Document:

exv10w2

 

EXECUTION VERSION

Exhibit 10.2

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions.

NOTES AMENDMENT AND WAIVER AGREEMENT

     This Waiver Agreement (the “Agreement”) is entered into as of February 7, 2005, among
Bookham Technology plc, a public limited company incorporated under the laws of England and Wales
(“Bookham plc”), Bookham, Inc., a Delaware corporation (“Bookham, Inc.” and,
together with Bookham plc and its other subsidiaries whose names appear on the signature pages
hereto, the “Bookham Parties”), Nortel Networks UK Limited (“NNUKL”) and Nortel
Networks Corporation (“Nortel Networks”).

     WHEREAS, the parties to this Agreement are parties to a Restructuring Agreement (the
“Restructuring Agreement”), dated as of December 2, 2004;

     WHEREAS, Bookham plc has issued to NNUKL an amended and restated Series B-1 Senior Secured
Note, originally dated November 8, 2002, in aggregate principal amount of $30,000,000.00 (the
“Series B-1 Note”);

     WHEREAS, Bookham, Inc. has issued to NNUKL an amended and restated Series A-1 Senior Unsecured
Convertible Note, originally dated September 10, 2004, in the principal amount of $20,000,000.00
(the “Series A-2 Note”, together with the Series B-1 Note, the “Notes”);

     WHEREAS, Bookham, Inc. and the other Bookham Parties and NNUKL desire to further amend the
Notes as set forth herein;

     WHEREAS, Bookham, Inc. and certain of its subsidiaries and NNUKL are parties to an amended and
restated U.S. Security Agreement (the “U.S. Security Agreement”), dated as of December 2,
2004;

     WHEREAS, Bookham, Inc. and certain of its subsidiaries and Nortel Networks and certain of its
subsidiaries have entered into certain other security and other agreements and delivered certain
other documents in connection with the foregoing (all such agreements and documents, the
“Related Transaction Documents”);

     WHEREAS, pursuant to the Series B-1 Note, NNUKL has extended credit to Bookham plc and,
pursuant to the Series A-2 Note, NNUKL has extended credit to Bookham, Inc.; and

     WHEREAS, the Bookham Parties have requested that NNUKL agree to waive certain provisions of
the Notes pursuant to the terms and subject to the conditions set forth herein;

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     NOW THEREFORE, in consideration of the mutual premises hereinafter set forth and other good
and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto hereby
agree as follows:

     1. Amendment; Waiver; Further Actions. (a) Contemporaneously with the execution and
delivery of this Agreement, NNUKL hereby:

	 	(i)  	waives the application of Section 9(a)(vii) of the Series B-1
Note until the eighteen-month anniversary of the date hereof; and
	 
	 	(ii)  	waives the application of Section 9(a)(vi) of the Series A-2
Note until the eighteen-month anniversary of the date hereof.

          Except as specifically waived hereby, each of the Restructuring Agreement, the Notes, the U.S.
Security Agreement and the Related Transaction Documents shall continue in full force and effect in
accordance with the provisions thereof as in existence on the date hereof. After the date hereof,
any reference thereto shall mean any such document, as applicable, as modified hereby.

          (b) Contemporaneously with the execution and delivery of this Agreement, Bookham, Inc. and the
other Bookham Parties agree that the Notes are amended as follows:

	 	(i)  	The following new subsection (d) shall be inserted at the end
of Section 4 of the Series A-2 Note:
	 
	 	   	      “(d) Within two (2) Business Days after the occurrence of a
Supply-Related Prepayment Event (as defined below), the Borrower shall, upon
request of Lender, apply an amount equal to the Applicable Prepayment Amount
to prepay this Series A-2 Note and the Series B-1 Note on a pro rata basis
(based on their respective outstanding principal amounts) in cash by wire
transfer of immediately available funds.
	 
