EXHIBIT 10.7
NOTE: Information in this document marked with an "[*]" has been omitted and
filed separately with the Commission. Confidential treatment has been requested
with respect to the omitted portions.
SUPPLY AGREEMENT
This Supply agreement (the "Agreement") is made by and between ALCATEL, a French
societe anonyme having its registered office at 00 xxx Xx Xxxxxx 00000 Xxxxx,
Xxxxxx and AVANEX CORPORATION, a Delaware corporation having its principle place
of business at 00000 Xxxxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000, X.X.X.
("Supplier").
WHEREAS
The Parties, along with Corning Incorporated, are parties to a Share Acquisition
and Asset Purchase Agreement (as defined hereinafter) pursuant to which, among
other things, Supplier is purchasing or otherwise acquiring all of the issued
and outstanding stock of Optronics France. In connection with such stock
purchase, Alcatel and Supplier agreed to enter into a supply agreement in which
Supplier would sell, and Alcatel would purchase, certain products. The parties
hereby enter into this Agreement in order to effectuate such purchase and sale.
NOW THEREFORE, in furtherance of the foregoing recitals and in consideration of
the mutual covenants and obligations set forth in this Agreement, the Parties
agree as follows.
Article 1 Definitions Except as otherwise defined below, initially capitalized
terms used herein shall have the definitions assigned to such terms in the Share
Acquisition and Asset Purchase Agreement.
AFFILIATED COMPANIES : shall mean, as to any specified party, any other
entity that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with such
specified party; provided, however, that the term "Affiliate" shall not
include any entity of which a party or its Subsidiaries hold fifty
percent (50%) or less of the outstanding equity securities so long as
such party or its Subsidiaries hold fifty percent (50%) or less of the
seats on the governing board of such entity.
ALCATEL COMPETITOR : shall mean those entities listed on Exhibit 3.
SUPPLIER COMPONENT: means any product offered by Supplier or by any
Supplier Affiliated Company,
OPTO-ELECTRONIC COMPONENTS, OR COMPONENTS : means any optic components
for optical signal based devices, whether terrestrial or submarine used
in the transmission, conveyance, receipt of information (e.g. data,
voice, pictures, music, etc.), through analog wavelength signals (e.g.
optical detectors, signal lasers, pump lasers, optical amplifiers,
optical transmitters, transceivers and transponders, optical filters,
multiplexers, couplers) used as such or embedded into processing
optical module.
"SUBSIDIARY" shall mean, when used with respect to any party, any
corporation or other organization, whether incorporated or
unincorporated, at least a majority of the securities or other
interests of which having by their terms ordinary voting power to elect
a majority of the Board of Directors or others performing similar
functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such party or by any one
or more of its subsidiaries, or by such party and one or more of its
subsidiaries.
SUPPLIER ACCESSIBLE MARKET (XXX): means the aggregate amount of
Opto-electronic components procured during a specified period of time
by Alcatel and its Affiliated Companies, either directly or indirectly
through CMs and LSPs, which components are offered by Supplier and
qualified into Alcatel products, including Dispersion Compensation
Modules (DCM).
EFFECTIVE DATE: has the meaning assigned to such term in Article 7
hereof.
Article 2 Purchase
2.1 Minimum Purchase. During each Period during the term of this Agreement,
Alcatel will purchase from Supplier seventy percent (70%) of the XXX
(the "Minimum Purchase").
Such Components shall be purchased from Supplier and/or Supplier
Affiliated Companies by Alcatel, its Affiliated Companies and/or their
contract manufacturers (CMs) and/or their logistic service providers
(LSPs).
The Minimum Purchase will be measured over each 12 month period ending
on the anniversary of the Effective Date (each a "Period").
If during the term of this Agreement, Supplier introduces any new
Component, Alcatel will consider the integration of such Component,
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subject to Supplier being willing and able to supply on competitive
terms in accordance with Section 2.3, into any relevant application of
Alcatel or its Affiliated Companies, either existing or currently in
development. If this integration is accepted and requires an additional
substantial research and development effort from Alcatel, the parties
will discuss in good faith the most appropriate means and contributions
of each party.
