Exhibit 10.6

EQUIPMENT AND INVENTORY PURCHASE AGREEMENT

THIS EQUIPMENT AND INVENTORY PURCHASE AGREEMENT (“Agreement”) made and effective
this 19th day of March, 2012 (“Effective Date”) by and amongst :

 

(1) Oclaro Technology Ltd., a company organized under the laws of the United
Kingdom, having offices at Caswell Office, Towcester, Northamptonshire, NN12 8EQ
on behalf of itself and all of its Affiliates (collectively referred to as
“Oclaro”);

 

(2) Oclaro Technology (Shenzhen) Co., Ltd, (“Oclaro Shenzhen”),2 Phoenix Road,
Futian Free Trade Zone, Shenzhen, P.R.C. 518038

 

(3)

Venture Electronics (Shenzhen) Co., Ltd, (“Venture Shenzhen”) a company
incorporated in the People’s Republic of China, having its registered office at
2 Bin Lang Road, 5th Floor B/C Zone, Wei Guang Lian Logistics Building, Futian
District Free Trade Zone, Shenzhen 518038; and

 

(4) Venture Electronics Services (M) Sdn Bhd (“Venture Penang”), a company
incorporated in Malaysia, having its registered office at Plot 44, Bayan Lepas,
Industrial Park IV, 11900, Penang, Malaysia

(collectively referred to as the “Parties”).

Definitions.

“Active Inventory” is raw materials or completed sub-assemblies that are
forecasted to be required for production within the next 180 days from the
Effective Date. Oclaro will continue to own or consign Inventory with no
forecasted demand within the next 180 days as set forth in Section 6 of the
Manufacturing and Purchase Agreement.

“Affiliate” means any parent, subsidiary or other entity controlled by,
controlling or under common control with, a party to this Agreement. For
purposes of this definition, the term “control” shall mean the ownership of
voting stock or other equity interest entitling the owner to exercise at least
fifty percent (50%) of the voting rights of the entity.

“Appraised Value” shall have the meaning set out in Section 2.1.2.b.

“Common Equipment” means equipment that is generally available in the industry
and does not contain any Oclaro intellectual property in its base state and
includes equipment currently owned by Oclaro and located in Shenzhen, Zurich and
Sanmina Texas.

“Custom Equipment” means equipment that the Parties mutually agree is not
generally useable by other customers in the optical or electronics industries.

“Equipment Value” has the meaning set out in Section 2.1.

“Flight 1 Inventory” means raw material and completed sub-assemblies required to
manufacture and assemble products that are part of Flight 1 as set forth in a
Statement of Work under the Manufacturing and Purchase Agreement.

“Manufacturing and Purchase Agreement” means the manufacturing agreement of even
date by and between Oclaro Technology Ltd. for itself and its Affiliates, and
Venture Corporation Ltd for itself and its Affiliates.

“Net Book Value” means the net value as set forth on Oclaro’s books in
accordance with US GAAP, as of the most recent fiscal quarter prior to the
physical transfer of the Common Equipment.

“Restricted Equipment” means equipment that contains Oclaro intellectual
property in its base state or as a result of unique combinations of equipment
and processes or is identified as Restricted Equipment by Oclaro in its sole
discretion. Oclaro will continue to own Restricted Equipment and consign
Restricted Equipment to Venture Penang for the sole purpose of manufacturing
Oclaro products.

 

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EQUIPMENT AND INVENTORY PURCHASE AGREEMENT

 

“Supplemental Inventory” means the additional $2.5 million in inventory to be
transferred from Oclaro to Venture Penang in accordance with Section 2.5 below.

“Transition Period” means the period beginning on the Effective Date and ending
when the final piece of Common Equipment, Custom Equipment and Restricted
Equipment associated with the Flight Plans is transferred to Venture Penang.

“$” means US Dollars.

Capitalized terms not defined in this Agreement shall have the same meaning as
the terms defined in the Manufacturing and Purchase Agreement of even date.
References to Exhibits shall be references to Exhibits in the Manufacturing and
Purchase Agreement.