	 	(ii)  	The following new subsection (e) shall be inserted at the end
of Section 4 of the Series B-1 Note:
	 
	 	   	      “(e) Within two (2) Business Days after the occurrence of a
Supply-Related Prepayment Event (as defined below), the Borrower shall, upon
request of Lender, apply an amount equal to the Applicable Prepayment Amount
to prepay the Series A-2 Note and this Series B-1 Note on a pro rata basis
(based on their respective outstanding principal amounts) in cash by wire
transfer of immediately available funds.
	 
	 	(iii)  	The following new defined terms shall be inserted in
alphabetical order in Section 16 of each of the Notes:
	 
	 	   	      ““Addendum” means the Addendum to Optical Components Supply
Agreement dated as of the date hereof between Nortel Networks

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	 	   	Limited, a Canadian corporation, and Bookham Technology plc that amends
and supplements the Supply Agreement.”
	 
	 	   	      ““Applicable Prepayment Amount” means, with respect to each of
the Supply Related Prepayment Events set forth in the first column of the
table below (each as defined in Exhibit G to the Addendum), the
corresponding amount in dollars set forth in the second column of the table
below:

	 	 	 
	Supply Related Prepayment Event	 	Applicable Prepayment Amount
	First Prepayment Event
	 	$0.5 million
	Second Prepayment Event
	 	$1.0 million*
	Third Prepayment Event
	 	$1.0 million
	Fourth Prepayment Event
	 	$2.0 million
	Fifth Prepayment Event
	 	$1.0 million
	Sixth Prepayment Event
	 	$2.0 million
	Seventh Prepayment Event
	 	$1.0 million
	 

	*	 	The Applicable Prepayment Amount with respect to the Second
Prepayment Event shall be reduced to $0.5 million if the Applicable
Prepayment Amount with respect to the First Prepayment Event has been
applied to prepay the Series A-2 Note and/or the Series B-2 Notes as
required by their terms.”

	 	   	     ““Supply Agreement” means the Optical Components Supply
Agreement between Nortel Networks Limited, a Canadian corporation, and
Bookham Technology plc, effective as of November 8, 2002 (as amended,
modified or supplemented from time to time).”
	 
	 	   	      ““Supply-Related Prepayment Event” means any of the seven “Note
Prepayment Events” specified in Exhibit G to the Addendum.”

          (c) Each of the Bookham Parties (A) agrees that all references to the Notes contained in the
U.S. Security Agreement and the Related Transaction Documents and any filing or other documents
contemplated thereby shall mean the Notes as hereby amended and (B) agrees, and agrees to cause its
respective affiliates to, promptly execute and deliver any and all further agreements, instruments
and other documents, and to take any and all other actions, reasonably requested by NNUKL and
Nortel Networks to effect the purposes of this Agreement, including without limitation, executing
and delivering amended and restated notes, security agreements, deeds, mortgages, filings and other
documents.

     2. Representations and Warranties. The Bookham Parties hereby jointly represent and
warrant to NNUKL and Nortel Networks as follows:

          (a) Each Bookham Party is a corporation or legal entity duly organized and validly existing
under the laws of the jurisdiction of its organization and is duly qualified or licensed to do
business and is in good standing (if and to the extent such term is recognized in the relevant
jurisdiction) in each jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or licensing necessary,

3

 

except where the failure to so qualify would not reasonably be expected to result in damages
to the Bookham Parties of more than $1,000,000 in the aggregate.

          (b) Each Bookham Party has the requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as currently conducted and the requisite
corporate power and authority to enter into and perform this Agreement and all other agreements and
documents contemplated hereby (the “Additional Documents”) and to carry out the
transactions contemplated by this Agreement and the Additional Documents.

          (c) This Agreement has been, and the Additional Documents when executed will be, duly executed
and delivered by the applicable Bookham Party, and constitute valid and binding obligations of such
Bookham Party, enforceable in accordance with their respective terms, except that no such
representation and warranty is made herein with respect to the law of any jurisdiction outside of
the United States.

