Document:

Exhibit 10.3

 

PROJECT RADIANCE 

 

APPLIED OPTOELECTRONICS, INC.

  

AND  

 

Yuhan Optoelectronic Technology (Shanghai)
Co., Ltd. (裕汉光电子科技(上海)有限公司) 

 

PRODUCT SUPPLY AGREEMENT

 

* Certain information has been
excluded from this exhibit because it is both immaterial and competitively harmful if publicly disclosed. Where applicable, omissions
have been marked “[***]”.

 

     

     

    

CONTENTS

 

	Clause	Page

 

	1.	INTERPRETATION	1
	2.	SUPPLY OF PRODUCTS	2
	3.	PRODUCT PURCHASES	3
	4.	FORECASTS AND ORDERS	4
	5.	DELIVERY; TITLE	5
	6.	PRICE/PAYMENT/INVOICE	6
	7.	LICENSING REQUIREMENTS	7
	8.	PRODUCT WARRANTIES	8
	9.	INDEMNIFICATION AND COVENANTS	10
	10.	GENERAL WARRANTIES AND COVENANTS	10
	11.	INTELLECTUAL PROPERTY	11
	12.	CONFIDENTIALITY	12
	13.	TERM AND TERMINATION	13
	14.	MISCELLANEOUS	14
	EXHIBIT A THE PRODUCTS	20

     

     

    

THIS PRODUCT SUPPLY AGREEMENT (this “Agreement”)
is made on ____________ (the “Effective Date”)

 

BETWEEN:

 

	(1)	Applied Optoelectronics, Inc., a company incorporated in Delaware, USA, whose principal
place of business is at 13139 Jess Pirtle Blvd., Sugar Land, TX 77478 (“Supplier” or “AOI”);
and

 

	(2)	Yuhan Optoelectronic Technology (Shanghai) Co., Ltd. (裕汉光电子科技(上海)有限公司
), a company incorporated in the PRC (unified social credit code: 91310115MA1H8BHE0A) whose registered office is at Block C, No.
888 Huanhu West Two Road, Nanhui New Town, Pudong New District, Shanghai (“Buyer” or “Yuhan Shanghai”).

 

Supplier and Buyer, are also hereinafter individually referred
to as a “Party” and collectively as the “Parties”.

 

RECITALS:

 

	(1)	Prime World International Holdings Ltd. (“Prime World”)
(as the Seller) and Yuhan Shanghai have entered into the AGREEMENT FOR THE SALE AND PURCHASE OF A NEW COMPANY TO BE ESTABLISHED
IN HONG KONG on ____________, 2022 (the “SPA”), according to which, Seller agrees to sell, and Yuhan Shanghai
agrees to buy the Shares (as defined in the SPA) (i.e. the whole of the allotted and issued share capital of NewCo) and each right
(including, without limitation, the right to receive all dividends, distributions or any return of capital declared, paid or made
by NewCo) attaching to the Shares at or after Completion (as defined in the SPA).

 

	(2)	Upon the Completion, Buyer wish to purchase certain products and services from Supplier, and Supplier
wishes to sell such products and services to Buyer.

 

	(3)	Buyer and Supplier agree that the terms of this Agreement govern the products and related services
purchased by Buyer from Supplier.

 

NOW THEREFORE, in consideration of the foregoing
and of the mutual promises hereinafter set forth, the Parties agree as follows:

 

	1.	INTERPRETATION

 

“Affiliate” means,
in relation to a person, any other person which, directly or indirectly, controls, is controlled by or is under the common control
of the first-mentioned person, where “control” means the ownership, directly or indirectly, of more than fifty per
cent (50%) of the voting shares, registered capital or other equity interest of the relevant person, or the power to appoint or
elect a majority of the directors, or otherwise to direct the management of the relevant person;

 

“Applicable Laws” means all applicable
statutes and laws, and orders and regulations of any Governmental Authority;

 

“Business Day”
means any day (other than a Saturday or Sunday or public holiday) on which banks are open for the transaction of normal business
in the PRC, Taiwan and the United States;

 

“Delivery Sites” has the meaning given
to it in clause 4.2;

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“End of Life” has the meaning given
to it in clause 3.6;

 

“Firm Order Period” has the meaning
given to it in clause 4.1;

 

“Forecast” has the meaning given to it in clause 4.1;

 

“Force Majeure Event” has the meaning
given to it in clause 14.5;

 

“Frustrated Party” has the meaning given
to it in clause 14.5;

 

“Non-Frustrated Party” has the meaning
given to it in clause 14.5;

 

“Improvements” has the meaning given
to it in clause 3.3;

 

“Intellectual Property”
means all of the following anywhere in the world: (a) all patents and applications for patents; (b) all copyrights and copyright
registrations; (c) all trade dress and trade names, logos, internet addresses and domain names, social media addresses and handles,
trademarks and service marks and related registrations and applications and any renewals or extensions, all other indicia of commercial
source or origin and all goodwill associated with any of the foregoing; (d) rights of publicity; (e) all inventions, technology,
recipes, trade secrets, processes and techniques; and (f) other intellectual property or similar proprietary rights;

 

“Initial Term” has the meaning given
to it in clause 13.1;

 

“Order” has the meaning given to it in clause 4.2;

 

“PRC” means the
People’s Republic of China and solely for the purposes of this Agreement, excluding Hong Kong, Macau, and Taiwan;

 

“Preferred Supplier”
means the largest supplier for laser component products to the Buyer based on total revenue Buyer purchase for Products in a given
fiscal year.

 

“Products” means
laser component products and certain transceivers products as specified in Exhibit A;

 

“Product Specification”
means specifications agreed to by Supplier and Buyer for a Product.

 

“Product Specification Change” has
the meaning given to it in clause 3.2;

 

“Purchase Order” has the meaning given to it in clause 3.1;

 

“Renewal Term” has the meaning given
to it in clause 13.1;

 

“RMA” has the meaning given to it in clause 5.4;

 

“Tax” means any
form of taxation, levy, duty, charge, contribution, or withholding of whatever nature (including any related fine, penalty, surcharge
or interest) imposed, collected or assessed by, or payable to, any national, provincial, municipal or local government or other
authority, body or official anywhere in the world exercising a fiscal, revenue, customs or excise function;

 

“Warranty Period” has the meaning given
to it in clause 8.1.

 

	2.	SUPPLY OF PRODUCTS

 

	2.1	Any supply of the Products made by Supplier to Buyer shall be governed by this Agreement. Buyer shall order the Products in accordance
with clause 3.1 and Supplier shall supply them according to the conditions laid down herein.

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		2.2	Unless otherwise agreed in this Agreement or among the Parties in a separate
representation and distribution agreement, (a) none of the Products shall be re-sold or otherwise supplied by Buyer to any third
party; and (b) none of the Products shall be re-exported to any other individual, organization or country without the prior written
consent of Supplier.

 

		2.3	For the entire duration of this Agreement, and unless otherwise instructed by Supplier, Supplier
shall be the Preferred Supplier of Products if, and to the extent, Supplier offers the same terms and conditions (including price,
quality, any relevant tariffs and shipping cost) for such Products as other local suppliers’ best quotation, subject to the
conditions set out in the following exceptions. The obligations of the Buyer under this Section 2.3 of the Agreement do not apply
when and to the extent that: (a) a manufacturing of products by Supplier to Buyer is prohibited by applicable law; (b) the manufacturing
of products by Supplier is prohibited by an agreement between Buyer or an affiliate of Buyer and a third party which exists as
of the Effective Date; (c) any of the Buyer’s customers refuse Supplier. If Supplier’s terms deviate from terms offered
by industry standards and materially disfavor the Buyer, Supplier will consider and discuss those terms with Buyer.

 

		3.	PRODUCT PURCHASES

 

		3.1	Purchase Order. The Products shall be set forth in a purchase order agreed upon by the Parties
from time to time (“Purchase Order”). Each Purchase Order shall be substantially in the form of Purchase Order
set forth in Exhibit B, and shall include, among other items, the relevant Products pricing, purchase commitments, and delivery
date. The Parties intend for the express terms and conditions contained in this Agreement (including any Exhibits hereto) and to
exclusively govern and control each of the Parties’ respective rights and obligations regarding the subject matter of this
Agreement, and this Agreement is expressly limited to such terms and conditions. Without limitation of the foregoing, any additional,
contrary or different terms contained in any Purchase Order or other request or communication by Buyer pertaining to the sale of
Products by Supplier, and any attempt to modify, supersede, supplement or otherwise alter this Agreement, will not modify this
Agreement or be binding on the Parties unless such terms have been fully approved in a signed writing by authorized representatives
of both Parties.

 

		3.2	Product Specification Changes. In the event any Buyer requests a change in
the applicable Specifications (a “Product Specification Change”), then Supplier may, upon mutual agreement and
acceptance by both parties, elect to incorporate the Product Specification Change into the applicable Products, and the price for
such Products shall be adjusted accordingly as determined by Supplier.

 

		3.3	Improvements. During the Term of this Agreement, Supplier may, upon mutual
agreement and acceptance by both parties, develop improvements (“Improvements”) to the Products that are designed
to (i) mitigate obsolete components, (ii) improve manufacturability of the Products, or (iii) other commercially reasonable improvements
as deemed necessary by Supplier.

 

		3.4	If such Product Specification Change and Improvement are requested by Buyer,
Supplier will only be liable for damages caused to the Buyer if the Product does not meet Product Specifications.

 

		3.5	If Supplier makes Product Specification Changes or Improvements
without mutual agreement, then Supplier will be liable for any damages
resulting from these unauthorized Product Specification Changes or Improvements caused to the Buyer.

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		3.6	End of Life

 

		(1)	Nothing in this Agreement shall be construed as permitting Supplier to cease manufacture of the
then-current version of the Products (“End of Life”) without providing Buyer with at least six (6) months prior
written notice of its intent to End of Life.