 

1. Term

The initial term of this Agreement commences on the Effective Date and shall
terminate upon the termination of the Manufacturing and Purchase Agreement. The
Parties may extend the term upon mutual agreement.

 

2.0 Venture Purchase of Equipment and Inventory.

 

2.1 Equipment Value

 

2.1.1 For Common Equipment in serviceable condition which are less than four
(4) years old at the time of shipment, the Equipment Value shall be the Net Book
Value.

 

2.1.2 (a) Common Equipment which are more than four (4) years old at the time of
shipment will be categorized into two categories, Category A shall comprise
Common Equipment which are between four (4) to six (6) years old and Category B
shall comprise Common Equipment which are more than six (6) years old. Within
each Category the Common Equipment shall be sub-categorized according to
functionality of the Common Equipment.

(b) The Equipment Value for the Category A and B Common Equipment shall be the
fair market value as determined by a mutually appointed equipment appraiser, the
costs of which shall be borne equally by the Parties. To determine the fair
market value for each sub-category, the appointed appraiser shall appraise one
or more Common Equipment within each sub-category, which is/are representative
of that sub-category. The fair market value shall be expressed as a percentage
of the original purchase price for that equipment (“Appraised Value”). The fair
market value of all Common Equipment within that same sub-category shall be
determined applying the Appraised Value.

 

2.1.3 The first appraisal will be conducted within 30 days of the Effective Date
for the Common Equipment mutually identified to be transferred to Venture
Penang, within the next 12 to 15 months of the Effective Date. A second
appraisal will be conducted 12 months from the date of the first appraisal for
the remaining Common Equipment mutually identified to be transferred to Approved
Manufacturing and Product Development Location.

 

2.1.4 If Oclaro disagrees with the fair market value of any Common Equipment
determined by the appointed appraiser, Oclaro has the option of consigning that
Common Equipment to Approved Manufacturing and Product Development Location
instead.

 

2.1.5 The value of any Common Equipment that does not appear on the current
asset lists but is necessary to manufacture the Products will be determined by
the procedure outlined in Section 2.1. In the event that the exact purchase date
cannot be determined, the equipment will be categorized as Category B equipment.

 

2.2 Common Equipment

 

2.2.1

Within 30 days from the Effective Date, the Parties will mutually identify $2.5
million of Common Equipment which Oclaro will transfer from its sites in Zurich
and Shenzhen to Venture Penang based upon the Equipment Value. Oclaro shall ship
the Common

 

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  Equipment to Venture Penang. Venture Penang shall pay Oclaro for the Common
Equipment within 35 days from the Effective Date for the Common Equipment from
Zurich and upon receipt in good condition of the Common Equipment from Shenzhen.
Title to the Common Equipment shall be transferred to Venture Penang upon
shipment or payment, whichever is the earlier.

 

2.2.2 At such other time, Parties may mutually identify Common Equipment which
Oclaro will transfer to Venture Penang and which Venture Penang shall purchase
based upon the Equipment Value.

 

2.2.3 A representative from each Party will be present at the packing of the
Common Equipment at Oclaro’s site and at the unpacking in the Approved
Manufacturing and Product Development Location.

 

2.3 Flight 1 Inventory

Within 30 days from the Effective Date, Parties will mutually identify a total
of $2.5 million of Flight 1 Inventory to be shipped to Venture Penang from
Oclaro’s sites in Zurich and Shenzhen. Venture Penang shall pay Oclaro for the
Flight 1 Inventory upon receipt of the Flight 1 Inventory. Title to the Flight 1
Inventory shall transfer upon shipment.

 

2.4 $7.5 million of Active Inventory

 

2.4.1 Within 30 days from the Effective Date, Parties will mutually identify a
total of $7.5 million of Active Inventory which Oclaro will physically transfer
to Venture Shenzhen. Venture Shenzhen will pay Oclaro $7.5 million for the
Active Inventory 30 days after the Effective Date or upon receipt of the Bill of
Lading naming Venture Shenzhen as consignee, whichever is the later.