          (d) Other than (A) as set forth on Exhibit H to the Restructuring Agreement (B)
Indebtedness secured by purchase money security interests, (C) the Series A-2 Note, (D) the Series
B-1 Note, (E) $25,500,000 aggregate principal amount of 7.0% senior unsecured convertible
debentures issued by Bookham, Inc. on December 20, 2004 and (F) capitalized leases, letters of
credit, indemnity obligations and performance bonds not exceeding U.S.$2,000,000 in the aggregate,
the Bookham Parties do not have any Indebtedness. “Indebtedness” means any obligation in
respect of (i) borrowed money (excluding intercompany loans), (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) indemnity obligations or performance
bonds.

          (e) The execution and delivery of this Agreement and any Additional Documents have been duly
authorized by all requisite corporate action on the part of the Bookham Parties party hereto and
thereto, as the case may be.

          (f) Neither the execution or delivery by any Bookham Party of this Agreement, the consummation
of the transactions contemplated hereby, nor the compliance by the Bookham Parties 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 any Bookham Party;
(ii) conflict with, violate, or result in the breach by any Bookham Party 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 any Bookham
Party is a party or by which any Bookham Party or any of its assets is bound; or (iv) result in the
creation of any lien upon any of the assets of the Bookham Parties (other than the liens created
pursuant to the transactions contemplated hereby), 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 any Bookham Party.

4

 

          (g) 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 any Bookham Party 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 any Bookham Party.

          (h) As of the date hereof, other than Bookham (Canada), Inc. neither Bookham, Inc., nor any of
its subsidiaries owns, leases or operates any assets in Canada, except for any Intellectual
Property registered in Canada. The aggregate fair market value of the assets of Bookham, Inc. and
its subsidiaries in Canada does not exceed $[**] as of the date hereof. “Intellectual
Property” means trademarks, service marks, brand names, distinguishing guises, trade dress,
trade names, words, symbols, color schemes, business names, internet domain names and other
indications of origin, patents and pending patent applications, utility models, inventors’
certificates and invention disclosures

          (i) Bookham Technology (Shenzhen) (FFTZ) Co. Ltd. and New Focus Pacific (SHIP) Co. Ltd. are
the only entities organized under the laws of China in which Bookham, Inc. or any of its
subsidiaries holds an equity interest; and Bookham International Ltd. owns all the outstanding
equity interests of Bookham Technology (Shenzhen) (FFTZ) Co. Ltd. and New Focus Pacific (SHIP) Co.
Ltd. free and clear of all Liens.

          (j) Each Principal Subsidiary (as defined in the U.S. Security Agreement) of Bookham, Inc. is
a party to the U.S. Security Agreement and is a Guarantor (as defined in the Series A-2 Note) of
the obligations of Bookham, Inc. under the Series A-2 Note and the obligations of Bookham plc under
the Series B-1 Note and is a Pledgor Party under the U.S. Security Agreement or the Canadian
Security Agreement that is included among the Related Transaction Documents.

     3. Conditions to Effectiveness. This Agreement shall become effective as of the date
first above written when the parties to this Agreement shall have received executed and delivered
counterparts of this Agreement that, taken together, bear the signatures of each of the parties
hereto.

     4. Indemnification. Each of the Bookham Parties hereby agrees, jointly and severally,
to indemnify and hold harmless Nortel Networks and each of its affiliates and each of their
respective officers, directors, employees, agents, advisors and representatives (each, an
“Indemnified Party”) from and against any and all claims, damages, losses, liabilities and expenses
(including, without limitation, fees and disbursements of counsel), joint or several, that may be
incurred by or asserted or awarded against any Indemnified Party (including, without limitation, in
connection with any investigation, litigation or proceeding or the preparation of a defense in
connection therewith), in each case arising out of or in connection with or by reason of this
Agreement, the Restructuring Agreement, the Notes, the U.S. Security Agreement and the Related
Transaction Documents, or the transactions contemplated thereby or hereby, as applicable. In the
case of an investigation, litigation or other proceeding to which the indemnity

