions enumerated in Exhibit 3, which in Molex's case shall be
chargeable at the rates up to those disclosed in Exhibit 3. Lumenon shall not
assign any non-employees to work on this Teaming Project phase or otherwise
subcontract any of their obligations pursuant to this Teaming Agreement, without
prior written approval from the Molex Program Coordinator.
All persons furnished by Lumenon shall be considered solely Lumenon
employees or agents and Lumenon shall be responsible for payment to those
persons of their agreed compensation and all unemployment, social security and
other employment taxes including making contributions on their behalf when
required by law.
All persons furnished by Molex shall be considered solely Molex
employees or agents and Molex shall be responsible for payment to those persons
of their agreed compensation and
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all unemployment, social security and other employment taxes including making
contributions on their behalf when required by law, which shall be chargeable to
the Special Account to the extent such payments are acceptable expenses.
Employees and agents of either of the Parties shall, while on the
premises of the other, comply with all reasonable requests of the other Party
and all rules and regulations for such facility including where required by
government regulation, submission of satisfactory clearance from the U.S.
Department of Defense or other governmental authority.
All Parties shall have their respective employees sign appropriate
confidentiality agreement to protect confidential information relating to this
Teaming Agreement.
3.4 Scope of Work - Lumenon. Lumenon shall be
responsible for developing the specifications and products for the Three Device
Types including material and process development; assisting in packaging design
and testing; producing Sol-Gel waveguides for testing and providing
characterization of same; and producing masks for device fabrication. Such work
shall proceed in accordance with the Schedule of Work set forth in Exhibit 2.
3.5 Scope of Work - Molex. Molex shall be
responsible for developing specifications and products for the Three Device
Types including pigtailing and packaging development and perform testing of
various devices. Such work shall proceed in accordance with the Schedule of Work
set forth in Exhibit 2.
Section 4
MARKETING PHASE
4.1 Source and Sales of Products. During the
Marketing Phase, the Three Device Types and the sol-gel wave guide portion of
the Three Device Types shall be produced, packaged (including pigtailing) and
sold under the conditions set forth below:
(a) Exclusivity Period. During the period from the
commencement of the Marketing Phase to the date 12 months thereafter
(the "Exclusivity Period"), the Parties agree that (i) Lumenon shall
be the sole manufacturer of the Three Device Types (including the
sol-gel waveguide portion thereof), (ii) Molex shall be the sole
packager (including pigtailing) of the Three Device Types; (iii)
Molex in its discretion may grant Lumenon the right to package the
Three Device Types; (iv) Lumenon shall sell its entire output of the
Three Device Types (including the sol-gel waveguide portion thereof)
to Molex, and Molex shall purchase at a price of the Gross Cost of
the Three Device Types plus 25%, Lumenon's entire output of the
Three Device Types; and (v) Lumenon shall not sell the sol-gel
waveguide portion of the Three Device Types to any Person other than
Molex. Notwithstanding the foregoing, in no event shall Molex be
required to purchase in excess of 400 units per calendar month
during the Exclusivity Period.
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(b) Remaining Period. Following the completion of the
Exclusivity Period (the "Remaining Period"), the Parties agree that,
except as provided in Section 4.1(d) below, (i) Lumenon shall
manufacture and package (including pigtailing) the Three Device
Types (including the sol-gel waveguide portion thereof), and (ii)
Molex shall have the option of purchasing all of the Three Device
Types (including the sol-gel waveguide portion thereof) which are
produced by Lumenon on the terms which are contained on Exhibit 4
hereto. Molex shall be permitted to purchase such products from
Lumenon at their fair market value, subject to the provisions of
Section 4.1(c). Lumenon shall not sell any of the Three Device Types
(including the sol-gel waveguide portion thereof) without giving 30
days prior written notice to Molex.
(c) Pricing. During both the Exclusivity Period and the
Remaining Period, (i) Molex agrees to exercise its commercially best
efforts to sell products embodying the Three Device Types in
commercially reasonable quantities; and (ii) Lumenon agrees that it
shall sell to Molex its products, including but not limited to the
Three Device Types, on price terms not less favorable than offered
by Lumenon to any of Lumenon's other customers acquiring such
products (the "Price Terms"). Lumenon shall maintain adequate
records evidencing its compliance with this Section 4.1(c) (the
"Lumenon Pricing Records") for not less than two years from the date
of the payment of product sold to Molex by Lumenon . On not less
than 15 days' notice, the Pricing Records shall be made available to
a duly authorized representative of Molex during normal business
hours (the "Molex Pricing Audit") in order that Molex may verify
such calculation. Molex may only conduct a Molex Pricing Audit once
per calendar year. Molex shall have a period of one year from the
date of any payment for the sale of a product to notify Lumenon in
writing that Molex disagrees with the calculation of the Pricing
Terms for a product, following which such payment shall be deemed
final and in full satisfaction of Molex's rights thereto. Molex may
retain a recognized firm of chartered accountants reasonably
acceptable to Lumenon to conduct the Molex Pricing Audit, provided
that such accountants shall enter into a confidentiality agreement
with Lumenon containing the provisions set forth in Section 8.1 of
this Teaming Agreement. Such audit shall be at the cost of Molex
unless a shortfall of more than 10% is established in the amount of
the prices charged for the products during the audit period, in
which event Lumenon shall be under the obligation to reimburse Molex
twice the amount of such shortfall together with the cost of such
audit. Lumenon may dispute the findings of the audit pursuant to the
dispute resolution procedures of Section 10.14
(d) Failure to Supply or Change of Control. In the event
(i) Lumenon is unable to supply Molex or Molex Affiliates on a
timely basis with a commercially reasonable quantity of Three Device
Types (including the
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sol-gel waveguide portion thereof), or (ii) there is a Change of
Control of Lumenon, then in each case Molex shall have the right to
manufacture all components of the Three Device Types (including the
sol-gel waveguide portion thereof). In the event that the condition
described in (i) in the preceding sentence takes place during the
Exclusivity Period, Molex's sole recourse (except as provided in the
following sentence) shall be the right to fabricate or purchase the
Three Device Types (including the sol-gel waveguide portion thereof)
elsewhere. Notwithstanding the foregoing sentence, if Lumenon is
unable to supply Molex or Molex Affiliates on a timely basis with a
commercially reasonable quantity of Three Device Types (including
the sol-gel waveguide portion thereof) following Lumenon's
acceptance of a purchase order with respect to such Three Device
Types, Lumenon shall be liable for all reasonable damages for which
Molex is liable to third parties as a result of such failure as well
as any premium transportation or other costs required to meet any
delivery schedule of Molex.
(e) Royalty. If Molex manufacturers the Three Device
Types (including the sol-gel waveguide portion) on a quarterly basis
Lumenon shall receive a royalty on each Three Device Type sold by
Molex (the "Lumenon Royalty"). The Lumenon Royalty shall be 25% of
the Gross Cost incurred by Molex which is directly attributable to
the Three Device Type sold. Lumenon Parent shall specify whether the
royalty shall be paid to Lumenon Parent or LILT. All payments shall
be made in U.S. dollars. With each payment of the Lumenon Royaly,
Molex will provide to Lumenon a report setting forth the calculation
of such Lumenon Royalty. Subject to the following sentence, if Molex
manufactures the Three Device Types (including the sol-gel waveguide
portion) and manufactures and sells more than 400 units in a
calendar month (the "Trigger Month"), the parties shall negotiate in
good faith a new royalty amount based on fair market value of such a
royalty for the units sold in excess of 400 units per calendar
month. In the event the Parties cannot agree within 90 days of the
last day of the Trigger Month on a new royalty for the units in
excess of 400 units per calendar month, any Party may submit the
dispute for resolution pursuant to Section 10.14 of this Teaming
Agreement. The foregoing two sentences shall not apply and be of no
force and effect if there is a Change of Control of Lumenon or if
Molex terminates this Teaming Agreement pursuant to Section 9.1 of
this Teaming Agreement. Molex shall maintain adequate records
evidencing the calculation of the Gross Cost related to each Lumenon
Royalty (the "Lumenon Royalty Records") for not less than two years
from the date of the payment of the Lumenon Royalty. On not less
than 15 days' notice, the Lumenon Royalty Records shall be made
available to a duly authorized representative of Lumenon during
normal business hours (the "Lumenon Royalty Audit") in order that
Lumenon may verify such calculation. Lumenon may only conduct a
Lumenon Royalty Audit once per calendar year. Lumenon shall have a
period of one year from the date of any payment of the Lumenon
Royalty to notify Molex in writing that Lumenon disagrees with the
calculation of the Lumenon Royalty following which such payments
shall be deemed final and in full satisfaction of Lumenon's rights
thereto. Lumenon may retain a recognized firm of chartered
accountants reasonably acceptable to Molex to conduct the Lumenon
Royalty Audit, provided that such accountants shall enter into a
confidentiality agreement with Molex containing the provisions set
forth in
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Section 8.2 of this Teaming Agreement. Such audit shall be at the
cost of Lumenon unless a shortfall of more than 10% is established
in the amount of the Lumenon Royalty during the audit period, in
which event Molex shall be under the obligation to reimburse Lumenon
twice the amount of such shortfall together with the cost of such
audit. Molex may dispute the findings of the audit pursuant to the
dispute resolution procedures of Section 10.14.