2.2 In connection with the calculation of the Minimum Purchase, Supplier
shall communicate to Alcatel, promptly after the end of each Period,
the actual xxxxxxxx of Supplier and/or Supplier Affiliated Companies to
Alcatel Affiliated Companies, their CMs and their LSPs for Components
during such year and Alcatel shall communicate in writing to Supplier,
promptly after the end of each Period, the XXX for such Period.
At the end of each Period, if the amount of Alcatel's cumulative
purchases are less than [*] percent ([*]%) of the Minimum Purchase
(i.e. [*] percent ([*]%) of the XXX), then Alcatel shall pay to
Supplier an amount equal to [*] percent ([*]%) of the short-fall (each
a "Periodic Payment"); provided that if, at the end of the third
Period, the aggregate, cumulative purchases of Opto-electronic
Components during such three Periods is less than [*] percent ([*]%) of
the aggregate, cumulative XXX for all three Periods, Alcatel shall at
its election either: (i) pay the amount of such shortfall within [*]
after Supplier's invoice therefor or (ii) make up such shortfall in the
next succeeding Period upon mutual agreement between the parties to
extend the term of this Agreement for such an additional Period.
If the amount of Alcatel's cumulative purchases during any Period
(including excess amounts from prior Periods) exceeds the Minimum
Purchase, then the excess shall be included in the amount of purchases
made in the subsequent Period.
2.3 In the event Alcatel can demonstrate that Supplier (i) has [*] or (ii)
has [*] or (iii) has discontinued any Components previously purchased
by Alcatel and still requested by Alcatel, then the purchase of those
Components by Alcatel, its Affiliated Companies, CMs and LSPs from
third parties will be deemed purchased from Supplier and shall be taken
into account in determining Alcatel's fulfillment of the purchase
obligation set forth in this Article 2; provided that with respect to
[*].
[*] Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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2.4 In the event Supplier has discontinued a Component and Alcatel still
desires to purchase such Component as contemplated under subsection
2.3(iii) above, Alcatel's purchase of such Component from a third party
supplier shall count towards fulfillment of the Minimum Purchase in an
amount equal to Supplier's invoice price to Alcatel for the relevant
Component, multiplied by the number of such Components purchased by
Alcatel from the third party supplier.
2.5 Sale of Business
2.5.1 Subject to Supplier's obligations under Section 4.5, in the event of
any (i) change in the ownership of the voting shares of Supplier,
resulting in the ownership of more than 50% of such voting shares by an
Alcatel Competitor, (ii) merger of Supplier with an Alcatel Competitor,
or (iii) sale of 50% or more of the assets or the business of Supplier
to an Alcatel Competitor, then this Agreement shall terminate on notice
from Alcatel to Supplier.
2.5.2 In the event of the sale or transfer by Supplier of a specific product
line that includes at least one commercially released product purchased
under this Agreement to a third party, then products of such product
line shall not be required to be purchased by Alcatel hereunder, or
included in the XXX or the Minimum Purchase obligation.
2.5.3 If, during the term of this Agreement, Alcatel or an Alcatel Affiliated
Company intends to sell all or any part of a product line which uses
Components, or a portion of its or their business, to a third party
buyer, Alcatel shall notify Supplier of such intended sale as soon as
is reasonably practicable and Alcatel shall provide for the valid
assignment or replication of all rights and obligations under this
Agreement related to the product line or business being sold, provided
that Alcatel shall not have any joint and several liability with such
third party to Supplier arising after the date of such assignment or
replication.