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in this paragraph applies, such indemnity shall be effective whether or not such investigation,
litigation or proceeding is brought by the any of the Bookham Parties, any of their directors,
security holders or creditors, an Indemnified Party or any other person or an Indemnified Party is
otherwise a party thereto and whether or not the transactions contemplated hereby are consummated.
In no event, however, shall any Bookham Party be liable on any theory of liability for any special,
indirect, consequential or punitive damages (including, without limitation, any loss of profits,
business or anticipated savings), it being understood that the foregoing limitation shall not apply
to any such damages of a third party that result in any claim against, damage to or loss, liability
or expense of an Indemnified Party.

          No Indemnified Party shall have any liability (whether in contract, tort or otherwise) to any
of the Bookham Parties or any of their respective affiliates, security holders or creditors for or
in connection with this Agreement, the Restructuring Agreement, the Notes, the U.S. Security
Agreement and the Related Transaction Documents, or the transactions contemplated thereby or
hereby, as applicable, except as set forth in the Supply Agreement and the Addendum. In no event,
however, shall any Indemnified Party be liable on any theory of liability for any special,
indirect, consequential or punitive damages (including, without limitation, any loss of profits,
business or anticipated savings).

     5. Miscellaneous.

          (a) 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.

          (b) 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 all of
the parties to this Agreement.

          (c) 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).

          (d) 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:

               (i) If to any Bookham Party, at Bookham Technology plc, Caswell Towcester, Northamptonshire
NN12 8EQ, United Kingdom, Attention: Corporate Secretary, with a copy to Thomas S. Ward, Esq.,
Wilmer Cutler Pickering Hale and Dorr LLP, 60 State Street, Boston, MA 02109; and

6

 

               (ii) If to NNUKL or Nortel Networks, at Nortel Networks Corporation, 8200 Dixie Road,
Brampton, ON L6T 5P6, Canada, Attention: Secretary, with a copy to Robert Fishman, Nortel Networks
Corporation, 2221 Lakeside Boulevard, Mail Stop 991-14-B40, Richardson, TX 75082-4399.

               (iii) 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 3(d).

          (e) Entire Agreement. This Agreement and the exhibits hereto together with any other
agreement referred to herein constitute the entire agreement among the parties with respect to the
subject matter hereof.

          (f) Severability. The invalidity or unenforceability of any provision hereof shall in
no way affect the validity or enforceability of any other provision.

          (g) 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.

          (h) Expenses. Bookham, Inc. shall pay Nortel Networks or its designee a fee in cash
equal to [**] Dollars ($[**]) (it being understood that Nortel Networks and its subsidiaries shall
not be entitled to any additional reimbursement for any fees and disbursements of external legal
counsel to NNUKL and Nortel Networks in connection with the preparation, negotiation, execution and
delivery of this Agreement) within five (5) business days of the date of the Agreement. Except as
otherwise expressly set forth in this Agreement, each party shall otherwise bear all of its own
expenses incurred in connection with the transactions contemplated hereby.

* * * * *

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          IN WITNESS WHEREOF, this Restructuring Agreement has been executed by the parties hereto as of
the day and year first written above.

	 	 	 	 	 
	 	 	BOOKHAM TECHNOLOGY PLC
	 
	 	 	 	 
	

	 	By:	 	/s/ Stephen M. Abely
	

	 	 	 	 
	

	 	Name:	 	Stephen M. Abely
	

	 	 	 	 
	

	 	Title:	 	Director
	

	 	 	 	 
	 
	 	 	 	 
	 	 	BOOKHAM, INC.
	 
	 	 	 	 
	

	 	By:	 	/s/ Stephen M. Abely
	

	 	 	 	 
	

	 	Name:	 	Stephen M. Abely
	

	 	 	 	 
	

	 	Title:	 	Chief Financial Officer
	

	 	 	 	 
	 
	 	 	 	 
	 	 	NEW FOCUS, INC.
	 