4.2 Improved Packaging Source. If a third party
has packaging technology and/or method(s), which is jointly determined by Molex
and Lumenon to be an improvement over the packaging technology and/or method(s)
developed and/or used as part of this Teaming Agreement, Molex and Lumenon shall
cooperate (i) in purchasing outright or obtaining a license to use and/or
practice that improved third party packaging technology and/or method(s) or (ii)
if such technology and/or method is in the public domain, in developing such
improved packing technology and/or method(s).
4.3 Other Applications. Molex reserves the right
to use the products in applications other than those expressly contemplated by
this Teaming Agreement. Such use would be subject to the royalties enumerated in
Section 4.2.
4.4 Term of Marketing Phase. If Molex exercises
its option, the Marketing Phase shall commence upon the successful completion of
the Teaming Project Phase. The Marketing Phase shall continue for three (3)
years (the "Initial Term") and be renewable for an additional three year term,
at Molex's sole option, at (i) the conclusion of the Initial Term and (ii) each
successive three year period thereafter. Each such renewal option to be
exercised by Molex, in writing, no later than 120 days before the end of then
current term.
Section 5
COMPANY REPRESENTATIONS AND WARRANTIES
5.1 General Representations and Warranties. Each
of Lumenon Parent and LILT hereby represent, warrants and covenant to Molex
that:
(a) the facts set forth in the third, fourth and sixth
recitals hereto are true and correct;
(b) (i) it has all power and authority, statutory and
otherwise, to execute and deliver this Teaming Agreement, (ii) its
entry into this Teaming Agreement has been duly authorized by all
appropriate corporate action, and that its entry into this Teaming
Agreement does not constitute a breach of its Certificate of
Incorporation, By-laws, or any order, law, regulation, contract,
agreement or other instrument binding upon it and (iii) this Teaming
Agreement constitutes the legal, valid and binding obligation of
Lumenon enforceable against it in accordance with its terms except
as such enforceability may be limited by (1) bankruptcy, insolvency,
reorganization or other
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similar laws affecting the enforcement of creditors' rights
generally and (2) general principles of equity;
(c) it is a corporation duly organized, validly existing
and in good standing and has full corporate power to own, operate
and lease its properties and to carry on its business as now
conducted. Each of Lumenon Parent and LILT is duly qualified to do
business in Delaware and Quebec and is in good standing in such
jurisdictions;
(d) the execution, delivery and performance of this
Teaming Agreement by each of Lumenon Parent and LILT does not and
will not conflict with, breach, violate or cause a default under any
contract, agreement, instrument, order, judgment or decree to which
Lumenon is a party or by which any of Lumenon Parent or LILT is
bound;
(e) Subject only to the terms of the license agreement
with Polyvalor and XxXxxx University (a copy of which is attached
hereto as Exhibit 5), Lumenon has sufficient rights in and to all of
the Initial Lumenon Intellectual Property necessary to perform its
obligations pursuant to this Agreement; and
(f) Subject only to the terms of the license agreement
with Polyvalor and XxXxxx University (a copy of which is attached
hereto as Exhibit 5), Lumenon is not party to or bound by any
employment agreement, non-compete agreement, confidentiality
agreement or other agreement with any other person or entity which
would affect Lumenon's ability to perform his obligations under this
Teaming Agreement.
Section 6
MOLEX REPRESENTATIONS AND WARRANTIES
6.1 General Representations and Warranties. Each
of Molex Inc. and Molex Fiber hereby represents, warrants and covenants to
Lumenon that:
(a) the facts set forth in the first, second, fifth,
sixth and seventh recitals hereto are true and correct;
(b) (i) it has all power and authority, statutory and
otherwise, to execute and deliver this Teaming Agreement, (ii) its
entry into this Teaming Agreement has been duly authorized by all
appropriate corporate action, and that its entry into this Teaming
Agreement does not constitute a breach of its Certificate of
Incorporation, By-laws, or any order, law, regulation, contract,
agreement or other instrument binding upon it and (iii) this Teaming
Agreement constitutes the legal, valid and binding obligation of
Molex enforceable against it in accordance with its terms except as
such enforceability may be limited by (1) bankruptcy, insolvency,
reorganization or other similar laws
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affecting the enforcement of creditors' rights generally and (2)
general principles of equity;
(c) it is a corporation duly organized, validly existing
and in good standing and has full corporate power to own, operate
and lease its properties and to carry on its business as now
conducted and that each of Molex Fiber and Molex Inc. is duly
qualified to do business in the State of Illinois and is in good
standing in such jurisdiction;
(d) the Execution, delivery and performance of this
Teaming Agreement by Molex Inc. and Molex Fiber does not and will
not conflict with, breach, violate or cause a default under any
contract, agreement, instrument, order, judgment or decree to which
Molex is a party or by which Molex Inc. or Molex Fiber is bound;
(e) Molex is not party to or bound by any employment
agreement, non-compete agreement or confidentiality agreement with
any other person or entity which would affect Molex's ability to
perform its obligations under this Teaming Agreement; and
(f) Molex has sufficient rights in and to all of the
Initial Molex Intellectual Property necessary to perform its
obligations pursuant to this Agreement.
Section 7
INSURANCE AND INDEMNITY
7.1 Insurance.
(a) Lumenon Parent and LILT shall use commercially
reasonable best efforts, jointly, at all times during the term of
this Teaming Agreement and at their own expense provide and maintain
in effect, for commercially reasonable rates, those insurance
policies and minimum limits of coverage as designated below in
insurance companies each of which must be licensed to do business in
both the Canada and United States and be reasonably acceptable to
Molex and will comply with all the requirements stated in this
Section 7 with regard to such coverage:
(i) Worker's compensation and
similar employee benefits as required by
law.
(ii) Commercial General
Liability on an occurrence basis covering
all operations by or on behalf of Lumenon
arising out of or connected with this
Teaming Agreement providing insurance for
bodily injury, personal injury and property
damage liability with limits of liability
not less than: $ 1,000,000 USD for each
occurrence combined single limit (for bodily
injury and property damage).
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(iii) Auto Insurance on an
occurrence basis covering all driving by or
on behalf of Lumenon arising out of or
connected with this Teaming Agreement
providing insurance for bodily injury,
personal injury and property damage
liability with limits of liability not less
than $1,000,000 USD for each occurrence
combined single limit.
(iv) Umbrella/excess liability
Insurance on an occurrence basis covering
over the Commercial General Liability
Insurance and Auto Insurance providing
insurance for bodily injury, personal injury
and property damage liability with limits of
liability not less than: $ 5,000,000 USD for
each occurrence combined single limit (for
bodily injury and property damage).
(v) The total general aggregate
of the insurance policies required by
clauses (ii), (iii) and (iv) shall be no
less than $7,000,000.
The insurance shall not contain
any provision for co-insurance coverage and
shall include coverage against punitive
damages to the extent allowed by law. In no
way do these minimum requirements limit the
liability assumed elsewhere in this Teaming
Agreement.
(b) Molex and its Affiliates and their respective
officers, directors, employees and agents shall be named as
additional insureds for the General Liability policy. The policy(s)
shall be endorsed to stipulate that Lumenon Parent and LILT
insurance shall be primary insurance and that any other insurance
maintained by Molex and its Affiliates shall be excess only and
non-contributing.
(c) Certificates of Insurance shall be furnished by
Lumenon to Molex before work under this Teaming Agreement is
commenced by Lumenon and thirty (30) days prior to policy renewal.
The Certificates of Insurance shall provide that there will be no
cancellation or non-renewal of coverage without thirty (30) days
prior written notice to Molex. Copies of the endorsements required
hereunder shall be furnished with the certificates. If reasonably
requested by Molex, a certified copy of the actual policy(s) with
appropriate endorsement(s) shall be provided to Molex.
(d) To the extent permitted by law, Lumenon Parent and
LILT do hereby, and Lumenon shall use its commercially reasonable
efforts to cause its insurers and their subcontractor(s),
consultants, suppliers, and agents who are providing goods or
services in connection with this Agreement (regardless of tier) in
excess of $25,000 aggregated and their respective insurers, to waive
all rights of recovery or subrogation against Molex, its Affiliates
and their respective officers, directors, employee, agents, and
insurers. Lumenon Parent and LILT shall use commercial reasonable
effort to cause its subcontractor(s), consultants, suppliers and
agents (regardless of tier) and their
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respective insurers to acknowledge and agree to such waiver and
shall provide Molex with a copy of such waiver.
(e) Lumenon shall obtain insurance or shall reimburse
Molex and its Affiliates for loss or damage to any Molex-owned
property in the care, custody, or control of Lumenon, for all losses
including, but not limited to theft, loss, misappropriation or
destruction caused by Lumenon Parent and LILT, their employees,
agents, members or consultants whether intentional or through
negligence.