2.6 If during the term of this Agreement,
(i) Supplier ceases substantially all performance of its material
obligations under this Agreement, or ceases substantially all
of the manufacture and sale of any Components;
(ii) Supplier shall commence any case, proceeding or other action
seeking to have an order for relief entered on its behalf as
debtor or to adjudicate it a bankrupt or insolvent, or seeking
reorganization arrangement, adjustment, liquidation,
dissolution or composition of it or its debts under any law
relating to bankruptcy, insolvency,
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reorganization or relief of debtors or seeking appointment of
a receiver, trustee, custodian or other similar official for
it or for all or any substantial part of its property or shall
file an answer or other pleading in any case, proceeding or
other action admitting the material allegations of any
petition, complaint or similar pleading filed against it or
consenting to the relief sought therein; or
(iii) Any involuntary case, proceeding or other action against
Supplier shall be commenced seeking to have an order for
relief entered against it as debtor or to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, liquidation, dissolution or composition of it or
its debts under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, or seeking appointment of
a receiver, trustee, custodian or other similar official for
it or for all or any substantial part of its property, and
such case, proceeding or other action is not dismissed within
thirty (30) days;
then, on immediate, written notice to Supplier (a) in any case or proceeding
described under clauses (ii) or (iii) involving a petition or case under the
U.S. Bankruptcy Code, if (A) Supplier has "rejected" this Agreement as such term
is understood under the U.S. Bankruptcy Code, or its equivalent under any other
applicable bankruptcy or creditor laws under which such proceedings are
commenced, or (B) Supplier seeks requisite approvals to commence actions for, or
likely to result in, the liquidation of substantially all of Supplier's assets,
then, notwithstanding Supplier's continued performance of this Agreement in
accordance with its terms, Alcatel may [*] or (b) in any other case described
above, Alcatel may [*]. Notwithstanding the foregoing, if clauses (ii) or (iii)
above are applicable, then within five (5) business days following a written
request by Alcatel, Supplier shall file a motion to "assume" the Agreement
(including the cure of any default then existing hereunder and demonstration of
adequate assurance of future performance) pursuant to 11 U.S.C. Section 365(a),
and shall use its reasonable best efforts to cause the court to enter an order
granting such relief not later than thirty (30) days following the filing of
such motion. Without in any manner limiting or waiving Supplier's obligations
contained in the preceding sentence, if Supplier fails to comply with such
obligations, then in recognition of Alcatel's need under such circumstances to
promptly obtain appropriate assurances of Supplier's ability to perform
hereunder, which need for such assurances Supplier acknowledges, then Alcatel
shall, without limiting all of its rights under the U.S. Bankruptcy Code or the
applicable law, have the right to request expedited consideration of a motion
authorizing and directing Supplier's immediate assumption of the
[*] Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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Agreement pursuant to 11 U.S.C. Section 365(a) or seeking such other relief as
may be appropriate under the circumstances, and Supplier shall consent to, and
not contest, the entry of an order granting such relief to Alcatel.
2.7 The Parties hereby agree and acknowledge that Alcatel's payment as set
forth under section 2.2 shall constitute the sole rights and remedies
of Supplier to Alcatel regarding its obligation to make the Minimum
Purchase for any Period, exclusive of any other compensation
whatsoever.
Article 3 Research and Development
3.1 During the term of the Agreement, Alcatel will communicate to Supplier
its vision and strategic directions for future applications and
evolution of its future optical components requirements. Alcatel will
also communicate to Supplier, on a preferred supplier basis, any
request for information ("RFI") or quotation ("RFQ"). Supplier will
communicate to Alcatel its vision and strategic directions in the field
of optical technologies and/or components.
The Parties will jointly identify new strategic design and
opportunities of collaboration in the areas of interest for both
Parties. Consequently Supplier will make reasonable efforts to develop
such products and/or technologies to fit Alcatel's needs, as are
discussed in the Steering Committee, and mutually agreed between the
Parties.
Nothing in this Section 3.1 shall be deemed to require either party to
(i) disclose any Confidential Information of such party, or (ii) to
accept any Confidential Information of the other party, in each case
with respect to strategic directions, applications or opportunities.
Supplier shall be the preferred supplier of Alcatel and Alcatel
Affiliated Companies for any new design of Components.
