EXHIBIT 10.27
TECHNICAL LICENSING AGREEMENT
ON
FIBER OPTIC PRODUCTS
THIS AGREEMENT, made and entered into on December 17, 1997, by and between
E-TEK DYNAMICS, INC., a California corporation, with its principal place of
business at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ("E-TEK") and WALSIN
LIHWA CORPORATION, a corporation organized and existing under the laws of the
Republic of China, with its principal place of business at 12th Floor, 117,
Section 3, ▇▇▇▇ ▇▇▇▇▇ East Road, Taipei, Taiwan ("WALSIN"). Any term that is in
capital letters and listed in the attached Appendix A shall have the meaning set
forth therein.
WITNESSETH:
WHEREAS, E-TEK is engaged in the development, manufacture and sale of fiber
optic products; and,
WHEREAS, E-TEK has acquired and possesses technical knowledge, information,
experience, know-how and data concerning the manufacture of such products; and,
WHEREAS, WALSIN desires to be licensed under PATENTS, and to be granted
rights to use the PATENT INFORMATION and TECHNICAL INFORMATION (collectively,
"Information") in connection with the design and manufacture of LICENSED
PRODUCTS; and,
WHEREAS, E-TEK is willing to grant such licenses and rights on the terms
and conditions provided hereunder; and,
WHEREAS, the Parties are contemplating entering into a written agreement to
form under Taiwanese laws a third-party company limited by shares ("JV") that
would, among other things: (i) manufacture and sell LICENSED PRODUCTS with the
use of the PATENTS and the Information; and, (ii) assume all rights and
obligations of WALSIN under this Agreement.
NOW, THEREFORE, for good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
GRANT OF LICENSES AND RIGHTS
1.1. (a) Subject to the provisions of Articles III and VIII, E-TEK grants to
WALSIN under the PATENTS personal and nontransferable (except as otherwise
provided in Section 8.1(b)) licenses: (i) to make LICENSED PRODUCTS on a
nonexclusive basis in Taiwan and in the People's Republic of China ("PRC"), and
only in Taiwan and the PRC; and, (ii) to use, offer for sale and sell the
LICENSED PRODUCTS on a nonexclusive basis, and only in the following countries:
Japan, PRC, Indonesia, Malaysia, Philippines, Taiwan, North Korea, South Korea,
Singapore, Thailand, Vietnam, Australia and New Zealand (collectively, the
"Pacific Rim Countries"). The foregoing licenses do not include any sublicensing
or have-made rights, nor the right to make, have made, use, sell, offer for sale
or import devices other than
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LICENSED PRODUCTS. No license or right is granted herein to any E-TEK patents
not included in the PATENTS.
(b) All licenses granted in Section 1.1(a) under the PATENTS shall
continue until terminated pursuant to Article VII or until the PATENTS expire,
whichever is first to occur.
1.2. (a) Subject to the provisions of Articles III and VIII, E-TEK also grants
to WALSIN a personal and nontransferable (except as otherwise provided in
Section 8.1(b)) license under the Information: (i) to use the Information on a
nonexclusive basis in Taiwan and in the PRC, and only in Taiwan and the PRC, in
connection with WALSIN's efforts to design, test, manufacture and assemble
LICENSED PRODUCTS; and, (ii) to use, offer for sale and sell any resulting
LICENSED PRODUCTS on a nonexclusive basis, and only in the Pacific Rim
Countries. The foregoing license does not include any sublicensing or have-made
rights, nor the right to use the Information for any purpose other than the
design, manufacture, test and assembly of LICENSED PRODUCTS.
1.3. The Information may be disclosed to WALSIN's raw material suppliers solely
for their use to help WALSIN manufacture and assemble LICENSED PRODUCTS,
provided that: (i) before disclosing any such Information, WALSIN must first
disclose to E-TEK the identity of such supplier and enter into a confidentiality
agreement with such supplier with terms substantially similar to those contained
in the template agreement attached hereto as Exhibit C; and, (ii) WALSIN must
diligently initiate and fully prosecute legal action against any supplier
suspected of breaching any such confidentiality agreement, where such breach is
causing, or likely to cause, any adverse consequences to WALSIN or E-TEK.
1.4. During the first twenty-one months of this Agreement after the date first
set forth above, each party shall provide to the other party, promptly and free
of charge, any revisions to the Information. WALSIN's rights to any such
revisions provided by E-TEK shall be as set forth in Section 1.2, above. E-TEK's
rights to any such revisions provided by WALSIN shall be as follows: WALSIN
hereby grants to E-TEK an irrevocable, perpetual, nonexclusive license under
such Information to make, have made, use, offer for sale, sell, import and
sublicense E-TEK's products. Neither party shall have any other obligation to
provide other improvements to the PATENTS or Information to the other party.