7.2 Indemnity.
(a) Each Party (the "Indemnifying Party") covenants and
agrees to defend, indemnify and hold harmless the other Party, its
Affiliates and their respective officers, directors and employees
from and against any claim, suit, loss or damage, including
reasonable attorneys fees, resulting from any third party suits
(excluding suits by Affiliates) to the extent arising out of or
relating to (i) the breach by the Indemnifying Party or its
employees or agents of any representation, warranty or covenant
contained in this Teaming Agreement, (ii) the injury or death of any
person resulting from the negligence or willful misconduct of the
Indemnifying Party or its employees or agents, (iii) damage to real
or tangible personal property resulting from the negligence or
willful misconduct of the Indemnifying Party or its employees or
agents, or (iv) the employment relationship of the Indemnifying
Party with its employees or the termination by the Indemnifying
Party of such employment relationship.
(b) Any Party seeking indemnification (the "Indemnified
Party") shall promptly notify the Indemnifying Party in writing of
any claim believed to be subject to indemnification; provided,
however, that no delay on the part of the Indemnified Party in
providing such notice shall relieve the Indemnifying Party from its
indemnification obligations except to the extent the Indemnifying
Party is prejudiced thereby. The Indemnified Party shall allow the
Indemnifying Party to control the defense of any third party claim
for which the Indemnified Party seeks indemnity under this Section 7
and shall cooperate in the Indemnifying Party's defense thereof, at
the expense of the Indemnifying Party. In the event the Indemnifying
Party shall not assume the defense of any such claim, the
Indemnified Party shall have the right, following written notice to
the Indemnifying Party, to undertake to defend or settle such claim
on behalf of and for the account of and risk of loss of the
Indemnifying Party. The Indemnifying Party shall not settle any
claim or consent to the entry of any judgment without the prior
written consent of the Indemnified Party. Notwithstanding the
foregoing sentence, the Indemnifying Party may settle any such claim
solely for the payment of money by the Indemnifying Party provided
that the Indemnified Party has no obligations with respect to such
settlement nor is precluded from acting in any manner thereby.
Section 8
CONFIDENTIALITY AND OWNERSHIP
OF INTELLECTUAL PROPERTY
8.1 Protection of Initial Lumenon Intellectual
Property.
(a) Trade Secrets.
(i) Molex acknowledges that
Lumenon is engaged in the business of
developing and designing integrated optical
waveguides (the "Lumenon Business"), and
that (1) the Lumenon Business is conducted
throughout the world (the "Territory"); (2)
Molex's work with Lumenon will give Molex
access to trade secrets of, and confidential
information concerning, Lumenon; (3) the
agreements and covenants contained in this
Teaming Agreement are essential to protect
the business and goodwill of Lumenon; and
(4) Molex has means to support Molex and
Molex's dependents and the provisions of
this Section will not impair such ability.
Molex specifically acknowledges that the
consideration provided to Molex is intended
to and does compensate Molex for any
inconveniences or economic deprivation
resulting from Molex's agreements hereunder.
Molex also acknowledges and agrees that the
restrictions imposed upon Molex by this
Section and the purposes for such
restrictions are reasonable and are designed
to protect the good will, trade secrets,
confidential and proprietary business
information and the continued success of
Lumenon without unduly restricting Molex's
future business.
(ii) Molex acknowledges that
Lumenon has a legitimate and continuing
proprietary interest in the protection of
confidential information of it and its
Affiliates and that, prior to the date
hereof, Lumenon has invested substantial
sums, and Lumenon will continue to invest
substantial sums, to develop, maintain and
protect confidential information. Molex
agrees that, during the term of this Teaming
Agreement and at all times thereafter Molex,
its principals, agents and employees shall,
and shall cause their Affiliates to, keep
secret and retain in strictest confidence,
and shall not use or disclose to any Person
for Molex's benefit or the benefit of others
any proprietary, confidential or secret
knowledge, data or matters, whether
transmitted in writing, orally, visually or
otherwise, used in, associated with or
related to Lumenon, its Affiliates, the
current or anticipated business of Lumenon
or its Affiliates, the research and
development activities of Lumenon or its
Affiliates together with analyses or
documents which contain or otherwise reflect
such matters ("Lumenon Confidential
Information"),
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including know how, technology, technical or
business information, financial information,
trade secrets, customer lists, names or
identities, details of client or consultant
contracts, pricing policies, operational
methods, marketing plans or strategies,
product development techniques or plans,
business acquisition plans, new personnel
acquisition plans, methods of manufacture,
drawings, specifications, personnel data,
processes, formulas, designs and design
projects, computer programs, inventions and
research projects of Lumenon, its Affiliates
or any other entity which may hereafter
become an Affiliate thereof, except as set
forth in Section 8.1(a)(iv). Without
limiting the foregoing, Molex acknowledges
and agrees that the Lumenon Confidential
Information consists of trade secrets and
confidential and proprietary business
information of Lumenon and is subject to the
protection of any applicable federal or
state trade secrets act.
(iii) Molex shall treat as
confidential all Lumenon Confidential
Information, shall not use such Lumenon
Confidential Information except as expressly
set forth herein or otherwise authorized in
writing, shall implement reasonable
procedures to prohibit the disclosure,
unauthorized duplication, misuse or removal
of Lumenon's Confidential Information and
shall not disclose such Lumenon Confidential
Information to any third party except as may
be necessary and required in connection with
the rights and obligations of such party
under this Teaming Agreement, and subject to
confidentiality obligation at least as
protective as those set forth herein.
Without limited the foregoing, Molex shall
use at least the same procedures and degree
of care which it uses to prevent the
disclosure of its own confidential
information of like importance to prevent
disclosure of Confidential Information
disclosed to it under this Teaming
Agreement, but in no event less than
reasonable care.
(iv) Notwithstanding the above,
the foregoing restriction shall not apply
with regard to any Lumenon Confidential
Information which:
(A) was generally
known and available at the time
it was disclosed or becomes
generally known and available
through no fault of Molex;
(B) was known to
Molex, without restriction, at
the time of disclosure as shown
by the files of Molex in
existence at the time of
disclosure;
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(C) is disclosed
with the prior written approval
of Lumenon;
(D) was
independently developed by Molex
without any use of the Lumenon
Confidential Information and by
employees or other agents of
Molex who have not been exposed
to the Lumenon Confidential
Information, provided that Molex
can demonstrate such independent
development by documented
evidence prepared
contemporaneously with such
independent development;
(E) become known to
Molex, without restriction, from
a source other than Lumenon or
its Affiliates and disclosure of
such Lumenon Confidential
Information was without breach
of this Teaming Agreement by
Molex and otherwise not in
violation of Lumenon's rights;
or
(F) to the extent
(but only the extent) required
to be disclosed pursuant to the
order or requirement of a court,
administrative agency, or other
governmental body; provided,
that Molex shall provide prompt,
advanced notice thereof and to
enable Lumenon to seek a
protective order or otherwise
prevent such disclosure.
(v) All memoranda, notes, lists,
records, engineering drawings, technical
specifications and related documents and
other documents or papers (and all copies
thereof) relating to Lumenon, the Lumenon
Business, any of the Lumenon's Affiliates,
any of their respective successors and
assigns, any entity which might thereafter
become an Affiliate thereof or the business
of such Affiliates, including such items
stored in computer memories, microfiche or
by any other means, made or compiled by or
on behalf of Molex or made available to
Molex during the course of this Teaming
Agreement by Lumenon, its Affiliates or
their respective successors or assigns or
any entity which may hereafter become an
Affiliate thereof, shall remain the property
of Lumenon, its Affiliates or their
respective successors or assigns, and shall
be delivered to Lumenon promptly upon the
termination of this Teaming Agreement or at
any other time upon request. Molex shall
purge any and all copies of the data from
any computer storage medium or device and
provide Lumenon with written certification
of its compliance with such requirement.
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(b) Patents, Trademarks, Copyrights and Mask Works.
Lumenon and its Affiliates shall retain ownership of any and all
patents, trademarks, copyrights, mask works which comprise part of
the Initial Lumenon Intellectual Property.
(c) License Grant by Lumenon. Subject to the terms of
this Teaming Agreement, Lumenon grants, and Molex accepts, a
worldwide, royalty-free, non-exclusive license to import,
manufacture, reproduce and/or use any and all products embodying
Initial Lumenon Intellectual Property during the Teaming Project
Phase of this Teaming Agreement. Upon the occurrence of the
circumstances described in the first sentence of Section 4.1(d) or
the termination of this Teaming Agreement for any reason (but
subject to Section 9.4), Lumenon grants, and Molex accepts, a
worldwide, non-exclusive license to import, manufacture, reproduce
and/or use any and all products embodying the Initial Lumenon
Intellectual Property subject to the royalty provisions of Section
4.1(e). The license set forth in the preceding sentence shall
include the right of Molex to sublicense the Initial Lumenon
Intellectual Property for the sole purpose of manufacturing and/or
reproducing products embodying the Initial Lumenon Intellectual
Property for delivery solely to Molex or a Molex Affiliate for (i)
Molex's or Molex Affiliates' use or (ii) sale by Molex or a Molex
Affiliate. The entity receiving the sublicense shall enter into a
confidentiality provision substantially similar to the provisions of
Section 8.1 prior to receiving any Initial Lumenon Intellectual
Property.
