<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 17, 2000
REGISTRATION NO. 333-31396
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 8
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
NEW FOCUS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 3674 33-0404910
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
2630 WALSH AVENUE
SANTA CLARA, CALIFORNIA 95051-0905
(408) 980-8088
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
KENNETH E. WESTRICK
PRESIDENT AND CHIEF EXECUTIVE OFFICER
2630 WALSH AVENUE
SANTA CLARA, CALIFORNIA 95051-0905
(408) 980-8088
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
JUDITH M. O'BRIEN, ESQ. JOHN B. MONTGOMERY, ESQ.
ALISANDE M. ROZYNKO, ESQ. JOHN HAYES, ESQ.
MARGO M. EAKIN, ESQ. LAURA M. DE PETRA, ESQ.
EDWARD F. VERMEER, ESQ. LORA D. BLUM, ESQ.
WILSON SONSINI GOODRICH & ROSATI BROBECK PHLEGER & HARRISON LLP
PROFESSIONAL CORPORATION TWO EMBARCADERO PLACE
650 PAGE MILL ROAD 2200 GENG ROAD
PALO ALTO, CA 94304 PALO ALTO, CA 94303
(650) 493-9300 (650) 424-0160
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL HEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SUCH SECTION 8(a), MAY DETERMINE.
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<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by New Focus, Inc. in connection
with the sale of Common Stock being registered. All amounts are estimates except
the SEC registration fee and the NASD filing fee.
<TABLE>
<S> <C>
SEC registration fee........................................ $ 27,324
NASD filing fee............................................. 9,700
Nasdaq National Market listing fee.......................... 94,000
Printing and engraving costs................................ 300,000
Legal fees and expenses..................................... 500,000
Accounting fees and expenses................................ 300,000
Blue Sky fees and expenses.................................. 3,000
Transfer Agent and Registrar fees........................... 30,000
Miscellaneous expenses...................................... 35,976
----------
Total....................................................... $1,300,000
==========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law permits a corporation
to include in its charter documents, and in agreements between the corporation
and its directors and officers, provisions expanding the scope of
indemnification beyond that specifically provided by the current law.
The Registrant's Certificate of Incorporation provides for the
indemnification of directors to the fullest extent permissible under Delaware
law.
The Registrant's Bylaws provides for the indemnification of officers,
directors and third parties acting on behalf of the Registrant if such person
acted in good faith and in a manner reasonably believed to be in and not opposed
to the best interest of the Registrant, and, with respect to any criminal action
or proceeding, the indemnified party had no reason to believe his or her conduct
was unlawful.
The Registrant has entered into indemnification agreements with its
directors and executive officers, in addition to indemnification provided for in
the Registrant's Bylaws, and intends to enter into indemnification agreements
with any new directors and executive officers in the future.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since inception, we have issued unregistered securities to a limited number
of persons as described below:
None of these transactions involved any underwriters, underwriting
discounts or commissions, or any public offering, and we believe that each
transaction was exempt from the registration requirements of the Securities Act
by virtue of Section 4(2) thereof, Regulation D promulgated thereunder or Rule
701 pursuant to compensatory benefit plans and contracts relating to
compensation as provided under such Rule 701. The recipients of securities in
each such transaction represented their intention to acquire the securities for
investment only and not with a view to or for sale in connection with any
distribution thereof, and appropriate legends were affixed to the share
certificates and instruments issued in such transactions. All recipients had
adequate access, through their relationships with us, to information about us.
- -------------------------
(1) On April 18, 1990, we sold 400,000 shares of common stock to Dr. Milton
Chang at a purchase price of $.005 per share. On April 18, 1990, the Board
of Directors granted Dr. Chang an option
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<PAGE> 3
outside of our Stock Option Plan for 800,000 shares of our Common Stock at
an exercise price of $.0025. Dr. Chang exercised this option on January 19,
2000. Each transaction was exempt from registration in reliance on Section
4(2) of the Securities Act.
(2) From February 28, 1997 through March 31, 2000, (the most recent practicable
date) we granted stock options to acquire an aggregate of 6,438,000,
422,000 and 3,916,400 shares of our common stock at prices ranging from
$.46 to $1.25, $.62 to $.62 and from $.62 to $1.25 to employees,
consultants and directors pursuant to our 1990 Incentive Stock Option Plan,
1998 Stock Plan and 1999 Stock Plan, respectively. Each transaction
pursuant to our 1990 Incentive Stock Option Plan and our 1999 Stock Plan,
was exempt from registration requirements in reliance on Rule 701
promulgated under Section 3(b) under the Securities Act. Each transaction
pursuant to our 1998 Stock Plan was exempt from registration in reliance on
Section 4(2) of the Securities Act.
(3) From April, 1991 through February, 1992, we issued 8,640,000 shares of
Series A preferred stock to Dr. Milton Chang pursuant to a series of
put-option agreements at a price of $.1250. This transaction was exempt
from registration requirements in reliance on Section 4(2) of the
Securities Act.
(4) From May, 1990 through January 1991 we sold 15,160,000 shares of Series A
Preferred Stock for $.125 per share to a group of private investors for an
aggregate purchase price of $1,895,000. This transaction was exempt from
registration in reliance on Section 4(2) of the Securities Act.
(5) On December 10, 1993, we sold 1,000,000 shares of Series B Preferred Stock
for $0.25 per share to a group of private investors for an aggregate
purchase price of $250,000. This transaction was exempt from registration
in reliance on Section 4(2) of the Securities Act.
(6) On July 24, 1998, we sold 600,000 shares of Series C Preferred Stock
pursuant to a compensatory stock option plan established for the Company's
employees for $.85 per share for an aggregate purchase price of $510,000.
This transaction was exempt from registration in reliance on Rule 701
promulgated under Section 3(b) under the Securities Act as transactions
pursuant to a compensatory benefit plan or a written contract relating to
compensation.
(7) On July 31, 1998, and August 6, 1998, we sold 3,977,000 shares of Series D
Preferred Stock for $1.00 per share to a group of private investors for an
aggregate purchase price of $3,977,000. This transaction was exempt from
registration in reliance on Section 4(2) of the Securities Act.
(8) On February 9, 1999, in connection with a Loan and Security Agreement, we
issued a warrant to purchase 140,000 shares of Series D Preferred Stock at
an exercise price of $1.00 to Venture Lending and Leasing II, Inc. The
issuance of this warrant was exempt from registration in reliance on
Section 4(2) of the Securities Act.
(9) On June 14, 1999, we sold 10,857,616 shares of Series E Preferred Stock for
$1.20 per share to a group of private investors for an aggregate purchase
price of $13,029,139.20. This transaction was exempt from registration in
reliance on Regulation D promulgated under the Securities Act.
(10) We entered into a Technology Transfer Agreement dated June 24, 1999, with
Peter Chen pursuant to which we purchased certain technology from Mr. Chen
in consideration for options to purchase 230,000 shares of our common stock
at the fair market value and the sum of $220,000. Additional terms and
conditions are set forth in such Technology Transfer Agreement. The
issuance of the shares was exempt from registration in reliance on Rule 701
promulgated under Section 3(b) under the Securities Act as shares issued
pursuant to a compensatory benefit plan or a written contract relating to
compensation.
(11) On October 15, 1999, we sold 1,113,800 shares of Series F Preferred for
$1.20 per share to a group of private investors for an aggregate purchase
price of $1,336,560. This transaction was exempt from registration
requirements in reliance on Regulation D promulgated under the Securities
Act.
(12) On November 23, 1999, we sold 9,350,728 shares of Series G Preferred for
$3.25 per share to a group of private investors for an aggregate purchase
price of $30,389,866. This transaction was
II-2
<PAGE> 4
exempt from registration requirements in reliance on Regulation D promulgated
under the Securities Act.
(13) On March 3, 1999 and November 1, 1999, we entered into consulting
agreements with John Dexheimer, one of our directors, for services rendered
in connection with the Series E, Series F and Series G Preferred Stock
financings. Pursuant to these agreements, Mr. Dexheimer received warrants
to purchase 111,792 shares of Series E Preferred Stock at a price per share
of $1.20. The issuance of the warrants were exempt from registration
requirements in reliance on Section 4(2) of the Securities Act.
(14) On February 28, 2000, we issued 116,000 shares of our common stock to six
persons in connection with the acquisition of UBU Communications, Inc. This
transaction was exempt from registration requirements in reliance on
Section 4(2) of the Securities Act.
For additional information concerning these equity investment transactions,
reference is made to the information contained under the caption "Certain
Transactions" in the form of prospectus included herein.
The sales of the above securities were deemed to be exempt from
registration in reliance on Rule 701 promulgated under Section 3(b) under the
Securities Act as transactions pursuant to a compensatory benefit plan or a
written contract relating to compensation, or in reliance on Section 4(2) of the
Securities Act or Regulation D promulgated thereunder as transactions by an
issuer not involving any public offering. The recipients of securities in each
such transaction represented their intention to acquire the securities for
investment only and not with a view to or for sale in connection with any
distribution thereof and appropriate legends were affixed to the share
certificates and other instruments issued in such transactions. All recipients
either received adequate information about New Focus, Inc. or had access,
through employment or other relationships, to such information.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
1.1** Form of Underwriting Agreement
3.1** Amended and Restated Certificate of Incorporation of the
Registrant
3.2** Bylaws of the Registrant
4.1** Form of stock certificates
4.2** Warrant to Purchase Series D Preferred Stock dated February
1999, between Registrant and Venture Lending and Leasing,
see Exhibit 10.15.
4.3** Warrant to Purchase Series E Preferred Stock dated February
9, 2000, between Registrant and John Dexheimer.
4.4** Warrant to Purchase Series E Preferred stock dated February
9, 2000, between Registrant and Pamela York.
4.5** Form of warrant to Purchase Common Stock between Registrant
and Lincoln-RECP Hellyer Opco, LLC, a Delaware LLC.
4.6** Form of warrant to purchase Common Stock between Registrant
and Komag, Incorporated.
5.1** Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation
10.1** Form of Indemnification Agreement between the Registrant and
each of its directors and officers
10.2** 2000 Stock Plan
10.3** 2000 Employee Stock Purchase Plan
10.4** 2000 Director Option Plan and form of agreement thereunder
10.5** Form of Amendment to New Focus, Inc. Non Statutory Stock
Option Agreement, Restated Stock Purchase Agreement,
including Security Agreement and Promissory Note between
Registrant and Kenneth E. Westrick, Paul Smith, Bao-Tong Ma,
George Yule, Robert Marsland, Timothy Day, William L. Potts,
dated January 12, 2000.
10.6** Premises Lease Contract between Registrant and Shenzhen New
and High-tech Village Development Company dated September
23, 1999.
10.7** Lease Agreement between Registrant and Silicon Valley
Properties dated December 23, 1999.
</TABLE>
II-3
<PAGE> 5
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
10.8**+ Agreement on Terms and Conditions of Purchase and Sale of
Optical Components between Registrant and Corning,
Incorporated dated January 1, 2000.
10.9** Lease Agreement between Focused Research Inc. and University
Science Center Partnership, dated May 22, 1996, as amended,
June 19, 1997.
10.10** Fifth Amended and Restated Registration Rights Agreement
10.11+ Development Agreement between Registrant and Hewlett-Packard
GmbH dated December 23, 1996.
