Exhibit 1
Execution Copy
EXCHANGE AGREEMENT
This EXCHANGE AGREEMENT, dated as of June 22, 2004 (the "Agreement"),
is entered into by and among Bookham Technology plc, a public limited company
incorporated under the laws of England and Wales (the "Company"), and Nortel
Networks Optical Components Limited, a company incorporated under the laws of
England and Wales (the "Investor").
Recitals
WHEREAS, the Investor holds the Company's Series A Senior Unsecured
Note due 2007 in an aggregate principal amount of $20,000,000 (the "Series A
Note");
WHEREAS, it is contemplated that the Company will effect a
reincorporation in the United States pursuant to a scheme of arrangement (the
"Scheme of Arrangement") in which a newly formed Delaware corporation ("Newco")
will become the parent of the Company.
WHEREAS, the Investor desires on the effective date of the Scheme of
Arrangement to surrender for exchange and the Company desires to cause Newco to
issue a Series A-1 Convertible Note due 2007 in an aggregate principal amount of
$20,000,000 in the form attached as Exhibit A (the "Series A-1 Note") in
exchange for the Company's Series A Note.
WHEREAS, the Company desires on the effective date of the Scheme of
Arrangement to assign the Relationship Deed (as defined below) to Newco in the
form attached as Exhibit B (the "Deed of Assignment").
NOW THEREFORE, in consideration of the mutual covenants contained
herein and for other valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:
1. AGREEMENT TO EXCHANGE NOTE.
Pursuant to the terms and conditions set forth in this Agreement, at
the Closing (as defined below), the Investor agrees to surrender to Newco the
Series A Note, and the Company agrees to cause Newco to accept such note and, in
exchange therefor, issue to the Investor the Series A-1 Note.
2. CLOSING, DELIVERY.
2.1 Closing. The closing of the transactions contemplated by Section 1
above and Section 3.2 below (the "Closing") shall take place at 10:00 a.m. New
York time on the effective date of the Scheme of Arrangement at the offices of
Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP, 00 Xxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000 or such other time and place as the parties may agree;
provided, however, that the Investor shall have received written notice of the
effective date of the Scheme of Arrangement at least ten (10) business days
prior to such date.
2.2 Delivery. At the Closing, subject to the terms and conditions
hereof, the Investor shall deliver to Newco the Series A Note and, in exchange
therefor, the Company shall cause Newco to issue and deliver to the Investor the
Series A-1 Note.
2.3 Retirement. The Series A Note shall, once surrendered to Newco for
exchange in accordance with this Agreement, be forthwith retired and canceled.
3. RELATED AGREEMENTS.
3.1 Registration Rights. The parties hereby agree to amend the
Registration Rights Agreement dated November 8, 2002 among Nortel Networks
Corporation, certain of its subsidiaries and the Company (the "Registration
Rights Agreement"), in accordance with and subject to the other provisions of
this Section 3.1. The Company shall cause the shares of common stock of Newco
issuable upon conversion of the Series A-1 Note (the "Conversion Shares") to
have the rights of "Registrable Securities" under the Registration Rights
Agreement. The Investor shall be deemed to be an Initial Shareholder under the
Registration Rights Agreement and shall have all of the rights and obligations
of a holder of Registrable Securities under the Registration Rights Agreement
with respect to the Conversion Shares and Newco shall have the same rights and
obligations with respect to the Conversion Shares under the Registration Rights
Agreement as the does the Company with respect to the other Registrable Shares
under the Registration Rights Agreement, including the indemnification and
contribution obligations set forth in Section 2.8 of the Registration Rights
Agreement; provided that Newco shall have the obligation (a) to file a
registration statement to effect the registration of the resale of the
Conversion Shares on a Shelf Registration Statement (as defined in the
Registration Right Agreement) within 60 days of the date of a request of the
Investor to file such a Shelf Registration Statement or, at the option of the
Investor, and if permitted under the applicable rules and regulations of the
Securities Exchange Commission, to include, at the request of the Investor, the
resale of the Conversion Shares on the Shelf Registration Statement on Form F-3
(File No. 333-103913) previously filed by the Company or any successor
registration statement thereto, (b) to use its best efforts to cause any such
Shelf Registration Statement to be declared effective by the date that is 150
days after the date of any such request and (c) to use its best efforts to keep
any such Shelf Registration Statement effective until the second anniversary of
the Closing (subject to the extension of such period for each day that (i) Newco
fails to obtain or maintain the effectiveness of such Shelf Registration
Statement, (ii) a Shelf Registration Suspension (as defined in the Registration
Rights Agreement) is in effect and (iii) the Investors are restricted from
selling securities pursuant to Section 2.4(a) of the Registration Rights
Agreement). For the avoidance of doubt, the parties agree that the shares of
common stock of Newco to be issued to the Investor and its affiliates as part of
the Scheme of Arrangement shall be "Registrable Securities" under the
Registration Rights Agreement. In furtherance of the foregoing, the Company
agrees, as reasonably practicable following consummation of the Scheme of
Arrangement, to cause the Shelf Registration Statement on Form F-3 (File No.
333-103913) referred to above to be converted into a similar registration
statement of Newco or to cause Newco to file such other registration statement
on the appropriate form with the Securities and Exchange Commission, in each
case covering the resale of such shares.