8.2 Protection of Initial Molex Intellectual
Property.
(a) Trade Secrets.
(i) Lumenon acknowledges that
Molex is engaged in the business of
designing, manufacturing and marketing
electrical and optical terminals, connectors
and conductors, including various products
for use in fiber optic communications (the
"Molex Business"), and that (1) the Molex
Business is conducted throughout the
Territory; (2) Lumenon's work with Molex
will give Lumenon access to trade secrets
of, and confidential information concerning,
Molex; (3) the agreements and covenants
contained in this Teaming Agreement are
essential to protect the business and
goodwill of Molex; and (4) Lumenon has means
to support Lumenon and Lumenon's dependents
and the provisions of this Section will not
impair such ability. Lumenon specifically
acknowledges that the consideration provided
to Lumenon is intended to and does
compensate Lumenon for any inconveniences or
economic deprivation resulting from
Lumenon's agreements hereunder. Lumenon also
acknowledges and agrees that the
restrictions imposed upon Lumenon by this
Section and the purposes for such
restrictions are reasonable and are designed
to protect the good will, trade secrets,
confidential and
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proprietary business information and the
continued success of Molex without unduly
restricting Lumenon's future business.
(ii) Lumenon acknowledges that
Molex has a legitimate and continuing
proprietary interest in the protection of
confidential information of it and its
Affiliates and that, prior to the date
hereof, Molex has invested substantial sums,
and Molex will continue to invest substantial
sums, to develop, maintain and protect
confidential information. Lumenon agrees
that, during the term of this Teaming
Agreement and at all times thereafter
Lumenon, its principals, agents and employees
shall, and shall cause their Affiliates to,
keep secret and retain in strictest
confidence, and shall not use or disclose to
any Person for Lumenon's benefit or the
benefit of others any proprietary,
confidential or secret knowledge, data or
matters, whether transmitted in writing,
orally, visually or otherwise, used in,
associated with or related to Molex, its
Affiliates, the current or anticipated
business of Molex or its Affiliates, the
research and development activities of Molex
or its Affiliates together with analyses or
documents which contain or otherwise reflect
such matters ("Molex Confidential
Information"), including know how,
technology, technical or business
information, financial information, trade
secrets, customer lists, names or identities,
details of client or consultant contracts,
pricing policies, operational methods,
marketing plans or strategies, product
development techniques or plans, business
acquisition plans, new personnel acquisition
plans, methods of manufacture, drawings,
specifications, personnel data, processes,
formulas, designs and design projects,
computer programs, inventions and research
projects of Molex, its Affiliates or any
other entity which may hereafter become an
Affiliate thereof, except as provided in
Section 8.2(a)(iv). Without limiting the
foregoing, Lumenon acknowledges and agrees
that the Molex Confidential Information
consists of trade secrets and confidential
and proprietary business information of Molex
and is subject to the protection of any
applicable federal or state trade secrets
act.
(iii) Lumenon shall treat as
confidential all Molex Confidential
Information, shall not use such Molex
Confidential Information except as expressly
set forth herein or otherwise authorized in
writing, shall implement reasonable
procedures to prohibit the disclosure,
unauthorized duplication, misuse or removal
of Molex Confidential Information and shall
not disclose such Confidential Information
to any third party except as may be
necessary and required in connection with
the rights and obligations of such Party
under this Teaming Agreement, and subject to
confidentiality obligation at least as
protective as those set forth herein.
Without limited the foregoing, Lumenon shall
use at least the same
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procedures and degree of care which it uses
to prevent the disclosure of its own
confidential information of like importance
to prevent disclosure of Molex Confidential
Information disclosed to it by the other
Party under this Teaming Agreement, but in
no event less than reasonable care.
(iv) Notwithstanding the above,
the foregoing restrictions shall not apply
with regard to any Confidential Information
which:
(A) was generally
known and available at the time
it was disclosed or becomes
generally known and available
through no fault of Lumenon;
(B) was known to
Lumenon, without restriction, at
the time of disclosure as shown
by the files of Lumenon in
existence at the time of
disclosure;
(C) is disclosed
with the prior written approval
of Molex;
(D) was
independently developed by
Lumenon without any use of the
Molex Confidential Information
and by employees or other agents
of Lumenon who have not been
exposed to the Molex
Confidential Information,
provided that Lumenon can
demonstrate such independent
development by documented
evidence prepared
contemporaneously with such
independent development;
(E) become known to
Lumenon, without restriction,
from a source other than Lumenon
or its Affiliates and that the
disclosure of such Molex
Confidential Information was
without breach of this Teaming
Agreement by Lumenon and
otherwise not in violation of
Molex's rights; or
(F) to the extent
(but only the extent) required
to be disclosed pursuant to the
order or requirement of a court,
administrative agency, or other
governmental body; provided,
that Lumenon shall provide
prompt, advanced notice thereof
and to enable Molex to seek a
protective order or otherwise
prevent such disclosure.
(v) All memoranda, notes, lists,
records, engineering drawings, technical
specifications and related documents and
other
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documents or papers (and all copies thereof)
relating to Molex, the Molex Business, any
of the Molex's Affiliates, any of their
respective successors and assigns, any
entity which might thereafter become an
Affiliate thereof or the business of such
Affiliates, including such items stored in
computer memories, microfiche or by any
other means, made or compiled by or on
behalf of Lumenon or made available to
Lumenon during the course of this Teaming
Agreement by Molex, its Affiliates or their
respective successors or assigns or any
entity which may hereafter become an
Affiliate thereof, shall remain the property
of Molex, its Affiliates or their respective
successors or assigns, and shall be
delivered to Molex promptly upon the
termination of this Teaming Agreement or at
any other time upon request. Lumenon shall
purge any and all copies of the data from
any computer storage medium or device and
provide Molex with written certification of
its compliance with such requirement.
(b) Patents, Trademarks, Copyrights and Mask Works.
Molex and its Affiliates shall retain ownership of any and all
patents, trademarks, copyrights, mask works which comprise part of
the Initial Molex Intellectual Property.
8.3 Contingent License Of Molex Intellectual Property. Upon
successful completion of the Teaming Project Phase if (i) Molex does not elect
to enter into the Marketing Phase or (ii) the Marketing Phase terminates through
no fault of Lumenon then, and only then, Molex grants, and Lumenon accepts, a
world-wide non-exclusive license to import, manufacture, reproduce, and/or sell
the Three Device Types embodying the Initial Molex Intellectual Property used in
connection with this Agreement. The license set forth in the preceding sentence
shall include the right of Lumenon to sublicense the Initial Molex Intellectual
Property for the sole purpose of manufacturing and/or reproducing products
embodying the Initial Molex Intellectual Property for delivery solely to Lumenon
for (i) Lumenon's use or (ii) sale by Lumenon. In such an event, Lumenon shall
pay Molex on a quarterly basis a royalty of twenty-five percent (25%) of the
Gross Cost incurred by Lumenon for each Three Device Type sold by Lumenon which
is directly attributable to the Three Device Type sold (the "Molex Royalty").
Such license is non-transferable. Lumenon shall maintain adequate records
evidencing the calculation of the Gross Cost related to each Molex Royalty (the
"Molex Royalty Records") for not less than two years from the date of the
payment of the Molex Royalty. On not less than 15 days' notice, the Molex
Royalty Records shall be made available to a duly authorized representative of
Molex during normal business hours (the "Molex Royalty Audit") in order that
Molex may verify such calculation. Molex may only conduct a Molex Royalty Audit
once per calendar year. Molex shall have a period of one year from the date of
any payment of the Molex Royalty to notify Molex in writing that Molex disagrees
with the calculation of the Molex Royalty following which such payments shall be
deemed final and in full satisfaction of Molex's rights thereto. Molex may
retain a recognized firm of chartered accountants reasonably acceptable to Molex
to conduct the Molex Royalty Audit, provided that such accountants shall enter
into a confidentiality agreement with
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Lumenon containing the provisions set forth in Section 8.1 of this Teaming
Agreement. Such audit shall be at the cost of Molex unless a shortfall of more
than 10% is established in the amount of the Molex Royalty during the audit
period, in which event Lumenon shall be under the obligation to reimburse Molex
twice the amount of such shortfall together with the cost of such audit. Lumenon
may dispute the findings of the audit pursuant to the dispute resolution
procedures of Section 10.14.
8.4 Non-Grant of Rights.
(a) Lumenon acknowledges that it has and will have no
right, title or interest in Initial Molex Intellectual Property or
technology other than as granted pursuant to this Teaming Agreement
and that it will not seek to obtain any patents, copyrights,
trademark rights, or other proprietary rights with respect thereto,
unless with the written consent and cooperation of Molex.
(b) Molex acknowledges that it has and will have no
right, title or interest in Initial Lumenon Intellectual Property
or technology other than as granted pursuant to this Teaming
Agreement and that it will not seek to obtain any patents,
copyrights, trademark rights, or other proprietary rights with
respect thereto, unless with the written consent and cooperation
of Lumenon.