 

2.4.2 In the event that Venture Shenzhen does not pay Oclaro, Venture Penang
shall pay the said sum to Oclaro on behalf of Venture Shenzhen. Upon receipt of
the said sum from Venture Penang, Oclaro shall authorize Venture Shenzhen to pay
the $7.5 million to Venture Penang and Oclaro shall have no further claims
against Venture Shenzhen for the said sum.

 

2.4.3 The Parties agree that title transfer will occur in Hong Kong between
Oclaro Technology, LTD and Venture Shenzhen.

 

2.4.4 Within 30 days of the Effective Date, Parties shall jointly develop a
process by which Active Inventory can be imported by Venture Shenzhen into the
Futian Free Trade Zone (“FFTZ”) and held by Venture Shenzhen’s location or
another location that is mutually agreed to by the Parties.

 

2.4.5 Oclaro Shenzhen will issue purchase orders for $1.5 million Active
Inventory plus an additional three (3) percent mark up as carrying cost, to
fulfill production requirements of Oclaro’s Shenzhen facility at intervals of 30
days, the first beginning 60 days after the Effective Date. Venture Shenzhen
will physically transfer Active Inventory to Oclaro’s Shenzhen facility and
invoice Oclaro Shenzhen for the Active Inventory. Subject to Section 2.7, the
credit and payment terms shall be 120 days for purchase orders issued within 3
months of the Effective Date and 105 days for the subsequent three (3) purchase
orders, calculated from the end of month of each buy-back. Oclaro shall pay
Venture Penang an administrative fee of $37,500 as set forth in Schedule C of
the Management Services Agreement.

 

2.4.6 Oclaro Shenzhen undertakes to settle all payments for the Active Inventory
within the credit and payment terms mentioned above or otherwise in accordance
with Section 2.7 below. A late payment interest of three (3) percent per annum
shall be imposed on the outstanding balance unpaid beginning from the date
payment is due and will continue to be charged on a daily basis until the full
settlement of the outstanding balance.

 

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EQUIPMENT AND INVENTORY PURCHASE AGREEMENT

 

 

2.5 $2.5 million Supplemental Inventory

On or before June 30th, 2012 or 3 months after Effective Date, whichever is
later and contingent on Flight schedule, Oclaro will transfer at least an
additional $2.5 million of Supplemental Inventory required to support Flight 1
production by Venture in Venture Penang. The Parties will mutually agree on the
best location to store and manage this inventory during the Transition Period.
Payment will be made by Venture Penang to Oclaro upon receipt of Supplemental
Inventory.

 

2.6 Unforeseen Delays

In the event of a delay beyond thirty (30) days through no fault of one of the
Parties, the Parties shall use reasonable commercial efforts to mitigate and end
such delay as soon as reasonably practicable.

 

2.7 Adjustment of Credit and Payment Terms for $7.5 million Active Inventory

The Parties recognize that during the Transition Period, Venture Penang may
purchase Additional Equipment pursuant to Section 3.1 and/or additional
inventory as necessary to support the production in Venture Penang.

If within 270 days from the Effective Date, Venture Penang has to acquire
additional equipment and/or inventory, then the payment terms referred to in
Section 2.4.5 will be adjusted such that Venture Shenzhen and Venture Penang’s
payments net of receipts do not exceed $15 million for Active Inventory, Common
Equipment, Supplemental Inventory, Flight 1 Inventory and the additional
equipment and inventory during that period.

If within 270 days from the Effective Date, Venture Penang and Venture
Shenzhen’s payments net of receipts are below or exceed $15 million for Active
Inventory, Common Equipment, Supplemental Inventory and Flight 1 Inventory
during that period, the payment terms referred to in Section 2.4.5 shall be
adjusted accordingly to ensure that the payments for the Active Inventory,
Common Equipment, Supplemental Inventory, Flight 1 Inventory and the additional
equipment and inventory purchased remains at $15 million.