10.12+ Addendum to the Development Agreement between Registrant and
Hewlett-Packard GmbH dated November 6, 1997.
10.13+ Addendum No. 2 to the Development Agreement of December 23,
1996 between Registrant and Agilent Technologies Deutschland
GmbH dated December 10, 1999.
10.14**+ Memorandum of Agreement between Registrant and Alcatel USA
Sourcing, L.P. dated January 7, 2000.
10.15** Loan and Security Financing Agreement between Registrant and
Venture Lending and Leasing II, Inc.
10.16** Shenzhen Real Estate Sales and Purchase Contract by and
between the Registrant and Shenzhen Libaoyi Industry
Development Co., Ltd., dated April 6, 2000.
10.17** Shenzhen Futian Free Trade Zone Premises lease by and
between Registrant and Shenzhen Libaoyi Industry Development
Co., Ltd., dated April 6, 2000.
10.18**+ Supply Contract by and between the Registrant and Fuzhou
Conet Communication, Inc.
10.19** Sublease Agreement between the Registrant and Komag,
Incorporated, dated May 16, 2000.
21.1** List of Subsidiaries
23.1** Consent of Ernst & Young LLP, Independent Auditors
23.2** Consent of Counsel (see Exhibit 5.1)
24.1** Power of Attorney
27.1** Financial Data Schedules
</TABLE>
- -------------------------
+ The Registrant has requested confidential treatment with respect to certain
portions of this Exhibit. The omitted portions have been separately filed
with the Commission.
** Previously filed.
(b) FINANCIAL STATEMENT SCHEDULES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
<TABLE>
<CAPTION>
ADDITIONS-
BALANCES AT CHARGED TO BALANCES
BEGINNING COSTS AND DEDUCTIONS- AT END OF
OF PERIOD EXPENSES WRITE-OFFS PERIOD
----------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Year ended March 31, 1998...................... $ 70 $ 63 -- $$133
Year ended March 31, 1999...................... $133 $ 40 $(38) $135
Nine months ended December 31, 1999............ $135 $ 39 $(14) $160
</TABLE>
Schedules other than that listed above have been omitted since they are not
required or are not applicable or the required information is shown in the
financial statements or related notes.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions
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<PAGE> 6
referenced in Item 14 of this Registration Statement or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by a director, officer or controlling person in
connection with the securities being registered hereunder, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of Prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of Prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
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<PAGE> 7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Amendment No. 8 to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Santa Clara, State of California, on the 17th day of May, 2000.
NEW FOCUS, INC.
By: /s/ KENNETH E. WESTRICK
------------------------------------
Kenneth E. Westrick
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 8 to the Registration Statement has been signed by the
following persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ KENNETH E. WESTRICK President, Chief Executive May 17, 2000
- -------------------------------------------------------- Officer and Director
Kenneth E. Westrick (Principal Executive
Officer)
* Chief Financial Officer May 17, 2000
- -------------------------------------------------------- (Principal Financial and
William L. Potts, Jr. Accounting Officer)
Director May 17, 2000
- --------------------------------------------------------
Dr. David L. Lee
* Director May 17, 2000
- --------------------------------------------------------
Dr. Milton Chang
* Director May 17, 2000
- --------------------------------------------------------
John Dexheimer
* Director May 17, 2000
- --------------------------------------------------------
Dr. Winston Fu
* Director May 17, 2000
- --------------------------------------------------------
R. Clark Harris
* Director May 17, 2000
- --------------------------------------------------------
Robert D. Pavey
*By: /s/ KENNETH E. WESTRICK
------------------------------------------------
Kenneth E. Westrick
Attorney-in-fact
</TABLE>
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<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
1.1** Form of Underwriting Agreement
3.1** Amended and Restated Certificate of Incorporation of the
Registrant
3.2** Bylaws of the Registrant
4.1** Form of stock certificates
4.2** Warrant to Purchase Series D Preferred Stock dated February
1999, between Registrant and Venture Lending and Leasing,
see Exhibit 10.15.
4.3** Warrant to Purchase Series E Preferred Stock dated February
9, 2000, between Registrant and John Dexheimer.
4.4** Warrant to Purchase Series E Preferred stock dated February
9, 2000, between Registrant and Pamela York.
4.5** Form of warrant to Purchase Common Stock between Registrant
and Lincoln-RECP Hellyer Opco, LLC, a Delaware LLC.
4.6** Form of warrant to purchase Common Stock between Registrant
and Komag, Incorporated.
5.1** Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation
10.1** Form of Indemnification Agreement between the Registrant and
each of its directors and officers
10.2** 2000 Stock Plan
10.3** 2000 Employee Stock Purchase Plan
10.4** 2000 Director Option Plan and form of agreement thereunder
10.5** Form of Amendment to New Focus, Inc. Non Statutory Stock
Option Agreement, Restated Stock Purchase Agreement,
including Security Agreement and Promissory Note between
Registrant and Kenneth E. Westrick, Paul Smith, Bao-Tong Ma,
George Yule, Robert Marsland, Timothy Day, William L. Potts,
dated January 12, 2000.
10.6** Premises Lease Contract between Registrant and Shenzhen New
and High-tech Village Development Company dated September
23, 1999.
10.7** Lease Agreement between Registrant and Silicon Valley
Properties dated December 23, 1999.
10.8**+ Agreement on Terms and Conditions of Purchase and Sale of
Optical Components between Registrant and Corning,
Incorporated dated January 1, 2000.
10.9** Lease Agreement between Focused Research Inc. and University
Science Center Partnership, dated May 22, 1996, as amended,
June 19, 1997.
10.10** Fifth Amended and Restated Registration Rights Agreement
10.11+ Development Agreement between Registrant and Hewlett-Packard
GmbH dated December 23, 1996.
10.12+ Addendum to the Development Agreement between Registrant and
Hewlett-Packard GmbH dated November 6, 1997.
10.13+ Addendum No. 2 to the Development Agreement of December 23,
1996 between Registrant and Agilent Technologies Deutschland
GmbH dated December 10, 1999.
10.14**+ Memorandum of Agreement between Registrant and Alcatel USA
Sourcing, L.P. dated January 7, 2000.
10.15** Loan and Security Financing Agreement between Registrant and
Venture Lending and Leasing II, Inc.
10.16** Shenzhen Real Estate Sales and Purchase Contract by and
between the Registrant and Shenzhen Libaoyi Industry
Development Co., Ltd., dated April 6, 2000.
10.17** Shenzhen Futian Free Trade Zone Premises lease by and
between Registrant and Shenzhen Libaoyi Industry Development
Co., Ltd., dated April 6, 2000.
10.18**+ Supply Contract by and between the Registrant and Fuzhou
Conet Communication, Inc.
10.19** Sublease Agreement between the Registrant and Komag,
Incorporated, dated May 16, 2000.
21.1** List of Subsidiaries
23.1** Consent of Ernst & Young LLP, Independent Auditors
23.2** Consent of Counsel (see Exhibit 5.1)
24.1** Power of Attorney
27.1** Financial Data Schedules
</TABLE>
- -------------------------
+ The Registrant has requested confidential treatment with respect to certain
portions of this Exhibit. The omitted portions have been separately filed
with the Commission.
** Previously filed.
<PAGE> 1
EXHIBIT 10.11
Agreement No. .......
DEVELOPMENT AGREEMENT
by and between
HEWLETT-PACKARD GmbH
HERRENBERGER STRASSE 130
71034 BOEBLINGEN
GERMANY
- hereinafter referred to as "HP" -
and
NEW FOCUS INC.
2630 WALSH AVE.
SANTA CLARA CA
USA
- hereinafter referred to as "New Focus" -
REGARDING THE DEVELOPMENT OF A TUNABLE LASER SOURCE MODULE
1
<PAGE> 2
1. SUBJECT-MATTER OF THE AGREEMENT
This agreement pertains to and covers the development of a Tunable Laser
Source Module (including hard- and software) which is described in
greater detail in the specifications in Schedule 1 hereto, as well as to
the manufacture of prototypes and production units by New Focus whilst
adhering to the project schedule as set forth in Schedule 3 hereof.
2. BREAK-DOWN OF COSTS / REMUNERATION
2.1 In return for the services outlined in Article 1 above, HP shall effect
payment in installments as laid out in A.) 5. of Schedule 1 according to
the development phases described in A.) 4. of Schedule 1 hereto. The
payments shall become due and payable in accordance with the terms and
conditions outlined in A.) 5. of Schedule 1.
All prices quoted are FOB Santa Clara, CA, USA. HP is responsible for
all taxes, customs, and freight.
2.2 Should the parties agree upon payment by installments which are due
prior to final and complete performance of the entire development
service, New Focus undertakes, prior to payment of the respective
installment, to provide HP with an irrevocable, unconditional and
absolute guarantee from a bank recognized as guarantor in the amount of
the respective installment. HP shall return such guarantee to the
supplier upon written confirmation of acceptance of the prototypes or
the software.
Installments by HP shall not include any acceptance of the prototypes,
developed software or the production units. With payment of the
installment all performances and expenses of New Focus in regard of the
respective development phase shall be covered.
2.3 All obligations regarding payment of costs and expenses incurred by New
Focus in connection with the performance of services to be provided
shall be deemed discharged upon payment of the agreed remuneration.
3. DEVELOPMENT
3.1 The prototypes as well as the software shall be manufactured by New
Focus in accordance with the project schedule (Schedule 3) and the
development phases contained therein as well as in Schedule 1.
3.2 Prior to the commencement of development, New Focus shall ensure that
the specifications are complete and that implementation of the contents
thereof is feasible. Should New Focus detect any defects or omissions
upon examination of the specifications, it shall inform HP hereof in
writing without any undue delay.
2
<PAGE> 3
3.3 The deadlines outlined in the agreed project schedule (Schedule 3) shall
be binding upon both parties.
3.3 In order to ensure successful and timely performance of the Development
agreement for both parties, the parties hereto agree that New Focus
shall submit to HP a written report detailing key aspects of the project
at regular monthly intervals. Both parties shall have the option of
requesting that the other party engage in discussions regarding the
current stage of development, problems arising in connection therewith,
matters pertaining to coordination etc.
New Focus shall, in particular, advise HP of the following in this
regard:
3.4.1 PROJECT STATUS
Classification of the system components on which work was performed
during the period under review. The stage of work carried out and of the
semi-finished work, as well as a comparison of the target and actual
situation if the project schedule and/or the specification requirements
have not (yet) been complied with. Any deviations or postponement of
deadlines must be justified and the supplier is further required to
indicate the measures planned for re-establishing the target situation.
3.4.2 FORECAST
New Focus shall advise HP of the work scheduled for the next period
under review, also with a view to enabling HP to arrange, in good time,
for any support which it may be required to provide.
On HP's request, New Focus shall, during the course of discussions,
provide HP with copies of HP-specific documentation regarding the
development of prototypes and software available at the time of such
discussions.
Minutes, to be duly countersigned by both parties, shall be kept of all
such discussions.
3.5 New Focus shall document the development result and the individual
development steps and make such material available to HP in
machine-readable form.
4. RESOURCES
4.1 New Focus avails of a development center which is suitably equipped to
develop the developed software defined under the subject-matter hereof.