8.5 Protection of Joint Intellectual Property.
(a) Generally. Both Molex and Lumenon acknowledge that
one of the primary purposes of this Teaming Agreement is to develop
marketable uses of the DWDM, POF, PHASIC and SOL-GEL Technologies,
including but not limited to the Three Device Types. Molex and
Lumenon agree that any information, inventions, innovations,
discoveries, improvements, ideas, developments, methods, designs,
reports, charts, drawings, analyses, concepts, original works of
authorship or similar information relating to the purposes of this
Teaming Agreement, including methods, technology, reports, records,
instructions, manuals, computer apparatus, programs and
manufacturing techniques, whether or not protectable by patent or
copyright, that have been originated, developed, made, conceived,
authored or reduced to practice ("Agreement Intellectual Property")
by Lumenon, its affiliates, Molex and/or its Affiliates jointly
during the term of this Teaming Agreement shall be the property of
and belong to both Molex and Lumenon, jointly.
(b) Disclosure of Intellectual Property. All Parties
shall promptly and fully disclose to the others the origination or
development of any Agreement Intellectual Property and shall provide
the others with any information that it may reasonably request about
the Agreement Intellectual Property.
-21-
(c) Obtaining Necessary Rights to Intellectual Property.
Lumenon and Molex shall obtain from their respective employees and
agents any rights vested with those employees and agents and shall
assign same, as well as any rights held by Lumenon and Molex, to
each other as joint owners of all of the Agreement Intellectual
Property. Lumenon and Molex shall sign and shall require their
employees and agents to sign all documents necessary or appropriate
and shall otherwise fully cooperate with each other in order to
enable both to register or otherwise perfect the joint ownership of
the Agreement Intellectual Property, including for the preparation
and prosecution of copyright applications, patent applications,
design patent applications or similar filings and the procurement
and maintenance thereof. Any and all writings, software and/or other
copyrightable subject matter have been created as a "work for hire"
and accordingly are the property of Lumenon and Molex, jointly. In
the event that the copyrightable subject matter cannot constitute
work made for hire for the benefit of both companies under
applicable law, or in the event that any employees and/or agents
should otherwise retain any rights to any Agreement Intellectual
Property, Lumenon and Molex both agree to contractually obligate
their employees to:
(i) assign, and upon creation
thereof automatically assign, all right,
title, and interest in and to such Agreement
Intellectual Property to Lumenon and Molex,
jointly, without further consideration and
waive any and all moral rights such
employees may have therein;
(ii) execute any documents of
assignment or registration of copyright
requested by the Parties respecting any and
all copyrightable subject matter as directed
by the Parties and any waiver of moral
rights in connection therewith;
(iii) xxxx all materials created
under this Teaming Agreement with a
proprietary notice as directed by Lumenon
and Molex and shall take all actions deemed
necessary by Company to perfect Company's
rights therein;
(iv) acknowledge that all right,
title, and interest in and to any programs,
systems, data, and materials furnished to
Employee by Lumenon and/or Molex are and
shall remain the property of each respective
Party or both Parties jointly.
8.6 Employees and Consultants of the Other
Parties. During the period of this Teaming Agreement and continuing for a period
of one year commencing on the date of the termination (for any reason, with or
without cause) of the Teaming Agreement, neither Party nor any of its agents
shall, without the prior written consent of the other party, directly or
indirectly, hire or solicit, or cause others to hire or solicit, for employment
or engagement by any Person any employee or consultant of the other Parties or
their Affiliates or their
-22-
respective successors or assigns or any person who was an employee or consultant
of any of such Parties at any time within the six-month period immediately prior
to the date on which such hiring would take place, or encourage any such
employee or consultant to leave such employee's or consultant's employment or
engagement.
8.7 Rights and Remedies Upon Breach. If
receiving Party and/or any of its agents breaches, or threatens to commit a
breach of, any of the provisions contained in this Section of the Teaming
Agreement (the "Restrictive Covenants"), the other Party shall have the
following rights and remedies, each of which rights and remedies shall be
independent of the others and severally enforceable, and each of which is in
addition to, and not in lieu of, any other rights and remedies available to
these Parties under law or in equity:
(a) Specific Performance. The right and remedy to have
the Restrictive Covenants specifically enforced by any court of
competent jurisdiction, it being agreed that any breach or
threatened breach of the Restrictive Covenants would cause
irreparable injury to the other Parties and that money damages would
not provide an adequate remedy to the other Parties.
(b) Accounting. The right and remedy to require the
receiving Party to account for and pay over to the other Parties all
compensation, profits, moneys, accruals, increments or other
benefits derived or received by the receiving Parties as the result
of any action constituting a breach of the Restrictive Covenants.
(c) Tolling. If the receiving Party engages in any
business in violation of the covenants set forth in this Teaming
Agreement, the running of the periods of limitation referred to in
this Section shall be tolled until such violation shall cease and
shall begin to run again only when the receiving Party shall be in
compliance with the provisions of such covenant, whether voluntarily
or pursuant to an order of a court.
(d) Severability of Covenants. The receiving Party
acknowledges and agrees that the Restrictive Covenants are
reasonable and valid in duration and geographical scope and in all
other respects. If any court determines that any of the Restrictive
Covenants, or any part thereof, is invalid or unenforceable, the
remainder of the Restrictive Covenants shall not thereby be affected
and shall be given full effect without regard to the invalid
portions.
(e) Blue-Pencilling. If any court determines that any of
the Restrictive Covenants, or any part thereof, is unenforceable
because of the duration or geographical scope of such provision,
such court shall have the power to reduce the duration or scope of
such provision, as the case may be, and, in its reduced form, such
provision shall then be enforceable.
-23-
(f) Enforceability in Jurisdictions. Lumenon and Molex
intend to and hereby confer jurisdiction to enforce the Restrictive
Covenants upon the courts of Illinois or any other jurisdiction
within the geographical scope of such Restrictive Covenants where
any breach of, or threatened breach of, any of the Restrictive
Covenants has occurred. If the courts of any one or more of such
jurisdictions hold the Restrictive Covenants unenforceable by reason
of the breadth of such scope or otherwise, it is the intention of
Lumenon and Molex that such determination not bar or in any way
affect the right of the other Parties to the relief provided above
in the courts of any other jurisdiction within the geographical
scope of such Restrictive Covenants, as to breaches of such
Restrictive Covenants in such other respective jurisdictions, such
Restrictive Covenants as they relate to each jurisdiction being, for
this purpose, severable into diverse and independent covenants.
Section 9
TERMINATION
9.1 Termination by Molex. Molex Inc. shall have
the right to terminate this Agreement following the occurrence of any of the
following events:
(a) failure to complete the Teaming Project Phase as a
result of Lumenon's failure to perform its obligations pursuant to
this Agreement within 13 months following the Effective Date or such
late date as the parties may agree; or
(b) Lumenon's failure to comply with the Schedule of
Work attached hereto as Exhibit 2; or
(c) Molex's final rejection of any of the Three Device
Types by Molex during the Teaming Project Phase based upon
reasonable evaluation against the outlined specifications set forth
in Exhibit 1 hereto; or
(d) Lumenon Parent's or LILT's voluntary or involuntary
entrance into liquidation or receivership, or dissolution, or the
filing of a petition for bankruptcy or reorganization or for
suspension of payments, or adjudication as a bankrupt, or becoming
insolvent, or making any composition of assets for the benefit of
creditors; or
(e) Lumenon or any person acting on behalf of Lumenon
taking any act which violates any law and adversely affects
Lumenon's performance of its obligations under this Teaming
Agreement or any other Molex's reputation or goodwill or the
occurrence of any event that shall have the effect of making
performance of Lumenon's obligations hereunder illegal under the
laws of the United States or Canada; or
(f) failure by Lumenon to fulfill any of its other
material obligations or agreements under this Teaming Agreement, and
if such failure is capable of being
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cured, such failure is not cured and remedied in full within thirty
(30) days after written notice is given to Lumenon by Molex; or
(g) Lumenon's failure to satisfy the closing conditions
specified in the Stock Purchase Agreement for the First Closing or
the Second Closing (each as defined in the Stock Purchase
Agreement); provided, however, that Molex shall not have the right
to terminate this Teaming Agreement pursuant to this Subsection
9.1(g) if Molex shall waive such closing conditions and consummate
the First Closing or Second Closing, as applicable.
9.2 Termination by Lumenon. Lumenon Parent shall
have the right to terminate this Agreement following the occurrence of any of
the following events:
(a) failure to complete the Teaming Project Phase before
the Project Completion Date as a result of Molex's failure to
perform its obligations pursuant to this Agreement; or
(b) Molex's failure to comply with the Schedule of Work
attached hereto as Exhibit 2; or
(c) Molex Inc.'s or Molex Fiber's voluntary or
involuntary entrance into liquidation or receivership, or
dissolution, or the filing of a petition for bankruptcy or
reorganization or for suspension of payments, or adjudication as a
bankrupt, or becoming insolvent, or making any composition of assets
for the benefit of creditors; or
(d) Molex or any person acting on behalf of Molex taking
any act which violates any law and adversely affects Molex's
performance of its obligations under this Teaming Agreement or
Lumenon's reputation or goodwill or the occurrence of any event that
shall have the effect of making performance of Molex's obligations
hereunder illegal under the laws of the United States or Canada; or
(e) failure by Molex to fulfill any of its other
material obligations or agreements under this Teaming Agreement, and
if such failure is capable of being cured, such failure is not cured
and remedied in full within thirty (30) days after written notice is
given to Molex by Lumenon.
