Document:

MANUFACTURING SERVICES AGREEMENT

 
Exhibit 10.20

 
Sycamore Networks, Inc. 
 
MANUFACTURING SERVICES AGREEMENT 
 
This Manufacturing Services Agreement is entered into as of the 20th day of
March, 2003 (“Effective Date”) by and between Sycamore Networks Inc. (“Sycamore”), with offices at 220 Mill Road, Chelmsford, Massachusetts 01824 and Plexus Services Corp. (“Supplier”), with offices at 55 Jewelers Park
Drive, Neenah, Wisconsin 54957. 
 
WHEREAS, Sycamore desires to
enter into a business relationship involving the regular performance of two general classes of Manufacturing Services referred to as “non-recurring” and “recurring” services; and 
 
WHEREAS, Supplier desires to enter into such a business relationship to
perform such services for Sycamore, 
 
NOW, THEREFORE, in
consideration of the mutual promises, covenants, and Agreements contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Sycamore and Supplier hereby agree to the following
terms and conditions for the performance of Manufacturing Services by Supplier for Sycamore. 
 

	1.0	 	DEFINITIONS 

 
As used in this Agreement, the following terms shall have the following respective meanings: 
 
“Component Inventory” means inventory purchased by
Supplier as a result of a Sycamore Purchase Order owned by Supplier that remains at its location for Supplier’s use in performing Services hereunder exclusively for Sycamore. 
 
“Consigned Inventory” or “Consignment Inventory” means inventory owned by Sycamore but
located at Supplier’s site. 
 
“Consigned Repairs Components” means components owned by Sycamore and located at Supplier’s site for the purpose of Supplier performing “Out of Warranty” repairs. 
 
“Days” means calendar days unless otherwise noted.

 
“Direct Fulfillment Inventory” means
finished goods inventory built by Supplier at the direction of Sycamore, that remains at Supplier’s location for direct shipment to Sycamore customers. 
 
“Engineer Change Order” or “ECO” means a specification change issued by Sycamore which, if made to Products, would
affect the form, fit, or function of such Product. 
 
“Excess Inventory” means those components in Supplier’s inventory or on order that will not be consumed by a then outstanding Sycamore Purchase Order. 
 
“Long Lead-Time Components” means any Component with a lead-time greater than [ * ] Days.

 
“NCNR” means a non-cancelable,
non-returnable purchase order issued by Supplier for Component Inventory on behalf of Sycamore. 
 
“Non-Recurring Manufacturing Services,” “Non Recurring Expense” or “NRE” means services generally associated with the initial introduction of new Products, including, but
not limited to: development and design of production tooling; advanced circuit packaging development; printed wiring board design and layout; development and design of production tooling, test fixtures and test software for printed wiring
assemblies; and Product changes and rework of printed wiring assemblies based on Sycamore ECOs. 

	*	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested with
respect to the omitted portions. Asterisks within brackets denote omission. 

 

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“Obsolete Inventory” means those components in Supplier inventory or on order , which no longer appear on a Sycamore active bill of materials of a Product. 
 
“Pass Through Items” means any autonomous assembly(ies) that are purchased fully tested and ready
for direct ship to Sycamore customers for which Supplier has not performed, and Sycamore will not require it to perform, Recurring Manufacturing Services; a list of such items is attached hereto as Exhibit E, as may be amended from time to time by
agreement of the parties. 
 
“Product(s)” means the product(s) manufactured and assembled by Supplier in the course of performing Services hereunder. 
 
“Purchase Order(s)” shall have the meaning set forth in Section 4 hereof. 
 
“Recurring Manufacturing Services” means the volume
production of Products for Sycamore including, but not limited to, assembly of Printed Wiring Assemblies, testing and direct order fulfillment to identified Sycamore customers, and any other service not defined as Non-Recurring Manufacturing
Services. 
 
“Services” means Recurring
Manufacturing Services and Non-Recurring Manufacturing Services. 
 