ARTICLE II
FURNISHING OF INFORMATION AND SERVICES
2.1. Subject to the provisions of Articles III and VIII, E-TEK shall furnish two
copies, in the English language, of the Information to WALSIN, to the extent
such information exists in tangible form, and in accordance with the estimated
technology licensing schedule on the attached Appendix B.
2.2. Engineers and/or technicians dispatched by WALSIN shall be given the
opportunity, at the request of WALSIN, to receive a reasonable amount of
theoretical and practical training at E-TEK's facilities to help facilitate the
licensing of Information. Any such training shall be given in the English
language or, at E-TEK's option, in the Mandarin language. The training shall be
adequate to ensure that qualified WALSIN engineers and technicians can
manufacture, at E-TEK's facilities, samples of the LICENSED PRODUCTS that meet
or exceed E-TEK's
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current standards. WALSIN shall be solely responsible for all costs and expenses
relating to the travel, lodging and meals of its employees and agents.
2.3. During the term of this Agreement, E-TEK shall provide reasonable
assistance to promote WALSIN's efforts to set up manufacturing facilities in
Taiwan for LICENSED PRODUCTS and design, test, manufacture and assemble LICENSED
PRODUCTS. WALSIN shall pay, and be solely responsible for, all costs and
expenses relating to such assistance by E-TEK, including the transportation,
lodging and meals of the E-TEK employees and agents, and excluding only the
salaries of such E-TEK employees and agents.
2.4. WALSIN acknowledges that (i) the Information provides data solely on E-
TEK's LICENSED PRODUCTS; (ii) such Information does not constitute
specifications for LICENSED PRODUCTS; and, (iii) WALSIN shall be solely
responsible for designing and manufacturing LICENSED PRODUCTS.
2.5. WALSIN shall not re-export any technical data received from E-TEK, nor does
it intend to ship, directly or indirectly, any Information or any products
derived directly therefrom, except as may be specifically authorized by United
States law under U.S. Department of Commerce export control regulations. E-TEK
shall assist WALSIN in these efforts by providing WALSIN with a brief indication
on what E-TEK believes are general areas of concern on this issue; it being
understood by the parties that any such indication is neither legal advice nor a
legal opinion, and that WALSIN shall be solely responsible for fulfilling its
obligations under this section.
ARTICLE III
PAYMENT AND TAXES
3.1. (a) In consideration for E-TEK's performance under this Agreement, WALSIN
shall pay to E-TEK, by wire transfer of immediately available funds to an
account(s) designated by E-TEK, the sum of Seven Million Dollars, in lawful
money of the United States (US$7,000,000) (the "License Fee"), which shall be
payable in accordance with the following: thirty percent of the License Fee
shall be payable immediately upon receipt by WALSIN of any Taiwanese
governmental approvals of tax-exempt status of the License Fee, but in no event
any later than one hundred twenty days from the above date of this Agreement;
payment of the remaining seventy percent of the License Fee shall be made at
such time and in such increments as is hereafter agreed by the parties, but in
any event, such balance shall be paid in full within twenty-one months of the
above date of this Agreement, and in no more than three installments. The
License Fee shall be net of any Taiwanese taxes and similar liabilities,
including withholding taxes. WALSIN shall pay, reimburse E-TEK for, and hold E-
TEK harmless from, any and all such liabilities.
(b) Time is of the essence with respect to WALSIN's payment of the License
Fee. Any scheduled payment that is not made in full when due shall have a one
and one-half percent (1.5%) per month late payment charge assessed against any
unpaid balance thereof from the stated due date until the actual date of
payment. If such rate exceeds the maximum legal rate, then the legal rate shall
instead apply. E-TEK reserves the right to withhold its performance hereunder
during any period when outstanding payments payable by WALSIN become or remain
past due.