 

		(2)	In the event that Supplier determines to End of Life a version of the Products, the Parties shall
discuss all available options to ensure continued support of the Products by Supplier or a third party, on commercially reasonable
terms.

 

		4.	FORECASTS AND ORDERS

 

		4.1	Forecasts. Except as otherwise expressly stated in a Purchase Order, each Buyer shall by [***] provide to Supplier a rolling forecast of its estimated requirements for the applicable Products
over the following [***] (each a “Forecast”). Each Forecast shall state the relevant Buyer’s
anticipated requirements [***] The commitment levels relating to the applicable Products, unless otherwise agreed in writing, shall be carried forward as
follows in successive Forecasts:

 

		(1)	the [***] covered by that Forecast (the “Firm Order Period”)
shall be a binding order and, unless otherwise agreed by the Parties, shall not be amended by a subsequent Forecast and shall constitute
a commitment on Buyer to purchase, and on Supplier to supply, the stated amounts of Products for the Firm Order Period;

 

		(2)	the [***] covered by that Forecast shall not be a binding order but, unless otherwise
agreed by the Parties, shall not be amended by a subsequent Forecast by more than [***] and, within such tolerance,
shall constitute a commitment on Buyer to purchase, and on Supplier to supply, the stated amounts of Products;

 

		(3)	the [***] covered by that Forecast shall not be a binding order but, unless
                                                                                                         otherwise agreed by the Parties, shall not be amended by a subsequent Forecast by more than [***]
                                                                                                         and, within such tolerance, shall constitute a commitment on Buyer to purchase, and on Supplier to supply, the stated amounts
                                                                                                         of Products;

 

		(4)	the subsequent consecutive [***] estimation covered by that Forecast are provided
for planning purposes only and shall in no event be deemed as a commitment on Buyer to purchase, and on Supplier to supply, any
quantity of the Products.

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		4.2	Orders. On or prior to the date on which Buyer delivers Forecast pursuant to clause 4.1, each Buyer
shall submit, in writing or electronically, to Supplier a binding Purchase Order (each, an “Order”) for the
number of Products to which the relevant Buyer is committed to purchase during [***] such Forecast. Such Order shall specify the relevant Buyer’s order number, the applicable Purchase Order and Products
description, the quantity of Products to be purchased, the price for such Products (based on the applicable Purchase Order), the
Delivery dates and the location or locations identified as the destination for the shipment of Products in an Order (“Delivery
Sites”), and the specific carriers or transportation methods by which Delivery shall be made. Subject to the terms and
conditions of this Agreement, an Order submitted by Buyer pursuant to this clause 4.2 shall constitute a firm commitment by Buyer
to purchase the Products specified in the Order from Supplier. All orders are subject to acceptance by Supplier, who will accept
or reject orders according to Supplier’s then current processes. Every purchase order issued by Buyer to Supplier following
the Effective Date of this Agreement shall be governed by and be deemed to include the provisions of this Agreement.

 

		4.3	Order Cancellations. Buyer may not cancel or terminate any Order, in whole or in part, without
the prior written consent of Supplier, which consent, if given, shall be upon terms that will compensate Supplier for the incurred
costs therefrom.

 

		5.	DELIVERY; TITLE

 

		5.1	Shipment.

 

		(1)	Delivery shall be made by reasonably economical means and at a reasonable rate, in the sole discretion
of Supplier, at Buyer’ sole cost. If no Delivery Site is specified by Buyer for shipment of the applicable Products, then
the applicable Products shall be shipped to Buyer’ address noted on the Order.

 

		(2)	Supplier shall, subject to events beyond its control, make commercially reasonable efforts to meet
specified delivery dates referenced in the Purchase Order. Supplier shall notify Buyer immediately in writing if Supplier has knowledge
of any event that could result in any change to the agreed upon delivery plan. In the event that any Products scheduled for delivery
is more than [***] days late, Buyer may request such Products be shipped and delivered via a different mode of transportation
at Supplier’s expense.

 

		5.2	Inspection. Buyer shall have the right to inspect all Products within [***] days after
receipt thereof, and Products shall be conclusively deemed accepted by Buyer (unless a notice of rejection, along with evidence
thereof satisfactory to Supplier, has been sent by Buyer to Supplier within such [***] day period), relieving Supplier
of liability for damages, if any. Inspection is limited to volume or visual damages to the Products. If a transceiver product containing
an AOI laser fails at the end user, AOI shall work with the buyer to analyze it and if it is determined that the failure is on
AOI’s side, AOI will pass an RMA or a replacement.

 

		5.3	Buyer shall have the right to return a Products if after discussion with Supplier, Buyer believes
that the Products have failed and does not conform to the applicable Product Specifications. Notwithstanding any provision to the
contrary, Supplier’s sole and exclusive obligations to the Buyer for any Products made by Supplier and sold hereunder are
to repair returned Products or provide a replacement Products, at Supplier’s sole option, for any Products which has been
returned to Supplier under the Return Material Authorization procedure (as defined below).

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		5.4	Return Materials Authorization. Supplier will only accept
Products returned under the Supplier Return Materials Authorization
(“RMA”) process and shipped pursuant to the RMA Shipping and Packaging Instructions. Failure to comply with
RMA Shipping and Packaging Instructions shall render the Products warranty null and void immediately. Buyer is responsible for
shipping Products to Supplier and for such shipping expense in all circumstances. Buyer shall obtain a RMA number from Supplier
prior to returning any Products and return the Products prepaid and insured to Supplier to the FCA point. One RMA number per part
number will be designated by Supplier. Any part number not covered by the applicable RMA number will be returned to Buyer at Buyer’
sole expense. RMA numbers are issued only after Buyer have completed an RMA Authorization Request form. RMAs must be accompanied
by any and all test printouts, photos, photomicrographs, and any other results or characterization conducted by Buyer which Buyer
contend set forth defect(s). The warranty of repaired Products shall be the same as the original Products [***] and from the
shipment date of the repaired Products, or such other period expressly stated in the applicable Purchase Order. Supplier reserves
the right to test a representative sample of returned parts only and to make its return authorization for the entire requested
quantity based on said sample. Alternatively, and at Supplier’s sole and absolute discretion, returned Products may be replaced
in part or in its entirety with new Products that meets original Products specifications. In the event that Buyer returns the Products
to Supplier under the proper RMA process and Supplier, determines that it is covered under warranty and replaces or repairs the
defective Products, Supplier is responsible for shipping expense back to the Buyer only.

 

		5.5	Buyer Requested Delay. If any shipment of Products is delayed at Buyer’s request beyond the
applicable delivery date, Supplier, at its sole discretion, shall be entitled to either (a) treat such delay as a breach of this
Agreement, or (b)(i) arrange storage of the shipment either at Supplier’s premises or at another reasonably secure location
on Buyer’s behalf and at Buyer’s risk and expense and (ii) invoice Buyer for all reasonable storage costs relating
to such shipment delay that are incurred by Supplier between the date of Buyer’s notice and the actual delayed delivery date.

 

		5.6	Title. Unless otherwise agreed in writing by the Parties,
shipping terms shall be as follows:

 

		(1)	In the case where a third party carrier delivers the Products to the Delivery Sites, FCA (Incoterms
2020) the Supplier’s designated shipping warehouse, meaning that Supplier retains title to, and shall bear risk of loss for,
all Products until the Products are received by the third party carrier at Supplier’s designated shipping warehouse.

 

		(2)	Title and risk of loss to any Products that is properly rejected shall pass back to Supplier if
and when Supplier takes repossession of such Products (whether for of replacement or repair).

 

		(3)	All claims for loss or damage during shipment must be filed by Buyer with the carrier.

 

		6.	PRICE/PAYMENT/INVOICE

 

		6.1	Payment.

 

		(1)	Upon credit approval by Supplier, payment terms shall be cash upon delivery or, at the option of
Supplier, [***] from the date of the shipment. Supplier reserves the right to require alternative payment terms,
including TT in advance or letter of credit of payment in advance. All
payments must be in United States dollars.

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		(2)	If at any time any Buyer is delinquent in the payment of any invoice or is otherwise in breach
of this Agreement, Supplier may, at its discretion, withhold shipment (including partial shipments) of any order or may, at its
option, require such Buyer to pre-pay for further shipments. All payments not received when due shall be subject to an additional
charge of [***] per month (annual rate [***]) of the unpaid amount or the maximum rate permitted by law,
whichever is less, until the date of payment, as well as Supplier’s costs of collection, including attorneys’ fees
and costs, including court costs and cost of arbitration. In return or exchange for the credit extended by Supplier to Buyer on
account, Buyer gives Supplier a continuing security interest in rights, title, and interest in Product(s) currently and hereafter
acquired on account or otherwise purchased under this Agreement to secure payment for those Products purchased. Buyer shall execute
and deliver, in a form acceptable to Supplier, in Supplier’s sole opinion and judgment, all documents which are necessary
to perfect and maintain the security interest in the collateral, including assignments, financing statements, and certificates
of title or registration. Non-payment by Buyer of any outstanding invoices shall be deemed an extension of credit by Supplier for
purposes of the above security interest provisions only. There is no set-off right for the Buyer.

 

		6.2	No Taxes. The price for each Products is exclusive of any local, state or federal tax, levy, tariff,
sales tax, fees, customs or duties (foreign or domestic) required by law or any regulatory authority or which are assessable against
such Products by any government agency, all of which shall be payable by Buyer to the extent that Buyer is required by law to pay
the relevant tax authority for such tax. Buyer shall pay separately itemized sales and/or use taxes invoiced by Supplier on the
date of the sale of each Products. To the extent Supplier is required to pay any such tax, Supplier shall separately itemize such
amounts on the invoice and Buyer shall pay such amounts as provided herein. Neither Party shall have any obligation to pay any
tax which is not directly imposed on such Party or under this Agreement, including, without limitation, income, franchise, property
and gross receipts taxes imposed on such Party’s net income, net worth, property or revenue.