3.2 Subject to other applicable agreements with any third Party, Supplier
will give to Alcatel early access to new technologies and products, and
Alcatel will evaluate and provide Supplier with evaluation results of
new Supplier technologies and/or products, as discussed in the Steering
Committee, and as mutually agreed between the parties.
3.3 For any new designs mutually agreed to in writing by the parties,
Supplier shall use reasonable efforts to offer to Alcatel and Alcatel
Affiliated Companies short prototyping manufacturing cycle time.
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3.4 [*]
Article 4 Guaranty of supply and price
4.1 With respect to those Components a complete list of which is set forth
in Exhibit 1A hereto, the Parties agree as follows :
(i) Supplier will secure for Alcatel and its Affiliated Companies
the manufacturing capability of the Components listed in
Exhibit 1A during the term of this Agreement;
(ii) Supplier will sell and deliver to Alcatel and/or its
Affiliated Companies, in accordance with Alcatel needs, the
Components listed in Exhibit 1A during the term of this
Agreement;
(iii) Supplier will not [*] without the prior written consent of
Alcatel and/or its Affiliated Companies, which shall not be
unreasonably withheld;
(iv) Supplier will not [*] during the term of this Agreement.
(v) In case discontinuance of a Component is due to a third party
component phase out, Supplier will use its best efforts to
maintain product availability. Each party hereby acknowledges
and agrees that any increase or decrease in the price of the
relevant Component based on such procurement shall be
reflected and cause an adjustment to the prices for the
relevant Component as set forth in Exhibit 1A.
4.2 In case Alcatel and/or its Affiliated Companies reasonably require
technical modification to any Components listed in Exhibit 1, Supplier
and Alcatel shall agree to such technical modification pursuant to a
mutually executed engineering change order ("ECO").
4.3 Subject to Section 4.1(v), Supplier will sell to Alcatel and/or the
Affiliated Companies of Alcatel, and Alcatel and/or the Affiliated
Companies of Alcatel will purchase, the Components listed in Exhibit 1
hereto at prices which will not exceed the prices indicated in Exhibit
1, provided volumes are consistent with volumes purchased prior to the
date of this Agreement.
[*] Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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4.4 Supplier hereby grants Alcatel and its Affiliated Companies a
preferential customer status [*].
4.5 If Supplier sells all or part of the Assets as defined in 2.5 above to
any third party during the term of this Agreement, then Supplier
undertakes to condition such sale of Assets on the acquiring third
party agreeing to be bound by the same obligations as those set forth
in this article 4, provided that Supplier shall not have any joint and
several liability with such third party to Alcatel arising after the
date of such assignment or replication.
Article 5 Terms and conditions of purchase
The terms and conditions of purchase shall be those set forth in the
frame purchase agreement attached as Exhibit 2. In the event of any
contradictions between the terms and conditions of this Agreement and
the frame purchase agreement, the terms and conditions of this
Agreement shall prevail.
Article 6 Steering Committee
6.1 As soon as practicable after the effective date of this Agreement, the
Parties shall establish a Steering Committee to monitor the performance
of this Agreement and to discuss future product strategy.
6.2 The Steering Committee shall be composed of an equal number of
representatives of Alcatel and Supplier. The representatives will be
appointed among senior executives of each party, and the parties will
appoint the first members of the steering committee as soon as
practicable after the Share Acquisition Closing.
6.3 The Steering Committee will meet at least quarterly (or whenever
necessary as may be mutually agreed between the Parties) in Alcatel or
Supplier premises.
6.4 The Steering Committee shall not have any authority to take binding
decisions on behalf of either Party or to represent or bind the
Parties, including but not limited to dealings with any third parties.
All decisions of the Steering Committee will be taken on the basis of
mutual agreement.
[*] Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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Article 7 Term
This Agreement shall take effect at the "Share Acquisition Closing" as
such term is defined in the Share Acquisition and Asset Purchase
Agreement (the "Effective Date") and shall continue for a term of three
(3) years after the Share Acquisition Closing.