	 	 	 	 
	

	 	By:	 	/s/ Stephen M. Abely
	

	 	 	 	 
	

	 	Name:	 	Stephen M. Abely
	

	 	 	 	 
	

	 	Title:	 	President
	

	 	 	 	 
	 
	 	 	 	 
	 	 	ONETTA, INC.
	 
	 	 	 	 
	

	 	By:	 	/s/ Thomas Kelley
	

	 	 	 	 
	

	 	Name:	 	Thomas Kelley
	

	 	 	 	 
	

	 	Title:	 	Corporate Secretary
	

	 	 	 	 
	 
	 	 	 	 
	 	 	IGNIS OPTICS, INC.
	 
	 	 	 	 
	

	 	By:	 	/s/ Stephen M. Abely
	

	 	 	 	 
	

	 	Name:	 	Stephen M. Abely
	

	 	 	 	 
	

	 	Title:	 	President
	

	 	 	 	 

[NOTES AMENDMENT AND WAIVER AGREEMENT]

8

 

	 	 	 	 	 
	 	 	BOOKHAM (CANADA), INC.
	 
	 	 	 	 
	

	 	By:	 	/s/ Thomas Kelley
	

	 	 	 	 
	

	 	Name:	 	Thomas Kelley
	

	 	 	 	 
	

	 	Title:	 	Corporate Secretary
	

	 	 	 	 
	 
	 	 	 	 
	 	 	BOOKHAM (SWITZERLAND) AG
	 
	 	 	 	 
	

	 	By:	 	/s/ Steve M. Abely
	

	 	 	 	 
	

	 	Name:	 	Steve M. Abely
	

	 	 	 	 
	

	 	Title:	 	Director and President
	

	 	 	 	 

[NOTES AMENDMENT AND WAIVER AGREEMENT]

9

 

	 	 	 	 	 
	 	 	NORTEL NETWORKS UK LIMITED
	 
	 	 	 	 
	

	 	By:	 	/s/ Christian Waida
	

	 	 	 	 
	

	 	Name:	 	Christian Waida
	

	 	 	 	 
	

	 	Title:	 	Director
	

	 	 	 	 
	 
	 	 	 	 
	 	 	NORTEL NETWORKS CORPORATION
	 
	 	 	 	 
	

	 	By:	 	/s/ Khush Dadyburtor
	

	 	 	 	 
	

	 	Name:	 	Khush Dadyburtor
	

	 	 	 	 
	

	 	Title:	 	V.P. Mergers & Acquisitions
	

	 	 	 	 
	 
	 	 	 	 
	

	 	By:	 	/s/ Gordon A. Davies
	

	 	 	 	 
	

	 	Name:	 	Gordon A. Davies
	

	 	 	 	 
	

	 	Title:	 	Corporate Secretary
	

	 	 	 	 

[NOTES AMENDMENT AND WAIVER AGREEMENT]

10exv10w3

 

Exhibit 10.3

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions.

March 24, 2005

Mr. Steve Abely, CFO

Bookham, Inc.

1-10 Brewer Hunt Way

Ottawa, Ontario

Canada

     You have requested that Nortel Networks Limited (“Nortel”) provide certain commercial
accommodations to Bookham, Inc. (“Bookham”) in connection with certain agreements between
Nortel and its affiliates and Bookham and its affiliates, including:

	 	•  	The Restructuring Agreement entered into as of December 2, 2004, among Bookham
Technology plc, Bookham, Inc., Bookham plc and its other subsidiaries whose names appear
on the signature pages, Nortel Networks UK Limited and Nortel Networks Corporation, as
amended (the “Restructuring Agreement”)
	 
	 	•  	Series A-2 Senior Secured Note Due 2007 U.S.$20,000,000 September 10, 2004 executed by
BOOKHAM, INC., BOOKHAM TECHNOLOGY PLC, NEW FOCUS, INC., ONETTA, INC., BOOKHAM (US) INC.,
BOOKHAM (CANADA), INC., BOOKHAM (SWITZERLAND) AG, IGNIS OPTICS, INC.