 

		7.	LICENSING REQUIREMENTS

 

		7.1	Software License. Supplier grants to Buyer a limited, non-transferable, non-exclusive, fully paid
up, royalty free license (or, as applicable, a sublicense) to (a) use the Supplier Software in connection with the use of the Products
and (b) run the Supplier Software on the Products when required for testing, compatibility and quality assurance purposes. Except
as provided in this clause 7.1, nothing in this Agreement grants Buyer any rights in the Supplier Software. Buyer shall not translate,
reverse engineer, decompile, or disassemble the Supplier Software or any part thereof or otherwise attempt to derive source code
or create derivative works there from, and shall not authorize any third party to do any of the foregoing. For purposes of this
clause 7.1, “Supplier Software” shall mean any software provided by Supplier (including all updates, upgrades and fixed
thereto) hereunder.

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		8.	PRODUCT WARRANTIES

 

		8.1	Supplier Warranties

 

		(1)	Supplier represents, warrants and covenants to Buyer that for a period of [***] from the
shipment date of the applicable Products, or such other period expressly stated in the applicable Purchase Order (the “Warranty
Period”), (i) the Products and all components included in each Products shall be free from Material Defects (“Material
Defects” shall mean when the Products does not meet the Product Specifications) in materials and workmanship; (ii) excluding
normal wear and tear, each Products and all components and Supplier Software shall conform in all material respects to the applicable
Specifications and the Acceptance Performance Standard in effect at the time the Products was shipped; and (iii) each Products
shall conform in all material respects to any and all other requirements set forth in the applicable Purchase Order.

 

		8.2	Warranty Claims

 

		(1)	IF THE APPLICABLE WARRANTY PERIOD DESCRIBED HAS NOT EXPIRED, SUPPLIER’S LIABILITY SHALL
BE LIMITED SOLELY TO, AS DETERMINED AT SUPPLIER’S OPTION, THE REPAIR OR REPLACEMENT (IN EACH CASE TO THE EXTENT BUYER IS
NOT IN DEFAULT HEREUNDER) OF PARTS OF THE PRODUCTs UNDER THE WARRANTY CLAUSE HEREIN. If the Warranty Period has expired, Supplier
shall not be liable for any damages of any kind whatsoever and shall have no obligation under this warranty. Supplier shall have
the right to determine, prior to effecting such repair or replacement, whether or not the warranty noted above has been violated
failure of Buyer to use/operate the Products in accordance with Supplier’s instructions, misuse, abuse or neglect by or on
the behalf of Buyer, modification, abnormal conditions of operation, damage by accident (including fall, fire, exposure to water,
improper temperature, humidity, other environmental conditions, or abnormal electrical exposure), installed improperly by personnel
not certified or approved by Supplier or attempted service or modification not authorized by Supplier. If such determination is
made by Supplier, then Supplier shall not be liable for any damages of any kind whatsoever and shall have no obligation under the
warranty in clause 8.1. Additionally, Supplier shall not have responsibility or liability, direct or indirect, contingent or otherwise,
arising out of, or based upon, a violation of the warranty caused in whole or in part, in the opinion of Supplier, by those actions
or omissions of or on behalf of Buyer described in this clause. Responsibility for proper service and operation of the Products
if not installed, serviced and operated by Supplier, or in accordance with Supplier’s instructions, rests entirely with Buyer.
If and to the extent that correction of a defect involves the provision of replacement Products, Buyer shall be liable for any
and all costs of retrieving or re-installing Products or any portion thereof. Other than as set out above, any and all costs of
defect correction shall be met by Buyer.

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		(2)	BUYER ACKNOWLEDGES AND AGREES
                                         THAT THE PROVISIONS CONTAINED IN THIS WARRANTY CONSTITUTE THE SOLE AND EXCLUSIVE REMEDY
                                         AVAILABLE TO IT WITH REGARD TO THE PRODUCTS, SOFTWARE AND SERVICES FURNISHED BY SUPPLIER.
                                         EXCEPT FOR THE EXPRESS WARRANTIES MADE IN SECTION 6.01, PRODUCTS ARE SOLD “AS IS”
                                         AND SUPPLIER EXPRESSLY DISCLAIMS AND EXCLUDES ALL WARRANTIES, WHETHER STATUTORY, EXPRESS
                                         OR IMPLIED, INCLUDING ALL WARRANTIES WHICH, BUT FOR THIS PROVISION, MIGHT ARISE FROM
                                         COURSE OF DEALING, CUSTOM OR TRADE AND INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES
                                         OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT OF THIRD PARTY
                                         RIGHTS WITH RESPECT TO THE PRODUCTS, SOFTWARE AND SERVICES FURNISHED BY SUPPLIER.
                                         If any portion of the Products is not manufactured by Supplier, then Supplier will, to
                                         the extent it is authorized to do so, pass along to Buyer the manufacturer’s warranty.
                                         Supplier makes no warranty whatsoever with respect to any portion of the Products not
                                         manufactured by Supplier and such portion of the Products are sold to Buyer by Supplier
                                         “AS IS”.

 

		(3)	All warranty claims (including with respect to prioritization and timing) for
the Products will be handled in accordance with Supplier’s policies then in effect. Buyer is responsible for shipping and
shipping expenses related to any warranty claim.

 

		(4)	The warranty claim shall apply to Buyer and Buyer’s Affiliates and subsidiaries.

 

		(5)	If a customer of Buyer demands a longer warranty period, Supplier may provide
up to five (5) year Warranty if Buyer provides written evidence of such demand to Supplier.

 

		8.3	Procedure for Warranty Qualification. Notwithstanding anything to the contrary
Supplier shall not be liable for a breach of the warranties set out in clause 8.1 unless (a) any Buyer notifies Supplier of the
breach in writing within [***] days of the expiration of the Warranty Period (provided that the breach shall have
occurred during the Warranty Period), and (b) Supplier is given a reasonable opportunity after receiving the notice to examine
the applicable Products. The Buyer must make all claims under this warranty and no claim will be accepted from any third party.

 

		8.4	Security Agreement. For any Products delivered to Buyer for which any Buyer
has not fully paid Supplier, such Buyer hereby grants to Supplier, its successors and assigns, a purchase money security interest
in such Products to secure the full payment of the purchase price of such Products, including a right of repossession until the
full purchase price has been paid under the applicable Purchase Order without limiting any other rights or remedies of Supplier
hereunder. Buyer will, other than the security interest granted to Supplier hereby, cause such Products to be free and clear of
all liens, claims, charges and encumbrances. Default in payment of such price or any part of the price when due shall permit Supplier,
in its sole discretion, to declare all obligations of such Buyer immediately due and payable under the applicable Purchase Order,
and in such event, Supplier shall have all the rights and remedies of a secured party under applicable law (including the rights
of repossession described above). In connection with any security interest granted herein, Supplier is expressly authorized, at
its discretion, to file one or more financing statements or other notices under
applicable law naming the relevant Buyer as debtor and Supplier as secured party. In the event that Supplier commences legal action,
or consults with counsel, with respect to the transaction which is the subject hereof, such Buyer shall, on demand, pay Supplier
the legal fees, costs and expenses so incurred by Supplier.

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		8.5	If Buyer becomes a Frustrated Party due to a Force Majeure Event as specified in section 14.5,
Buyer shall promptly provide a written notice to the Supplier within 5 business days of such Force Majeure Event. Buyer need to
indicate on the notice how such Force Majeure Event impacted Buyer’s ability to continue manufacturing, the period of time
which Buyer believe such event will last, and provide an inventory of the Supplier’s Products (“Listed Products”)
that are impacted by this Force Majeure Event. Upon receiving such notice, Supplier will extend the warranty period for the Listed
Products by the duration of the Force Majeure Event.

 

		9.	INDEMNIFICATION AND COVENANTS

 

		9.1	General Indemnity

 

		(1)	Supplier will defend against and will indemnify and hold harmless Buyer, at Supplier’s expense,
from and against any claims, demands, suits, proceedings, or causes of actions brought by a third party to the extent arising from
(i) Supplier’s negligent acts or omissions or intentional misconduct in connection with the performance of its obligations
hereunder; or (ii) any violation of any applicable law by Supplier.

 

		(2)	Buyer will defend against and will indemnify and hold harmless Supplier, its affiliates and each
of their respective employees, directors, officers, and successors and assigns from and against at Buyer’s expense, from
and against any claims, demands, suits, proceedings, or causes of actions brought by a third party to the extent arising from (i)
Buyer’s breach, negligent acts or omissions or intentional misconduct in connection with the performance of its obligations
hereunder; (ii) the violation of any applicable law by Buyer in its marketing and distribution of the Products; or (iii) Buyer’s
possession or use of the Products, including without limitation, any misuse or mishandling of the Products or modification(s) to
the Products by Buyer.

 

		9.2	Survival of Indemnification Obligations. The rights and obligations in clause 9.1 shall survive
expiration or earlier termination of this Agreement.

 

		9.3	Limitation of Liability. [***].

 

		9.4	Consequential Damages. IN NO EVENT SHALL ANY PARTY BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL
OR CONSEQUENTIAL DAMAGES ARISING OUT OF ITS PERFORMANCE OR NONPERFORMANCE OF ANY PROVISION OF THIS AGREEMENT OR THE PRIOR AGREEMENT
REGARDLESS OF THE NATURE OF THE CLAIM OR WHETHER SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

 

		10.	GENERAL WARRANTIES AND COVENANTS

 

		10.1	Mutual Warranties. Each Party represents and warrants
to the other Party that (a) it is duly organized and validly existing under the laws of its jurisdiction of organization; (b)
it has the legal power and authority to execute
and deliver this Agreement and to fully perform its obligations hereunder; (c) the execution, delivery and performance of this
Agreement by it have been duly authorized by all necessary actions and do not violate its organizational documents or any other
material agreements to which it is a Party; and (d) this Agreement constitutes a legally valid and binding obligation of such Party,
enforceable against it in accordance with its terms, except as such enforcement may be limited by applicable law.