In the event HP employees are assigned to the development project New
Focus shall provide appropriate support to these employees.
4.2 HP shall support New Focus as described in Schedule 5.
3
<PAGE> 4
5. MODIFICATIONS/AMENDMENTS TO THE SYSTEM DESCRIPTION/SPECIFICATIONS
5.1 Modifications to the specifications are subject to HP's prior written
approval. HP may request that New Focus incorporate modifications or
amendments. New Focus may also request that HP incorporate modifications
or amendments. Any such request must be submitted in writing. New Focus
shall perform the modified services if and to the extent that New Focus
can be reasonably expected to do so and New Focus has not provided HP
with written justification as to why it cannot be reasonably expected to
do so within 1 week of receipt for the modification request.
5.2 Should such modifications affect contractual agreements (relating to
costs or performance deadlines for example), the parties hereto shall
accordingly revise such agreements taking the increase/decrease in
time/expenditure required into consideration. The modifications shall be
performed within the framework of existing contractual agreements if no
such demand for review is submitted to the other party to the agreement
in writing within 2 weeks of receipt of the modification request by New
Focus. HP undertakes to advise New Focus of the significance of its
actions prior to commencement of the period in question.
5.3 In the event of a dispute regarding the scope of any increase/decrease
in time/expenditure required on the basis of modifications, both
parties hereto shall be entitled to request that an independent,
publicly-appointed and certified expert decide the issue with binding
effect for both parties.
5.4 New Focus shall inform HP immediately upon receipt of a modification
request if work already carried out by New Focus would become unusable
as a result of this modification.
6. FAILURE TO ADHERE TO THE PROJECT SCHEDULE
6.1 If, during the development phases, it already becomes apparent that the
completion date agreed upon in the project schedule (schedule 3) cannot
be adhered to, New Focus shall advise HP hereof without delay indicating
the reasons therefor. New Focus shall simultaneously advise HP of the
period of delay by which the completion date is to be postponed
vis-a-vis the deadline agreed upon in the project schedule.
6.2 If a deadline agreed upon in the project schedule is already or will
apparently be exceeded by more than 2 weeks, HP may extend the deadline
by a reasonable period of time. If this extended period expires to no
avail, HP shall be entitled to rescind the agreement. This shall not
apply if New Focus bears no responsibility for the existing or
foreseeable failure to adhere to the project schedule or for the expiry
to no avail of the period of grace.
6.3 Irrespective of the right to rescind the agreement pursuant to Article
6.2 above, the following contractual penalty shall apply:
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Should New Focus be unable to adhere to the delivery deadlines agreed
upon in the project schedule (Schedule 3) for the prototypes or the
software during the respective development phases, HP shall be entitled,
without providing any further evidence, to demand a contractual penalty
in the amount of [*] of the net value of each development phase
according to Schedule 1 for each working day beginning two weeks after
the delivery deadlines of Schedule 3 or part thereof up to an amount
not exceeding [*] of the total value of each development phase
according to Schedule 1 however. This shall not apply if New Focus does
not bear responsibility for the delay.
7. EXAMINATION AND DELIVERY BY NEW FOCUS
7.1 Upon completion of development and manufacture of the prototypes
together with the developed software in accordance with the
specifications (Schedule 1), New Focus shall subject the prototypes and
the software to a functional check pursuant to HP specifications in
regard of the respective development phase according to Schedule 1 with
a view to establishing conformity with the specifications. A test report
shall be submitted.
7.2 New Focus shall deliver the tested prototypes and the developed software
to HP on or before the deadline defined in the project schedule
(Schedule 3). Tested means that no deviations from the specification
requirements in regard of the respective development phase according to
Schedule 1 and no other defects were detected during testing at New
Focus.
New Focus shall provide HP with all the necessary documentation/data
sheets, source codes etc. upon delivery of the prototypes as described
in Schedule 1.
7.3 New Focus shall produce further prototypes and production units in
accordance with the terms and provisions hereof according to Schedule 1.
8. EXAMINATION AND ACCEPTANCE BY HP
8.1 HP shall examine the design of the prototypes. HP shall accept the
design provided that the prototypes to be manufactured in accordance
with this design will ensure the fulfillment of the product
specifications as described in Schedule 1.
8.2 HP shall subject any prototype as well as the developed software to a
separate functional check within eight weeks of delivery, according to
Schedule 1. HP shall provide weekly updates/reports on the progress
and results of the testing. A test report shall be submitted.
8.3 HP shall submit a written acceptance certificate of the prototypes and
the developed software to New Focus if the prototypes and the developed
software conform to all of the specification requirements of Schedule 1
and if no other defects can be detected.
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filed separately with the Commission. Confidential treatment
has been requested with respect to the omitted portions.
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8.4 Should HP detect deviations from the specifications or defects during
the course of the functional check, HP shall inform New Focus thereof in
writing.
In this event, New Focus shall provide HP with repaired or newly
manufactured prototypes or developed software which is/are free of the
respective defect(s) within five working days. New Focus shall ensure
that the defects are remedied and rectified according to Schedule 4 by
employees who were already involved in the development of the developed
software defined under the subject-matter hereof. Subject to mutual
agreement between the parties, such rectification of defects may be
carried out by HP. In the case that New focus can not rectify such
defects within short term New Focus shall provide HP a temporary
solution.
8.5 Following delivery of the repaired / newly manufactured prototypes or
developed software, HP shall conduct another functional test. If
deviations from the specifications (Schedule 1) or defects are still
detected in the repaired / newly manufactured prototypes or developed
software and these are not remedied and rectified within 15 working
days of receipt of appropriate notice thereof from HP, HP may, at its
discretion, rescind the Agreement, rectify the defect itself or have it
rectified by a third party at New Focus's expense. Any further claims
shall remain unaffected thereby.
8.6 In the case that HP does not accept the manufactured prototypes or the
developed software within a reasonable period of time after delivery,
New Focus may set forth a deadline in order to declare the acceptance.
The manufactured prototypes or the developed software shall deemed to
be accepted if HP does neither declare the acceptance nor informs about
defects. HP shall not refuse the acceptance because of insignificant
defects. If HP accepts the manufactured prototypes or the developed
software without regard of defects, these defects shall be written down
within the minutes of the acceptance.
8.7 According to Schedule 1 HP shall release the prototypes for production
and delivery of 30 production units to HP upon acceptance of the
prototypes. In this case, the New Focus prices for these production
units as set forth in Schedule 1 shall apply.
HP shall be entitled to purchase additional production units and
building blocks thereof (for additional use in other future developed
products) after completion of the development according to this
Agreement. The scope of delivery/supply shall form the subject matter
of a separate agreement (standard purchase Agreement). The parties
hereto will enter into good faith negotiations in order to conclude
such an agreement, in which New Focus shall guarantee the same warranty
as described in clause 10 as well as a product support for a period of
five years after delivery of the last production unit.
9. CONTACT PERSONS
9.1 Both parties shall appoint contact persons in Schedule 2 to facilitate
close cooperative links in an atmosphere of mutual trust. The contact
persons shall be entitled to issue
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and receive legally binding statements on behalf of the respective
party, always provided that this Agreement is not modified thereby.
9.2 New Focus assures that the employees listed in Schedule 2 designated by
New Focus for support and development for the entire duration of the
project avail of the requisite knowledge and necessary experience in
this field.
9.3 During the phase of development the parties hereto shall schedule
regular meetings every 3 to 4 months in order to discuss any problems
regarding the fulfillment of this Agreement and for any other purpose as
described in this clause 9. Such meeting shall be attended by the
contact persons designated according to 9.1 and/or any other persons as
deemed appropriate in mutual agreement by the parties hereto. The
meetings shall alternately take place at the respective business sites
of the parties hereto.
10. WARRANTIES
(a) PRODUCTS AND SERVICES
New Focus warrants that for twelve (12) months following the acceptance
of the manufactured prototypes, the developed software and associated
documentation in accordance with section 8 the manufactured prototypes,
the developed software and associated documentation shall be free from
defects in workmanship and materials; the developed software shall be
free from significant programming errors; the manufactured prototypes
and the developed software shall conform to the performance
capabilities, characteristics, specifications, functions and other
descriptions and standards applicable thereto as set forth in Schedule 1
hereto; and that, in general, the services to be performed by New Focus
shall be performed in a timely and professional manner by qualified
technicians totally familiar with the manufactured prototypes and the
developed software. In the event that defects are discovered during the
warranty period, New Focus shall promptly remedy such defects at no
additional expense to HP, according to Schedule 4.
This section 10(a) shall in no way limit any of HP's rights under the
applicable law.
(b) COMPLIANCE WITH APPLICABLE LAWS
New Focus warrants that the manufactured prototypes and the developed
software and all other products, documentation and other materials
required to be delivered to HP hereunder, the development and use by HP
thereof, and the performance by New Focus of its obligations hereunder
shall be in compliance with all applicable laws, rules and regulations
as of the date of delivery thereof.
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11. RIGHTS OF USE
11.1 HP is hereby vested with an irrevocable, exclusive, transferable production
and distribution right regarding the Tunable Laser Source Module (including
software, the respective prototypes, the production units and any and all
parts, such parts including, but not limited to, any building blocks) in
its respective state of processing, such right being unlimited with respect
to time, contents and geographical scope.
HP may grant third parties sub-licensing rights and the above mentioned
rights of use, subject to the agreement of the respective third parties to
enter into an agreement on the payment of royalty fees with respect to the
two patents on the design of external cavity diode lasers (US Patent No.:
5,319,668 and US Patent No.: 5,354,575) held by New Focus.
With respect to the manufacturing and the supply of the Tunable Laser
Source Module, HP agrees to exclusively enter into negotiations with New
Focus on the terms and conditions of a respective agreement, provided that
HP shall have total discretion as to whether or not entering into such
agreement.
11.2 New Focus shall grant HP a non-exclusive, international license to all
industrial property rights, copyrights included, at no extra cost provided
New Focus is entitled to grant such a license, if and to the extent that
this is necessary to exercise the rights of use granted to HP as set forth
under sub-clause 11.1 above.
11.3 With regard to HP's exclusive production and distribution right to the
subject-matter hereof, New Focus shall not process or otherwise use the
subject-matter either for its own purposes or for those of third parties.
12. INDUSTRIAL PROPERTY RIGHTS
12.1 New Focus hereby represents and covenants that it is the unlimited and
undisputed holder of all copyrights and other intellectual property rights
(business and trade secrets included) to the development system, thus
enabling New Focus to grant HP the rights of use pursuant to Article 11
hereof.
12.2 In the event of any violation of a third party's industrial property right,
New Focus shall establish HP's right to continued use of the development
system without payment of any additional remuneration, or, if this should
not be possible, alter or replace the subject-matter hereof in such a way
as to circumvent violation of industrial property rights whilst, however,
conforming to the specification requirements. HP shall be entitled, pending
the above, to withhold any payments due.
12.3 In the event of any such violation of an industrial property right, New
Focus shall defend HP against any claims asserted by third parties, if and
to the extent that HP does not wish to defend itself. Should third parties
file a claim against HP on account of the violation of industrial property
rights, New Focus shall indemnify HP against all claims (for damages) and
shall further bear all costs incurred by HP in connection with such a
claim (e.g. in connection with legal disputes). This shall apply
analogously in
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favor of those persons who, up to such time, have been [*] the
subject-matter hereof in accordance with Article 11 above.