 

3.0 Additional Equipment Purchases.

 

3.1 The Parties recognize that during the Transition Period, Oclaro may purchase
additional equipment that ultimately will be transferred to an Approved
Manufacturing location. The Parties agree that this additional equipment will be
categorized by mutual agreement into Common Equipment, Custom Equipment or
Restricted Equipment and, will be treated in accordance with the terms of this
Agreement and/or the Manufacturing and Purchase Agreement. Venture agrees to
purchase all Common Equipment required to manufacture the Products set forth in
the Manufacturing and Purchase Agreement.

 

3.2 During the Transition Period, and in accordance with the flight schedules,
the Parties will identify Custom Equipment and Restricted Equipment that will be
transferred to Venture Penang but will remain the property of Oclaro. Oclaro
will manage Custom Equipment and Restricted Equipment on a consignment basis per
the terms of the Manufacturing and Purchase Agreement. Where title to equipment
is transferred from Oclaro to Venture, but no physical transfer occurs, Venture
will consign such Common Equipment to Oclaro for use until physical transfer
occurs and Oclaro will manage these Common Equipment on the consignment terms
set forth in Section 7.4 below.

 

4.0 Use of Common Equipment for Venture’s other customers.

 

4.1 Venture may use Common Equipment for Venture’s other customers so long as no
Oclaro intellectual property is disclosed or used without Oclaro’s written
consent. Oclaro will be responsible for only the proportionate share of this
Common Equipment’s depreciation when such Common Equipment is also used or made
available for use by Venture’s other customers, per the terms of the
Manufacturing and Purchase Agreement.

 

4.2 From time to time, the Parties may mutually agree to convert Restricted
Equipment or Custom Equipment into Common Equipment. Venture will pay Oclaro the
Equipment Value by wire transfer at the time Oclaro transfers title and the
converted equipment will then be treated in accordance with the terms of this
agreement and/or the Manufacturing and Purchase Agreement.

 

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EQUIPMENT AND INVENTORY PURCHASE AGREEMENT

 

 

5.0 Oclaro Warranty.

 

5.1 Oclaro warrants that Oclaro holds, and will transfer, upon receipt of
payment, good and marketable title to the Flight 1 Inventory, Supplemental
Inventory, Active Inventory and Common Equipment, free and clear of any
encumbrances, including any encumbrance by Wells Fargo, liens, liabilities and
claims of any third parties.

 

5.2 Oclaro warrants that (i) the Common Equipment capable of being used for the
purposes for which they were designed and for the purposes of the Manufacturing
and Purchase Agreement, for which they are being acquired by Venture Penang;
(ii) the Common Equipment is in good operating condition and repair, subject
only to ordinary wear and tear and (iii) the Flight 1 Inventory, Supplemental
Inventory and Active Inventory shall be in substantially the same condition in
which it was received or has been repackaged consistent with the manner in which
it was received.

 

5.3 If any of the Active Inventory transferred to Venture is found to be
defective, Oclaro shall pursue all claims related to all defective or
nonconforming Active Inventory against the manufacturers. Oclaro shall have no
claims or demands for loss or damage against Venture Shenzhen in connection with
the defective or nonconforming Active Inventory.

 

5.4 If any of the Common Equipment is found defective after having been
transferred to Venture Penang, and any Common Equipment or part thereof are to
be repaired or replaced, Oclaro shall bear the costs and expense of such repair
or replacement. This shall be the sole remedy and Venture Penang shall have no
further claims against Oclaro in respect thereof.