    10

     

    

		10.2	Supplier’s Undertaking. Supplier undertakes to Buyer to grant the following preferential treatment to Buyer:

 

		(1)	Supplier will make commercially reasonable efforts to build up actual capacity to fulfil Buyer’s Forecast;

 

		(2)	Supplier will make commercially reasonable efforts to give Buyer priority on open capacity (for
the avoidance of doubt, excluding any actual capacity that Supplier is required expressly to provide to any third party in accordance
with any supply agreement to which Supplier is a party). If at any point Supplier is no longer a Preferred Supplier of Buyer, then
this section 10.2(2) is deemed void;

 

		(3)	in case of capacity shortage, Supplier will use commercially reasonable efforts to satisfy the supply to Buyer; and

 

		(4)	in case the actual demand of Buyer exceeds the forecasted or contracted supply, Supplier will make
commercially reasonable efforts to coordinate additional idle capacity to supply to Buyer.

 

		11.	INTELLECTUAL PROPERTY

 

		11.1	Ownership. Each Party to this Agreement shall (a) continue to own all intellectual property that
was owned by such Party prior to the Effective Date (including but not limited to in the case of Supplier, Testing Tools) and (b)
separately own any intellectual property subsequently developed or acquired by such Party independent of its performance pursuant
to this Agreement.

 

		11.2	Supplier Intellectual Property. All rights, title and interest in and to any inventions, discoveries,
improvements, methods, ideas, computer and other apparatus programs and related documentation, other works of authorship fixed
in any tangible medium of expression, mask works, or other forms of intellectual property, whether or not subject to statutory
protection, which are made, created, developed, written, conceived, or first reduced to practice by Supplier solely, jointly or
on its behalf, in the course of, arising out of, or as a result of work performed under an order, and any related tooling set-up,
fitting-up and preparation charges whether or not invoiced, shall belong to and be the sole and exclusive property of Supplier.

 

		11.3	Use Restrictions. Except as and to the extent expressly permitted, or as reasonably necessary to
make any use of the Products, Buyer shall not and shall not permit others to engage in any of the following:

 

		(1)	Modifying, correcting, adapting, translating, enhancing or otherwise preparing derivative works or improvements of the Products.

 

		(2)	Reverse engineering, disassembling, decompiling, tampering, decoding, or adapting the Products,
or otherwise attempting to derive or gain access to the software source code, in whole or in part.

    11

     

    

		(3)	Renting, leasing, lending, selling, sublicensing, assigning, distributing, publishing, transferring,
or otherwise making the Products available to any third party unless the Parties enter into a Products representation and distribution
agreement or the Parties are Buyer’s Affiliates and subsidiaries.

 

		(4)	Remove, alter, erase, deface or cover over any markings on the Products or its packaging.

 

		12.	CONFIDENTIALITY

 

		12.1	Confidential Information Defined.

 

		(1)	The term “Confidential Information” shall include, without
limitation, information provided by a Party that such Party has designated as confidential; this Agreement (and all exhibits thereto)
and all of its terms and conditions; all manuals and training materials provided by a Party; and all financial, technical, business,
product and credit information relating to either Party, including without limitation, all market analyses and market expansion
plans, all revenue and profit analyses and projections and all commission structures and statements; all technical information
relating to either Party, including, without limitation, all implemented or planned product and service improvements or changes;
and all other information relating to the operations of a Party which was disclosed or provided to the other Party or became known
to the other Party through this relationship; and all other information not generally known to the public relating to either Party.

 

		(2)	Notwithstanding the foregoing, “Confidential Information” does not include information
or material:

 

		(i)	which is publicly available when it is received by, or becomes known to, the
receiving Party or which subsequently becomes publicly available through no fault of the receiving Party;

 

		(ii)	which is already known to the receiving Party at the time of its disclosure
to the receiving Party and is not the subject of an obligation of confidence to the disclosing Party of any kind;

 

		(iii)	which is independently developed by the receiving Party without any use of or access or reference to the Confidential Information
of the disclosing Party; or

 

		(iv)	which is received by the receiving party from a third party in good faith and free of any obligations
of confidentiality of any kind.

 

		12.2	No Disclosure. Except as expressly permitted by this Agreement, neither Party
nor any person, firm, corporation or other entity affiliated with, owned in whole or in part by, employed by or otherwise connected
with such Party, shall directly or indirectly, without the express written consent of the other Party, divulge, use, sell, exchange,
furnish, give away, or transfer in any way any Confidential Information of the other Party. Each Party agrees and acknowledges
that the obligations imposed in this clause 12 shall be in effect during the Term of this Agreement and for three (3) years after
the earlier expiration or termination of this Agreement.

    12

     

    

		12.3	Purpose of Access. Each Party acknowledges that any Confidential
Information that has been disclosed to it by the other Party has been disclosed solely for the purpose of enabling the Party to
perform its duties hereunder. Each Party agrees that all Confidential Information, whether provided by the other Party prior to
or after the commencement date hereof, is the exclusive property of the disclosing Party.

 

		12.4	Compelled Disclosure. If either Party is served with any form of process purporting to require
that Party to disclose any Confidential Information to any third party, the served Party shall immediately notify the disclosing
Party who shall, in addition to the served Party’s efforts, if any, have the right to seek to quash such process. Each Party shall
cooperate with the other in all efforts to quash such process or otherwise to limit the scope of any required disclosure. In the
event that the disclosure of any Confidential Information is compelled, the served Party shall seek an appropriate protective order
from the court to limit access to such information.

 

		12.5	No Publicity. Neither Party shall issue a press release or any other publicity (including listing
Buyer in a Buyer list or listing Supplier in a supplier list) relating to this Agreement without the other Party’s prior
written approval, except for a Party’s required disclosure of this relationship and/or letter in order to comply with U.S.
federal financial reporting obligations or other statutory regulations. In the event such disclosure is required, the disclosing
Party will notify the other Party in writing.

 

		12.6	Destruction/Return of Information. Upon the expiration or termination of this Agreement or upon
either Party’s request, each Party, as a receiving Party, shall return all Confidential Information to the disclosing Party
or at such disclosing Party’s option, destroy all Confidential Information and provide a written certification signed by
an officer of such Party, certifying that all Confidential Information in all formats, including without limitation, paper, electronic
and disk form, have been returned or destroyed, as the case may be, within ten (10) days of a Party’s receipt of a written
request.

 

		12.7	Injunctive Relief. Each Party acknowledges that its failure to comply with the provisions of this
clause 12 may cause irreparable harm to the other Party which cannot be adequately compensated for in damages, and accordingly
acknowledges that the other Party shall be entitled to claim, in addition to any other remedies available to them, interlocutory
and permanent injunctive relief to restrain any anticipated, present or continuing breach of this clause 12.

 

		13.	TERM AND TERMINATION

 

		13.1	Term. This Agreement shall come into force on the Effective Date and shall continue in effect for
three (3) years from such date, unless earlier terminated in accordance with the provisions of this clause 13 (“Initial
Term”). Thereafter, this Agreement shall automatically renew on each anniversary of the Effective Date for a period of
one (1) year, unless either Party gives written notice to the other Party of its intent not to renew at least ninety (90) days
prior to the anniversary of the Effective Date (“Renewal Term”). The Initial Term and each Renewal Term, if
any, are referred to herein, collectively, as the “Term”.

 

		13.2	Termination. Subject to clause 13.3, either Party shall be entitled by written notice to the other
Party at any time to terminate this Agreement in its entirety if the other Party commits a material breach of this Agreement and
such breach continues uncured for a period of thirty (30) days after written notice detailing the breach is provided to the other
Party.

    13

     

    

		13.3	Effect of Termination. Upon expiration or termination of this Agreement or any Purchase Order,
all Products ordered prior to the Effective Date of such expiration or termination shall be delivered and paid for in accordance
with the applicable Purchase Order.

 

		14.	MISCELLANEOUS

 

		14.1	Dispute. Subject to the other terms and conditions of this Agreement, Supplier and Buyer agree
to make a good faith attempt to settle any dispute arising under or related to this Agreement without resort to legal action. If
such good faith effort fails, Supplier, at its option, may submit any controversy or claim arising out of or relating to this Agreement,
or the breach thereof, to binding arbitration administered by the American Arbitration Association in accordance with its Commercial
Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.
Such arbitration shall be maintained and held in Houston, Texas, USA. Should Supplier decide to submit the dispute to arbitration,
the parties agree that arbitration will be the sole method of resolving such dispute and the matter may not be submitted to the
courts of any jurisdiction except for enforcement of any arbitration award. In that event, any previously filed lawsuit shall be
dismissed in favor of arbitration so long as Supplier notifies the other party of its intent to have the matter arbitrated, rather
than litigated, within forty-five (45) days of being served with such lawsuit. Supplier retains the right to seek immediate, temporary
and/or injunctive relief from the courts of any jurisdiction. Except for claims by Supplier for non-payment, the cost of arbitration,
including the fees of the mediator(s) or arbitrator(s) shall be divided equally by the Parties. Each party shall bear its own costs
of preparing and presenting its case. An action for breach of contract or warranty, other than for non-payment, must be commenced
within two (2) years after the date of original shipment of the Products. The Parties agree that the failure to meet that two (2)
year deadline will bar subsequently filed suits or arbitration proceedings. Any lawsuit against Supplier must be filed, to the
extent not precluded by arbitration, in the courts in Harris County, Texas.

 

		14.2	Waiver. Except as expressly provided in this Agreement, no waiver of this Agreement shall be binding
unless executed in writing by the Party to be bound by it. No waiver of any provision of this Agreement shall constitute a waiver
of any other provision nor shall any waiver of any provision of this Agreement constitute a continuing waiver unless otherwise
expressly provided.