3.2 Relationship Deed. The parties hereby agree to amend the
Relationship Deed dated November 8, 2002 among Nortel Networks Corporation,
certain of its subsidiaries and the Company (the "Relationship Deed") by the
addition of the words "(which shall for these purposes include any cancellation
of their Ordinary Shares)" after the word "vary" in the sixth line of Clause 3
of the Relationship Deed. The parties also hereby agree and consent that at
Closing the benefit of the Relationship Deed will be assigned to Newco pursuant
to the Deed of Assignment.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
4.1 Authorization. The Company has all requisite corporate power and
authority to execute and deliver this Agreement and the Company has and Newco
shall have all requisite corporate power and authority to execute and deliver
any and all instruments necessary or appropriate in order to effectuate fully
the terms and conditions contained herein and all related transactions and to
perform their respective obligations hereunder. This Agreement has been duly
authorized by all necessary action on the part of the Company, has been duly
executed and delivered by the Company, and constitutes the valid and legally
binding obligation of the Company enforceable in accordance with its terms and
conditions. The authorization, issuance, execution, exchange and delivery of the
Series A-1 Note has been, or prior to the Closing shall have been, duly
authorized by all requisite corporate action on the part of the Company and
Newco.
4.2 Valid Issuance of the Conversion Shares. The Conversion Shares,
when issued upon conversion of the Series A-1 Note in accordance with its terms,
will be duly and validly issued, fully paid and non-assessable and, assuming the
accuracy of the Investor's representations in this Agreement at the time of each
such issuance, issued in compliance with all applicable securities laws.
4.3 No Conflicts; Approvals and Consents. (a) Neither the execution or
delivery by the Company of this Agreement, the consummation of the transactions
contemplated hereby, nor the compliance by the Company and Newco with any of the
provisions hereof will (i) conflict with, violate or result in the breach of,
any provision of the certificate of incorporation or by-laws or other
organizational documents of the Company or Newco; (ii) conflict with, violate,
or result in the breach by the Company or Newco of any applicable law; (iii)
conflict with, violate, result in the breach or termination of, or constitute a
default or give rise to any right of termination or acceleration or right to
increase the obligations or otherwise modify the terms under any contract,
agreement or understanding to which the Company or Newco is a party or by which
the Company, Newco or any of their assets is bound; or (iv) result in the
creation of any lien upon any of the assets of the Company or Newco, in each
case, with respect to the foregoing, except for such conflicts, violations,
breaches, terminations, defaults, rights or liens that have not had and would
not reasonably by expected to have, individually or in the aggregate, a material
adverse effect on the Company or Newco.
(b) No consent, approval or authorization of, permit from, or
declaration, filing or registration with, any governmental authority or any
other person is required to be made or obtained by the Company or Newco in
connection with the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby, except where the
failure to obtain such consent, approval, authorization or permit, or to make
such declaration, filing or registration, has not had and would not reasonably
be expected to have, individually or in the aggregate, a material adverse effect
on the Company or Newco.
5. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.
The Investor hereby represents and warrants to the Company as follows:
5.1 Investment. The Investor is acquiring the Series A-1 Notes and the
Conversion Shares for its own account for investment and not with a view to, or
for sale in connection with, any distribution thereof, nor with any present
intention of distributing or selling the same.
5.2 Authority. The Investor has full power and authority to enter into
and to perform this Agreement in accordance with its terms. Such Investor has
not been organized, reorganized or recapitalized specifically for the purpose of
investing in Newco.
5.3 Experience. The Investor has reviewed the representations
concerning the Company and Newco contained in this Agreement, and has made
inquiry concerning the Company and Newco, their respective businesses and
personnel; the officers of the Company have made available to such Investor any
and all written information which he, she or it has requested and have answered
to such Investor's satisfaction all inquiries made by such Investor; and such
Investor has sufficient knowledge and experience in finance and business that it
is capable of evaluating the risks and merits of its investment in Newco and
such Investor is able financially to bear the risks thereof.
5.4 Accredited Investor. The Investor is an "accredited investor"
within the meaning of Regulation D under the United States Securities Act of
1933.
5.5 Ownership. The Investor has good and marketable title to the Series
A Note to be tendered by it at the Closing free and clear of any and all liens,
encumbrances or adverse claims of any kind whatsoever as of the Closing.
6. MISCELLANEOUS.
6.1 Parties in Interest. All covenants, agreements, representations,
warranties and undertakings in this Agreement made by and on behalf of any of
the parties hereto shall bind and inure to the benefit of the respective
successors and permitted assigns of the parties hereto.
6.2 Amendments and Waivers. Except as set forth in this Agreement,
changes in or additions to this Agreement may be made, or compliance with any
term, covenant, agreement, condition or provision set forth herein may be
omitted or waived (either generally or in a particular instance and either
retroactively or prospectively), upon the written consent of (i) the Company,
and (ii) the Investor.
6.3 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York (without reference to
the conflicts of law provisions thereof).
6.4 Notices. All notices, requests, consents, and other communications
under this Agreement shall be in writing and shall be deemed delivered (i) two
business days after being sent by registered or certified mail, return receipt
requested, postage prepaid or (ii) one business day after being sent via a
reputable nationwide overnight courier service guaranteeing next business day
delivery, in each case to the intended recipient as set forth below:
(a) If to the Company, at Bookham Technology plc, 00 Xxxxxx
Xxxx, Xxxxxxxx, Xxxxxxxxxxx, XX00 0XX, Xxxxxx Xxxxxxx, Attention: Xxxxxx Xxxxx,
Esq., General Counsel, or at such other address or addresses as may have been
furnished in writing by the Company to the Investor, with a copy to Xxxxxx X.