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ARTICLE IV
DISCLAIMER AND LIMITED WARRANTY
4.1. Nothing contained in this Agreement shall be construed as, with respect to
E-TEK:
(i) requiring the securing of any patent or the maintaining of
any patent in force;
(ii) a warranty or representation as to the validity or scope of
any PATENT;
(iii) a warranty or representation that any design, manufacture,
sale, use or importation will be free from infringement of patents or other
intellectual property rights of any third party (other than the warranty
set forth in Section 4.2., below);
(iv) an agreement to bring or prosecute actions or suits against
third parties for infringement;
(v) conferring any right to use, in advertising, publicity or
otherwise, any name, trade name, trademark, service ▇▇▇▇, or any
contraction, abbreviation or simulation thereof;
(vi) an obligation to furnish any information or service, except
as provided in Article II;
(vii) conferring by implication, estoppel or otherwise any license
or other right under any patent or other intellectual property, except as
expressly granted herein;
(viii) any arrangement or understanding to make any purchase, lease,
examination or test of, or give any approval with respect to, any product
(including LICENSED PRODUCTS) or any service; or,
(ix) any obligation to make any determination as to the
applicability of any PATENT to any product (including LICENSED PRODUCTS).
4.2. (a) E-TEK warrants and represents that there are no commitments or
restrictions which shall limit the licenses and rights which are purported to be
granted to WALSIN hereunder, and that, to the best of its knowledge, neither the
Patents nor the Information infringe any third party's intellectual property
rights as of the above date of this Agreement.
(b) E-TEK makes no representations, extends no warranties of any kind
other than those specified in Section 4.2(a), and assumes no responsibility or
liability whatsoever with respect to the (i) design, manufacture, assembly,
testing, sale, use or importation of any LICENSED PRODUCT or any portion
thereof; or, (ii) use or sufficiency of the Information. WALSIN accepts all such
Information "As Is."
(c) E-TEK's failure to meet any obligation hereunder due to the assignment
of title to any invention or patent, or the granting of any licenses, to the
United States government or any agency or designee thereof pursuant to a statute
or regulation of, or contract with, such government or agency, shall not
constitute a breach of this Agreement.
(d) EXCEPT FOR THE WARRANTIES SPECIFIED IN SECTION 4.2(a), E-TEK MAKES NO
WARRANTIES, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO: THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND,
WARRANTIES AGAINST INFRINGEMENT OF PATENTS OR OTHER INTELLECTUAL PROPERTY
RIGHTS.
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(e) E-TEK'S LIABILITY UNDER THIS AGREEMENT, IF ANY, SHALL BE LIMITED TO
THE PORTION OF THE LICENSE FEE ACTUALLY RECEIVED. IN NO EVENT SHALL E-TEK HAVE
ANY LIABILITY TO WALSIN UNDER ANY CAUSE OF ACTION FOR ANY SPECIAL, INDIRECT,
CONSEQUENTIAL OR PUNITIVE DAMAGES (INCLUDING WITHOUT LIMITATION DAMAGES FOR LOSS
OF PROFITS) THAT RELATE IN ANY WAY WHATSOEVER TO THIS AGREEMENT, HOWEVER CAUSED
AND UNDER ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE), WHETHER OR NOT E-TEK
HAS BEEN ADVISED OF THE POSSIBILITY OF ANY SUCH DAMAGES. THESE LIMITATIONS SHALL
APPLY NOTWITHSTANDING THE FAILURE OF THE ESSENTIAL PURPOSE OF ANY LIMITED
REMEDY.
ARTICLE V
PATENT MARKING
5.1. WALSIN shall ▇▇▇▇ all LICENSED PRODUCTS made, sold or put into use with the
applicable numbers of the PATENTS. If it is impractical to so ▇▇▇▇ such
products, then WALSIN shall so ▇▇▇▇ the packages or containers in which the
products are distributed.
ARTICLE VI
CONFIDENTIALITY
6.1. To the extent it does not conflict with the terms of this Agreement,
Section 1 of the parties' September 2, 1997 Mutual Confidentiality Agreement
("MCA") is hereby incorporated into this Agreement as if fully set forth herein.
All Information shall be deemed to constitute, and be treated as, "Confidential
Information," as that term is defined in the MCA.
ARTICLE VII
TERMINATION
7.1. Unless terminated pursuant to Section 7.2., below, this Agreement, and all
licenses and rights granted to WALSIN hereunder, shall continue indefinitely.
7.2. This Agreement, and all licenses and rights granted to WALSIN hereunder,
shall, at E-TEK's option, terminate immediately if:
(a) WALSIN files for bankruptcy, becomes insolvent or makes an
assignment for the benefit of its creditors, or if WALSIN's business is
placed in the hands of a receiver, assignee or trustee for the benefit of
creditors (or the equivalent of the foregoing under the laws of Taiwan);
(b) WALSIN fails to pay in full any portion of the License Fee
(including any applicable late charges) within thirty days of the stated
due date; or,
(c) either party commits a material breach of this Agreement (other
than the non-payment by WALSIN of the License Fee) and cannot cure the
same, or fails to cure the same within thirty (30) days of receiving
written notice from the other party of such breach.