and

Series B-1 Senior Secured Note Due 2006 U.S.$30,000,000.00 November 8, 2002 executed by
BOOKHAM TECHNOLOGY PLC, NEW FOCUS, INC., ONETTA, INC., BOOKHAM (US) INC., BOOKHAM (CANADA)
INC., BOOKHAM (SWITZERLAND) AG, IGNIS OPTICS, INC., BOOKHAM, INC.

(together the “Senior Secured Notes”)

The Restructuring Agreement, the Senior Secured Notes, the security agreements entered into
pursuant thereto and in connection therewith (the “Security Agreements”) and the other
agreements and documents delivered pursuant thereto together are referred to hereinafter as the
“Senior Note Documents”.

	 	•  	Optical Components Supply Agreement between Bookham Technology plc and Nortel Networks
Limited with Nortel Networks Agreement No. 011634, as amended (the “Supply
Agreement”).

 

 

Nortel is prepared to make certain of the requested accommodations available to Bookham on the
terms and subject to the conditions contained herein (the “Proposal”).

1. The Supply Agreement will be amended to provide that, for the twelve (12) month period beginning
April 1, 2005 (the “Effective Date”), the due date for payments by Nortel to Bookham under the
Supply Agreement for product delivered during such 12-month term will be [**] calendar days
following receipt by Nortel of the invoice to [**] calendar days (paid via wire transfer or in a
similar manner) following receipt by Nortel of the invoice. For the avoidance of doubt, the
foregoing does not allow Bookham to accelerate the issuance of invoices. The reduction of payment
terms referenced in this paragraph will automatically expire upon the occurrence of an Expiration
Event (defined below).

2. The Supply Agreement will also be amended to provide a price increase of [**]% on Last Time Buys
(as such term is defined in the Supply Agreement Addendum dated February 7, 2005) and a price
increase of [**]% on all other products purchased under the Supply Agreement, such price increases
to remain in effect for no longer than twelve (12) months from the Effective Date. The price
increases will apply to the prices in effect immediately prior to the Effective Date, and Nortel
and Bookham will agree to a schedule which will set out the price increases by part and such
schedule will be included in the written amendment to the Supply Agreement. Following such twelve
(12) months (or shorter in the event that an Expiration Event occurs) time period, prices will
return to those in effect under the Supply Agreement immediately prior to the Effective Date. The
price increases referenced in this paragraph will automatically expire upon the occurrence of an
Expiration Event.

The parties agree to work together to create a process which is acceptable to Nortel’s and
Bookham’s auditors and finance department for implementing the above price increases.

3. Nortel will or will instruct its contract manufacturer to, no later than fifteen (15) business
days after the Effective Date, issue non-cancelable purchase orders for all products Nortel
estimates it will require for:

	 	(i)  	eight (8) months against its twelve (12) month forecast current at April 1,
2005 for products other than Last Time Buys; and
	 
	 	(ii)  	one hundred percent (100%) of the value of the Last Time Buys.

((i) and (ii) collectively the “Accelerated Purchase Orders”). However, the foregoing will not
prevent Nortel from issuing additional purchase orders in Nortel’s discretion. The product mix to
be delivered by Bookham pursuant to the Accelerated Purchase Orders will be determined
on a monthly basis by Nortel and Bookham and will be in agreement with the Supply Agreement
Addendum dated February 7, 2005. In no event will such Accelerated Purchase Orders be
transferable or assignable by Bookham. The Accelerated Purchase Orders will
automatically expire upon the occurrence of an Expiration Event.

 

 

4. The Supply Agreement shall be amended to provide that it is not assignable or transferable
without the express written consent of Nortel, which consent may be withheld by Nortel in its sole
discretion, and that any attempted assignment or transfer in violation of such provision shall be
void.