 

		14.3	Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF TEXAS WITHOUT REGARD TO ITS CONFLICTS OF LAWS PRINCIPLES.
EACH PARTY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL COURTS OF HARRIS COUNTY, TEXAS (OR STATE COURTS LOCATED
IN HARRIS COUNTY, TEXAS IF FEDERAL JURISDICTION DOES NOT APPLY) FOR THE PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING
OUT OF THIS AGREEMENT OR THE SUBJECT MATTER HEREOF. EACH PARTY HEREBY WAIVES THE RIGHT TO TRIAL BY JURY OF ANY SUCH SUIT, ACTION
OR PROCEEDING.

 

		14.4	No Assignment. Except as provided below, neither Party shall have the right to assign, delegate
or otherwise transfer any of its rights or duties granted to it under this Agreement without obtaining the other Party’s
prior written consent. Notwithstanding the foregoing sentence, a Party may assign this
Agreement to (a) any affiliate of that Party; (b) a successor in interest of that Party or as part of a corporate reorganization,
consolidation or merger; or (c) a purchaser of all or substantially all of that Party’s assets.

    14

     

    

		14.5	Force Majeure. No Party (a “Frustrated Party”) shall be liable to any other
Party (a “Non-Frustrated Party”) for any failure to perform or delay in performance of its obligations under
this Agreement caused by (a) act of God; (b) outbreak of hostilities, riot, civil disobedience, act of terrorism or plague; (c)
the act of any governmental authority including revocation of any license or consent; (d) fire, explosion, lightning strike, storm
(including but not limited to hurricanes and tornadoes) or flood; (e) theft, malicious damage, strike, lockout or industrial action
of any kind (provided that the strike, lockout or industrial action was outside the reasonable control of the Frustrated Party);
or (f) any causes or circumstances beyond the Frustrated Party’s reasonable control (collectively, a “Force Majeure Event”).
The Frustrated Party shall promptly notify the Non-Frustrated Party of the nature and extent of the circumstances of the Force
Majeure Event once known. In the event of a Force Majeure Event, the Frustrated Party shall forthwith establish and implement a
plan that minimizes the disruption to the Non-Frustrated Party and shall use its commercially reasonable efforts to remedy the
situation and remove the cause of its inability to perform as soon as possible. The Frustrated Party shall give the Non-Frustrated
Party prompt notice of the cessation of the Force Majeure Event. The Frustrated Party and the Non-Frustrated Party shall negotiate
in good faith adjustments to the terms and conditions of this Agreement that are equitable taking into account the nature and extent
of the circumstances of the Force Majeure Event as they develop and become known, including equitable reductions in the obligations
of the Non-Frustrated Party.

 

		14.6	Compliance with Laws. Buyer shall at all times comply with all Laws applicable to this Agreement,
Buyer’s performance of its obligations hereunder and Buyer’s use or sale of the Products. Without limiting the generality
of the foregoing, Buyer shall (a) at its own expense, maintain all certifications, credentials, licenses and permits necessary
to conduct its business relating to the purchase, use or resale of the Products and (b) not engage in any activity or transaction
involving the Products, by way of resale, lease, shipment, use or otherwise, that violates any Law.

 

		14.7	Export Restrictions.

 

		(1)	Buyer shall obtain all licenses, permits and approvals, at Buyer’s expense, required by any
government and shall comply with all applicable laws, rules, policies and procedures of the applicable government and other competent
authorities. Buyer will indemnify and hold Supplier harmless for any violation or alleged violation by Buyer of such laws, rules,
policies or procedures. Buyer shall not transmit, export, or re-export, directly or indirectly, separately or as part of any system,
the Products or any technical data (including processes and services) received from Supplier, without first obtaining any and all
licenses required by the applicable government, including the United States Government and/or any other applicable competent authority.
Buyer also certifies that none of the products of technical data supplied by Supplier under this Agreement will be sold or otherwise
transferred to, or made available for use by or for, any entity that is engaged in the design, development, production, or use
of nuclear, biological or chemical weapons or missile technology. If Buyer resells or otherwise disposes of any product or technical
data purchased hereunder, it will comply with any export restrictions applicable to such transfer.
Supplier shall have no liability for delayed delivery or nondelivery resulting from denial, revocation, suspension or governmental
delay in issuance, of any necessary export license or authority.

    15

     

    

		(2)	Supplier shall not be obligated to fulfill its obligations hereunder if such
fulfillment is prevented by any impediments arising out of national or international foreign trade or customs requirements or any
embargoes or other sanctions.

 

		(3)	If required to conduct export control checks, Buyer, upon request by Supplier,
shall promptly provide Supplier with all information pertaining to particular end customer, destination and intended use of Products,
works and services provided by Supplier, as well as any export control restrictions existing.

 

		14.8	Severability. Any term of this Agreement which is judged to be void or unenforceable shall to the
extent of such invalidity be severable and the continuation in full force and effect of the remainder of the provisions will not
be prejudiced.

 

		14.9	Entire Agreement. This Agreement, including all Exhibits, Attachments, Statements of Work and Purchase
Orders, constitutes the entire agreement between the Parties and their respective affiliates with respect to the subject matter
hereof and supersedes all prior agreements and understandings, both oral and written, between the Parties and their respective
affiliates with respect to the subject matter hereof.

 

		14.10	Amendment. This Agreement may not be amended, varied or modified in any manner except by an instrument
in writing signed by duly authorized officers or representatives of each of the Parties.

 

		14.11	No Partnership. Nothing in this Agreement shall create or be deemed to create a partnership or
joint venture or the relationship of principal and agent between the Parties.

 

		14.12	Survival of Obligations. Subject to the terms and conditions of this Agreement, the obligations
under this Agreement and/or any Orders placed hereunder that by their nature or as specified under this Agreement are intended
to continue beyond the termination, cancellation or expiration of this Agreement, including, without limitation and for the avoidance
of doubt, the Parties’ obligations under clause 8 and clause 9, shall survive the termination, cancellation or expiration
of this Agreement.

 

		14.13	Notices. A notice shall be in writing in English, and delivered personally or sent by internationally
reputable courier or by email to the party due to receive the notice to the address set out in clause 14.13 (or otherwise notified
by the other Party in accordance with this clause 14.13).

 

Unless there is evidence that it was received earlier,
a notice is deemed given if:

 

		(1)	delivered personally, when left at the address set out in clause 14.13;

 

		(2)	sent by internationally reputable courier, three (3) Business Days after posting it if the sender
and recipient are in the same country or eight (8) Business Days after posting it if the sender and recipient are in different
countries; or

 

		(3)	sent by electronic mail, when confirmation of its transmission has been recorded by the sender’s email system.

    16

     

    

The address referred to in this clause 14.13 is:

 

	Name of party	Address	 	Marked for the attention of	 	E-mail Address
	 	 	 	 	 	 
	Supplier	13139 Jess Pirtle Blvd. 

Sugar Land, Texas 77478	 	[***]	 	[***]
	 	 	 	 	 	 
	Buyer	4th Floor, Building A,

No. 888, Huanhu West

2nd Road, Nanhui New

Town, Pudong New

Area, Shanghai	 	[***]	 	[***]

  

		14.14	Non-exclusivity. None of the activities to be performed by Supplier and Buyer
under this Agreement are exclusive. This Agreement does not grant to Supplier any exclusive right or privilege to provide to Buyer
any products or services of the type contemplated herein, and this Agreement does not grant to Buyer an exclusive right or privilege
to receive from Supplier any products or services of the type contemplated herein. Supplier and Buyer reserve the right to contract
with other persons for the sale and procurement of comparable products and services of the type contemplated herein.

 

		14.15	Other Definitional and Interpretative Matters. Unless specified otherwise in this Agreement the
obligations of any Party consisting of more than one person are joint and several. The words “hereof”, “herein”
and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement. The captions herein are included for convenience of reference only and shall be ignored
in the construction or interpretation hereof. References to Articles, Sections and Exhibits are to Articles, Sections and Exhibits
of this Agreement unless otherwise specified. All Exhibits annexed hereto or referred to herein are hereby incorporated in and
made a part of this Agreement as if set forth in full herein. Any capitalized term used in any Exhibit but not otherwise defined
therein shall have the meaning as defined in this Agreement. Any singular term in this Agreement shall be deemed to include the
plural, and any plural term the singular. Whenever the words “include”, “includes” or “including”
are used in this Agreement, they shall be deemed to be followed by the words “without limitation”, whether or not they
are in fact followed by those words or words of like import. “Writing”, “written” and comparable terms
refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any
agreement or contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance with
the terms hereof and thereof. References to any person include the successors and permitted assigns of that person. References
from or through any date mean, unless otherwise specified, from and including or through and including, respectively.

 

		14.16	No Third Party Beneficiary. Nothing in this Agreement is intended to confer
any benefit on any third party (whether referred to herein by name, class, description or otherwise) or any right to enforce a
term set forth in these conditions.

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		14.17	Counterparts. This Agreement, and any documents to be executed by the Parties in connection herewith,
may be executed in multiple counterparts (facsimile or otherwise), each of which shall constitute an original, but all of which
together shall constitute one and the same instrument.

 

 

[Signatures on Following Page]

    18

     

    

IN
WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives, each of which
shall constitute an original effective as of the date hereof.

	 	 	 	 	 
	APPLIED OPTOELECTRONICS, INC.
	 	 