Xxxx, Esq., Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP, 00 Xxxxx Xxxxxx, Xxxxxx,
XX 00000; and
(b) If to the Investor, at Nortel Networks Corporation, 0000
Xxxxx Xxxx, Xxxxxxxx, XX X0X 0X0, Xxxxxx, Attention: Secretary, with a copy to
Xxxxxx Xxxxxxx, Nortel Networks Corporation, 0000 Xxxxxxxx Xxxxxxxxx, Mail Stop
991-14-B40, Richardson, TX 75082-4399.
(c) Any party may give any notice, request, consent or other
communication under this Agreement using any other means (including, without
limitation, personal delivery, messenger service, telecopy, first class mail or
electronic mail), but no such notice, request, consent or other communication
shall be deemed to have been duly given unless and until it is actually received
by the party for whom it is intended. Any party may change the address to which
notices, requests, consents or other communications hereunder are to be
delivered by giving the other parties notice in the manner set forth in this
Section.
6.5 Entire Agreement. This Agreement and the exhibits hereto together
with any other agreement referred to herein constitute the entire agreement
among the Company and the Investor with respect to the subject matter hereof.
This Agreement supersedes all prior agreements between the parties with respect
to the note purchased hereunder and the subject matter hereof.
6.6 Termination. If the effective date of the Scheme of Arrangement
shall not have occurred by December 31, 2004, the Agreement shall terminate and
be of no further force and effect.
6.7 Severability. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provision.
6.8 Counterparts; Facsimile Signatures. This Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an original,
and all of which shall constitute one and the same document. This Agreement may
be executed by facsimile signatures.
6.9 Legends. It is understood that the Series A-1 Note and certificates
evidencing the Conversion Shares shall bear a legend substantially in the
following form and such other legends that may be required under the laws of any
applicable jurisdiction:
"The security represented by this instrument has not been
registered under any applicable securities law. This security
cannot be sold or otherwise transferred unless it is
registered under the U.S. Securities Act of 1933 or the
borrower is furnished with an acceptable opinion of counsel
that an exemption from registration is available.
This note has not been qualified by the filing of a prospectus
under applicable Canadian securities laws. By its acceptance
of this note, the holder represents that it is an accredited
investor, as such term is defined in Ontario Securities
Commission rule 45-501, and agrees that this note is not being
acquired with a view to distribution."
[SIGNATURE PAGE TO EXCHANGE AGREEMENT]
IN WITNESS WHEREOF, this Exchange Agreement has been executed by the
parties hereto as of the day and year first written above
COMPANY:
BOOKHAM TECHNOLOGY PLC
By: /s/ Xxxxxx Xxxxx
-----------------------------------------
Name: Xxxxxx Xxxxx
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Title: General Counsel and Company Secretary
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INVESTOR:
NORTEL NETWORKS OPTICAL COMPONENTS LIMITED
By: /s/ Xxxxxxx Xxxxx
-----------------------------------------
Name: Xxxxxxx Xxxxx
---------------------------------------
Title: Director
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Exhibit A
SERIES A-1 NOTE
THE SECURITY REPRESENTED BY THIS INSTRUMENT HAS NOT BEEN REGISTERED UNDER ANY
APPLICABLE SECURITIES LAW. THIS SECURITY CANNOT BE SOLD OR OTHERWISE TRANSFERRED
UNLESS IT IS REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 OR THE BORROWER IS
FURNISHED WITH AN ACCEPTABLE OPINION OF COUNSEL THAT AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
THIS NOTE HAS NOT BEEN QUALIFIED BY THE FILING OF A PROSPECTUS UNDER APPLICABLE
CANADIAN SECURITIES LAWS. BY ITS ACCEPTANCE OF THIS NOTE, THE HOLDER REPRESENTS
THAT IT IS AN ACCREDITED INVESTOR, AS SUCH TERM IS DEFINED IN ONTARIO SECURITIES
COMMISSION RULE 45-501, AND AGREES THAT THIS NOTE IS NOT BEING ACQUIRED WITH A
VIEW TO DISTRIBUTION.
Series A-1 Senior Unsecured Convertible Note Due 2007
U.S $20,000,000 ___________, 2004
7. General.
7.1 _______________________, a Delaware corporation (the "Borrower"),
for value received, hereby promises to pay, subject to the further provisions
hereof, to Nortel Networks Optical Components Limited (the "Lender"), the
principal amount of TWENTY MILLION U.S. DOLLARS (U.S.$20,000,000.00), as such
principal amount may be reduced by prepayments pursuant to Section 2 and Section
3 of this Note (as defined below), on November 8, 2007 (such date, the "Maturity
Date"), on presentation and surrender of this Note to the Borrower, in such coin
or currency of the United States of America as at the time of payment shall be
legal tender therein for the payment of public and private debts.
7.2 The Borrower further agrees to pay interest on the outstanding
principal amount hereof from time to time from the date hereof at the Interest
Rate (as defined below), payable in arrears on each Interest Payment Date (as
defined below) and on the Maturity Date; provided, however that on the first
Interest Payment Date after the date hereof, the Borrower shall also pay to the
Holder additional interest in an amount equal to $[insert amount accrued on the
Series A Note from the last interest payment date under the Series A Note to the
date of the issuance of the Series A-1 Note]. Interest shall be calculated on
the basis of a 360-day year of twelve 30-day months.