“Ship Date” means the date specified on a Purchase Order as the date on which Products are to ship from Supplier’s manufacturing facility to a destination specified by Sycamore in such order. 
 
“Sycamore Price File” or “SPF” means the
prices of the components for which Sycamore has independently established the pricing with the Vendor for use by the Supplier. 
 
“Specifications” means the bill of materials, manufacturing specifications, schematics, assembly drawings and test
specifications provided by Sycamore to Supplier and reasonably agreed upon by Supplier for purposes of performing Recurring Manufacturing Services under this Agreement. 
 
“Supplier Supplied Pricing” or “SSP” means the prices of the components for which the
Supplier has independently established the pricing with the Vendor. 
 
“Vendor” means any third party supplying products or services to Supplier or Sycamore. 
 

	2.0	 	PURPOSE OF AGREEMENT 

 

	 	2.1	 	On and subject to the terms and conditions of this Agreement, from time to time, Sycamore may purchase Services from Supplier. Pricing shall be determined in
accordance with Section 6 below. 

 

	 	2.2	 	To purchase Services, Sycamore, as applicable, shall issue a purchase order (“Purchase Order”) at least [ * ] Days prior to the requested Ship Date. Each
such Purchase Order shall be deemed to incorporate by reference the terms and conditions of this Agreement. 

 

	3.0	 	TERM OF AGREEMENT 

 
This Agreement shall become effective on the latter of the signature dates of the parties, and it shall continue in effect until
terminated in accordance with Section 24. 
 

	4.0	 	SYCAMORE ORDERS TO SUPPLIER 

 

	 	4.1	 	Sycamore shall purchase Products and/or Services from Supplier by issuing Sycamore Purchase Orders [ * ] Days prior to the requested Ship Date. Sycamore may issue
Purchase Orders in writing, by mail or facsimile, or by electronic means as the parties may from time to time agree. 

	*	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested with
respect to the omitted portions. Asterisks within brackets denote omission. 

 

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	 	4.2	 	Each Sycamore Purchase Order shall include: a description of the Products and/or Services to be purchased, the quantity, routing instructions, requested Ship Date,
destination and price per this Agreement. Sycamore Purchase Orders issued under this Agreement shall constitute the only authorization for the Supplier to expend any money or incur any liabilities for which Supplier will be reimbursed by Sycamore.

 

	 	4.3	 	Supplier shall acknowledge such Purchase Orders promptly and shall notify Sycamore of acceptance (or rejection, with the reasons therefor) of such Purchase Orders
within [ * ] business days of receipt. Supplier shall be deemed to have accepted any Purchase Order which is not rejected within [ * ] business days of receipt. Supplier shall not reject any Purchase Order which conforms to the terms of this
Agreement but may modify the Ship Date by mutual agreement of the parties to reflect the then-current lead time of components and manufacturing lead time. 

 

	 	4.4	 	Supplier shall [ * ] require Sycamore to place a [ * ] of Products in its Purchase Orders. 

 

	5.0	 	SUPPLIER PURCHASES ON BEHALF OF SYCAMORE 

 

	 	5.1	 	Supplier shall purchase components on Sycamore’s behalf only in accordance with Sycamore issued Purchase Orders. Supplier shall not hold Sycamore liable for any
amounts not supported by a Sycamore Purchase Order, provided that Sycamore shall be liable for components purchased as part of a [ * ] if such purchase was approved by Sycamore pursuant to Section 5.4 hereof. 

 

	 	5.2	 	Supplier shall use reasonable and prudent purchasing practices to minimize Sycamore’s liability to pay for components or services. Such reasonable and prudent
purchasing practices include, without limitation, Supplier’s use of its reasonable best efforts (a) to obtain and secure rights to return, reschedule and/or cancel its purchase or order of such components or services, (b) to ascertain the
restocking charge, if available, for such components, subject to the prior approval of Sycamore, and (c) to return, cancel, reschedule, resell or use such components or services elsewhere in its business. 