Article 8 Applicable Law - settlement of dispute
This Agreement shall be governed by the laws of France. Any dispute
arising out of this Agreement shall be finally settled under the Rules
of Conciliation and Arbitration of the International Chamber of
Commerce by three (3) arbitrators appointed in accordance with said
Rules, New York City, New York. The arbitration, agreements, evidence
and any other materials used by either party in the course of making
their case before such arbitrators will be in the English language.
Article 9 Miscellaneous
This Agreement and the Exhibits and the Share Acquisition and Asset
Purchase Agreement, and any and all attachments thereto, embody the
entire understanding of the Parties relating to the subject matter
hereof and supersede any prior oral or written agreement, materials,
communications or other understandings between the Parties
In case of discrepancies between this Agreement and its Exhibits, this
Agreement shall prevail
No amendment shall be valid and binding upon the Parties unless it is
made in writing and signed by their respective duly authorized
representatives.
This Agreement is, and shall otherwise be deemed to be, an agreement
"supplementary to" the Intellectual Property Licensing Agreement
between Alcatel and Supplier.
Article 10 Assignment
Neither Party shall be permitted to assign this Agreement or any rights
or obligations herein (by operation of law or otherwise) without the
prior written consent of the other Party, and any such attempted
assignment shall be void; provided, however, subject to the other
provisions of this Agreement, that either Party may assign this
Agreement in its entirety and
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all of its associated rights and obligations without such consent in
connection with the sale of all or substantially all of the business to
which this Agreement relates. Without limiting the foregoing, this
Agreement shall be binding upon and inure to the benefit of the Parties
and their respective successors and permitted assigns.
IN WITNESS WHEREOF, the Parties duly represented have signed this Agreement in
two (2) original copies
FOR ALCATEL
/s/
FOR SUPPLIER
/s/
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EXHIBIT 1
EXHIBIT 1A - SOLE SOURCE (*) OR SUBMARINE (**)
ALCATEL CODE A. OPTRONICS PN FAMILY DESCRIPTION CURRENCY 2003 PRICE NOTE
1AB091420004 3CN00077AA A 1901 OFA [*] EUR [*] (*)
1AB165030005 3CN00365AA A 1926 OFA [*] EUR [*] (*)
155-2659-0xx FBG-xxx-R95-S0.15-AO1 A 1901 RBF [*] USD [*] (*)
1AB175880001 3CN00395AB A 1948 MPM [*] EUR [*] (*)
1AB1700470 3CN00488XX A 1905 LMI [*] EUR [*] (**)
1AB1515900 3CN00490XX A 1905 LMI [*] EUR [*] (**)
1AB156030002 3CN00366AA A 1901 OFA [*] EUR [*] (**)
1AB156030001 3CN00363AA A 1901 OFA [*] EUR [*] (**)
1AB169210001 3CN00476AA A 1901 OFA [*] EUR [*] (**)
1AB186310001 3CN00670AB A 1901 OFA [*] EUR [*] (**)
1AB170480003 3CN00537AA A 1901 OFA [*] EUR [*] (**)
1AB162580003 3CN00352TB A 1948 FBG [*] EUR [*] (**)