8. Voluntary Prepayment.
This Note shall be prepayable, at the option of the Borrower, in whole
or in part, on one or more occasions, on not less than two (2) Business Days (as
defined below) and not more than twenty (20) days prior written notice to the
Holder, at a price in cash equal to 100% of the outstanding principal amount to
be prepaid, plus accrued and unpaid interest to such prepayment date.
9. Mandatory Prepayment.
9.1 Within one (1) Business Day after the consummation of any Qualified
Financing (as defined below), the Borrower shall prepay in cash on a pro rata
basis by wire transfer of immediately available funds the outstanding
obligations under the Series A-1 Note in an amount equal to the Net Proceeds (as
defined below) of such Qualified Financing to the extent such Net Proceeds
constitute all or part of the Threshold Net Proceeds (as defined below).
9.2 Within one (1) Business Day after the consummation of any sale,
transfer or other disposition by the Borrower or any of its Subsidiaries to any
unaffiliated third Person of any of the Collateral, the Borrower shall prepay on
a pro rata basis by wire transfer of immediately available funds the outstanding
obligations under the Series A-1 Note in an amount equal to the Net Proceeds of
such sale, transfer or other disposition to the extent (i) such Net Proceeds
constitute all or part of the Excess Asset Sale Proceeds (as defined below) and
(ii) such amount is not required to be applied to prepay the Series B Note;
provided that the Borrower shall be entitled to delay any such prepayment until
the aggregate amount of all such delayed prepayments exceeds U.S.$250,000, at
which time any such delayed prepayments shall be made.
9.3 Within one (1) Business Day after a Change of Control (as defined
below) of the Borrower, the Borrower shall prepay the Series A Note in full at a
price in cash equal to 100% of the outstanding principal amount, plus accrued
and unpaid interest to such prepayment date.
10. Replacement of Note.
At the request of the Holder (as defined below) upon receipt by the
Borrower of evidence satisfactory to it of the loss, theft, destruction or
mutilation of this Note and, in case of loss, theft or destruction, of indemnity
reasonably satisfactory to it, or, in the case of mutilation, upon surrender and
cancellation of this Note, and in all cases upon reimbursement to the Borrower
of all reasonable expenses incidental thereto, the Borrower and the Guarantors
shall make and deliver to the Holder a replacement Note of like tenor in lieu of
this Note.
11. Amendments, Modifications and Waivers.
No covenant, agreement or condition contained in this Note may be
amended or modified and no right hereunder may be waived (either generally or in
a particular instance and either retroactively or prospectively) other than by a
written instrument or agreement executed by the Holder and the Borrower. Any
such amendment, modification or waiver shall be binding upon each present and
future holder of this Note and upon the Borrower. Upon the request of the
Borrower, the Holder shall submit this Note to the Borrower so that this Note be
marked to indicate such amendment, modification or waiver, and any Note issued
thereafter shall bear a similar notation referring to any such amendment,
modification or continuing waiver.
12. Existence; Conduct of Business.
Each of the Borrower and the Guarantors shall do or cause to be done
all things necessary to preserve, renew and keep in full force and effect its
legal existence and the rights, contracts, licenses, permits, privileges,
franchises, patents, copyrights, trademarks and trade names that are, in the
Borrower's reasonable judgment, material to the conduct of its business.
13. Guarantees.
13.1 Each Guarantor hereby jointly and severally unconditionally
guarantees, as a primary obligor and not merely as a surety, to the Holder the
full and punctual payment when due, whether at the Maturity Date, by
acceleration, by prepayment or otherwise, of all obligations of the Borrower
under this Note, whether for payment of principal or interest (including
interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) in respect of the Note and all other monetary
obligations of the Borrower under this Note, whether for fees, expenses,
indemnification or otherwise (all the foregoing being hereinafter collectively
called the "Guaranteed Obligations"). Each Guarantor further agrees that the
Guaranteed Obligations may be extended or renewed, in whole or in part, pursuant
to the terms of Section 5, without notice to or further assent from each such
Guarantor, and that each such Guarantor shall remain bound under this Section 7
notwithstanding any extension or renewal of any Guaranteed Obligation.
13.2 Each Guarantor waives presentation to, demand of payment from and
protest to the Borrower of any of the Guaranteed Obligations and also waives
notice of acceptance of its guarantee and notice of protest for nonpayment. Each
Guarantor waives notice of any default under this Note. The obligations of each
Guarantor hereunder shall not be affected by (i) the failure of the Holder to
assert any claim or demand or to enforce any right or remedy against the
Borrower or any other Person (as defined below) under this Note or any other
agreement or otherwise; (ii) any extension of the repayment terms of the
Guaranteed Obligations; (iii) any rescission, waiver, amendment or modification
of any of the terms or provisions of this Note or any other agreement; (iv) the
failure to perfect any security interest in, or the release of, any security
held by the Holder for the Guaranteed Obligations or any of them; or (v) the
failure of the Holder to exercise any right or remedy against any other
Guarantor. In the event that there is a Change in Control with respect to any
Guarantor, all obligations of such Guarantor hereunder shall be relieved in full
and such Guarantor shall cease to be subject to any obligation hereunder or to
be deemed a "Guarantor" upon the effectiveness of such Change in Control.
13.3 Each Guarantor hereby waives any right to which it may be entitled
to have its obligations hereunder divided among the Guarantors, such that such
Guarantor's obligations would be less than the full amount claimed. Each
Guarantor hereby waives any right to which it may be entitled to have the assets
of the Borrower first be used and depleted as payment of the Borrower's or such
Guarantor's obligations hereunder prior to any amounts being claimed from or
paid by such Guarantor hereunder. Each Guarantor hereby waives any right to
which it may be entitled to require that the Borrower be sued prior to an action
being initiated against such Guarantor.