 

	 	5.3	 	Prior to Supplier issuing any Supplier purchase orders on Sycamore’s behalf, Supplier shall use applicable Consigned Inventory and Component Inventory to
support Sycamore Purchase Orders or Supplier shall be liable for additional purchases. 

 

	 	5.4	 	In the event that Supplier’s materials requirement planning indicates demand for Component Inventory that: (a) is less than the Vendor’s [ * ] or [ * ]
value, or (b) is identified as an NCNR component, Supplier shall identify such components to Sycamore in writing in advance of order. To the extent that the total dollar cost of all material components, including NCNR and [ * ], ordered by Supplier
for any Purchase Order equals or is less than the total dollar cost of all material components identified in that Purchase Order, Supplier shall be entitled to purchase such NCNR and [ * ] components required to produce the Product subject to that
Purchase Order without obtaining the advance approval of Sycamore through the Variance Authorization Form so long as those components have been identified and documented as [ * ] (including the quantities thereof) and/or NCNR during the [ * ] review
to establish the reconciled costed bill of materials under Section 6.2 hereof; all other orders for NCNR and [ * ] components must be approved by Sycamore in advance using the Variance Authorization Form attached hereto as Exhibit A. Notwithstanding
the foregoing, with respect to a Vendor’s [ * ] or [ * ] value, Supplier shall be entitled to order such components without obtaining the prior written approval of Sycamore through the Variance Form to the extent of [ * ] in the aggregate for
all such components per [ * ]. Supplier shall obtain prior written consent from Sycamore as set forth herein to order such [ * ] or NCNR components, and agrees that Sycamore shall not be liable for such components purchases without Sycamore’s
written preapproval except and only to the extent of the specific exceptions set forth in the preceding sentences of this Section 5.4. Excess components shall be held by Supplier as Component Inventory and Sycamore shall direct its disposition under
the inventory liability provisions hereinafter set forth in Section 11.2 hereof. 

 
For example, in the event that Sycamore places a Purchase Orders in the amount of $1 million per quarter and $500,000 of that cost is for the material components, Supplier can order NCNR and [ * ]
components without use of the Variance Form so long as the total cost to Sycamore for all components required to produce the Product subject to that Purchase Order does not exceed [ * ]. 

	*	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested with
respect to the omitted portions. Asterisks within brackets denote omission. 

 

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	 	5.5	 	Sycamore may independently establish a Sycamore Price File with a particular Vendor to supply a specific component for Products and/or Services by Supplier. In that
event, Sycamore shall notify Supplier of the SPF. To extent that Sycamore does not establish an SPF with respect to any and all other components, Supplier shall establish an SSP file for such components. Supplier shall issue its purchase orders in
accordance with the pricing of the SPF for all SPF components and the SSP for other components. In the event that any SPF terms and conditions with a particular vendor conflicts with any provision in this Agreement, Supplier shall not be obligated
to perform such conflicting terms and conditions within this Agreement and Sycamore shall waive any such claims of non-performance under this Agreement with respect to the specific purchase order in question.

 

	 	5.6	 	Purchase Price Variance 

 

	 	5.6.1	 	“PPV” occurs when the Supplier is not able to purchase an SPF component at the SPF price. For SPF components only, in the event that the Supplier is not
able to purchase a component at the then current SPF price, then Supplier must provide prompt written notice to Sycamore in advance of placing any purchase orders. Such notice shall be in the form of the Variance Authorization Form attached hereto
as Exhibit A, and Supplier shall attach the following documentation to such form or provide such information electronically: 

 

	 	•	 	Sycamore Purchase Order Number which created the demand, and 

 

	 	•	 	Vendor quotation including price, quantity, and delivery date. 