9.3 Termination if No Second Closing at Molex's
Election. Unless otherwise agreed by Molex Inc. and Lumenon Parent, this Teaming
Agreement shall terminate immediately upon the date of the Second Closing if
Molex elects not to purchase shares of Common Stock pursuant to Section 1.6 of
the Stock Purchase Agreement.
9.4 Continuation of Certain Terms of this
Teaming Agreement. Following termination of this Teaming Agreement Sections 1,
4(i)(e), 5, 6, 7, 8 (provided, however, that
-25-
Section 8.3 shall only survive if the parties agree that the Teaming Project
Phase has been successfully completed as of the date of termination) and 10
shall remain in force in perpetuity. Notwithstanding the foregoing sentence,
Section 8.1(c) shall not survive termination of this Teaming Agreement if this
Teaming Agreement shall terminate pursuant to Section 9.3 hereof.
Section 10
OTHER PROVISIONS
10.1 Relationship of the Parties. The
relationship between Molex and Lumenon under this Teaming Agreement shall not be
seen as creating a partnership, joint venture, or association of any other kind.
(a) Lumenon shall be in no way authorized to make any
contract, agreement, warranty or representation on behalf of Molex
or to create any obligation on the behalf of Molex. Lumenon agrees
not to hold itself out as an agent of Molex. Lumenon shall be
responsible for and pay all federal, state, local or foreign income,
employment, social security and other taxes relating to its
engagement hereunder.
(b) Molex shall be in no way authorized to make any
contract, agreement, warranty or representation on behalf of Lumenon
or to create any obligation on the behalf of Lumenon. Molex agrees
not to hold itself out as an agent of Lumenon. Molex shall be
responsible for and pay all federal, state, local or foreign income,
employment, social security and other taxes relating to its
engagement hereunder.
10.2 Notices. Any notice or other communication
required or permitted hereunder shall be in writing and shall be delivered
personally, sent by facsimile transmission or sent by a nationally-recognized
overnight delivery service or by certified or registered mail, postage prepaid,
return receipt requested. Any such notice shall be deemed given when so
delivered personally or sent by facsimile transmission (with request of
assurance of receipt in a manner customary for communication of such type) and
on the date of actual receipt if sent by a nationally recognized overnight
delivery service or if mailed, as follows:
(a) if to Molex, to:
Molex Incorporated
0000 Xxxxxxxxxx Xxxxx
Xxxxx, XX 00000
Attention: Xxxxx Xxxxx, Corporate Secretary and
General Counsel and
Xxxxxx Xxx, Vice President,
New Ventures and Acquisitions
Fax: (000) 000-0000
-26-
with a copy to:
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
8000 Sears Tower
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxx, Esq.
Fax No. (000) 000-0000
(b) if to Lumenon, to:
Lumenon Innovative Lightwave Technology, Inc.
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxxx X0X 0X0, Xxxxxx
Attention: Xx. Xxxx X. Xxxxxx
Fax No. (000) 000-0000
with a copy to:
De Grandpre Chaurette Xxxxxxxx
2000 XxXxxx College Avenue, Suite 1600
Xxxxxxxx, Xxxxxx X0X 0X0
Attention: Xxxxxx Xxxxxxx
Fax No. (000) 000-0000
Either Party may change its contact person, address and facsimile
number for notice hereunder by notice to the other Party hereto.
10.3 Entire Agreement. This Teaming Agreement
contains the entire agreement between the Parties with respect to the subject
matter hereof and supersedes all prior discussions and agreements, written or
oral, with respect thereto. This Teaming Agreement shall be read in association
with the Stock Restriction and Stock Purchase Agreements.
10.4 Time of the Essence. Time is of the essence
for this Agreement.
10.5 Force Majeure. No liability hereunder shall
result to either Party from delay in performance or non-performance caused by
circumstances beyond the reasonable control of that party, such as acts of God,
fire, flood or other casualty, failure of utilities, war or government action.
In the event of any delay in a party's performance due in whole or in part to
any cause beyond that party's reasonable control, that Party shall promptly
notify the other Party in writing of such event and shall have such additional
time for performance as may be reasonably necessary under the circumstances.
Notwithstanding the foregoing, if such
-27-
event continues for more than thirty (30) days, Molex may cancel any order with
respect to any products not delivered and purchase products elsewhere, and Molex
shall be under no obligation to accept or pay for the same or compensate Lumenon
for any expense which it may have incurred.
10.6 Exclusion of Consequential Damages. IN NO
EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY AND ITS SUCCESSORS OR
ASSIGNS, FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES, INCLUDING, WITHOUT
LIMITATION, LOST PROFITS, COSTS OF DELAY, ANY FAILURE OF DELIVERY, COSTS OF LOST
OR DAMAGED DATA OR DOCUMENTATION, OR OTHER LIABILITIES TO THIRD PARTIES ARISING
FROM ANY SOURCE.
10.7 Waivers and Amendments. This Teaming
Agreement may be amended, superseded, canceled, renewed or extended, and the
terms and conditions hereof may be waived, only by a written instrument signed
by the Parties or, in the case of a waiver, by the Party waiving compliance. No
delay on the part of any Party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof. No waiver on the part of any Party
of any right, power or privilege hereunder, or any single or partial exercise of
any right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege
hereunder.
10.8 Governing Law and Enforcement. This Teaming
Agreement shall be governed by and construed in accordance with the laws of the
State of Illinois, U.S.A. and enforcement of this Teaming Agreement or any
action taken or held with respect to this Teaming Agreement may be taken in the
courts of appropriate jurisdiction in Illinois. Each of the Parties agrees that
if, at the commencement of or during such action, a Party does not then reside
within the jurisdiction of that court before which the action is brought, that
Party will submit to the jurisdiction of that court and will accept service of
process and any other papers, orders or judgments by any method permitted by the
rules of that court, by mail, by private process server or by any other method
ordered by the court.
10.9 Assignment and Subcontracting. Neither Party
may delegate its duties hereunder without the prior written consent of the other
party. This Teaming Agreement shall not be assignable by either party. Any
attempt by either Party to delegate any of its duties or to assign any of its
rights hereunder without the written prior consent of the other Party shall be
null and void. Notwithstanding the foregoing provisions of this Section 10.9,
Molex Fiber may, without the prior consent of Lumenon, transfer this Teaming
Agreement to (i) Molex Inc. or (ii) any wholly-owned subsidiary of Molex Inc. if
such subsidiary acquires substantially all the operations of Molex Fiber and
provided that Molex Inc. shall be responsible for the performance by such
Affiliate of its obligations pursuant to this Agreement.
-28-
10.10 Counterparts. This Teaming Agreement may be
executed in separate counterparts, each of which when so executed and delivered
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
10.11 Headings. The headings in this Teaming
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Teaming Agreement.
10.12 Severability. This Teaming Agreement shall
be deemed severable and the invalidity or unenforceability of any term or
provision shall not affect the validity or enforceability of this Teaming
Agreement or of any other term or provision hereof.
10.13 Parties in Interest. Except as expressly
contemplated hereby, this Teaming Agreement shall be binding upon and inure
solely to the benefit of each Party hereto, and nothing in this Teaming
Agreement is intended to confer upon any other Person any rights or remedies of
any nature whatsoever under or by reason of this Teaming Agreement. Affiliates,
successors and assigns of Molex and Lumenon are expressly entitled to the
benefits inuring to them under this Teaming Agreement.
10.14 Dispute Resolution. In the event of any
dispute, claim, question, or disagreement arising from or relating to this
Teaming Agreement or the breach thereof, the Parties hereto shall attempt to
settle the dispute, claim, question, or disagreement. To this end, they shall
consult and negotiate with each other in good faith and attempt to reach a just
and equitable solution satisfactory to both Parties . If they do not reach such
solution within thirty days, then, upon notice by either Party to the other,
dispute claims, questions, or difference shall be settled by binding arbitration
under the Commercial Rules of Arbitration of the American Arbitration
Association by open arbitrator appointed in accordance with said rules. The
arbitrator shall apply Illinois law to the merits of any dispute or claim,
without reference to rules of conflict or law or arbitration. The arbitrator's
award shall be in writing and shall specify the factual and legal bases for the
award. The arbitrator will have no authority to issue an injunction or to award
punitive or other damages not measured by the prevailing party's actual damages
and may not, in any event, make any ruling, finding, or award that does not
conform to the terms and conditions of this Teaming Agreement. Judgment on the
award rendered by the arbitrator may be entered in any court having jurisdiction
hereof. The arbitral proceedings and all pleadings and written evidence shall be
in English language. Any written evidence originally in language other than
English shall be submitted in English translation accompanied by the original or
a true copy thereof. Neither Party nor an arbitrator may disclose the existence,
contest, or results of any arbitration hereunder without the prior written
consent of both Parties . Notwithstanding the foregoing, the Parties may apply
to any court of competent jurisdiction for injunctive relief without breach of
this arbitration provision.