13.4 Each Guarantor further agrees that its guarantee herein
constitutes a guarantee of payment when due (and not a guarantee of collection)
and waives any right to require that any resort be had by the Holder to any
security held for payment of the Guaranteed Obligations.
13.5 The obligations of each Guarantor hereunder shall not be subject
to any reduction, limitation, impairment or termination for any reason (other
than payment of the Guaranteed Obligations in full), including any claim of
waiver, release, surrender, alteration or compromise of any Guaranteed
Obligation, and shall not be subject to any defense of setoff, counterclaim,
recoupment or termination whatsoever or by reason of the invalidity, illegality
or unenforceability of the Guaranteed Obligations or otherwise. Without limiting
the generality of the foregoing, the obligations of each Guarantor herein shall
not be discharged or impaired or otherwise affected by the failure of the Holder
to assert any claim or demand or to enforce any remedy under this Note or any
other agreement, by any waiver or modification of any provision thereof by any
default, failure or delay, willful or otherwise, in the performance of the
Guaranteed Obligations, or by any other act or omission or delay to do any other
act that may or might in any manner or to any extent vary the risk of any
Guarantor or that would otherwise operate as a discharge of any Guarantor as a
matter of law or equity.
13.6 Each Guarantor agrees that its guarantee shall remain in full
force and effect until payment in full of all the Guaranteed Obligations. Each
Guarantor further agrees that its guarantee herein shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of principal of or interest on any Guaranteed Obligation is
rescinded or must otherwise be restored by the Holder upon the bankruptcy or
reorganization of the Borrower or otherwise.
13.7 In furtherance of the foregoing and not in limitation of any other
right which the Holder has at law or in equity against any Guarantor by virtue
hereof, upon the failure of the Borrower to pay the Guaranteed Obligation when
and as the same shall become due, whether at maturity, by acceleration, by
prepayment or otherwise, each Guarantor hereby promises to and shall, upon
receipt of written demand by the Holder, forthwith pay, or cause to be paid, in
cash, to the Holder an amount equal to the sum of (i) the unpaid amount of such
Guaranteed Obligations and (ii) accrued and unpaid interest on such Guaranteed
Obligations then due and owing (but only to the extent not prohibited by law).
13.8 Each Guarantor agrees that it shall not be entitled to any right
of subrogation in relation to the Holder in respect of any Guaranteed
Obligations guaranteed hereby until payment in full of all Guaranteed
Obligations. Each Guarantor further agrees that, as between it and the Holder,
(i) the maturity of the Guaranteed Obligations guaranteed hereby may be
accelerated as provided in Section 9 for the purposes of any guarantee herein,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the Guaranteed Obligations guaranteed hereby, and
(ii) in the event of any declaration of acceleration of such Guaranteed
Obligations as provided in Section 10, such Guaranteed Obligations (whether or
not due and payable) shall forthwith become due and payable by such Guarantor
for the purposes of this Section 7.
13.9 Each Guarantor also agrees to pay any and all costs and expenses
(including reasonable attorneys' fees and expenses) incurred by the Holder in
enforcing any rights under this Section 7.
13.10 The Borrower shall cause each Subsidiary that (i) has not
executed and delivered this Note "as Guarantor" and (ii) is or becomes a
Principal Borrower Subsidiary to execute and deliver such instruments and do
such acts as may be necessary for such Principal Borrower Subsidiary to become a
Guarantor under this Section 7, including without limitation Bookham Technology
plc.
13.11 Upon request of the Holder, each Guarantor shall execute and
deliver such further instruments and do such further acts as may be reasonably
necessary or proper to carry out more effectively the purpose of this Note.
13.12 In the case of any payments made by a Guarantor pursuant to this
Section 7, the following shall apply:
(a) All such payments shall be made to the Holder without
withholding or deduction for, or on account of, Taxes (other than those
withholdings or deductions to which payments by the Borrower are subject). In
the event any withholding or deduction for Taxes is required by law or by the
interpretation or administration thereof by the relevant governmental authority,
such Guarantor shall pay such additional amounts as may be necessary in order
that the net amounts received by the Holder after such withholding or deduction
may not be less than the net amount that would have been received by the Holder
from the Borrower.
(b) If the Holder is entitled to claim an exemption from, or a
reduction of, any withholding or deduction for or on account of Taxes under any
applicable law or treaty, the Holder hereby covenants and agrees that it will
take all reasonably necessary steps to secure the benefit of such exemption or
reduction. Further, if the Holder is entitled to claim a refund of any
withholding or deduction of or on account of Taxes under any applicable law or
treaty, the Holder hereby covenants and agrees that it will take all reasonably
necessary steps to secure such refund, and (to the extent that such Guarantor
has made a payment of an additional amount pursuant to this Section 7(l))
account for such refund to such Guarantor.
(c) If (and for so long as) the Holder fails to satisfy its
obligations under clause (ii) of this Section 7(l), such Guarantor shall not be
required to make any payments under this Section 7 to the extent that such
payments could have been avoided if the Holder had complied with its obligations
under clause (ii) of this Section 7(l). For example (and solely for purposes of
illustration), if payments by such Guarantor are subject to a withholding tax of
15%, but under the applicable tax treaty the Holder is entitled to claim a
reduction of withholding tax from 15% to 10%, then, if the Holder fails to
comply with its obligations under clause (ii) of this Section 7(l), such
Guarantor shall be obligated to make payments under clause (i) of this Section
7(l) on the reduced 10% withholding tax and shall have no obligation under
clause (i) of this Section 7(l) with respect to the 5% withholding tax that
could have been avoided if the Holder had complied with its obligations under
clause (ii) of this Section 7(l).