 
Sycamore must give prior written approval of each and every Supplier purchase order to a Vendor which varies
from the price in the then current SPF. If Supplier does not give written notice of Purchase Price Variance prior to placing its purchase order with the Vendor, then the PPV claim against Sycamore is waived. In addition to the foregoing, in the
event that the Supplier determines that there are expedite or premium charges for any SSP component during [ * ] after the parties have agreed upon the costed bill of materials for that [ * ] pursuant to Section 6.2 below, Supplier shall provide
written notice to Sycamore in advance of placing any such purchase orders and must obtain Sycamore’s prior written approval. Such notice shall be in the form of the Variance Authorization Form attached hereto as Exhibit A, and Supplier shall
attach the following documentation to such form or provide such information electronically: 
 

	 	•	 	Sycamore Purchase Order Number which created the demand, and 

 

	 	•	 	Vendor quotation including price, quantity, and delivery date. 

 
Notwithstanding the foregoing, in no event shall Supplier request or be entitled to recover expedite or
premium charges for any SSP component to the extent it has failed to order such components in a timely and prudent manner using reasonable business practices in order to meet the scheduled Ship Date. 
 

	 	5.7	 	At Sycamore’s discretion, Sycamore approved purchase price variance changes will be processed on a case by case basis under either Section 10.3 Component
Inventory Buy Down or under Section 5.6, but not under both provisions. To the extent that Sycamore elects to process a purchase price variance under Section 5.6, Supplier shall promptly issue either a credit memo or an invoice (in accordance with
Section 16.3) following issuance by Sycamore of a Purchase Order to Sycamore reflecting the purchase pricing variances identified through this Purchase Price Variance Process. Disagreement on any aspect of this process shall be resolved through the
Dispute Resolution Process set out in Section 31.0. 

 

	 	5.8	 	In the event that Sycamore establishes an SPF and issues a Sycamore Purchase Order to a Vendor, Sycamore may, at its discretion, transfer such Sycamore Purchase
Order to the Supplier and such Purchase Order, subject to Supplier’s agreement in writing to transfer the same, shall be treated by the parties as having been initially issued directly by the Supplier to the Vendor. Upon Supplier’s consent
to transfer such purchase order, Supplier shall issue its own purchase order to the Vendor to substitute for the original Sycamore purchase order.  

 

	 	5.9	 	At Sycamore’s cost for its out-of-pocket expenses, Sycamore has the right to audit the purchasing practices and records utilized by Supplier. Such audit rights
shall include but not be limited to the right to audit purchase price variances approved under Section 5.6.1, in which case Supplier shall provide Sycamore with the following information: the Sycamore Purchase Order which created the demand, the
Supplier purchase order number with Vendor for the PPV material, the date Supplier 

	*	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested with
respect to the omitted portions. Asterisks within brackets denote omission. 

 

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placed the purchase order and Vendor confirmed delivery date, and quantity ordered and
purchase order unit cost. Sycamore shall provide 5 Days notice to Supplier and such practices and records shall be reviewed at Supplier’s location. Supplier shall have 10 business days to comply with Sycamore’s request. Sycamore’s
audit rights are subject to Supplier’s confidentiality obligations to third parties. 
 

	6.0	 	PRICING TERMS 

 

	 	6.1	 	NRE Pricing. The initial prices for Non-Recurring Manufacturing Services shall be as set forth in Exhibit B. In order to determine new pricing for NRE, Sycamore
shall provide Supplier with a Specification for requested NRE. Supplier shall use commercially reasonable efforts to issue a written quotation within [ * ] business days. Sycamore shall authorize the performance of the NRE by issuance of a Purchase
Order. Supplier charges for such NRE shall be in accordance with the quotation. 