13. AUDIT RIGHTS
At any time HP is entitled to make or cause to be made a special audit
regarding the production processes and the quality ensurance systems
established by New Focus, on reasonable request made in writing no less
than 15 days in advance. New Focus shall make all relevant matters
available for examination during regular business hours. A written summary
of the results of any such special audit shall be provided by HP to New
Focus.
14. CONFIDENTIALITY
14.1 The parties to this Agreement undertake to treat as confidential all of the
other party's information identified as such in writing and not to disclose
or divulge such information to third parties, unless such information was
released by the other party or became public knowledge without any breach
of obligations under this Agreement.
This shall apply in particular to facts and information on operational
procedures, operating results, production figures, products, business
policies, duties, claims, organizational and social services or business
management measures as well as data on purchasing/procurement functions.
The confidential information provided by HP shall solely be used by New
Focus for the purpose of this Agreement.
In doing so, the parties hereto shall apply the same level of care and
diligence as they would exercise in their own affairs.
14.2 This obligation shall expire for each party hereto four years subsequent to
receipt of the last confidential fact or item of information from the other
party.
14.3 New Focus shall take the necessary measures to ensure that the results of
development are not inadmissibly used, disclosed or copied.
15. TERMINATION
15.1 This Agreement may be terminated in writing by either party only in the
event of good cause.
Good cause shall be deemed to exist, in particular, if one of the parties
hereto fails to perform its contractual obligations, despite a reminder to
this effect. Good cause shall also be deemed to exist for HP if composition
or bankruptcy proceedings are instigated or initiated against New Focus's
assets or in the event of a lasting modi-
[*] Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.
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fication to the ownership rights within New Focus (for example, if New
Focus will be taken over by competitors).
Furthermore, HP shall be entitled to terminate the Agreement on
extraordinary grounds if HP comes to the conclusion that continued
implementation of the general project which incorporates the developed
system is no longer feasible in view of the economic and/or technical
situation.
15.2 Should this Agreement be terminated for reasons in respect of which New
Focus bears responsibility, New Focus shall only be remunerated for
services commissioned and performed prior to termination. This is subject
to the provision that HP is in a position to use the relevant services to
further use the developed system.
15.3 In all other cases, New Focus shall be entitled to the agreed remuneration
as determined by the date of termination, subject however, to the
deduction of expenditure saved, estimated at 90% of the remuneration for
services not yet performed by New Focus. HP reserves the right to prove
that additional expenditure was saved.
15.4 In the event of termination of this Agreement, New Focus shall, without
exception, deliver and surrender to HP without delay all documents which
HP made available to New Focus within the framework of this Agreement, as
well as all and any prototypes and/or parts of them already in existence
at the time of termination and all and any documentation and other
information including but not limited to the respective source code
regarding the HP-specific development result available at the time of
termination. HP shall be vested with the rights to this development result
in accordance with Article 11 above (rights of use).
15.5 In the event of termination hereof, the obligations set forth under
Article 14 (confidential information) shall prevail and continue for a
period of four years subsequent to termination and those set forth under
Article 10 (warranty) shall also prevail and continue.
16. SCHEDULES TO THIS AGREEMENT
The Schedules listed in the following shall be deemed an integral part of
this Agreement:
Schedule 1 - Specifications, Development phases, Payment,
Schedule 2 - Contact persons
Schedule 3 - Project schedule
Schedule 4 - Bugfixing
Schedule 5 - Resources provided by HP
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17. MISCELLANEOUS PROVISIONS
17.1 No ancillary verbal agreements have been made. Any alterations and
amendments hereto must be made in writing in order to be valid and must
expressly indicate that they constitute an alteration or amendment hereto.
This shall similarly apply to any waiver of this written form requirement.
17.2 Unless otherwise expressly agreed upon herein, any transfer of the rights
arising in connection herewith to third parties by one of the parties
hereto shall be subject to the prior written approval of the other party.
17.3 Should one or more of the provisions hereof be or become void or invalid,
the parties hereto undertake to replace such a provision with a valid
provision which approximates the economic purpose or intent of the void or
invalid provision as closely as possible. The validity of the remaining
provisions shall remain unaffected thereby.
17.4 This Agreement shall be governed by and construed in accordance with the
laws of the Federal Republic of Germany. The Uniform Laws of the UN
Convention on Contracts for the International Sale of Goods shall not
apply. The courts of Stuttgart, Germany, shall have jurisdiction and
venue over any claims asserted under or in connection herewith.
For HP: For New Focus:
Boeblingen 23/12/96 Santa Clara 1/9/97
/s/ WERNER BERKEL /s/ TIMOTHY DAY
- ------------------------------------- -----------------------------------
Name Name
Business Manager Vice President, Engineering
- ------------------------------------- -----------------------------------
Area of activity/title Area of activity/title
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SCHEDULE 1 - SPECIFICATIONS, DEVELOPMENT PHASES, PAYMENT
A.) PRODUCT TO BE DEVELOPED:
1. A 1550 nm tunable laser source module (entire plug-in module) which will be
based on the patented (US Patent No. [*] and [*]) opto-mechanical design of
the New Focus ECDL product family for integration into the HP optical
component test platforms (or additional purposes).
2. This includes the development and production of the opto-mechanical
sub-assemblies as well as the assembly and test of the chassis and
interface electronics. Specifically, New Focus will reduce the cost and
size of the opto-mechanical head associated with the current New Focus
products, develop the low cost electronics needed to interface the
multimeter platform, and refine the packaging of the isolated fiber launch.
In addition, New Focus will develop an operations approach that allows for
the production of up to [*] plug-in modules per year. In the event that [*]
plug-in modules per year are desired an option, which requires additional
funding and a [*] period to increase capacity to [*] per year, may be
exercised by HP. The additional funding for this option will be part of a
separate development contract.
A focused team operating in a project management infrastructure and
reporting directly to the New Focus management team will be employed for
that purpose.
[*] Certain information on this page has been omitted and
filed separately with the Commission. Confidential treatment
has been requested with respect to the omitted portions.
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3. New Focus will develop and deliver a final module that will meet all of the
specifications described below.
Condition: The Module is [*]
(currently under development at HP)
All Specifications apply over the Operating Temperature Range and under the
Humidity Conditions.
[*]
[*] Certain information on this page has been omitted and
filed separately with the Commission. Confidential treatment
has been requested with respect to the omitted portions.
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MODULE KEY FUNCTIONS AND FEATURES
3.1.0 TUNABLE WAVELENGTH LASER SOURCE PARAMETERS
From the customer point of view this source will have the following parameters.
All these parameters must be accessible via the user interface.
[*]
3.1.1 TUNABLE WAVELENGTH LASER SOURCE FUNCTIONALITY
[*]
3.1.2 TUNABLE WAVELENGTH LASER SOURCE EXCEPTIONS/EVENTS
[*]
[*] Certain information on this page has been omitted and
filed separately with the Commission. Confidential treatment
has been requested with respect to the omitted portions.
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4. Development requirement and payment criteria:
The Development will proceed in accordance with the development phases as
described below.
A: MODULE HARDWARE
Start Contract
o Final contract signed from both parties
o Agreement on development schedule (see appendix "Development
Schedule")
o Agreement on all product specifications (see appendix "Module
Specification")
1. Design Review
a) Complete product documentation available, and documentation is
supposed to be capable to fulfill the product requirements.
[*]
2. Phase 1 Prototypes
[*]
3. Phase 2 Prototype
[*]
4. Release to Production
a) All prototypes out of phase 2 are tested at HP regarding HP
Environmental Test Manual Class B and meet the product
requirements (see appendix "Module Specification")
b) Stress and lifetime test results are available
c) Exhaustive search for design defects complete
d) Entire production process works and is documented
e) Test tooling complete
f) Incoming material inspection in place
g) Shipping container in place
5. Final Contact close
[*]
[*] Certain information on this page has been omitted and
filed separately with the Commission. Confidential treatment
has been requested with respect to the omitted portions.
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B: MODULE SOFTWARE
1. Design Review
[*]
2. Prototype (alpha)
[*]
3. Prototype (beta)
[*]
4. Release to Production
[*]
[*] Certain information on this page has been omitted and
filed separately with the Commission. Confidential treatment
has been requested with respect to the omitted portions.
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5. The delivery dates are laid down within the project schedule (Schedule 3).
The remuneration will be paid [*]. The respective installment will be due
[*] provided that HP will not detect major deviations in regard of the
requirements of the respective development phase. The installments are as
follows.
<TABLE>
<S> <C>
Start Contract $[*]
Design Review $[*]
Phase 1 Prototypes $[*]
High Power diodes in cavities $[*]
Phase 2 Prototypes $[*]
Release to Production $[*]
Final Contract close $[*]
30 Production Units $[*]
</TABLE>
The development cost approach is to use non-recurring engineering funding
from HP to develop the product and production line so that the per unit
price in 3/98 will be $[*]. The per unit price will be $[*] and the
development cost will be $[*] to get to [*] fully tested plug in modules
per year. This $[*] non-recurring engineering effort will include delivery
of [*] units but the [*] delivered at the end of the project will be $[*]
each (FOB Santa Clara, CA). This $[*] per unit price is based on a cost for
the coated diodes of $[*]. If a qualified source of AR coated diodes could
be identified that would work in our cavity then the per unit price would be
$[*] plus the cost (to NFI) of the diodes.
An option to increase the capacity in a separate development contract has
been offered, but not exercised by HP at this time, that will allow New
Focus to tool up to the [*]/year numbers associated with the high end of the
HP marketing numbers. This effort would be covered under a separate
development project and New Focus would need [*] advance notice before the
increased capacity could be realized. If this option is chosen the per unit
price for a quantity of [*] units would be $[*] (FOB Santa Clara, CA) (New
Focus are essentially only increasing capacity with this approach) and the
per unit price at [*] units would be $[*] (FOB Santa Clara, CA). In these
cases the assumed cost of the AR coated diode is $[*] and $[*],
respectively.
B.) TECHNICAL APPROACH (PROPOSED BY NEW FOCUS):
1. [*]
2. [*]
3. [*]
4. [*]
5. Extensive environmental testing of the pigtailed opto mechanical head
6. Development of compact low cost versions of our analog control electronics
(ongoing)
7. Integration of the analog and digital opto-mechanical control electronics
with the micro-processor interface and communications design provided by
HP.
8. [*]
[*] Certain information on this page has been omitted and
filed separately with the Commission. Confidential treatment
has been requested with respect to the omitted portions.
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The above Technical Approach is understood as a proposal by New Focus which may
be amended, provided that the development requirements as set out in this
Schedule 1 are fully met.
New Focus will use the HP communications and interface design, which uses a 32
bit-microprocessor, together with New Focus design for opto-mechanical control
to design and develop a complete [*]. To do this New Focus will acquire the [*]
development environment necessary to design with this processor, New Focus will
use [*] and New Focus will work to ensure that there is complete overlap between
the development effort at HP and at NFI.