 

5.5 Except as otherwise set forth herein, Oclaro offers no other warranties
express or implied.

 

6.0 Limitation Of Liability

 

6.1 NEITHER PARTY OR THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AND AGENTS
BE LIABLE FOR ANY INDIRECT, SPECIAL, PUNITIVE, EXEMPLARY, OR CONSEQUENTIAL
DAMAGES OF ANY KIND, INCLUDING BUT NOT LIMITED TO LOST PROFITS, WITH RESPECT TO
THIS AGREEMENT, EVEN IF THE PARTIES HAVE BEEN ADVISED OF THE POSSIBILITY OF THE
SAME OR EVEN IF SAME WERE REASONABLY FORESEEABLE.

 

6.2 The entire and aggregate liability of Oclaro for all claims by Venture
Penang and Venture Shenzhen in respect of the warranties set out in Section 5
above shall not exceed the total amounts paid by Venture Shenzhen or Venture
Penang to Oclaro and shall be further limited solely to direct damages.

 

6.3 The provisions of this Section apply whether the claim for damages arises a
result of contract, tort (including negligence), or any other statutory, legal
or equitable grounds.

 

7.0 Transfer of Common Equipment Warranties, Manuals etc

 

7.1. Together with the Common Equipment, Oclaro shall deliver to Venture all
available maintenance and repair records and warranty certificates.

 

7.2. Oclaro shall provide, where available, information regarding installation
procedures with the Common Equipment. Installation information shall include
plans for managing the installation process, logistical aspects of the
installations and storage or delivery requirements. The costs of, replacement of
any missing or parts damaged during transportation and transit shall be borne by
Oclaro.

 

7.3. Oclaro shall assign to Venture, Oclaro’s rights, title and interest in all
agreements between Oclaro and the manufacturers and suppliers of the Common
Equipment, any engines and any parts thereof, including any rights which may
have accrued prior to delivery but which have not fully been exercised by Oclaro
and agrees to give notice of such assignments to such manufacturers and
suppliers and to obtain their consents to such assignments.

 

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EQUIPMENT AND INVENTORY PURCHASE AGREEMENT

 

7.4. In respect of Common Equipment which will remain in the possession of
Oclaro:

 

7.4.1 Oclaro shall store such Common Equipment required for the manufacturing of
products free of charge in a place of storage that is safe and suitable for the
specific nature of the Common Equipment in accordance with industry standard
practice for the type of property stored and at a minimum meets any specified
storage conditions for the property, and undertakes never to hide, damage or
remove the identification plates on the Common Equipment. Oclaro shall ensure
that all of the Common Equipment shall be clearly identified as Venture Penang’s
property. Oclaro shall ensure that none of Common Equipment is seized by any
third party, whether pursuant to an order of court or otherwise, while in
Oclaro’s possession. Oclaro shall not allow any lien or encumbrance to be
created over or otherwise encumber the Common Equipment.

 

7.4.2 Oclaro shall take out insurance to adequately cover such Common Equipment,
and add Venture Penang as a loss payee with respect to the Common Equipment, at
Oclaro’s own cost, and give proof of such insurance to Venture Penang on
request.

 

8. Bill of Sale.

Upon receipt of payment, Oclaro agrees to provide Venture a bill of sale or
other instrument of transfer evidencing such transfer in any jurisdiction where
necessary to establish a sale has occurred.

 

9. Delivery, and Risk of Loss.

 

9.1 Equipment. Risk of loss shall pass upon delivery to Venture’s premises.
Delivery shall be Ex Works (INCOTERMS 2010), Hong Kong.

 

9.2 Inventory. Risk of loss shall transfer upon delivery. Delivery shall be DDP
(INCOTERMS 2010), Shenzhen or Penang (as applicable).

 

10. Transition From Shenzhen to Approved Manufacturing and Development Location

The Parties have entered into this Agreement on the basis that a Manufacturing
and Purchase Agreement related to the manufacture of the Transferred Products
would be entered into. In the event that any of the Flight Plans in Exhibit A-3
does not take place as envisaged and have been cancelled or delayed beyond a
mutually acceptable date, Parties shall take the following action :

(a) meet to review the extent of the Transferred Products which are affected by
the cancellation or delay and consequential effects; and

(b) Identify Common Equipment and inventory which Venture Penang and Venture
Shenzhen have purchased in accordance with the terms of this Agreement which are
associated with the Flight Plans which have been cancelled or delayed and Oclaro
shall acquire the Common Equipment and inventory so identified at Venture Penang
and Venture Shenzhen’s cost of acquisition.