	By:	                             	 
	Name:	                         	 
	Title:	                         	 
	 	 
	Yuhan Optoelectronic Technology (Shanghai) Co., Ltd. (裕汉光电子科技(上海)有限公司)

	 	 
	By:	 	 
	Name:	 	 
	Title:	 	 

 

Signature Page to Product Supply Agreement

     

     

    

EXHIBIT A

THE PRODUCTS 

 

1.       The Products

 

	Product	Specification	Product Number
	Laser Chips	 	 

    20Exhibit
10.4

 

Contract
Manufacturing Agreement

 

This
Contract Manufacturing Agreement (this “Agreement”), effective as of _______________ (the
 “Effective Date”), is made and entered into by and between (1) Applied
Optoelectronics, Inc., a Delaware corporation having a place of business at 13139 Jess Pirtle Blvd., Sugar Land,
Texas 77478, www.ao-inc.com (“AOI”) and (2) Global Technology Co., Ltd. (宁波环球广电科技有限公司),
a company incorporated in the PRC (unified social credit code: 91330212739470836U) whose registered office is at No.88 Qiushi
Road, Wangchun Industrial Park, Haishu District, Ningbo, Zhejiang Province; (“GT”) and (3) Yuhan Optoelectronic
Technology (Shanghai) Co., Ltd. (裕汉光电子科技(上海)有限公司),
a company incorporated in the PRC (unified social credit code: 91310115MA1H8BHE0A) whose registered office is at Block C, No.
888 Huanhu West Two Road, Nanhui New Town, Pudong New District, Shanghai (“Yuhan Shanghai”, collectively
with GT, “Suppliers”).

 

Recitals

 

The
following provisions form the basis for, and are hereby made a part of, this Agreement:

 

Whereas,
Prime World International Holdings Ltd. (“Prime World”) (as the Seller) and Yuhan Shanghai have entered into the AGREEMENT
FOR THE SALE AND PURCHASE OF A NEW COMPANY TO BE ESTABLISHED IN HONG KONG SPECIAL ADMINISTRATIVE REGION OF THE PEOPLE’S
REPUBLIC OF CHINA on _______________, 2022 (the “SPA”), according to which, Prime World agrees to sell, and Yuhan
Shanghai agrees to buy the Shares (as defined in the SPA) and each right attaching to the Shares at or after Completion.

 

Whereas,
upon the Completion, AOI wish to purchase certain products and services from Suppliers, and Suppliers wishes to sell such products
and services to AOI.

 

Whereas,
AOI is in the business of, among other things, designing, manufacturing and selling products for markets including but not limited
to CATV, Lidar Module Assembly or High Power Industrial Laser Module Assembly.

 

Whereas,
SUPPLIERS are in the business of contract manufacturing, and desires to manufacture such products for AOI.

 

Whereas,
SUPPLIERS desire to enter into a long-term relationship with
AOI pursuant to which SUPPLIERS will manufacture and sell to AOI in accordance with the terms and conditions set forth herein
said products as defined and listed in Exhibit “A” (the “Products”) and in Exhibit “B”
(the “Pricelist”), which Exhibits may be amended from time to time as set out herein or by mutual agreement; and

 

Whereas,
in order to confirm the general terms and conditions pursuant
to which SUPPLIERS will manufacture and sell the Products to AOI, and AOI will purchase the Products from SUPPLIERS, SUPPLIERS
and AOI (collectively, the “Parties”) desire to enter into this Agreement.

 

* Certain information has
been excluded from this exhibit because it is both immaterial and competitively harmful if publicly disclosed. Where applicable, omissions
have been marked “[***]”.

 

     1

     

    

Agreement

 

Now,
Therefore, in
consideration of the mutual promises, covenants, and obligations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are acknowledged, the Parties hereby mutually agree as follows:

 

	1.	Purchase
                                         Orders, Forecasting & Delivery.

 

	1.1	AOI
                                         will purchase Products from SUPPLIERS by issuing purchase orders (“Order”
                                         or “Orders”) to SUPPLIERS as set out in Section 1.2. Orders shall
                                         specify quantity, price, delivery date, part numbers, shipping terms, and other relevant
                                         information.

 

AOI
and SUPPLIERS will establish a Standard Lead Time for each Product.

 

Except as otherwise expressly stated in an Order, AOI shall,
by the [***] provide to SUPPLIERS a rolling forecast of its estimated requirements for the applicable
Products over the following [***] (“Forecast”). Each Forecast shall state the relevant AOI anticipated
requirements by [***] beginning with the [***] in which the forecast is being delivered. The commitment levels relating
to the applicable Products, unless otherwise agreed in writing, shall be carried forward as follows in successive Forecasts:

 

		(1)	The
                                         first [***] covered by the Forecast (the “Firm Order Period”) shall
                                         be a binding order and, unless otherwise agreed by the Parties, shall not be amended
                                         by a subsequent Forecast and shall constitute a commitment on AOI to purchase, and on
                                         SUPPLIERS to supply, the stated amount of Products from the Firm Order Period.

 

	1.2	Long
                                         Lead Time Parts: SUPPLIERS and AOI will collaborate to identify and establish at SUPPLIERS’s
                                         facilities mutually agreed upon inventories of long lead time parts in order to ensure
                                         that a shortage of a small number of parts does not affect delivery of Products as set
                                         out herein. The cost and ownership of such inventories will also be mutually agreed upon.

 

	1.3	AOI
                                         will prepay [***] of all raw material or parts (except for laser components
                                         or Products, whether sourced from AOI or elsewhere) sourced by SUPPLIERS for the manufacturing
                                         of the Products. AOI will pay SUPPLIERS said prepayment consistent with the payment terms
                                         for the raw materials or parts.

 

	1.4	SUPPLIERS
                                         shall provide AOI a Purchase Plan and inventory list on a regular basis for AOI’s
approval. If SUPPLIERS’s purchased inventory is consistent with AOI’s approved Purchase
Plan, then AOI will purchase from SUPPLIERS any raw materials or parts with an inventory age of more than [***]. If any
of the aged inventory of raw materials or parts are subsequently used in production, SUPPLIERS will re-purchase from AOI or provide
AOI with a credit for the difference in the Product price and inventory.

 

	1.5	SUPPLIERS
                                         shall accept all Orders submitted in accordance with this Agreement, and shall acknowledge
                                         its acceptance or rejection of any particular order within [***] after
                                         receipt. Upon actual acceptance of a purchase order by SUPPLIERS, a binding contract
                                         for the sale and purchase of Product shall exist between SUPPLIERS and AOI in accordance
                                         with this Agreement and AOI’s purchase order. After receiving each Order, SUPPLIERS
                                         may conduct a profit margin analysis of the Order, and if the analysis results in a profit
                                         margin of less than [***] SUPPLIERS may provide written notice to AOI rejecting the Order
                                         within three (3) business days. In the event that SUPPLIERS do not accept or reject an
                                         order within [***] then the order shall be deemed to have been accepted.
                                         For the avoidance of doubt, the Deal Prohibition (as defined in the SPA and the period
                                         of the Deal Prohibition starts from the Completion (as defined in the SPA) until the
                                         seventh (7th) anniversary of the Completion) only applies so long as GT is
                                         the largest supplier of AOI for CATV Products, to be determined by the value of the total
                                         revenue for CATV Products awarded to GT (the “Subsidiary
CATV Revenue”), in comparison to all of the AOI suppliers of similar CATV Products (the “Total CATV Revenue”),
during any of AOI’s fiscal year following the Effective Date, where the Subsidiary CATV Revenue shall be equal to or more
than 51% of Total CATV Revenue. For the purpose of this Agreement, the Subsidiary CATV Revenue includes any purchase orders that
is awarded to GT but rejected by GT under section 1.5 of this Agreement where AOI’s expected Gross Margin for the CATV Products
to be manufactured by GT under such Order is equal to or more than 10%, but excludes any Order that is awarded to the Subsidiary
but rejected by GT under section 1.5 of this Agreement under which AOI’s expected Gross Margin for the CATV Products to
be manufactured by GT is less than 10%. 

     2

     

    

For
the purpose hereof, the “Gross Margin” with respect to any CATV Products shall be calculated as: (total revenue of
relevant CATV Products minus cost of goods sold) divided by total revenue of relevant CATV Products multiplied by 100%

 

	1.6	All
                                         Orders will be subject to the provisions of this Agreement and not governed by any terms
                                         attached to the Order or the acknowledgement unless mutually agreed to in writing by
                                         the Parties. Any changes to orders will be by written notice and SUPPLIERS will provide
                                         AOI with written confirmation within five (5) business days of receiving a change request.

 

	1.7	Time
                                         shall be of the essence in filling AOI’s orders. Delivery performance shall be
                                         measured by the date of delivery to the named place of shipment. Unless otherwise set
                                         forth in the Order, title and risk of loss shall pass to AOI upon successful passage
                                         of the Products per standard shipping term under this Agreement.

 

	1.8	SUPPLIERS
                                         shall notify AOI immediately in writing if SUPPLIERS has knowledge of any event that
                                         could result in any change to the agreed delivery plan.

 

	1.9	SUPPLIERS
                                         agrees to pay AOI liquidated damages for failure to deliver Products by the delivery
                                         date as specified on each Purchase Order.

 

	1.10	AOI
                                         may not cancel or terminate any Order, in whole or in part, without the prior written
                                         consent of SUPPLIERS, which consent, if given, shall be upon terms that will compensate
                                         SUPPLIERS for the incurred costs.

 

	2.	Specifications
                                         and Quality Control.

 

	2.1	SUPPLIERS
                                         shall manufacture the Products in accordance with the AOI’s product specifications
                                         or mutually agreed specifications (the “Specifications”). A list of Products
                                         and Specification document identifications is set out in Exhibit A which shall be revised
                                         from time to time as required. SUPPLIERS shall not change the Specifications, or manufacture
                                         any Products in a manner that varies from the Specifications, without AOI’s prior
                                         written approval. SUPPLIERS further agrees to advise AOI of major changes to its manufacturing
                                         process, vendors or materials relating to the Products, and to ensure that such changes
                                         do not compromise the quality or reliability of Products, or their ability to satisfy
                                         the Specifications.