C.) OPERATIONS APPROACH (PROPOSED BY NEW FOCUS):
New Focus will develop a production line solely dedicated to the assembly and
test of the HP ECDL in Santa Clara CA using some of New Focus' available
manufacturing space. The approach is summarized below:
1. Develop the operational approach (demand flow/JIT)
2. Build and capitalize laboratory manufacturing space
3. Design manufacturing tooling and automation software
4. Develop method sheets and documentation for operational model
New Focus will expand and improve its present [*] production line (model 6200)
for use in the production of up to [*] HP-ECDLs per year.
D.) PROJECT MANAGEMENT BY NEW FOCUS:
This development effort will require a focused team operating within a tight
schedule. The scope of the project is well understood as are the resources
necessary to accomplish the task. New Focus will create a development team that
will report directly to the VP of Engineering. This team will be solely
dedicated to this project. The team will consist of but not be limited to:
1. Project Manager: Extensive experience with ECDL's,
project management, and e-o-engineering
2. Senior Electro-Optics Engineer: One of our senior laser designers with
extensive control and AR coating
experience
3. Senior Mechanical/Control Engineer: One of our engineers associated with the
DC servo control of precision
opto-mechanical hardware
4. Electrical Engineer: Engineer focusing on low cost
analog/digital electronics and rapid
prototyping
5. Electrical Engineer: Engineer focused on firmware and
interface to HP platform
6. Mechanical Engineer: Engineer focused on tooling
designs/documentation/incorporation of
fiber launch designs
[*] Certain information on this page has been omitted and
filed separately with the Commission. Confidential treatment
has been requested with respect to the omitted portions.
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7. Manufacturing Engineer: Engineer focused on production line
layout / manufacturing tooling / testing
New Focus will commit additional resources to this project as it moves forward.
SCHEDULE 2 - CONTACT PERSONS
For a better fulfillment of this Agreement both parties name the following
contact persons
By HP: By New Focus
Name: Edgar Leckel Name: Timothy Day
Telephone-No.: (49) 7031-142691 Telephone-No.: 408-980-8088
FAX: (49) 7031-147023 FAX: 408-980-8883
Name: Emmerich Muller Name: Michael Brownell
Telephone-No.: (49) 7031-144861 Telephone-No.: 408-980-8088
FAX: (49) 7031-147023 FAX: 408-980-8883
SCHEDULE 3 - PROJECT SCHEDULE
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[*]
[*] Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.
<PAGE> 21
[*]
[*] Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.
<PAGE> 22
SCHEDULE 4 - BUGFIXING
1. Any bugs in the developed software shall be recorded and verified by HP.
Following verification, HP shall forward the bug report to New Focus.
Bugs shall be categorized as follows:
A. Serious bugs
Bugs that result in system crashes (hangs or halts), loss of data,
destruction of data, corruption of data or cases of unreasonable
handling effort for which no "workaround" is available (i.e. there is
no method accepted by HP or by the customer for either avoiding the
bug or using the developed software).
Any medium bug as defined in B of this schedule 4 which causes a
serious bug as defined above within the final optical component
platforms shall additionally be categorized as a serious bug.
B. Medium bugs
Bugs as specified under A above, but for which a "workaround" is
available for bug avoidance.
C. Minor bugs
Any bugs not included in categories A and B above.
2. Any serious bugs in the developed software shall be immediately fixed by
New Focus. New Focus will begin to fix the bug 24 hours after the
respective report by HP the latest. New Focus shall fix the bug during 3
days or during a longer period agreed by HP. If New Focus is unable to
reproduce or to fix any bug immediately on its own computer system, it
shall fix the bug - if decided by HP - on-site in customer's place.
3. Any medium bug in the developed software shall be fixed in a reasonable
period of time. New Focus shall begin fixing the bug during 48 hours after
the respective report by HP. New Focus shall fix the bug during two weeks
or during a longer period agreed by HP.
4. Any other bugs shall be fixed as soon as possible within the scope of the
maintenance of the developed software.
5. New Focus shall update the documentation in accordance with the bug fix.
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6. New Focus shall ensure that any serious and medium bugs shall be fixed for
both the current and the previous operating system release.
7. New Focus will maintain a telephone number with a designated knowledgeable
contact to HP to call during normal business hours to report problems and
receive assistance.
8. The Bugfixing according to this schedule 4 shall be free of charge during
the warranty period.
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SCHEDULE 5 - RESOURCES PROVIDE BY HP
1. HARDWARE RELATED DOCUMENTS (see separate Documentation Package)
a) Drawings of all mechanical parts of the Module Chassis
o Module Bottom Cover
o Module Top Cover
o Module Sub Panel
o Plastic Front Panel
o Module Extractor
o Fiber Connector Bushing at Front Panel
o Module Fiber Interface
b) Description of Module Interface and digital Hardware
o Printed Circuit Board Outline
o Interface Connector to Module/Mainframe Positioning Dwg.
c) Schematics of digital parts including part list
d) Documentation and File of FPGA Communication Part
2. SOFTWARE RELATED DOCUMENTS (see separate Documentation Package)
a) Description of Communication between Mainframe and Module
b) HP Coding Standards
c) Documentation and Source Code Template for Operating System, Start-up
and Communication of Module
3. HARDWARE SUPPORT
a) For first Phase of Development (December 96 - March 97 Time Frame)
o HP8153 Mainframe
o Dummy and Extendermodule
--> Delivery January 1997
b) For the rest of the Development (April 97 - March 98)
o New OCT Mainframe Prototype
--> Delivery End of March
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[GRAPH]
[*]
Page 1
[*] Certain information on this page has been omitted and
filed separately with the Commission. Confidential treatment
has been requested with respect to the omitted portions.
<PAGE> 26
[GRAPH]
[*]
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EXHIBIT 10.12
ADDENDUM TO THE
DEVELOPMENT AGREEMENT OF 23.12.1996
REGARDING THE DEVELOPMENT OF A TUNABLE LASER SOURCE MODULE
by and between
HEWLETT-PACKARD GmbH
HERRENBERGER STRABE 130
71034 BOEBLINGEN
GERMANY
- hereinafter referred to as "HP" -
and
NEW FOCUS INC.
2630 WALSH AVE.
SANTA CLARA CA 95051
USA
- hereinafter referred to as "New Focus" -
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1. If not expressly stated to the contrary herein, all provisions set forth
in the Development Agreement of 23.12.1996 (the "Agreement") shall fully
apply to this Addendum and shall remain in full force and effect.
2. Delivery by New Focus of the 30 production units as described in the
Agreement shall be due on July 31, 1998. The per unit price for these
production units shall remain unchanged at $[*].--([*] U.S. Dollars).
3. The parties hereto will agree on separate terms and conditions for a
contract regarding the production and delivery of the Tunable Laser Source
Modules as defined in Clause 11.1 of the Agreement. In amendment of
Schedule 1 A.) 5. of the Agreement, the parties agree on an initial per
unit price ("HP Purchase Price") of $[*]. -- ([*] U.S. Dollars) for the
Module. This HP Purchase Price is based on the initial HP U.S. List Price
for the Module of $[*]. -- ([*] U.S. Dollars). To the extent HP decreases
or increases the HP U.S. List Price for the Module, New Focus will decrease
or increase the HP Purchase Price by half of the percentage the HP List
Price decreased or increased. If and to the extent the HP Purchase Price
falls below $[*],-- ([*] U.S. Dollars), New Focus shall have the right to
terminate the contract regarding the production and delivery of the Tunable
Laser Source Modules. If and to the extent the HP List Price falls below
$[*] -- ([*] U.S. dollars), HP shall have the right to terminate such
contract. These rights of termination shall be specified in detail in such
contract. It is understood between the parties hereto that, in this case,
HP shall be absolutely free to manufacture the Modules itself or have the
Modules manufactured and delivered by a third party provided licensing
agreements as outlined in Clause 7 of this Addendum are strictly adhered
to. In addition, HP shall not be responsible for any additional development
costs associated with supplying HP with the PMF Option of the Module due to
the fact that such additional development costs were already covered by the
NRE payments documented in the Development Contract of December 23, 1996.
4. HP agrees to pay to New Focus an amount of $500,000.--(Five Hundred
Thousand U.S. Dollars) within 30 days of the execution of this Addendum in
order to ensure timely manufacturing and delivery of the Modules by New
Focus. Payment shall be subject to New Focus providing HP a guarantee for
50% ($250,000.--Two Hundred-Fifty Thousand U.S. Dollars) of the above
amount from an internationally recognized Bank substantially in the form as
laid out in Schedule 1 hereto.
5. New Focus shall repay up to 50% ($250,000.--Two Hundred-Fifty Thousand U.S.
Dollars) of the above amount to the extent that one or more of the
following applies:
(i) New Focus being in delay with any deadline set forth in the
Agreement, this Addendum or the production and delivery contract;
provided that a delay with respect to the delivery of the production
units according to Clause 2 above shall
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only trigger repayment if such delay exceeds one month and New Focus
does not provide HP with reasonably sufficient justification for such
delay
and/or HP may not be reasonably expected to accept such delay and/or
the delay has not been primarily caused by HP.
(ii) New Focus being in default of any other material provision of the
Agreement, this Addendum or the production and delivery contract.
The following repayment schedule shall be binding:
$50,000.--(Fifty-Thousand U.S. Dollars) on September 1, 1998
$50,000.--(Fifty-Thousand U.S. Dollars) on October 1, 1998
$50,000.--(Fifty-Thousand U.S. Dollars) on November 1, 1998
$50,000.--(Fifty-Thousand U.S. Dollars) on December 1, 1998
$50,000.--(Fifty-Thousand U.S. Dollars) on January 1, 1999
Clauses 5 (i) and 5(ii) of this Addendum shall not apply for any failure or
delay in the performance of New Focus due to causes including, but not
limited to, an act of God, an act of civil or military authority, fire,
epidemic, flood, earthquake, riot, war, sabotage, and governmental action
which are beyond its reasonable control; provided that New Focus: (i)
promptly gives HP written notice of such cause and, in any event, within
fifteen (15) calendar days of discovery thereof; and (ii) uses diligent
efforts to correct such failure or delay in its performance.
6. In view of HP's exclusive rights of use as described in Clause 11 of the
Agreement, the Parties agree upon the following:
(i) New Focus may solely sell Modules in their completely assembled form
(as defined by form factor, HW and SW interface) to HP.
(ii) Until HP officially informs New Focus of the obsolescence of the
Module, New Focus shall not in any way manufacture and/or sell the
Module and/or the building blocks (defined as the complete assembled
opto-mechanical sub-assembly including but not limited to, the diode
laser, external cavity, cavity optics, and drive train, in the exact
configuration) thereof either under its own brand name in a way that
direct competition to the HP Module is created or to direct HP Module
competitors (including but not limited to corporations such as Anritsu,
Photonetics, EXFO, Tektronix, Santec etc.) without the expressed
written consent of HP.
Subject to the foregoing, none of HP's rights according to Clause 11 of the
Agreement and Clause 7 of this Addendum nor any other of HP's rights under
the Agreement shall be in any way affected hereby.
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7. With respect to HP's rights of use pursuant to 11.1 of the Agreement, and
to the extent HP decides to manufacture the Modules itself or decides to
have the Modules manufactured and delivered by a third party, the Parties
shall enter into negotiations regarding the amount of the license fee for
the New Focus patent in question (U.S. Patent No.: 5,319,668). This
license fee shall not exceed $[*]. -- ([*] U.S. Dollars) per manufactured
Module. New Focus warrants that it is the sole owner of U.S. patent No.