14. Conversion Rights.
14.1 This Note shall be convertible into shares of common stock, $.01
par value per share, of the Borrower ("Common Stock") in accordance with and
subject to this Section 8. An election to convert some or all of the principal
amount of this Note shall be made by the Holder by providing written notice to
the Borrower of the principal amount to be converted (provided that an election
shall not be in an amount of less than US$5,000,000) at least five (5) trading
days prior to the date of conversion. Each principal amount of this Note shall
be convertible into a number of shares of Common Stock, equal to the Conversion
Rate until 5:00 pm, New York City time, on the 365th day after the date hereof.
14.2 The Borrower shall not issue any fractional shares upon conversion
of the Note. Instead, the Borrower will pay to the Holder the value of any such
fractional share. The value of a fractional share shall be determined, to the
nearest 1/1,000th of a share, by multiplying the Conversion Price as of the date
of such conversion by the fractional amount and rounding the product to the
nearest whole cent.
14.3 The Conversion Rate shall be adjusted to reflect fully the effect
of any reclassification, stock split, consolidation, reverse split, stock
dividend, reorganization or other like change with respect to the Common Stock.
15. Events of Default.
15.1 An "Event of Default" occurs if:
(a) any default shall be made in the payment of the principal
of or cash interest on the Series A-1 Note, when and as the same shall become
due and payable, whether at the due date thereof, upon acceleration thereof or
otherwise;
(b) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity; provided that this
clause (ii) shall not apply in the case of (A) voluntary or mandatory
prepayments under the Series A-1 Note or the Series B Note that are paid in full
when due or (B) any secured Indebtedness that becomes due as a result of the
voluntary sale or transfer of the property or assets securing such Indebtedness;
(c) an Event of Default (as defined in the Series B Note)
occurs with respect to the Series B Note;
(d) the Borrower or any of its Subsidiaries defaults in any
material respect in its obligations hereunder (other than any obligations for
the payment of principal or interest) or in any of the Security Agreements;
provided that such default shall not have been cured within twenty (20) Business
Days after written notice of such default;
(e) the Borrower becomes subject to a Bankruptcy Event;
(f) (A) except as permitted by this Note, any of the Security
Agreements or other documents delivered pursuant thereto shall be held in any
judicial proceeding to be unenforceable or invalid, or shall cease for any
reason to be in full force and effect and such default continues for twenty (20)
Business Days after written notice, or (B) the Borrower or any Guarantor, or
anyone acting on behalf of the Borrower or any Guarantor, shall deny or
disaffirm its obligations under any of the Security Agreements or other
documents delivered pursuant thereto.
15.2 If an Event of Default occurs, then the Holder of this Note may,
by written notice to the Borrower, declare this Note to be forthwith due and
payable, whereupon this Note shall become forthwith due and payable, both as to
principal and interest, without presentment, demand, protest, or other notice of
any kind, all of which are hereby expressly waived.
16. Notices of Material Events.
16.1 The Borrower shall furnish the Holder written notice of the
occurrence of any Event of Default or any development or circumstance that has,
or could reasonably be expected to have, a Borrower Material Adverse Effect (as
defined below) promptly upon the Borrower's obtaining knowledge thereof.
16.2 Each notice delivered under this Section 9 shall be accompanied by
a statement of an executive officer of the Borrower setting forth the details of
the event, development or circumstance requiring such notice and any action
taken or proposed to be taken with respect thereto.
17. Extension of Maturity.
Should the principal of and interest on this Note become due and
payable on other than a Business Day, the maturity hereof shall be extended to
the next succeeding Business Day, and interest shall be payable at the rate per
annum herein specified during such extension.
18. Successors and Assigns.
The provisions of this Note shall be binding upon and inure to the
benefit of the Borrower and the Guarantors and their respective successors and
permitted assigns and the Holder of this Note and its successors and assigns.
None of the obligations of the Borrower or any Guarantor hereunder may be
assigned without the prior written consent of the Holder.
19. No Waiver.
Neither a failure nor a delay on the part of the Holder in exercising
any right, power or privilege under this Note shall operate as a waiver thereof,
nor shall a single or partial exercise thereof preclude any other or further
exercise of any right, power or privilege. The rights, remedies and benefits of
the Holder herein expressly specified are cumulative and not exclusive of any
other rights remedies or benefits which either may have under this Note at law,
in equity, by statute or otherwise.
20. Governing Law.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK. This Note was negotiated and executed in the
State and County of New York. All actions, suits and proceedings arising out of
relating to this Note shall be heard and determined exclusively in a New York
state or federal court sitting in the County of New York, and the Holder, the
Borrower and the Guarantors hereby irrevocably submit to the exclusive
jurisdiction of such courts in any such action or proceeding and irrevocably
agree to the laying of venue in such courts and waive the defense of an
inconvenient forum to the maintenance of any such action, suit or proceeding.
21. Titles and Subtitles.
The titles and subtitles used in this Note are used for convenience
only and are not to be considered in construing or interpreting this Note.