 

	2.2	AOI
                                         may from time to time change the Specifications with respect to a Product and SUPPLIERS
                                         agrees to use its best efforts to comply with said changes without additional cost. If
                                         any such change will cause an increase in SUPPLIERS’s costs, SUPPLIERS shall provide
                                         AOI with written notice of such increase in cost within ten (10) business days of change
                                         request, and SUPPLIERS shall not undertake such change until AOI approves the increase
                                         in costs.

 

	2.3	Specifications
                                         will include a manufacturing test plan. SUPPLIERS agrees to inspect and test the Products
                                         for quality and reliability prior to shipment and to confirm by inclusion of a compliance
                                         certificate with all shipments that said Products meet or exceed the Specifications.

     3

     

    

	3.	Inspection
                                         and Acceptance

 

	3.1	Products
                                         purchased pursuant to this Agreement shall be subject to final inspection and acceptance
                                         by AOI at AOI facilities within [***] of receiving the Products, in accordance
                                         with mutually agreed quality standard and acceptable quality level. AOI reserves the
                                         right to reject any Product lot that does not conform to the Specifications.

 

	3.2	In
                                         the event that [***] or more of a lot of Product manufactured by Suppliers is delivered
                                         to AOI within a rolling  [***] period is found to be defective or is rejected and
                                         the delivery schedule of Products from AOI to its clients does not permit return of the
                                         Products to SUPPLIERS for repair or replacement then AOI may elect to repair such defective
                                         Products or to have them repaired locally. The cost of such repairs shall be borne by
                                         SUPPLIERS.

 

	3.3	In
                                         the event that a lot of Product is rejected and AOI elects not to repair the Products
                                         AOI may, at its discretion, either return defective Products for full credit, refund
                                         or require prompt correction or replacement of the defective or non-conforming Products.

 

	3.4	In
                                         the event AOI returns a Product to SUPPLIERS for correction or replacement, SUPPLIERS
                                         shall use its best effort to repair or replace said defective Product within [***] of receipt of the Product, or within a reasonable period agreeable to both Parties.

 

	3.5	SUPPLIERS
                                         shall bear all risk and costs for said defective product attributable to SUPPLIERS such
                                         as labor, material, inspection, and shipping from SUPPLIERS’S facilities. AOI shall
                                         pay for shipping costs for returns of any Product to SUPPLIERS. SUPPLIERS agrees to provide
                                         failure analysis of rejected Product within [***] after receipt of said
                                         Product. SUPPLIERS will also provide a written corrective action report addressing the
                                         steps that will be taken to eliminate the cause of the problem.

 

	4.	Pricing

 

	4.1	Prices
                                         for the Products shall be as set forth in the Pricelist which shall be revised from time
                                         to time as set out herein. Unless otherwise indicated in the Pricelist, all prices shall
                                         have INCOterm DDP AOI Facility.

 

	4.2	Prices
                                         shall be established by way of written quotations issued by SUPPLIERS. Upon acceptance
                                         by AOI of such a quotation the Pricelist shall be revised.

 

	4.3	Prices
                                         will be reviewed periodically by both AOI and SUPPLIERS and the price for the Products
                                         will be adjusted upward or downward in response to the change of BOM cost of the Products
                                         that are outside the control of AOI or SUPPLIERS. Such changes may include but are not
                                         limited to commodity price increases or decreases. All such changes shall be made by
                                         written notice issued by SUPPLIERS at least [***] in advance of the effective date.

 

	4.4	Orders
                                         placed by AOI before the effective date mentioned in Section 4.3 above shall not be subject
                                         to the said change without the AOI’s consent.

 

	4.5	Non-Recoverable
                                         Engineering Expenses: Prior to engaging in any engineering or other design work, SUPPLIERS
                                         will provide a written quotation to AOI setting out the scope, parameters and deliverables
                                         of the work to be performed as well as payment terms. AOI shall not be responsible for
                                         any costs of such work unless it has provided a written acceptance of a quotation to
                                         SUPPLIERS.

     4

     

    

	5.	Terms
                                         & Conditions of Shipment & Payment

  

	5.1	Payment
                                         will be made by wire transfer [***]  from the date of SUPPLIERS’s invoice
                                         provided that the relevant Products have been delivered to named place of delivery within
                                         [***] of the invoice date, otherwise [***] from the date of delivery to the
                                         named place of shipment.

 

	5.2	Unless
                                         otherwise agreed in writing by the Parties, the prices of the Products shall be quoted
                                         “DDP Houston, TX USA as standard shipping term.

 

	6.	Product
                                         Warranty

 

	6.1	SUPPLIERS
                                         warrants all Products delivered to AOI under this Agreement shall be free and clear of
                                         all liens, encumbrances, restrictions or other claims, and that for a period of [***]  from date of invoice to AOI, that all Products shall be free from defects in
                                         material, workmanship, and design under normal use and service. SUPPLIERS further warrants
                                         and represents that all Products shall conform to applicable Specifications, drawings,
                                         samples, and descriptions referred to in this Agreement. The warranty for any Product
                                         replaced or repaired will be the same as the original Product.

 

	6.2	If
                                         defect or non-conformance is found during the warranty period, AOI will promptly notify
                                         SUPPLIERS of any non-conforming material to obtain a Return Material Authorization (RMA)
                                         number. Upon receipt of the RMA number, AOI will cause the return of the non-conforming
                                         Products to SUPPLIERS at AOI’s expense. Upon its receipt, SUPPLIERS will promptly
                                         either repair or replace it, at SUPPLIERS’s discretion. Properly repaired or replaced
                                         Products will promptly be delivered to AOI at SUPPLIERS’s cost.

 

	6.3	Epidemic
                                         Failure. In the event that [***] or more of any lot, batch or other separately distinguishable
                                         manufacturing run of Products manufactured by SUPPLIERS is delivered to AOI and is found
                                         to be defective within a rolling [***] period, following SUPPLIERS’ delivery
                                         of such Products, SUPPLIERS will promptly: (a) dedicate sufficient resources to thoroughly
                                         investigate the cause of the defect; (b) perform root cause analysis; and (c) implement
                                         corrective action. In addition, after SUPPLIERS’ verification, it will render repair
                                         and replacement services, as may be requested by AOI, during the applicable Product warranty
                                         period. In addition to repair or replacement of Products, SUPPLIERS will credit AOI an
                                         amount equal to 100% (one hundred percent) of any penalties imposed upon AOI by AOI customers
                                         as compensation for removal and reinstallation associated with the repair or replacement
                                         of such Products purchased by AOI’s customers, to the extent that such products
                                         have been installed by AOI’s customer. SUPPLIERS’s maximum liability for
                                         each Epidemic Failure event shall not exceed the total dollar value of the Purchase Orders
                                         of Products that are found to be defective as relating to such Epidemic Failure. Notwithstanding
                                         the foregoing, in the event that the epidemic failure is determined to have been caused
                                         by an AOI-engineered product or portion of the product, or due to the failure of an AOI-specified
                                         vendor’s product, then SUPPLIERS’ liability under this section is limited
                                         to repair or replacement of any units returned to SUPPLIERS by AOI.

  

	7.	Term
                                         of Agreement & Termination for Cause

 

	7.1	The
                                         initial term of this Agreement shall be two (2) years, commencing on the Effective Date,
                                         and will automatically renew for successive terms of one (1) each unless either Party
                                         provides the other Party written notice of its intention not to renew not less than sixty
                                         (60) days prior to the end of the then current term.

 

	7.2	Notwithstanding
                                         the foregoing, this Agreement shall remain in full force and effect and shall be applicable
                                         to any Order(s) issued by AOI during the term of this Agreement until any and all obligations
                                         of the Parties under such Order(s) have been fulfilled.

     5

     

    

	7.3	Either
                                         Party may terminate this Agreement and/or any Order issued hereunder at any time by written
                                         notice if the other Party:

 

		(a)	Fails
                                         to comply with any material provision of this Agreement or any Order issued hereunder,
                                         and, in the case of a breach which is capable of remedy, fails to remedy same, in the
                                         case of a termination of this Agreement within sixty (60) days of notification of said
                                         breach, and in the case of a termination of an Order, within thirty (30) days of notification
                                         of said breach; or

 

		(b)	Becomes
                                         insolvent or makes an assignment for the benefit of creditors, or a Receiver or similar
                                         officer is appointed to take charge of all or a part of such Party’s assets and
                                         such condition has not been cured within thirty (30) days.

  

	7.4.	Upon
                                         termination of this Agreement and/or any Order by SUPPLIERS in accordance with the terms
                                         hereof, SUPPLIERS shall promptly terminate all performance under this Agreement and under
                                         any outstanding Orders. AOI’s entire liability shall be to settle obligations owed
                                         to SUPPLIERS for finished Products, raw materials, parts, or semi-finished goods which
                                         were prepared or manufactured under any outstanding Order by AOI or purchased through
                                         a Purchase Plan as approved by AOI. SUPPLIERS shall transfer title and deliver to AOI
                                         all finished Products, raw materials, parts and/or semi-finished goods and return to
                                         AOI all AOI property furnished by or belonging to AOI or AOI customers or dispose of
                                         such property in accordance with AOI’s instructions.

 

	8.	Intellectual
                                         Property & Trademarks

 

	8.1.	AOI
                                         warrants the Product does not infringe upon any patent, trademark, copyright, or any
                                         other intellectual property right of any third party, and that there are no such claims
                                         of infringement pending or threatened with respect to the Product.

 

	8.2.	AOI
                                         shall defend, at its expense, any claim against SUPPLIERS alleging that any Product furnished
                                         under this Agreement infringes any patent, trademark, copyright, or other intellectual
                                         property right of any third party, and shall pay all costs and damages awarded, provided
                                         AOI is notified in writing of such claim and permitted to defend and compromise the claim.

 

	8.3.	Any
                                         tools, drawings, specifications, or other materials furnished by AOI for use by SUPPLIERS
                                         in its performance under this Agreement or any Order issued hereunder shall remain the
                                         property of AOI and shall be used by SUPPLIERS only in its performance hereunder.