5,319,668 and the therewith related applications [*] and [*] and any other
patent or patent application claiming the priority of this patent or
patent application.
Furthermore, it is the understanding of the parties:
(i) that no further royalty or license fees shall in any way be payable by
HP to New Focus for the Module.
(ii) that HP's use of the patent in question is limited to the Module in
its completely assembled form (as defined by form factor, HW and SW
interface).
8. No ancillary verbal agreements have been made. Any alterations and
amendments hereto must be made in writing in order to be valid and must
expressly indicate that they constitute an alteration or amendment hereto.
This shall similarly apply to any waiver of this written form requirement.
Should one or more of the provisions hereof be or become void or invalid,
the parties hereto undertake to replace such a provision with a valid
provision which approximates the economic purpose or intent of the void or
invalid provision as closely as possible. The validity of the remaining
provisions shall remain unaffected thereby.
For HP: For New Focus:
Boeblingen, 10/30/97 Santa Clara, 11/6/97
/s/ WERNER BERKEL /s/ TIMOTHY DAY
- ----------------------------- -----------------------------
Werner Berkel Timothy Day
Fiber Optic Test/Business Manager Engineering/Vice President
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MID-PENINSULA BANK
October 23, 1997
Hewlett-Packard GmbH
Herrenberger Str. 130
71034 Boeblingen
Germany
Dear Sirs:
Mid-Peninsula Bank (the "Bank") herewith confirms that it has knowledge that
Hewlett-Packard GmbH (hereinafter referred to as HP), Herrenberger Str. 130,
71034 Boeblingen, Germany has granted to New Focus, Inc. a payment in the amount
of $USD500,000 (Five Hundred Thousand US Dollars). The payment to New Focus,
Inc. is specified within the terms and conditions of the Addendum dated October
28, 1997 to the Development Agreement (the "Agreement") dated December 23, 1996
by and between HP and New Focus, Inc.
The Bank herewith provides assurance to HP as follows. The Bank, acting as a
principal obligor, guarantees to HP prompt payment by New Focus, Inc. of all of
its (repayment) obligations under the terms specified in that certain Addendum
to the Agreement, in an amount not to exceed $USD250,000 (Two Hundred-Fifty
Thousand US Dollars), such amount to exclude accrued interest and/or costs. In
the event that New Focus, Inc. does not make payment to HP in accordance with
Clause 5 of the Addendum to the Agreement, the Bank shall forthwith upon the
first demand of HP, make payment to HP in such amount(s) (not to exceed
$USD250,000 - Two Hundred-Fifty Thousand US Dollars) as was not paid by New
Focus, Inc. (as if the Bank instead of New Focus, Inc. were expressed to be the
principal obligor).
This guaranty shall remain in effect as long as New Focus, Inc. has a potential
payment obligation towards HP under Clause 5 of the Addendum to the Agreement.
Mid-Peninsula Bank
By: /s/ MURRAY B DEY
---------------------------------
Murray B. Dey
Executive Vice President
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Schedule 1
GUARANTEE
Whereas
We, the undersigned, Bank, herewith confirm that we have knowledge that
Hewlett-Packard GmbH, Herrenberger Str. 130, 71034 Boblingen, Germany has
granted to New Focus payment of an amount of $500,000 -- (Five Hundred
Thousand U.S. Dollars).
Therefore
We guarantee, as principal obligor, to HP prompt performance by New Focus
of all its (repayment) obligations under the Addendum. We undertake with HP
up to a maximum amount of $250,000 -- (Two Hundred-Fifty Thousand U.S.
Dollars), such maximum amount not including accrued interest and/or costs,
that whenever New Focus does not pay amount when due in accordance with
Clause 5 of the Addendum, we shall forthwith on first demand pay that
amount as if we instead of New Focus were expressed to be the principal
obligor.
This guarantee shall be valid until final performance of New Focus of all
its obligations under the Agreement, the Addendum or the production and
delivery contract.
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EXHIBIT 10.13
ADDENDUM NO 2
to the
Development Agreement of 23.12.1996 regarding the development of a Tunable Laser
Source Module, amended by an Addendum of 30.10.1997
by and between
AGILENT TECHNOLOGIES
DEUTSCHLAND GMBH
Herrenberger Str. 130
71034 Boblingen
Germany
hereinafter referred to as "AGILENT"
and
NEW FOCUS INC.
2630 Walsh Ave.
Santa Clara CA
U.S.A.
hereinafter referred to as "New Focus"
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WHEREAS, New Focus developed a tunable laser module for AGILENT known as the
"Happy module" under the Development Agreement of 23.12.1996, amended of
30.10.1997 (hereinafter "the Development Agreement").
WHEREAS, the parties wish to develop a version of this module that provides more
power, referred to hereinafter as the "TL1502 Module" as well as an
L-band version, referred to hereinafter as the "TL1601 Module" (together
hereinafter called "Monet Module").
NOW THEREFORE, the parties agree as follows:
1. DEVELOPMENT AGREEMENT AND THIS ADDENDUM
If not expressly stated to the contrary herein, all provisions set forth
in the Development Agreement of 23.12.1996 and the Addendum of
30.10.1997 shall fully apply to this Addendum No 2 and shall remain in
full force and effect.
With respect to the penalty clause set forth in section 5.2 of the
Addendum 1 to the Development Agreement regarding the Happy Module,
AGILENT agrees not to enforce such clause with respect to any delays
having occurred before the date of this Addendum (altogether $250,000;
Two hundred and fifty thousand Dollars).
2. AMENDMENTS REGARDING THE DEVELOPMENT AGREEMENT
2.1 PRICES AND RAMP-UP
In amendment of Schedule 1 A.) 5. Of the Development Agreement of
23.12.1996, the parties agree on an initial per unit price ("AGILENT
Purchase Price") of $[*]-([*] U.S. Dollars) for the Happy Module. The
parties agree that this price shall not be increased in case the initial
AGILENT U.S. List Price increases or decreases.
AGILENT agrees to purchase [*] "Modules" from New Focus prior to March
2000. A "Module" is defined as a Happy Module or a Monet Module.
2.2 DELIVERY MILESTONES
2.2.i New Focus shall deliver the Happy Module according to the following
delivery milestones.
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It is hereby agreed that the deliveries of the Happy Module as of the
date of signing of this Addendum are in full compliance with the
delivery milestones listed above.
From December 1999 on, the parties take into account a rolling three
months window (further delivery milestones after March 2000 will be
agreed to in a separate purchase agreement). The numbers of units
delivered by New Focus will be reviewed on a monthly basis. If the total
number for one month is below the numbers agreed to this respective
month, New Focus will have a two months period to bring the total number
of units back to the number agreed to for the respective three months
period.
2.2.ii In the event that New Focus fails to deliver the number of units agreed
to for a three months period, AGILENT may terminate this Agreement upon
90 days notice.
AGILENT may also terminate this Addendum without notice if New Focus
fails to deliver the first PM beta unit by February 29, 2000 or fails to
deliver the first PM production unit by March 31st, 2000.
AGILENT must inform New Focus that AGILENT wishes to terminate the agreement in
writing within 60 days of failure by New Focus to deliver. If AGILENT fails to
do so, then AGILENT's right to terminate will lapse until the next trigger event
occurs.
2.3 QUALITY TRIGGER (HAPPY MODULE)
Regarding the Annualized Failure Rate (AFR) as defined in schedule 7,
the parties will monitor a 6 months rolling average starting in June
2000. The parties will notify each other in writing every month of the
six month rolling average of the AFR.
Regarding the rate of Defect on Arrival (DOA) as defined in schedule 7,
the parties will measure a rolling three months average starting in
December 1999. The parties will notify each other in writing every month
of the three month rolling average of the DOA.
In the event that the following trigger events apply, AGILENT may
terminate this Addendum to the Development Agreement upon 90 days prior
notice:
- the six month rolling average of the AFR is above [*]%
- the three month rolling average of the DOA exceeds [*]%
AGILENT must inform New Focus in writing within 60 days of the occurrence of the
above trigger events that AGILENT wishes to terminate the agreement. If AGILENT
fails to do so, then AGILENT's right to terminate will lapse until the next
trigger event occurs.
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2.4 TRANSITION
In the event that this Addendum will be terminated according to Article
2.2, 2.3,5,6,7 or according to any provision regarding the Monet Module
herein, New Focus agrees to provide the following documents and
transition services to AGILENT:
i. complete transfer of all R&D documentation regarding the Products
of the Development Agreement and this Amendment.
ii. transfer of SW source code
iii. transfer of all Manufacturing documentation
iv. transfer of supply chain access and documentation
v. [*] months engineering support (Mr. Tim Day or an equivalent
engineer)
vi. [*] months phone support after transfer is complete
vii. New Focus agrees to bridge the production up to six months
during transfer of documents and processes.
viii. New Focus agrees to transfer all unique production tools and
fixtures plus any testcode.
ix. It is agreed that the guaranteed purchase price for the capped
diode will a) include a [*]% gross margin to New Focus and b)
the cost of coating used in this calculation will not exceed
$[*]. The price to AGILENT for the coated and capped diode will
therefore be according to the following formula: (Actual laser
diode cost + coating cost max.$[*]) / ([*]) The supply of
the capped diode is guaranteed for a period of one year after
termination.
3. DEVELOPMENT OF THE MONET MODULE
New Focus agrees to develop a Tunable Laser Source Module (including
hard- and software), hereinafter "Monet Module", which is described in
greater detail in the specifications in Schedule 1 hereto, as well as to
manufacture prototypes and produce units whilst adhering to the project
schedule as set forth in Schedule 2 hereof.
4. BREAK-DOWN OF COSTS / REMUNERATION FOR THE MONET MODULE
4.1 In return for the services outlined in Article 3 above, AGILENT shall
effect payment in installments as laid out in Section3. "Payment
Criteria" of Schedule 1 according to the development phases for hardware
and software described in 2 Sections 2. A-B of Schedule 1 hereto. The
payments shall become due and payable in accordance with the terms and
conditions outlined in Section3. "Payment Criteria" of Schedule 1.
4.2 A) AGILENT agrees to an initial payment to New Focus of [*] U.S. Dollars
($[*]) within 30 days of the execution of this Addendum in order to
ensure timely manufacturing and delivery of the Monet Module by New
Focus. This sum represents [*]% of the total developmental amount of [*]
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U.S. dollars ($[*]) which Agilent is hereby obligated to pay according
to the terms and of this Addendum and the schedules attached hereto for
the development of the Monet Module. This sum is in addition to any
contract amounts which Agilent has previously agreed to pay New Focus
(See for Example: Section 4 of the Addendum No. 1 of 30.10.1997 to the
Development Agreement.)
B) The initial and subsequent payments for the Monet Module set forth
above in Section 4.2A and which are detailed in the attached schedules
1-2 shall be subject to New Focus providing AGILENT a performance
guarantee of [*] U.S. Dollars ($[*]) from an internationally recognized
Bank. This subsection shall, for the Monet Module, supercede and replace
the guarantees set forth in Section 5 of Addendum No 1 of 30.10.1997 to
the Development Agreement.