(d) the JV dissolves, liquidates or unwinds.
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7.3. Upon termination, for any reason, of this Agreement or the licenses and
rights granted to WALSIN hereunder, WALSIN shall immediately cease all uses of
the inventions of the PATENTS and all use of the Information, and shall promptly
destroy all such information and all copies thereof.
7.4. Termination of this Agreement or the licenses and rights granted to WALSIN
hereunder shall not relieve either party from any obligations that arose prior
to such termination. The termination rights provided herein are in addition to
all other rights and remedies available to the parties.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1. This Agreement and all rights and obligations hereunder are subject to the
satisfaction of the following conditions precedent:
(a) E-TEK and WALSIN shall have entered into a written agreement to form
the JV for the purpose of, among other things, manufacturing and selling
LICENSED PRODUCTS with the use of the PATENTS and the Information.
(b) WALSIN shall have assigned completely to the JV, and the JV shall have
accepted from WALSIN, all of WALSIN's rights, licenses, duties and obligations
under this Agreement, and the JV shall have agreed to assume all the same; it
being understood and agreed that no licenses or rights shall thereafter remain
in WALSIN.
(c) E-TEK and the JV shall have entered into a supplier agreement whereby,
among other things, E-TEK has a right of first refusal with respect to products
manufactured by the JV.
(d) E-TEK shall have entered into a distributorship agreement with either
WALSIN, or an affiliate or designee thereof that is acceptable to E-TEK, to
develop demand for and sell certain of E-TEK's products in the PRC.
(e) All governmental approvals that are necessary or desirable for the
formation of the JV and all related agreements shall have been obtained, and
such approvals shall not be conditioned upon, or materially alter or affect,
this Agreement, the JV or any related agreement.
(f) Exhibits A through C of this Agreement shall have been finalized and
incorporated herein.
8.2. All of the foregoing conditions precedent must occur within ninety days of
the above date of this Agreement, or else this Agreement becomes null and void.
The parties shall engage in good faith discussions to attempt to satisfy the
foregoing conditions precedent; however, neither party is obligated to conclude
any agreement(s) or continue any discussions.
ARTICLE IX
ASSIGNMENT
9.1. Except as provided in Section 8.1(b), neither this Agreement nor any
licenses, rights, duties or obligations hereunder shall be assignable or
transferable (by merger, operation of law, purchase or otherwise) by WALSIN
without the prior written consent of E-TEK, which can be withheld in E-TEK's
discretion.
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ARTICLE X
GENERAL
10.1. There may be countries in which WALSIN may have, as a consequence of this
Agreement, rights against infringers of the PATENTS licensed hereunder. WALSIN
hereby waives any such right it may have by reason of the infringement or
alleged infringement of any such PATENTS.
10.2. There may be countries in which the owner of an invention is entitled to
compensation, damages or other monetary award for another's unlicensed
manufacture, sale, use or importation involving such invention prior to the date
of issuance of a patent for such invention but on or after a certain earlier
date, referred to as the invention's protection commencement date. For purposes
of this Agreement, an invention which has a protection commencement date in any
such country shall be deemed to have had a patent issued therefor in such
country on such date.
10.3. WALSIN shall not, without E-TEK's prior written consent: (i) use in
advertising, publicity, packing, labeling or otherwise any trade name,
trademark, service ▇▇▇▇, symbol or any other identification or any abbreviation,
contraction or simulation thereof owned or used by E-TEK to identify its
products or services; or, (b) represent that any product or service produced in
whole or in part by the use of any Information is a product or service of E-TEK
or is made in accordance with or uses any information or documentation of E-TEK.
10.4. Each party acknowledges that any breach of this Agreement may give rise
to irreparable injury to the other party that would not be adequately
compensable in damages, and therefore agrees that, in addition to any other
remedies, such other party will be entitled to seek injunctive relief for any
such breach or threatened breach by the first party.
10.5. Neither party shall be liable to the other party, nor shall a party be
deemed to be in breach of this Agreement, for any delay or failure in
performance or interruption of service resulting from acts of God, civil or
military authority, acts of the public enemy, war, riots, accidents, fire,
explosions, earthquakes, floods, the elements, strikes, labor disputes,
shortages of labor, or, any other cause or causes beyond such party's reasonable
control.