The Supply Agreement to the extent not inconsistent with the terms and conditions of this Proposal
and any definitive documentation evidencing the transactions contemplated herein (the “Definitive
Documentation”) will govern purchase orders and the following provisions will have no force or
effect as at the Effective Date (i) any click-wrap or shrink-wrap terms and conditions (or any
terms and conditions referenced within any click-wrap or shrink-wrap terms), (ii) any purchase
order or standard acknowledgement form terms and conditions.

5. The provisions of the Senior Secured Notes which require prepayments in the event Bookham raises
additional capital will be modified on a temporary basis such that no prepayments will be required
from the proceeds of additional capital raised by Bookham (whether debt or equity) from the
Effective Date through the first anniversary thereof except and to the extent that such proceeds in
the aggregate, during such period exceed US$75 million. No proceeds of any such additional capital
shall be used to retire, redeem, prepay, or repay any other debt of Bookham, but shall instead be
used for working capital in the ordinary course of business. The prepayment modifications
referenced in this paragraph will automatically expire upon the occurrence of an Expiration Event.

6. In consideration of the value provided herein by Nortel, in particular the price increases and
changed payment terms, contemporaneously with the execution of the amendment to the Supply
Agreement contemplated herein, Bookham and Nortel will enter into amendments to the Security
Agreements and such of the other Senior Note Documents as, in Nortel’s discretion, may be necessary
or advisable to:

	 	(i)  	confirm the perfection and priority of the liens, charges, and security
interests granted under or pursuant to the Senior Note Documents;
	 
	 	(ii)  	grant to Nortel a first priority mortgage on the real property located at
Swindon, United Kingdom; however, Bookham shall be permitted to sell such real
property and retain the proceeds of sale free and clear of any security interest for
working capital in the ordinary course of business, provided an Event of Default by
Bookham has not occurred under the Supply Agreement or a default has not occurred
under the Senior Note Documents;
	 
	 	(iii)  	grant to Nortel a perfected, first priority security interest in Nortel
specific inventory as described in Exhibits A and B to the Supply Agreement Addendum
dated February 7, 2005 provided that, so long as no Event of Default shall have
occurred and be continuing under the Supply Agreement or under any of the Senior Note
Documents on the one year anniversary of the Effective Date, Nortel in its sole
discretion may, at Bookham’s request, release and terminate such security interest;

 

 

	 	(iv)  	grant to Nortel a perfected, first priority security interest in accounts
owing by Nortel or its affiliates to Bookham or its affiliates provided that, so long
as no Event of Default shall have occurred and be continuing under the Supply
Agreement or under any of the Senior Note Documents on the [**] anniversary of the
Effective Date, Nortel in its sole discretion may, at Bookham’s request, release and
terminate such security interest;
	 
	 	(v)  	provide that the Security Agreements secure the obligations of Bookham under
the Supply Agreement in addition to the indebtedness evidenced by the Senior Secured
Notes;
	 
	 	(vi)  	provide that an Event of Default by Bookham under the Supply Agreement is an
event of default under the Senior Note Documents, and vice versa;
	 
	 	(vii)  	remove clause (g) from the definition of Collateral in the Amended and
Restated U.S. Security Agreement dated as of December 2, 2004, such that the proceeds
form part of Nortel’s collateral;
	 
	 	(viii)  	reflect changes in relevant law, including Article 9 of the Uniform Commercial Code,
which may be necessary or advisable for the Security Agreements; and
	 
	 	(ix)  	provide such comfort as Nortel may otherwise reasonably require as to the
creation, perfection, and priority of the liens, charges, and security interests
contemplated under the Senior Note Documents and this Proposal.

Bookham expressly agrees that [**] under the Supply Agreement.