22. Definitions. As used in this Note, unless otherwise specified, the
following terms have the meanings specified below:
"Acquisition Agreement" means the Acquisition Agreement between Nortel
Networks Corporation and Bookham Technology plc dated as of October 7, 2002 (as
amended through the date hereof).
"Bankruptcy Event" has the meaning set forth in the Acquisition
Agreement.
"Borrower" has the meaning set forth in Section 1(a).
"Borrower Material Adverse Effect" means any long-term or short-term
effect that is or is reasonably likely to be materially adverse to (i) the
business, results of operations, assets, liabilities or condition (financial or
otherwise) of the Borrower and its Subsidiaries, taken as a whole, or (ii) the
ability of the Borrower and its Subsidiaries to perform their respective
obligations under the Security Documents and the Supply Agreement between the
Borrower and Nortel Networks Corporation dated as of the date hereof, but in
each case shall not include any effect arising out of or resulting from (A) a
change in general economic or financial conditions (provided that such changes
do not affect the Borrower and its Subsidiaries, taken as a whole, in a
materially disproportionate manner in comparison to other companies engaged in
the same industry) or (B) a change, condition or circumstance in the industry in
which the Borrower and its Subsidiaries operate (provided that such changes do
not affect the Borrower and its Subsidiaries, taken as a whole, in a materially
disproportionate manner in comparison to other companies engaged in the same
industry); provided, however, that (1) any decrease in the market price or
trading volume of the Borrower's securities or any shareholder litigation
resulting therefrom shall not, in and of itself, constitute a Borrower Material
Adverse Effect and (2) the failure of the Borrower to achieve internal or
external financial forecasts or projections shall not, in and of itself,
constitute a Borrower Material Adverse Effect.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which banks are required or authorized by law to be closed in New York,
New York; London, England or Xxxxxxx, Xxxxxxx, Xxxxxx.
"Change of Control" has the meaning set forth in the Acquisition
Agreement.
"Collateral" has the meaning set forth in the U.S. Security Agreement.
"Control" or "Controlled" means, as to any Person, the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.
"Conversion Price" means as of any date, ninety percent (90%) of the
average of closing price per share of Common Stock on The NASDAQ National Market
(or, if the Common Stock is not then traded on The NASDAQ National Market, the
principal United States securities exchange or trading market where the Common
Stock is then listed or trading) for the three (3) trading days preceding such
date, but at no time less than $19.001 per share.
"Conversion Rate" means a number of shares of Common Stock equal to the
principal amount of the Note being converted divided by the Conversion Price,
subject to adjustment as set forth in Section 8(c).
"Equity Interest" of any Person means any and all common stock,
preferred stock and any other class of capital stock of, and any partnership or
limited liability company interests in, such Person or any other similar
interests in such Person if such Person is not a corporation, partnership or
limited liability company and includes any interest that is convertible into or
exchangeable or exercisable for any Equity Interest and any other right to
acquire any Equity Interest.
--------
1 Note to form: Assumes an exchange ratio of 1 share of common stock of the
Borrower for every 10 ordinary shares of Bookham Technology plc in the
Scheme of Arrangement and shall be adjusted accordingly to reflect the
actual exchange ratio for the Scheme of Arrangement.
"Excess Asset Sale Proceeds" means the Net Proceeds of all sales,
transfers and other dispositions of Collateral consummated to the extent the
aggregate of all such Net Proceeds exceeds $30,000,000.
"Event of Default" has the meaning set forth in Section 9(a).
"Guaranteed Obligations" has the meaning set forth in Section 7.
"Guarantors" means (i) subject to the last sentence of Section 7(b),
those Subsidiaries of the Borrower that have executed and delivered this Note on
the date hereof "as Guarantor" and (ii) such other Affiliates of the Borrower
that have guaranteed the Series A-1 Note pursuant to Section 7(j).
"Highest Lawful Rate" means the maximum non-usurious rate of interest,
as in effect from time to time, which may be charged, contracted for, reserved,
received or collected by the Holder in connection with this Note under
applicable law.
"Holder" means the Person named as the Lender or such Person's
permitted transferee or assign.
"Indebtedness" means any obligation in respect of (i) borrowed money,
(ii) capitalized lease obligations, (iii) obligations under interest rate
agreements and currency agreements, (iv) guarantees of any obligation of any
third Person, (v) letters of credit and (vi) indemnities or performance bonds.
"Interest Payment Date" means each February 8, May 8, August 8 and
November 8 beginning on [insert August 8, 2004 or, if the closing of the
Exchange Agreement occurs after such date, the first interest payment date to
otherwise occur after the closing of the Exchange Agreement].
"Interest Rate" means 4.00% per annum; provided that anything herein to
the contrary notwithstanding, if during any period for which interest is
computed hereunder, the amount of interest computed on the basis provided for in
this Note, together with all fees, charges and other payments that are treated
as interest under applicable law, as provided for herein or in any other
document executed in connection herewith, would exceed the amount of such
interest computed on the basis of the Highest Lawful Rate, neither the Borrower
nor any Guarantor shall be obligated to pay, and the Holder shall not be
entitled to charge, collect, receive, reserve or take, interest in excess of the
Highest Lawful Rate, and during any such period the interest payable hereunder
shall be computed on the basis of the Highest Lawful Rate.
"Lender" has the meaning set forth in Section 1(a).
"Material Indebtedness" means any Indebtedness of the Borrower or any
of its Subsidiaries having an outstanding principal amount of at least
U.S.$5,000,000, individually or in the aggregate, whether such Indebtedness now
exists or shall hereafter be created.
"Maturity Date" has the meaning set forth in Section 1(a).