-29-
IN WITNESS WHEREOF, the Parties have executed this
Teaming Agreement as of the date first above written.
MOLEX INCORPORATED
By:
-------------------------------
Name:
-----------------------------
Its:
------------------------------
MOLEX FIBER OPTICS, INC.
By:
-------------------------------
Name:
-----------------------------
Its:
------------------------------
LILT CANADA INC.
By:
-------------------------------
Name:
-----------------------------
Its:
------------------------------
LUMENON INNOVATIVE LIGHTWAVE
TECHNOLOGY, INC.
By:
-------------------------------
Name:
-----------------------------
Its:
------------------------------
-30-
EXHIBIT 1
Preliminary Data Sheet for Dense WDM Multiplexer and Demultiplexer
----------------------------------------------------- ----------------------------------------------------
Specification Parameter
----------------------------------------------------- ----------------------------------------------------
----------------------------------------------------- ----------------------------------------------------
8, 16, 32 Number of channels
----------------------------------------------------- ----------------------------------------------------
----------------------------------------------------- ----------------------------------------------------
200 GHz, 100 GHz Channel spacing
----------------------------------------------------- ----------------------------------------------------
----------------------------------------------------- ----------------------------------------------------
+0.1 nm Channel center accuracy
----------------------------------------------------- ----------------------------------------------------
----------------------------------------------------- ----------------------------------------------------
>0.3 nm @ 100 GHz spacing Channel width (3 dB)
>1.0 nm @ 200 GHz spacing
----------------------------------------------------- ----------------------------------------------------
----------------------------------------------------- ----------------------------------------------------
<5 dB for 32 Channel Optical insertion loss
<4 dB for 16 Channel
<4 dB for 8 Channel
----------------------------------------------------- ----------------------------------------------------
----------------------------------------------------- ----------------------------------------------------
<1.5 dB Insertion loss uniformity
----------------------------------------------------- ----------------------------------------------------
----------------------------------------------------- ----------------------------------------------------
>35 dB Optical return loss
----------------------------------------------------- ----------------------------------------------------
----------------------------------------------------- ----------------------------------------------------
<-30 dB Optical crosstalk
----------------------------------------------------- ----------------------------------------------------
----------------------------------------------------- ----------------------------------------------------
0(degree)C to 70(degree)C Operating temperature range
----------------------------------------------------- ----------------------------------------------------
----------------------------------------------------- ----------------------------------------------------
-40(degree)C to 85(degree)C Storage temperature range
----------------------------------------------------- ----------------------------------------------------
----------------------------------------------------- ----------------------------------------------------
+5 GHz over operating temperature range Temperature dependence of channel
center frequency
----------------------------------------------------- ----------------------------------------------------
----------------------------------------------------- ----------------------------------------------------
+0.5 dB over operating temperature Temperature dependence of insertion
range loss
----------------------------------------------------- ----------------------------------------------------
----------------------------------------------------- ----------------------------------------------------
Open Dimensions
----------------------------------------------------- ----------------------------------------------------
----------------------------------------------------- ----------------------------------------------------
Standard SM Fiber
----------------------------------------------------- ----------------------------------------------------
----------------------------------------------------- ----------------------------------------------------
Customer specified Connector
----------------------------------------------------- ----------------------------------------------------
-31-
EXHIBIT 2
---------
Article 1 Define details target specification for 8, 16,
and 32 channel DWDM multiplexers/demultiplexers.
Article 2.1
Title:
Material and process development
Purpose:
Determine specific device parameters needed
to produce final devices by iteratively producing
waveguide devices and measuring characteristics.
Output:
Device parameters are acceptable input to
Article 3, allowing successful design of devices Primary
responsibility:
Lumenon
Facilities/Equipment:
Molex Fiber Optics clean room
Personnel:
2 Lumenon engineers @ Molex Fiber Optics
Timeline:
Months 1-6
Article 2.2
Title:
Pigtailing and packaging development
Purpose:
Determine pigtailing and packaging strategy.
Output:
Acceptable pigtailing method is developed
that satisfies coupling requirements over specified
range of environmental conditions.
Responsibility:
o Molex Fiber Optics to design/test pigtailing
o Lumenon to assist in design/test
Facilities/Equipment:
Molex Fiber Optics clean room
Personnel:
o 1 Molex Fiber Optics engineer
o 1 Lumenon engineer @ Molex Fiber Optics
Timeline:
Months 1-6
-32-
Article 2.3
Title:
Sol-gel chip reliability
Purpose:
Determine environmental effects on sol-gel
waveguides.
Output:
Determination whether sol-gel waveguides can
handle Bellcore environmental stresses under (i)
unpackaged, (ii) encapsulated, or (iii) hermetically
packaged conditions Responsibility:
o Lumenon to provide sol-gel waveguides
o Lumenon to provide characterization of
waveguides
o Molex Fiber Optics to perform environmental
testing
Facilities/Equipment:
Molex Fiber Optics environmental chamber
Personnel:
o 1 Lumenon engineer @ Lumenon
o 1 Molex Fiber Optics engineer
Timeline:
Months 1-2
Article 3
Title:
Device design
Purpose:
Design fully functional devices as specified
in Article 1 Output:
o Successful design of functional devices
using device parameters determined in
Article 2.1
o Photolithography mask sets needed to
fabricate devices
Responsibility:
Lumenon
Facilities/Equipment:
None
Personnel:
1 Lumenon engineer @ Lumenon
Timeline:
Month 7
-33-
Article 4
Title:
Device manufacturing/first article
Purpose:
Build fully functional, packaged devices
that can be sampled to customers Output:
5 fully packaged, functional devices of each
device type meeting the parameters specified in Article
1 Responsibility:
o Device fabrication; Lumenon
o Device packaging: Molex Fiber Optics
o Device characterization: Lumenon
o Environmental testing: Molex Fiber Optics
Facilities/Equipment:
o Molex Fiber Optics clean room
o Molex Fiber Optics environmental testing
xxxxxxxx
o Lumenon characterization facility
o Molex-supplied equipment needed for
characterization Personnel:
o 3 Lumenon engineer @ Molex Fiber Optics
o 1 Lumenon engineer @ Lumenon
o 2 Molex Fiber Optics engineers
Timeline:
Months 8-13
-34-
EXHIBIT 3
---------
--------------------------------------------------------------------------------
Employer Job Description Salary Travel & Living
--------------------------------------------------------------------------------
Molex Packaging Engineer $150,000 $25,000
--------------------------------------------------------------------------------
Molex Reliability & Testing Engineer $150,000 $25,000
--------------------------------------------------------------------------------
Molex Clean Room Technician $150,000 $25,000
--------------------------------------------------------------------------------
Molex Program Coordinator $200,000 $50,000
--------------------------------------------------------------------------------
-35-
EXHIBIT 4
---------
TERMS AND CONDITIONS OF PURCHASE AND SALE
ALL PURCHASES AND SALES OF PRODUCTS UNDER THE MARKETING PHASE OF
THIS TEAMING AGREEMENT ARE SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS:
1. Agreement. These terms and conditions shall govern all purchases and
sales of Products under the Teaming Agreement between seller
("Seller") and buyer ("Buyer"). No terms or conditions in any way
adding to, modifying or otherwise changing the provisions stated
herein shall be binding upon either party unless made in writing and
signed and approved by an officer of both Parties . These terms will
not be modified by Seller's shipment of Products following receipt
of Buyer's purchase order, shipping request or similar forms
containing printed terms and conditions conflicting or inconsistent
with the terms herein, or by Seller's use of its own sales forms
with printed terms and conditions conflicting or inconsistent with
the terms herein.
2. Orders Subject to Acceptance. All orders are subject to acceptance
in writing by Seller at its principal office. An acknowledgement of
each order must be returned by Seller to Buyer promptly after the
receipt of same, and must contain price and definite delivery data.
Signing of an acknowledgement, or holding an order ten (10) days or
longer, shall constitute an acceptance of an order.
3. Prices. All prices are F.O.B. Factory and shall be quoted in U.S.
dollars, and exclude all federal, state or local taxes. All taxes
and excises of any nature whatsoever now or hereafter levied by
governmental authority, whether federal, state or local, either
directly or indirectly, upon the sale or transportation of any goods
covered hereby, shall be paid and borne as agreed by the parties
pursuant to Section 4 of the Teaming Agreement.
4. Payment. All accounts shall be paid in U.S. dollars net at Seller's
principal office within thirty (30) days after the date of invoice
or date of shipment, whichever is later. A service charge of the
lesser of 1 1/2% per month or the maximum permissible rate will be
added to all past due accounts.
5. Material and Manufacture. All material must conform strictly to
specifications. On any new parts, a sample must be approved by Buyer
before Seller proceeds with manufacture of a quantity run.
6. Quantity. Seller must furnish the entire quantity ordered hereunder
and said quantity cannot be varied by Seller unless Buyer's director
of purchasing agrees in writing to accept a different quantity.