10.6. If any term or provision of this Agreement shall be held invalid or
unenforceable to any extent, the remainder of this Agreement shall not be
affected and each other term and provision shall be valid to the fullest extent
permitted by law. This Agreement constitutes the entire agreement between the
parties with respect to the subject matter contained herein and supersedes all
prior and contemporaneous agreements, representations and understandings of the
parties. No supplement, modification or amendment of this Agreement shall be
binding unless executed in writing by the parties. No waiver of any of the
provisions hereof shall constitute a waiver of any other provision, whether or
not similar, nor shall any waiver constitute a continuing waiver. No waiver
shall be binding unless executed in writing by the party to be charged. Any
statute, rule or doctrine regarding the interpretation of contracts against a
particular party shall not apply to this Agreement.
10.7. This Agreement shall be governed by the laws of the State of California
(excluding laws and principles relating to the conflict of laws), as if made,
executed and performed within
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this State. Any action brought in connection with this Agreement shall be heard
and determined on its merits exclusively in San Jose, California in the federal
or state courts, as appropriate.
10.8. If any action is brought for the enforcement of this Agreement, or because
of an alleged dispute, breach, default or misrepresentation in connection with
any of the provisions hereof, the prevailing party shall be entitled to recover
reasonable attorneys' fees and other costs incurred in that action, in addition
to any other relief to which that party may be entitled.
10.9. (a) If any dispute whatsoever arises relating to this Agreement, the
parties shall attempt in good faith to promptly and informally resolve the same.
If the dispute is not so resolved, then any party may submit the matter to
arbitration in accordance with the provisions of Sections 10.9.(b)-(g)., below;
provided, that, as a condition to invoking arbitration, such party must have
first attempted in good faith to informally resolve such dispute.
(b) Subject to the conditions of Section 10.9(a), above, and at the option
of either party, any and all disputes and controversies whether of law or fact
and of any nature whatsoever relating to this Agreement shall be decided through
binding arbitration by the American Arbitration Association ("AAA") in
accordance with the rules and regulations of such association.
(c) The arbitrators shall be selected as follows. In the event the parties
agree on one arbitrator, the arbitration shall be conducted by such arbitrator.
In the event the parties do not so agree, then each party shall select an
arbitrator, and the two arbitrators so selected shall select the third
arbitrator. If a party fails or refuses to select an arbitrator, then the other
party's selected arbitrator shall solely arbitrate the dispute. If the two
arbitrators selected by the parties fail or refuse to select a third arbitrator,
then either party may request the AAA to make such selection.
(d) Arbitration shall be held in San Jose, CA, USA, and shall take place
under the purview of the San Francisco, CA offices of the AAA. Any controversy
concerning whether an issue is arbitratable shall be determined by the
arbitrator(s), but such arbitrator(s) may not limit, expand or otherwise modify
the terms of this Agreement. The parties, their representatives, other
participants and the arbitrator(s) shall hold the existence, content, and result
of the arbitration in confidence. The arbitrator(s), who shall act by majority
vote, shall be able to decree any and all relief of an equitable or legal
nature, subject to the limitations on liability provided in this Agreement. The
decree or judgment of an award rendered by the arbitrator(s) shall be conclusive
and binding, and may be entered in any court having jurisdiction thereof.
(e) The arbitrator(s) shall give effect to the applicable statutes of
limitations in determining any claim.
(f) The fees and expenses of the arbitrator(s) shall initially be split
evenly between the parties, and each party shall initially bear its own costs in
any arbitration proceeding; provided, however, that the arbitrator(s) shall
award the prevailing party its reasonable attorneys' fees and costs (including
the fees and expenses of the arbitrator(s)) incurred therein.
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(g) The institution and maintenance of any civil action for judicial
relief or for a provisional or ancillary remedy shall not constitute a waiver of
the right of any party to submit the dispute to arbitration if any other party
contests such action.
10.10. The respective rights, duties and obligations of the parties pursuant to
Articles IV, VI and X shall survive any expiration or termination of this
Agreement.
10.11. English is the governing language of this Agreement and of any
arbitration proceeding or legal action.
IN WITNESS WHEREOF, the parties have made and entered into this Agreement
as of the date first above written.
E-TEK DYNAMICS, INC. WALSIN LIHWA CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ By: /s/ Yu-▇▇▇ ▇▇▇▇▇
----------------------------- ----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ Yu-▇▇▇ ▇▇▇▇▇
President and CEO President
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