"Net Proceeds" means, with respect to the sale, transfer or other
disposition of any asset, the issuance of any security or any financing, the
aggregate amount of cash proceeds (including any other consideration that is
converted into cash) therefrom, in each case net of any customary attorneys'
fees, accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage and consultant fees actually incurred in connection,
and contemporaneously, therewith.
"Note" means this Note and any replacement Note executed and delivered
by the Borrower and the Guarantors pursuant to Section 4 hereof.
"Person" means any natural person, general or limited partnership,
corporation, limited liability company, firm, association or other legal entity.
"Principal Borrower Subsidiary" means any Subsidiary of the Borrower
the assets of which have an aggregate fair market value equal to or greater than
$1,000,000.
"Qualified Financing" means any issuance by the Borrower or any of its
Subsidiaries of any Equity Interests and any Indebtedness incurred by the
Borrower or any of its Subsidiaries that is convertible into or exchangeable or
exercisable for any Equity Interests.
"Security Agreements" has the meaning set forth in the Acquisition
Agreement.
"Series A-1 Note" means the Series A-1 Note Senior Unsecured
Convertible due 2007 of the Borrower with an original aggregate principal amount
of U.S.$20,000,000.
"Series B Note" means the Series B Senior Secured Note due 2005 of the
Borrower with an original aggregate principal amount of U.S.$30,000,000.
"Subsidiary" of any Person means any corporation, partnership, joint
venture, limited liability company, trust or estate of which (or in which) more
than 50% of (a) the issued and outstanding capital stock (or other Equity
Interest) having ordinary voting power to elect a majority of the board of
directors (or similar governing body) of such entity or (b) the interest in the
capital or profits of such entity is at the time directly or indirectly owned or
Controlled by such Person, by such Person and one or more of its other
Subsidiaries or by one or more of such Person's other Subsidiaries.
"Taxes" has the meaning set forth in the Acquisition Agreement.
"Threshold Net Proceeds" means the excess over $100,000,000 of Net
Proceeds of all Qualified Financings consummated after the date hereof.
IN WITNESS WHEREOF, each of the Borrower and the Guarantors has duly
executed and delivered this Note as of the date first written above.
________________________, as Borrower
By:
-----------------------------------
Name:
Title:
BOOKHAM TECHNOLOGY PLC, as Guarantor
By:
-----------------------------------
Name:
Title:
BOOKHAM US INC., as Guarantor
By:
-----------------------------------
Name:
Title:
BOOKHAM ACQUISITION INC., as Guarantor
By:
-----------------------------------
Name:
Title:
BOOKHAM (SWITZERLAND) AG, as Guarantor
By:
-----------------------------------
Name:
Title:
Exhibit B
DATED
------------ 2004
DEED OF ASSIGNMENT
relating to a
RELATIONSHIP DEED
between
BOOKHAM TECHNOLOGY PLC
and
NORTEL NETWORKS CORPORATION
and
OTHERS
XXXXXX XXXXXX XXXXXXXXX
XXXX AND XXXX LLP
Alder Castle
00 Xxxxx Xxxxxx
Xxxxxx XX0X 0XX
Tel: x00 (0)00 0000 0000
Fax: x00 (0)00 0000 0000
Ref: 0107708/00189
THIS DEED is dated [ ] 2004
PARTIES
(1) BOOKHAM TECHNOLOGY PLC, a company registered in England and Wales under
number 2298887 whose registered office is at 00 Xxxxxx Xxxx, Xxxxxxxx,
Xxxxxxxxxxx, XX00 0XX ("Bookham Plc"); and
(2) BOOKHAM TECHNOLOGY INC., a company incorporated in Delaware US whose
registered office is at [ ] ("Bookham Inc.")
BACKGROUND
(A) This Deed is supplemental to an agreement dated November 8, 2002 and
made between Bookham Plc, Nortel Networks Corporation ("Nortel") and
others (the "Relationship Deed") for the purpose of regulating certain
aspects of the on-going relationship between, inter alia, Bookham Plc
and Nortel.
(B) Bookham Plc now wishes to assign the benefit of the Relationship Deed
to Bookham Inc.
AGREED TERMS
ASSIGNMENT
As from the effective date of the scheme of
arrangement pursuant to which Bookham Plc will effect a reincorporation
in the United States and Bookham Inc. will become the parent of Bookham
Plc, Bookham Plc hereby assigns to Bookham Inc. the full benefit
(subject to the burden thereof) of the Relationship Deed the terms of
which shall apply mutatis mutandis as if Bookham Inc. had been a party
to it in place of Bookham Plc.
GOVERNING LAW AND JURISDICTION
1.1 This Deed and any disputes or claims arising out of or in connection
with its subject matter are governed by and construed in accordance
with the law of England.
1.2 The parties irrevocably agree that the courts of England have exclusive
jurisdiction to settle any dispute or claim that arises out of or in
connection with this Deed.
This Deed executed as a deed and is delivered and takes effect on the date
stated at the beginning of it.
Executed as a deed by BOOKHAM TECHNOLOGY PLC ...........................
acting by [NAME OF FIRST DIRECTOR] and [NAME OF Director
SECOND DIRECTOR/SECRETARY]
...........................
Director/Secretary
Executed as a deed by BOOKHAM TECHNOLOGY INC. ...........................
acting by [NAME OF FIRST DIRECTOR] and [NAME OF Director
SECOND DIRECTOR/SECRETARY]
...........................
Director/Secretary