C) The parties agree on an initial per unit price for the Monet Module
(either for the TL1502 or the TL1601 single mode fiber version) of $[*]
for the first [*] units and for any further unit $[*], as well as for
the PM-Version of these Modules $[*]. The parties agree that this price
shall not be increased within the first year after delivery of the first
production unit. The parties to this Addendum will renegotiate the per
unit price one year after acceptance by AGILENT of the first units of
Monet Modules produced under this Addendum. New Focus shall work
continuously on reducing the cost of the products. Any share of cost
advantages will be part of a future procurement agreement.
4.3 The production and delivery of the Monet Modules shall be subject to a
separate Framework Purchase Agreement. The parties shall negotiate such
terms and conditions and have an agreement in place 2 months before the
first product shipment. This agreement shall contain the ramp up
quantities for the first six months of production. The target capacity,
without any commitment herein, is intended to be in total (for SMF/PC,
SMF/APC, PMF/PC; PMF/APC) [*] units up to [*] per year.
5. DEVELOPMENT
5.1 The prototypes as well as the software of the Monet Modules shall be
manufactured and developed by New Focus in accordance with the project
schedule (Schedule 2 to this Addendum No 2) and the development phases
contained therein as well as in Schedule 1.
5.2 AGILENT may terminate this Addendum upon 90 days notice if New Focus
fails to deliver the TL1502 prototype and production unit as well as the
TL1601 prototype and production unit as defined in section 2 of schedule
1 of this Addendum, until 3 months after the milestones as defined in
Schedule 2 of this Addendum. Article 2.4 ("Transition") shall apply
accordingly.
Agilent must inform New Focus in writing of Agilent's intention to terminate the
agreement within 60 days of the occurrence of the failure by New Focus to
deliver the TL1502 and TL1601 prototype and production units. If AGILENT fails
to do so, then AGILENT's right to terminate
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will lapse until the next trigger event occurs.
6. QUALITY TRIGGER (MONET MODULE)
Regarding the Annualized Failure Rate (AFR) as defined in schedule 7,
the parties will monitor a 6 months rolling average starting 6 months
after the first production unit is delivered. The parties will notify
each other in writing every month of the six month rolling average of
the AFR.
Regarding the rate of Defect on Arrival (DOA) as defined in schedule 7
the parties will measure a rolling three months average starting three
months after the first production unit is delivered. The parties will
notify each other in writing every month of the six month rolling
average of the AFR.
In the event that the following trigger events apply, AGILENT may
terminate this Addendum upon 90 days notice:
- the six month rolling average of the AFR is above [*]%
- the three month rolling average of the DOA exceeds [*]%
- the absolute number of DOA is higher than 3 during the first
three months after the delivery of the first production unit.
AGILENT must inform New Focus in writing within 60 days of the occurrence of a
trigger event that AGILENT wishes to terminate the agreement. If AGILENT fails
to do so, then AGILENT's right to terminate will lapse until the next trigger
event occurs.
7. RIGHTS OF USE
7.1 All rights of use set forth in Section 11 of the Development Agreement
of 23.12.1996 granted to AGILENT regarding the Happy Modules under the
Development Agreement shall remain in full force and effect and shall
not be amended in any way by this Addendum. Only with respect to the
Monet Modules being subject of this Addendum, section 11.1 shall be
amended as follows.
7.2 AGILENT is hereby vested with an irrevocable, exclusive, transferable
distribution right regarding the Monet Modules (including software, the
respective prototypes, the production units and any and all parts
including, but not limited to any building blocks) in their respective
state of process, such right being unlimited with respect to time,
contents and geographical scope.
7.3 It is the intent of the parties that the manufacturing and supply of the
Monet Module be performed for AGILENT exclusively by New Focus provided
that the quality, timeliness
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of delivery of the Monet Modules as supplied by New Focus meet the
commitments made herein. The parties will establish an escrow account to
protect AGILENT in the event that New Focus is unable to meet its
commitments under this Addendum, or in the event that the agreement is
terminated under section 2, 5 or 6. The terms of the escrow account are
set forth below in subsections 7.3 i to v.
7.3.i As soon as available, New Focus shall deposit any
prototypes and/or parts of them as well as any
documentation with the latest version of the source code
regarding the AGILENT-specific development result and
update such deposits in escrow with a mutually agreeable
escrow trustee. AGILENT shall bear the costs of the
escrow trust.
The provisions applicable to the deposit of source code by New
Focus shall be as follows:
In the event that one or more of the following trigger
events apply AGILENT is automatically vested with an
irrevocable, transferable, non-exclusive production
right regarding the Products under this Addendum.: New
Focus
a. is no longer able to meet its maintenance and support
contract obligations to AGILENT, provided that the
cessation of maintenance services is not solely
attributable to the failure of the licensee to make
timely payment of any charges under such maintenance
contract;
b. has ceased to do business;
c. has ceased to produce the Products specified in
Schedule 1 hereto;
d. has significantly changed its quality management in
such a way that it becomes unacceptable to AGILENT
(e.g. audit reasons, administrative or governmental
regulations) or if the Modules will not reach an
acceptable level and if after AGILENT informs New
Focus in writing New Focus fails to remedy such
quality deficiency within 90 days;
e. has increased prices of the Products specified in
Schedule 1 hereto by more than [*]%;
f. has become insolvent, suffers or permits the
appointment of a receiver for its business or assets
or becomes subject to, any bankruptcy proceedings or
any statute relating to insolvency or the protection
of rights of creditors.
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7.3.ii The escrow trustee shall follow the procedures set forth
herein below:
- Escrow trustee shall promptly notify New Focus of the
occurrence of the Release Condition and shall provide
to New Focus a copy of AGILENT's notice to escrow
trustee. "Release Condition" for the purposes of this
Agreement shall mean all of the trigger events
described above.
- If the escrow trustee does not receive Contrary
Instructions, as defined below, from New Focus within
thirty (30) days following escrow trustee's delivery
of a copy of such notice to New Focus, Escrow trustee
shall deliver a copy of the source code to AGILENT.
"Contrary Instructions" for the purposes of this
subclause shall mean the filing of written notice with
escrow trustee by New Focus, with a copy to AGILENT
demanding delivery, stating that the Release Condition
has not occurred or has been cured.
- If Escrow trustee receives Contrary Instructions from
New Focus within thirty (30) days of the giving of
such notice to New Focus, Escrow trustee shall not
deliver a copy of the Source Material to AGILENT, but
shall continue to store the source code until:
a) otherwise directed by New Focus and AGILENT
jointly;
b) Escrow trustee has received a copy of an order of a
court of competent jurisdiction directing Escrow
trustee as to the disposition of the Source
Material; or
c) Escrow trustee has deposited the source code with a
court of competent jurisdiction or a Trustee or
receiver.
7.3.iii Upon receipt of Contrary Instructions from New Focus,
escrow trustee shall have the absolute right, at escrow
trustee's election to file an action in interpleader
requiring the New Focus and AGILENT to answer and
litigate their several claims and rights amongst
themselves.
7.3.iv Upon execution of this Addendum, AGILENT shall be
granted, at no charge, a non-exclusive,
non-transferable, irrevocable and perpetual right of
utilization to the deposited source codes. AGILENT may
only exercise
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its rights under this license and use the source code in
the event that the requirements of subclause 7.3.ii are
met.
7.3.v Prior to depositing the source codes, AGILENT may
inspect the source material to assure itself of the
quality thereof and of the fact that they are complete.
7.4 New Focus grants to AGILENT a non-exclusive, worldwide, transferable and
irrevocable license to all international property rights in the Monet
Module which are owned by New Focus, copyrights included, Said grant
will be provided royalty free for the Monet Modules sold to AGILENT by
New Focus. Said grant will be provided under the royalty provisions set
forth in subsection 7.7 hereof for Monet Modules not sold by New Focus
to AGILENT..
7.5 AGILENT grants to New Focus a non-exclusive, transferable, irrevocable
production and distribution right regarding the optoblock as defined in
Schedule 3. New Focus will pay to AGILENT a royalty of $[*] for the
first [*] and $[*] for any further sold optoblock. In the event of an
acquisition of New Focus, New Focus will be allowed to produce the
optoblock under the same agreement. AGILENT grants to New Focus a
non-exclusive, non-transferable, irrevocable production and distribution
right regarding the Digital/analog part as defined in Schedule 3. The
rights granted shall be revocable if New Focus will be taken over by
competitors as defined in Article 8.2 of this Addendum.
7.6 AGILENT grants to New Focus a non-exclusive, non-transferable,
irrevocable production and distribution right regarding the
Computing/interface part as defined in Schedule 3. New Focus will pay to
AGILENT a royalty of $[*] for each sold Computing/interface part. The
rights granted shall be revocable if New Focus will be taken over by
competitors as defined in Article 8.2 of this Addendum.
7.7 In the event of termination of this Addendum by AGILENT, AGILENT will
pay to New Focus a royalty for the Monet Module based on AGILENT's net
revenues for Monet or other modules which are based on the optoblock as
defined in schedule 3 of this Addendum or other modules which are based
on the optoblock as defined in schedule 3 of this Addendum per calendar
year as follows:
- 2000: [*]%
- 2001: [*]%
- 2002: [*]%
- 2003 and onward: [*]%
The above royalty payments will not be due in case that one or more of
the trigger events mentioned in Article 7.3i a-f apply.
In case that this Addendum will be terminated by AGILENT because of
Article 7.3.i.a-f, AGILENT agrees to pay a royalty of $[*] for each unit
of the Monet Modules built after
[*] Certain information on this page has been omitted and
filed separately with the Commission. Confidential treatment
has been requested with respect to the omitted portions.
Page 9
<PAGE> 10
termination.
AGILENT agrees to keep records showing the sales or other disposition of
Monet Modules or other modules based on the optoblock defined in
schedule 3 of this Addendum in sufficient detail to enable the royalties
payable hereunder by AGILENT to be determined, and further agrees to
permit its books and records to be examined to the extent necessary to
verify the Royalties payable. Such examination to be made at the expense
of New Focus by an independent auditor acceptable to AGILENT. Costs
shall be born by AGILENT if discrepancies occur.
8. MISCELLANEOUS
8.1 With respect to section 8.5 of the Development Agreement of 23.12.1996,
the liability for New Focus under this section, regarding AGILENT's
right to rectify the defect itself or have it rectified by a third party
at New Focus's expense, shall be limited to [*] U.S. dollars ($[*].)
8.2 Article 15.1 second paragraph of the Development Agreement of 23.12.1996
shall be modified as follows:
Good cause shall be deemed to exist, in particular, if one of the
parties hereto fails to perform its contractual obligations, despite a
reminder to this effect. Good cause shall also be deemed to exist for
AGILENT if bankruptcy proceedings are instigated or initiated against
New Focus's assets or in the event of a lasting modification to the
ownership rights within New Focus (for example, if New Focus will be
taken over by competitors within the market of telecommunication, test
and measurement).
8.3 Article 15.1 third paragraph of the Development Agreement of 23.12.1996
shall not apply to this Addendum.
8.4 No ancillary verbal agreements have been made. Any alterations and
amendments hereto must be made in writing in order to be valid and must
expressly indicate that they constitute an alteration or amendment
hereto. This shall similarly apply to any waiver of this written form
requirement.