Buyer reserves the right to reject any
-36-
unauthorized quantities and to return same to Seller at Seller's
risk and expense. Notwithstanding the foregoing, Seller shall have
the option, upon written notice to Buyer, of manufacturing, shipping
and billing a portion of Buyer's order and later, within the time
specified in Buyer's order, manufacturing, shipping and billing the
remainder of any such order.
7. Delivery Terms. Seller will attempt to meet the requirements of
Buyer's delivery schedule but shall be obligated only to the
delivery schedule shown on the order acknowledgment. All delivery
expenses, including transportation, insurance and other shipping
costs, shall be for Buyer's account.
8. Title/Risk of Loss. Delivery of goods to carrier shall be deemed
delivery to Buyer, and thereupon title to such goods, and risk of
loss or damage, shall be Buyer's. Any claim by Buyer against Seller
for shortage or damage occurring prior to such delivery must be made
in writing within thirty (30) days after receipt of shipment and
accompanied by original transportation xxxx signed by carrier noting
that carrier received goods from Seller in the condition claimed.
Any claim by Buyer for damage occurring during shipment shall be
made directly against the freight carrier, with a copy of such claim
promptly forwarded to Seller.
9. Buyer's Inspection. All Products purchased hereunder will be subject
to Buyer's right of inspection and rejection. Buyer shall have
thirty (30) days from receipt of the Products to inspect them and to
notify Seller of any nonconformance. Buyer may reject any Products
which do not conform to the terms of this Agreement or any order,
or, with Seller's consent, may repair or correct them at Seller's
cost. If rejected, they will be held for disposition at Seller's
risk and expense. Any payment on account thereof will be promptly
refunded by Seller. Any inspection by Buyer of Products at Seller's
plant during or after manufacture, whether or not such inspection at
said plant is provided for by the terms hereof, shall be provisional
only, and shall not constitute final inspection, nor be construed as
a waiver of the foregoing right of inspection and rejection after
receipt of same.
10. Buyer's Changes. Buyer shall have the right at any time to make
changes in drawings, specifications, or both of them, relating to
any order by giving Seller written notice of such change. If such
changes cause an increase or decrease in the amount due under an
order or in the time required for Seller's performance, an equitable
adjustment shall be made by mutual agreement between the Parties
hereto.
11. Cancellation. Buyer reserves the right to cancel all or any part of
the undelivered portion of any order if Seller does not make
deliveries as specified, time being of the essence of this contract,
or if Seller breaches any of the terms hereof including, without
limitation, the warranties of Seller. Any provisions herein for
delivery of Products or the rendering of services by installments
shall not be construed as making the obligations of Seller
severable.
-37-
12. Buyer's Termination. Buyer may at any time for its convenience
terminate any order, in whole or in part, by written or by facsimile
notice, or by verbal notice confirmed in writing. If an order is
terminated for Buyer's convenience, any claim of Seller shall be
settled on the basis of the reasonable costs it has incurred in the
performance of that order, plus five percent (5%).
13. Force Majeure. No liability hereunder shall result to either party
from delay in performance or non-performance caused by circumstances
beyond the reasonable control of that party, including, but not
limited to, acts of god, fire, flood or other casualty, war,
government action, accident, labor strikes or other difficulty, or
shortage of or inability to obtain fuel, energy, material, equipment
or transportation. In the event of any delay in a party's
performance due in whole or in part to any cause beyond that party's
reasonable control, that party shall promptly notify the other party
in writing of such event and shall have such additional time for
performance as may be reasonably necessary under the circumstances.
Notwithstanding the foregoing, if such event continues for more than
thirty (30) days Buyer may cancel any order with respect to any
Products not delivered and purchase products elsewhere, and Buyer
shall be under no obligation to accept or pay for the same or
compensate Seller for any expense which it may have incurred.
14. Warranty and Disclaimer. Seller warrants to Buyer that any Products
sold hereunder will be free from defects in workmanship and
materials under normal conditions of use for six (6) months from the
date of delivery to Buyer. This warranty will survive acceptance of
the Products.
THE FOREGOING WARRANTY IS IN LIEU OF AND EXCLUDES ALL OTHER
WARRANTIES ON THE PRODUCTS WHETHER EXPRESS OR IMPLIED BY OPERATION
OF LAW OR OTHERWISE, INCLUDING BUT NOT LIMITED TO ANY IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS.
Seller's liability and Buyer's sole remedy hereunder for a breach of
warranty is expressly limited, at Seller's election, to repair or
replacement (in the form originally shipped) of Products not
complying with this agreement, or to the repayment of, or crediting
Buyer with, an amount equal to the purchase price of such Products.
Any claim by Buyer with reference to the Products sold hereunder for
any cause shall be deemed waived by Buyer unless submitted to Seller
in writing within ninety (90) days from the date Buyer discovered,
or should have discovered, any claimed breach.
15. Limitation of Remedies. Seller shall not be liable for incidental or
consequential losses, damages or expenses, directly or indirectly
arising from the sale, handling or use of the Products, or from any
other cause with respect to the Products or any
-38-
order, whether such claim is based upon breach of contract, breach
of warranty, strict liability in tort, negligence or any other legal
theory.
16. Security. If Buyer fails to fulfill the terms of payment or if
Seller shall have any doubt at any time as to Buyer's financial
condition, Seller may decline to make further deliveries except upon
receipt of cash or satisfactory security. This requirement will not
release Buyer from any previous obligation. Seller's rights under
this Section shall be in addition to all other rights and remedies
available to Seller upon Buyer's default.
17. Compliance with Laws. In fulfilling this order, Seller shall comply
with all applicable laws and governmental regulations and orders,
federal, state, local and foreign. With respect to goods produced in
the United States, Seller specifically warrants that all goods
furnished hereunder will be produced and sold in compliance with all
applicable requirements of the Fair Labor Standards Act, as amended,
including Section 6, 7 and 12, and the regulations and orders issued
under Section 14 thereof, and that it will certify such compliance
on each invoice submitted in connection with this order.
18. Seller's Indemnification. Seller shall indemnify and hold harmless
Buyer, and its successors, assigns, employees and agents, from and
against all claims, direct losses, penalties, damages (excluding
incidental and consequential damages), costs and expenses (including
reasonable attorneys' fees) arising out of (a) any alleged or actual
infringement or contributory infringement of any letters patent or
trade secrets or trademarks or service marks by reason of the use,
sale or lease of any Products purchased hereunder, excepting
unpatented staple articles of commerce, Products manufactured in
accordance with Buyer's design, or otherwise non-infringing Products
incorporated into a product of Buyer, (b) any alleged or actual
defects in the Products, whether latent or patent, and whether of
design, warning or manufacture, (but excluding any claims arising
out of designs provided by Buyer), or (c) any alleged or actual
failure of the Products to include necessary safety features or
otherwise conform to the requirements of any federal, state or local
health or safety law, standard regulation or ordinance, when used in
a manner and for a purpose intended by Seller. Buyer shall duly
notify Seller of any such claims, proceedings or suits, and Seller
shall, at its own expense, defend all claims, proceedings or suits
against Buyer, its successors, assigns, officers directors,
employees or agents, in which any of the aforesaid claims are
alleged. At its own expense, Buyer may be represented by counsel of
its own choosing in connection with any such claim, proceeding or
suit. In the event that it is determined that Seller was not solely
responsible for the entire claim, Buyer shall reimburse Seller for
any expenses Seller has incurred under this provision on a pro rata
basis in proportion to each party's or third party's share of the
responsibility for the claim. In addition, if Seller fails timely to
deliver Products ordered hereunder, Seller shall reimburse Buyer for
the cost of any work in process for a customer that is cancelled as
a result of such delay or parts in Buyer's inventory which have
become obsolete as a result of such delay.
-39-
19. Insurance. Seller agrees to procure and maintain, at its own
expense, products liability and other appropriate insurance covering
Seller's obligations hereunder, and including Buyer as one of the
name insureds. Seller agrees to furnish evidence of said insurance
satisfactory to Buyer as Buyer may request from time to time. All
policies of insurance procured or maintained hereunder (a) shall
provide that coverage thereunder shall not be terminated without ten
(10) day's written notice to Buyer, and (b) shall apply separately
to each insured against whom claim is made or suit is brought and
shall contain no provision which excludes coverage under a claim
made by one insured under the policy against another insured under
the policy.
20. Assignment; Subcontracting. This order may not be assigned or
subcontracted by Buyer or Seller, in whole or in part.
21. Waiver. Waiver by either party of any breach of these terms and
conditions shall not be construed as a waiver of any other breach,
and failure to exercise any right arising from any default hereunder
shall not be deemed a waiver of such right which may be exercised at
any subsequent time.
22. Severability. In the event that any one or more of these terms or
conditions is held invalid, illegal or unenforceable, such provision
or provisions shall be severed and the remaining terms and
conditions shall remain binding and effective.
23. Controlling Law. Except as otherwise provided herein, this agreement
and all rights and obligations hereunder, including matters of
construction, validity and performance, shall be governed by the
internal laws of the state of Illinois, including the Uniform
Commercial Code as enacted in that jurisdiction, without giving
effect to that jurisdiction's choice of law principles. This
agreement will not be governed by the U.N. Convention on Contracts
for the International Sale of Goods.