For the purpose of this Proposal, an Event of Default under the Supply Agreement shall mean the
occurrence of any of the following without the requirement for further notice or action: (i)
Bookham’s intentional cessation of shipment of product to Nortel against an agreed delivery
schedule without prior written approval by an authorized representative of Nortel; (ii) Bookham’s
failure to deliver products pursuant to the requirements of Section 8 of the Supply Agreement to
the extent that the same would entitle Nortel to cancel all or part of an order, provided that
Nortel has provided Bookham written notice of such default; (iii) Bookham’s failure to meet a
milestone for a Last Time Buy product pursuant to Section 2.2 of the February 7, 2005 Addendum to
the Supply Agreement, provided that Nortel has provided Bookham written notice of such default;
(iv) Bookham’s breach of or default under any one of its material obligations under the Supply
Agreement which continues for more than 10 calendar days; or (v) any other default by Bookham which
would entitle Nortel to terminate the Supply Agreement pursuant to Section 25.2 of that agreement.

For the purpose of this Proposal, an Event of Default under the Senior Note Documents shall have
the meaning provided therein.

7. As of the Effective Date, Bookham will represent and warrant in writing that it has reviewed the
impact of the amendment to the Supply Agreement, the amendments to the Senior Note Documents, and
the other matters contemplated herein, from an accounting and legal perspective and that it has or
will take all necessary steps to ensure

 

 

compliance with United States federal and state securities laws and U.S. generally-accepted
accounting principles.

8. Because the accommodations to Bookham referenced herein (including the shortened payment terms,
Accelerated Purchase Orders, price increases and prepayment modifications) are intended to assist
Bookham in its restructuring only, they will terminate automatically upon the occurrence of any of
the following (each an “Expiration Event”): (i) Event of Default not currently waived under the
Supply Agreement or any of the Senior Note Documents, or (ii) change in control of Bookham or an
insolvency event with respect to Bookham, each to be defined in a manner acceptable to Nortel in
definitive documentation. Upon an Expiration Event, the modifications described in Sections 1
through 3 and 5 shall no longer apply.

9. Notwithstanding anything contained herein, all of the terms and conditions of this Proposal
shall terminate on April 29, 2005 unless all of the following have been satisfied:

	 	A.  	Definitive agreements reflecting the terms of this Proposal and such other
terms as are customary, all in form and substance satisfactory to Nortel and Bookham,
shall have been executed by both Bookham and Nortel;
	 
	 	B.  	No Events of Default under the Supply Agreement or any of the Senior Note
Documents which have not been waived or cured or material adverse change in the
business of Bookham shall occur from the date hereof; and
	 
	 	C.  	Nortel, its agents, and advisors shall have completed a review of the
collateral securing the Senior Secured Notes and the related Guarantees, with
Bookham’s and the Guarantors’ cooperation and assistance. Such review will include
ensuring that Nortel has valid liens on all of the collateral intended to be covered
by the Security Agreements (as amended as required by this Proposal) given in
connection with the Senior Secured Notes and the Guarantees, and that Bookham has
complied with its obligations to Nortel with respect to intellectual property.

Nortel expressly reserves all of its rights, remedies, powers and privileges under the Supply
Agreement and the Senior Note Documents, except to the limited extent specifically provided to the
contrary herein. No failure on the part of Nortel to exercise, and no delay by Nortel in
exercising, any right, remedy, power or privilege under the Supply Agreement or the Senior Note
Documents, at law, or in equity, shall operate as a waiver thereof, nor shall any single or partial
exercise by Nortel of any such right, remedy, power or privilege preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.

 

 

Please sign below to evidence Bookham’s agreement to the terms described herein and to enter into
appropriate amendments to the Supply Agreement and the Senior Note Documents to reflect this
Proposal, which amendments will be prepared by Nortel following your agreement to this Proposal.

Sincerely,

/s/ Philippe Morin

Philippe Morin,GM Optical Networks

Nortel Networks Limited

Agreed:

BOOKHAM, INC.

	 	 	 	 	 
	By:
	 	/s/ Steve M.  Abely	 	 
	

	 	

	 	 
	Name:
	 	 	 	 
	Title:

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