8.5 Should one or more of the provisions hereof be or become void or
invalid, the parties hereto undertake to replace such a provision with a
valid provision which approximates the economic purpose or intent of the
void or invalid provision as closely as possible. The validity of the
remaining provisions shall remain unaffected thereby.
8.6 In the case that AGILENT transfers all or part of its assets to a new
legal entity and therefore has to assign and/or transfer the rights and
obligations under the agreement and this Addendum No 2 to such new legal
entity, New Focus declares its agreement to such assignment or transfer
and AGILENT accepts such agreement.
[*] Certain information on this page has been omitted and
filed separately with the Commission. Confidential treatment
has been requested with respect to the omitted portions.
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9. SCHEDULES TO THIS ADDENDUM
The Schedules listed in the following shall form an integral part of
this Addendum:
Schedule 1 Specifications, Development Phases, Payment
Schedule 2 Project schedule
Schedule 3 Definition of the "Tunable Laser Module" and Parts thereof
Schedule 4 Contact persons
Schedule 5 Bugfixing
Schedule 6 Resources provided by AGILENT
Schedule 7 Definition of Annualized Failure Rate (AFR) and Defect on
Arrval(DOA)
For AGILENT: For New Focus:
Boeblingen, 12/16/1999 Boeblingen, Dec 10, 1999
/s/ JORGE SCHULTZ /s/ PAUL SMITH
- ----------------------------------- ------------------------------------
Name Name
CONTROLLER, OCMD VP/GM Telecom Division
- ---------------------------- ---------------------------------
Area of activity/title Area of activity/title
Page 11
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Final Version - 10.12.1999
SCHEDULE 1 SPECIFICATIONS, DEVELOPMENT PHASES, PAYMENT
Complete specification should be according to specification control
drawings!
1. MODULE KEY FUNCTIONS AND FEATURES
1.0 TUNABLE WAVELENGTH LASER SOURCE PARAMETERS
From the customer point of view this source will have the following
parameters. All these parameters must be accessible via the user
interface.
<TABLE>
<CAPTION>
Parameter Limits Preset Remarks
- --------- ------ ------ -------
<S> <C> <C> <C>
[*]
</TABLE>
1.1 TUNABLE WAVELENGTH LASER SOURCE FUNCTIONALITY
[*]
1.2 TUNABLE WAVELENGTH LASER SOURCE EXCEPTIONS / EVENTS
[*]
[*] Certain information on this page has been omitted and
filed separately with the Commission. Confidential treatment
has been requested with respect to the omitted portions.
1
<PAGE> 14
[*]
[*] Certain information on this page has been omitted and
filed separately with the Commission. Confidential treatment
has been requested with respect to the omitted portions.
2
<PAGE> 15
2. Development requirement:
The Development will proceed in accordance with the development phases
as described below.
("of each" herein means of [*] and of [*] modules)
A: MODULE HARDWARE
Start Contract
- Final Contract signed from both parties
- Agreement on Project schedule (see schedule 2)
- Agreement on all product specifications (see specification control
drawing [*] and specification control drawing [*])
1. Design Review
a) Complete product documentation available, and
documentation is supposed to be capable to fulfill
the product requirements.
- Drawings of mechanical parts
- Assembly drawings of mechanical parts
- Technical specifications of all electro-mechanical components
- Technical specifications of all optical components
- Technical specifications of all opto-electronic components
- Printed circuit board layout and schematics of electronic
circuits
- Electrical power dissipation summary
- Series of operation description
2. Phase 1 Prototypes
a) First [*] of each (alpha units) prototypes are
delivered and test data of each prototype is
supplied
b) Prototypes meet specification according to
specification control drawing
3. Phase 2 Prototypes
a) [*] of each (beta units) prototypes are delivered
and test data of each prototype is supplied
b) Prototypes meet specification according to
specification control drawing
4. Release to Production
a) All prototypes out of phase 2 are tested at AGILENT
regarding AGILENT Environmental Test Manual Class B
and meet the product requirements specification
control drawing
b) Stress and lifetime test results are available
c) Exhaustive search for design defects complete
d) Entire production process works and is documented
e) Test tooling complete
f) Incoming material inspection in place
g) Shipping container in place
5. Final Contact close
a) 30 Production units of each are delivered and
product performance is documented
b) [*] units of each are at AGILENT incoming inspected
and meet the product specification
[*] Certain information on this page has been omitted and
filed separately with the Commission. Confidential treatment
has been requested with respect to the omitted portions.
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Final Version - 10.12.1999
B: MODULE SOFTWARE
1. Design Review
[*]
2. Phase 1 Prototypes (alpha units)
[*]
3. Phase 2 Prototypes (beta units)
[*]
4. Release to Production
[*]
3. Payment criteria:
[*]% ($[*]) will be due at contract start (payment criteria; contract
signing by AGILENT and NFI).
[*]% ($[*]) will be due after shipment of [*] with waiver spec and [*]
(payment criteria is an [*] module successfully tested by AGILENT in
Germany meeting specifications according to specification control
drawing [*]). Estimated completion date [*].
[*]% due [*] modules with coherence control and with the original
environmental spec. (payment criteria both Alpha Modules pass
environmental testing by AGILENT in Germany according to specification
control drawing [*] and specification control drawing [*]. Estimated
completion date [*].
[*]% ($[*]) due after the first shipment of the [*] with coherence
control (payment criteria: units meet the same specification control
drawing limits as the [*] according to [*]). Estimated Completion date
[*].
[*]% ($[*]) due at final contract close (payment criteria: final
contract close which shall occur after 30 production units of both the
[*] modules have been accepted by AGILENT in Germany). Estimated
completion date [*].
[*] Certain information on this page has been omitted and
filed separately with the Commission. Confidential treatment
has been requested with respect to the omitted portions.
4
<PAGE> 17
Final Version - 10.12.1999
SCHEDULE 2 - PROJECT SCHEDULE
5
<PAGE> 18
Agilent Technologies
[*]
[*] Certain information on this page has been omitted and
filed separately with the Commission. Confidential treatment
has been requested with respect to the omitted portions.
<PAGE> 19
Agilent Technologies
[*]
[*] Certain information on this page has been omitted and
filed separately with the Commission. Confidential treatment
has been requested with respect to the omitted portions.
<PAGE> 20
Agilent Technologies
[*]
[*] Certain information on this page has been omitted and
filed separately with the Commission. Confidential treatment
has been requested with respect to the omitted portions.
<PAGE> 21
Agilent Technologies
[*]
[*] Certain information on this page has been omitted and
filed separately with the Commission. Confidential treatment
has been requested with respect to the omitted portions.
<PAGE> 22
Final Version - 10.12.1999
SCHEDULE 3: DEFINITION OF THE "TUNABLE LASER MODULE" AND PARTS THEREOF
Digital/analog part
Comprising the [*] and the Analog board as well as the related Low Level
Software drivers.
Computing/interface part
Comprising the Computing Platform and the Bus interface as well as the
adaptation to the Wind River OS and the High Level Software Functions.
The optoblock
as the complete assembled opto-mechanical sub-assembly, including but not
limited to the diode laser, external cavity, cavity optics and drive train, in
the exact configuration, as subject of the Addendum to the Development
Agreement, last signed on Oct. 30, 1997.
[*]
[*] Certain information on this page has been omitted and
filed separately with the Commission. Confidential treatment
has been requested with respect to the omitted portions.
6
<PAGE> 23
Final Version - 10.12.1999
SCHEDULE 4 - CONTACT PERSONS
For a better fulfillment of this Agreement both parties name the following
contact persons
By AGILENT: By New Focus
Name: Edgar Leckel Name: Bruce Pittman
Telephone-No.: (49) 7031-142691 Telephone-No.: (01) 408 919-2741
FAX: (49) 7031-143387
Name: Emmerich Muller Name: Dave Arnone
Telephone-No.: (49) 7031-144861 Telephone-No.: (01) 408-919-1528
FAX: (49) 7031-143387
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Final Version - 10.12.1999
SCHEDULE 5 - BUGFIXING
1. Any bugs in the developed software shall be recorded and verified by
AGILENT. Following verification, AGILENT shall forward the bug report to
New Focus.
Bugs shall be categorized as follows:
A. Serious bugs
Bugs that result in system crashes (hangs or halts), loss of
data, destruction of data, corruption of data or cases of
unreasonable handling effort for which no "workaround" is
available (i.e. there is no method accepted by AGILENT or by the
customer for either avoiding the bug or using the developed
software).
Any medium bug as defined in B. of this schedule 4 which causes
a serious bug as defined above within the final optical
component platforms shall additionally be categorized as a
serious bug.
B. Medium bugs
Bugs as specified under A above, but for which a "workaround" is
available for bug avoidance.
C. Minor bugs
Any bugs not included in categories A and B above.
2. Any serious bugs in the developed software shall be immediately fixed by
New Focus. New Focus will begin to fix the bug 24 hours after the
respective report by AGILENT the latest. New Focus shall fix the bug
during 3 days or during a longer period agreed by AGILENT. If New Focus
is unable to reproduce or to fix any bug immediately on its own computer
system, it shall fix the bug - if decided by AGILENT - on-site in
customer's place.
3. Any medium bug in the developed software shall be fixed in a reasonable
period of time. New Focus shall begin fixing the bug during 48 hours
after the respective report by AGILENT. New Focus shall fix the bug
during two weeks or during a longer period agreed by AGILENT.
4. Any other bugs shall be fixed as soon as possible within the scope of
the maintenance of the developed software.
5. New Focus shall update the documentation in accordance with the bug fix.
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Final Version - 10.12.1999
6. New Focus shall ensure that any serious and medium bugs shall be fixed
for both the current and the previous operating system release.
7. New Focus will maintain a telephone number with a designated
knowledgeable contact to AGILENT to call during normal business hours to
report problems and receive assistance.
8. The Bugfixing according to this schedule 5 shall be free of charge
during the warranty period.
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<PAGE> 26
Final Version - 10.12.1999
SCHEDULE 6 - RESOURCES PROVIDED BY AGILENT
1. HARDWARE RELATED DOCUMENTS (see separate Documentation Package)
a) Drawings of all mechanical parts of the Module Chassis
- Module Bottom Cover
- Module Top Cover
- Module Sub Panel
- Plastic Front Panel
- Module Extractor
- Fiber Connector Bushing at Front Panel
- Module Fiber Interface
b) Description of Module Interface and digital Hardware
- Printed Circuit Board Outline
- Interface Connector to Module/Mainframe Positioning Dwg.
c) Schematics of digital parts including part list
d) Documentation and File of FPGA Communication Part
2. SOFTWARE RELATED DOCUMENTS (see separate Documentation Package)
a) Description of Communication between Mainframe and Module
b) AGILENT Coding Standards
c) Documentation and Source Code Template for Operating System, Start-up
and Communication of Module
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Final Version - 10.12.1999
SCHEDULE 7 - DEFINITION OF ANNUALIZED FAILURE RATE(AFR) AND DEFECT ON
ARRIVAL(DOA)
AFR(% YR), PER MONTH:
=(SUM OF 'ONE YEAR' WARRANTY FAILS IN THIS MONTH)/(SUM OF UNITS IN
WARRANTY THIS MONTH) *12 * 100
DOA = MODULE IS EITHER INCOMPLETE, DEFECT, OR DOES NOT MEET SPECIFICATIONS.
11