29 CLS 0000 8AAC 3CN00067AA A 1948 PLM [*] EUR [*] (**)
1AB144310003 3CN00207BD A 0000 XXX [*] EUR [*] (**)
EXHIBIT 1B
1AB071630007 3CN00431KW A 1915 LMI [*] EUR [*]
1AB091410001 3CN00001AA A 1901 OFA [*] EUR [*]
1AB091420001 3CN00001AB A 1901 OFA [*] EUR [*]
1AB091420003 3CN00066AA A 1901 OFA [*] EUR [*]
1AB1390900X 3CN00149XX A 1916 LMM [*] EUR [*]
1AB1391000X 3CN00397XX A 1916 LMM [*] EUR [*]
1AB141790001 3CN00294AA A 1925 OFA [*] EUR [*]
1AB144310001 3CN 00207 FC A 1948 PLI [*] EUR [*]
1AB144310004 3CN 00207 FT A 0000 XXX [*] EUR [*]
1AB157300001 3CN 00328 AB A 1926 SDH [*] USD [*]
1AB157320003 3CN 00336 BB A 1926 SDH [*] USD [*]
1AB157320005 3CN 00336 DM A 1926 SDH [*] EUR [*]
1AB157320010 3CN00582AM A 1926 SDH [*] EUR [*]
1AB165030001 3CN 00000 XX A 1926 OFA [*] EUR [*]
1AB165030002 3CN00402AB A 1936 OFA [*] EUR [*]
1AB165030006 3CN00604AA A 1901 0AM [*] EUR [*]
1AB165030007 3CN00605AA A 1901 0AM [*] EUR [*]
1AB165570003 3CN00390AA A 1906 OFA [*] EUR [*]
1AB165570004 3CN00389AA A 1906 OFA [*] EUR [*]
1AB165570005 3CN00391AA A 1906 OFA [*] EUR [*]
1AB1660900xx 3CN00505XX A 1901 RBF [*] EUR [*]
1AB1714300xx 3CN 00624 XX A 1926 SDH [*] EUR [*]
1AB174720001 3CN00465AA A 1907 OFA [*] EUR [*]
1AB18212000X 3CN00744XX A 1926 SDH [*] EUR [*]
1AB186390001 3CN00392AA A 1907 OFA [*] EUR [*]
999197619 3CN00638XX A 1965 SDH [*] EUR [*]
999197742 3CN00593AA A 1901 0AM [*] EUR [*]
999197743 3CN00594AA A 1901 0AM [*] EUR [*]
1AB146670001 3CN00299KW A 1915 LMI [*] EUR [*]
1AB157300002 3CN00328AM A 1926 SDH [*] EUR [*]
999... 3CN00532AA A 1964 TRX [*] EUR [*]
3AL79498XXXX 3CN00625XX A 1964 SDH [*] EUR [*]
3AL79515AA 3CN00626AA A 1964 SDH [*] EUR [*]
487166267 3CN00573AA A 1964 SDH [*] EUR [*]
487166269 3CN00574AA A 1964 SDH [*] EUR [*]
487166268 3CN00755AA A 1964 SDH [*] EUR [*]
487156949 3CN00756AA A 1964 SDH [*] EUR [*]
999197804 3CN00652AX A 1964 MRX [*] EUR [*]
999... TBD A 1915 LMM [*] EUR [*]
99919782X 3CN0079OXX A 1935 TLS [*] EUR [*]
999197750 3CN00702AG A 1921 OAC [*] EUR [*]
999197802 3CN00703AG A 1926 OAC [*] EUR [*]
999... 3CN00704AG A 1926 OAC [*] EUR [*]
1AB189320001-24 3CN00746AX A 1908 AWC [*] EUR [*]
1AB189330001-12 3CN00747AX A 1910 AWC [*] EUR [*]
1AB189350001-12 3CN00748AX A 1912 AWC [*] EUR [*]
1AB1417100X 3CN00643XX A 1905 LMI [*] EUR [*]
1AB146670004 3CN00299LW A 1915 LMI [*] USD [*]
1AB159410001 3CN00321AB A 1915 LMM [*] USD [*]
1AB1639400xx 3CN00410XX A 1905 LMI [*] USD [*]
[*] Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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EXHIBIT 1 C DCM
1AB151690008 [*] EUR [*]
1AB151690009 [*] EUR [*]
1AB151690010 [*] EUR [*]
1AB161690011 [*] EUR [*]
1AB161690012 [*] EUR [*]
[*] Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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EXHIBIT 2
FRAME PURCHASE AGREEMENT
[See Exhibit 10.8 to the Quarterly Report on Form 10-Q for the period ending
September 30, 2003.]
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