 

	8.4.	SUPPLIERS
                                         acknowledge and agree that AOI specifically retains all right, title and interest in
                                         and to the designs of the Products, and all intellectual property rights embodied in
                                         the Products, including, without limitation, all copyrights, trade secret rights and
                                         other proprietary rights

 

	8.5.	SUPPLIERS
                                         acknowledge and agree that no license or intellectual property right is conveyed by this
                                         Agreement. SUPPLIERS agrees not to sell, lease, promote or advertise the Products without
                                         obtaining AOI’s prior written approval. The Products shall not bear any trademark
                                         or other identifying name or symbol pertaining to SUPPLIERS.

 

	8.6.	SUPPLIERS
                                         acknowledge and agree that nothing herein is intended to grant SUPPLIERS any right or
                                         license to use any trademark, trade name or brand name owned or controlled by AOI on
                                         any products, documentation or packaging. AOI shall have the right to affix, or to demand
                                         that the SUPPLIERS affixes, to the Products any trademarks as AOI may decide.

     6

     

    

	9.	Preferred
                                         Manufacturer

 

During
the Term of this Agreement, AOI agrees to give preference to SUPPLIERS for Products AOI is seeking quotes for manufacturing. AOI
will consider quotes from SUPPLIERS for the manufacturing of said Products and if the terms of the quotations (including taxes
as defined herein) provided to AOI by SUPPLIERS are equal to or better than terms provided to AOI by other manufacturers, AOI
will provide preference to SUPPLIERS in placing its purchase order, subject to the conditions set out in the following exceptions.
The obligations of AOI under this section 9 of the Agreement do not apply when and to the extent that: (a) the manufacturing of
products by SUPPLIERS to AOI is prohibited by applicable law; (b) the manufacturing of products by SUPPLIERS is prohibited by
an agreement between AOI or an affiliate of AOI and a third party which exists as of the Effective Date; (c) any of AOI’s
customers refuse SUPPLIERS. 

 

	10.	Limitation
                                         of liability

 

Notwithstanding
anything to the contrary in this Agreement, neither Party shall be liable to the other party for any incidental, indirect, exemplary,
punitive, special or consequential damages such sustained or incurred in connection with this Agreement including, without limitation,
claims for loss of profits, loss of data or losses due to business disruption and the OEM Products that are subject to this Agreement,
whether the action is in contract or in tort or otherwise and whether or not damages are foreseeable.

 

	11.	Confidential
                                         Information

 

The
Parties agree that all matters of confidentiality and Confidential Information will be governed and controlled by the provisions
of their executed Nondisclosure Agreement dated _______________ the provisions of which will survive the expiration of that Agreement
and which are hereby incorporated herein by reference.

 

	12	MISCELLANEOUS.
                                         

 

Conflicting
Terms. If any terms specified in Section 1 through 6 above come into dispute between the Parties for a specific Order, AOI
agrees to review the terms provided to AOI by its customer regarding the above conflicting terms and replace the terms of the
Order with the terms of the customer.

 

Compliance
with Laws. Parties shall, and shall cause their subcontractors to, at all times comply with all Laws applicable to this Agreement,
to each Party’s operation of its business, and to the exercise of its rights and performance of its obligations hereunder.
Without limitation of the foregoing, SUPPLIERS shall ensure the Products and any related packaging conform fully to any applicable
Law. Upon AOI’s request, SUPPLIERS shall provide AOI with (a) written certification of SUPPLIERS’ compliance with
applicable Laws; (b) written certification of the origin of any components or materials in the Products; and (c) any additional
information regarding the Products requested by AOI such that AOI may comply in a timely manner with its obligations under Law.

 

Permits,
Licenses and Authorizations. SUPPLIERS shall obtain and maintain all Permits necessary for the exercise of its rights and
performance of AOI’s obligations under this Agreement, including any permits required for the import of Products or any
raw materials and other manufacturing parts used in the production and manufacture of the Products, and the shipment of hazardous
materials, as applicable. 

     7

     

    

Export
Control. The rights and obligations of the Parties under this Agreement shall be subject in all respects to United States
laws and regulations as shall from time to time govern the license and delivery of technology and products abroad, including the
United States Foreign Assets Control Regulations, Transaction Control Regulations and Export Control Regulations, as amended,
and any successor legislation issued by the Department of Commerce, International Trade Administration, or Office of Export Licensing.
Without in any way limiting the provisions of this Agreement, each Party agrees that, unless prior authorization is obtained from
the Office of Export Licensing, it will not export, re-export, or transship, directly or indirectly, to any country, any of the
technical data disclosed to it by the other Party hereto if such export would violate the laws of the United States or the regulations
of any department or agency of the United States Government. Furthermore, failure to export or deliver any product or technology
contemplated by this Agreement due to government regulations prohibiting such export or delivery shall not be held as a material
breach of this Agreement.

 

Hazardous
Material. SUPPLIERS are required to follow all AOI’s Safety, Health, and Environmental procedures as well as all
applicable local, state and federal environmental health and safety regulatory requirements. For each shipment of Products,
SUPPLIERS shall provide AOI, appropriate labels on Products, containers and packing, including material safety data sheets,
sufficient advance warning and notice of any hazardous or restricted material that is an ingredient or a part of the
shipment, together with such special handling instructions as may be necessary to advise logistics providers, handlers of the
goods and personnel of how to exercise measures of care and precaution that will comply with any applicable laws and prevent
bodily injury or property damage in the handling, transportation, processing, use, or disposal of the Suppliers. All tasks
should be completed in an environmentally friendly manner; to reduce pollution wherever possible; and minimize the use of
natural resources as much as possible.

 

Entire
Agreement/Amendments. This Agreement, together with its exhibits, schedules and attachments, and together with open purchase
orders and previously executed confidentiality or non-disclosure agreements, constitutes the complete agreement between the Parties
concerning the subject matter set forth herein and supersedes all prior negotiations, agreements or representations between the
Parties, whether oral or written, in respect thereof. This Agreement may not be amended, modified or supplemented except in writing
signed by a duly authorized representative of each Party, and no other act, document, usage or custom shall be deemed to amend,
modify or supplement this Agreement.

 

Assignment
 & Successors. Neither Party may transfer or assign this Agreement, or any rights granted hereunder, in whole or in part
to any third party without the prior written consent of the other Party, which consent shall not be unreasonably withheld. Notwithstanding
the foregoing the rights and benefits of the parties under this Agreement shall accrue to, and run in favor of, each party’s
successors and assigns. The rights and obligations of the parties under this Agreement shall be binding upon their respective
successors and assigns.

 

Waiver.
Any provision of this Agreement may be waived by the Party entitled to the benefit thereof. Neither Party shall be deemed by any
act or omission to have waived any of its rights or remedies hereunder unless such waiver is in writing and signed by the waiving
Party, and only to the extent specifically set forth in said writing. A waiver, failure or delay in exercising any right, power
or privilege, or any single or partial exercise of any right, power or privilege, will not act to preclude any subsequent or further
exercise of that or any other right, power or privilege. 

     8

     

    

Choice
of Laws; Arbitration. This Agreement shall be governed by, and its terms shall be construed in accordance with, the laws
of the State of Texas without regard to its principles for conflict of laws. All disputes arising out of or in connection
with this Agreement shall be finally settled through a binding arbitration in Houston, Texas, administered by the American
Arbitration Association in accordance with its rules. Each Party shall be responsible for its own attorneys’ fees. The
expenses of the arbitrator(s) shall be borne equally by the Parties. AOI reserves the right to abandon arbitration and pursue
all available legal and equitable remedies in the event SUPPLIERS do not comply with a demand for arbitration within 30 days
of notice.

 

Force
Majeure. No party (a “Frustrated Party”) shall be liable to any other Party (a “Non-Frustrated
Party”) for any failure to perform or delay in performance of its obligations under this Agreement caused by (a) act of
God; (b) outbreak of hostilities, riot, civil disobedience, act of terrorism, or plague; (c) the act of any governmental
authority including revocation of any license or consent; (d) fire, explosion, lightning strike, storm (including but not
limited to hurricanes and tornadoes) or flood; (e) theft, malicious damage, strike, lockout or industrial action of any kind
(provided that the strike, lockout or industrial action was outside the reasonable control of the Frustrated Party); or (f)
any causes or circumstances beyond the Frustrated Party’s reasonable control (collectively, a “Force Majeure
Event”). The Frustrated Party shall promptly notify the Non-Frustrated Party of the nature and extent of the
circumstances of the Force Majeure Event once known. In the event of a Force Majeure Event, the Frustrated Party shall
forthwith establish and implement a plan that minimizes the disruption to the Non-Frustrated Party and shall use its
commercially reasonable efforts to remedy the situation and remove the causes of its inability to perform as soon as
possible. The Frustrated Party shall give the Non-Frustrated Party prompt notice of the cessation of the Force Majeure Event.
The Frustrated Party and the Non-Frustrated Party shall negotiate in good faith adjustments to the terms and conditions of
this Agreement that are equitable taking into account the nature and extent of the circumstances of the Force Majeure Event
as they develop and become known, including equitable reductions in the obligations of the Non-Frustrated Party.

     9

     

    

In
Witness Whereof, the
Parties by their duly authorized representatives have caused this Agreement to be executed as of the date first written above.

	 	 	 	 	 
	AOI
	Applied Optoelectronics,
    Inc.
	 	 
	By:	                             	 
	Name:	                         	 
	Title:	                         	 
	 	 
	Global Technology Co., Ltd. (宁波环球广电科技有限公司)

	 	 
	By:	 	 
	Name:	 	 
	Title:	 	 
	 	 
	Yuhan Optoelectronic Technology (Shanghai) Co., Ltd. (裕汉光电子科技(上海)有限公司)

	 	 
	By:	 	 
	Name:	 	 
	Title:	 	 

     10

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