 

11. General Terms.

 

11.1 Governing Law

This Agreement shall be construed, governed and interpreted in accordance with
the laws of the United States of America and the State of California, without
regard to choice of law principles. The U.N. Convention on Contracts for the
International Sale of Goods does not apply to this Agreement.

 

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EQUIPMENT AND INVENTORY PURCHASE AGREEMENT

 

11.2 Disputes

All disputes arising out of or relating to this Agreement will be resolved by in
accordance with the process established in Section 22 of the Manufacturing and
Purchase Agreement.

 

11.3 Miscellanous

The failure or delay of a party to insist on performance of any provision of
this Agreement, or to exercise any right or remedy available under this
Agreement, shall not be construed as a waiver of that or any other provision (or
any right or remedy with respect thereto) with respect to any failure or delay
that has or may later occur. If any provision of this Agreement is or becomes
void or unenforceable by operation of law, the remaining provisions shall be
valid and enforceable. No part of this Agreement may be assigned or
subcontracted by Venture without the prior written approval of Oclaro.

 

11.4 Change of Control

This Agreement shall inure to the benefit of, and be binding upon, the Parties
hereto and their respective successors and assigns. Venture may request that any
acquirer of all or substantially all of the assets of Oclaro provide written
confirmation of its obligations under this Agreement within thirty (30) days of
the closing of such acquisition.

 

11.5 Amendment

Any and all amendments, alterations, or additions to this Agreement must be in
writing and executed by the Parties. No modifications to this Agreement proposed
by a Party, or “riders” whether inserted in the page margins or attached on
separate pages, shall be binding on the other Party unless signed or initialed
by a duly authorized representative of the other Party.

 

11.6 Waiver

The failure of either Party at any time to require performance by the other
Party of any provision hereof will not affect in any way the right to require
such performance at any time thereafter. The waiver by either Party of a breach
of any provision hereof will not be taken or held by the other Party to be a
waiver of the provision itself unless such a waiver is expressed in writing.

 

11.7 Severability

Any provision in this Agreement which is held to be illegal or unenforceable in
any jurisdiction shall be ineffective to the extent of such illegality or
unenforceability without invalidating the remaining provisions and any such
illegal or unenforceable provision shall be deemed to be restated to reflect as
nearly as possible the original intentions of the Parties in accordance with
applicable law.

 

11.8 Survival

The provisions of this Agreement that would naturally survive termination shall
so survive.

 

11.9 Counterparts

This Agreement may be signed in counterparts, including but not limited to
facsimile or scanned versions of the full document, each of which shall be
deemed to be an original but all of which shall constitute an original and the
same instrument.

 

11.10 Entire Agreement

This Agreement, together with all valid attachments, exhibits, supplemental
sheets and riders, constitutes the entire understanding and agreement of the
Parties with respect to the subject matter hereof, and supersedes all prior or
contemporaneous communications, understandings, representations and agreement,
whether written or oral, with respect to such subject matter.

 

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EQUIPMENT AND INVENTORY PURCHASE AGREEMENT

 

IN WITNESS WHEREOF the Parties have executed this Agreement on the day and year
first above written.

 

Oclaro Technology, Ltd    Venture Electronics Services (M) Sdn Bhd Date   

 

   Date   

 

Signature   

 

   Signature   

 

Printed

Name

  

 

   Printed Name   

 

Title   

 

   Title   

 

Oclaro Technology (Shenzhen) Co., Ltd    Venture Electronics (Shenzhen) Co., Ltd
Date   

 

   Date   

 

Signature   

 

   Signature   

 

Printed Name   

 

   Printed Name   

 

Title   

 

   Title   

 

 

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