 

	 	6.2	 	Recurring Manufacturing Services Pricing. [ * ] Days before the start of [ * ], Sycamore shall provide Supplier with a copy of its most recent SPF pricing file and
Supplier shall provide Sycamore with a copy of its most recent Supplier Supplied Pricing files for reconciliation. Sycamore and Supplier shall confer and agree within [ * ] Days on the cost of the components in the SPF and Supplier Supplied Pricing
files which shall form the basis of the costed bill of materials for Sycamore Products for such [ * ]. Supplier shall then provide an updated, reconciled costed bill of materials to Sycamore that represents a quote to Sycamore for production for
such [ * ]. This quote shall be firm [ * ] following its receipt by Sycamore subject to PPV as provided above in Sections 5.6 and 5.7. Supplier will promptly inform Sycamore of any Vendor price variations. 

 
Any Purchase Order(s) placed by Sycamore and accepted by
Supplier for delivery of Products before the parties have reached agreement on the reconciled costed bill of materials for Sycamore’s [ * ] will be adjusted to reflect new pricing as determined and requested by Sycamore; existing on hand and on
order inventory will be managed in Sycamore’s discretion either by resort to the Component Inventory Buy-Down provisions (Section 10.3) or through the PPV adjustment provisions (Sections 5.6 and 5.7), unless otherwise agreed to by the parties.
For the convenience of the parties, Exhibit D hereto sets forth [ * ]. 
 

	 	6.3	 	[ * ]. For each Product upon which Supplier performs Recurring Manufacturing Services, Supplier shall charge Sycamore a [ * ] at the time of delivery of a Product in
accordance with Schedule 1. At least [ * ] Days before the start of [ * ], the parties shall meet and confer to designate the [ * ] based on Sycamore’s estimated business range for [ * ] based on the Purchase Orders placed by Sycamore with
Supplier for that [ * ] prior to the start thereof. If the parties are unable to agree upon the [ * ], the parties shall attempt to resolve the disagreement utilizing the Dispute Resolution Process set out in Section 31. The parties agree that the [
* ] designated by Sycamore in good faith based on the Purchase Orders placed by Sycamore with Supplier prior to the start of [ * ] shall apply to all orders for Product pending resolution of the disagreement. 

 
[ * ] Review. The [ * ] set out in Schedule 1 is fixed
for the term of the Agreement for Sycamore’s [ * ] and [ * ] family of Product lines (including, but not limited to, any modifications to an existing Product or the introduction of new feature(s) in an existing Product). In the event that
Sycamore introduces a new Product which does not fall within the[ * ] or [ * ] Product family, then Sycamore and Supplier will confer as to the appropriate [ * ] for the manufacture of such Products, provided, however, that to the extent that the
Recurring Manufacturing Services required to manufacture any such new Product are substantially similar to the Recurring Manufacturing Services, both in terms of nature and quantity, as are required to manufacture the [ * ] or [ * ] Products, the [
* ] shall apply thereto. 
 
One [ * ] after the
Effective Date, and on an [ * ] basis thereafter, the [ * ] may be adjusted only by mutual written agreement of the parties. If the parties are unable to agree upon any adjustment of the [ * ], the parties shall attempt to resolve the disagreement
utilizing the Dispute Resolution Process set out in Section 31. The parties agree that the current [ * ] shall apply to all orders for Product pending resolution of the disagreement. 
 
Pass Through Items. Supplier shall charge Sycamore a maximum of [ * ] the Supplier purchase price for
Pass Through Items. 

	*	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested with
respect to the omitted portions. Asterisks within brackets denote omission. 

 

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	 	6.4	 	Supplier shall [ * ] require of Sycamore any [ * ] on a quarterly or annual basis. 

 

	7.0	 	ENGINEERING CHANGE ORDERS 

 

	 	7.1	 	Sycamore may by written notice initiate an ECO regarding components or Specifications by documenting and transmitting the proposed change to Supplier’s
Coordinator, who shall acknowledge receipt. Supplier shall use all commercially reasonable efforts to provide a detailed response, including the amount of change in costs resulting therefrom, within five (5) business days of receipt of such change
notice. In no event shall Supplier provide such response later than ten (10) business days after receipt of such notice. Sycamore will not be liable for any costs or expenses not covered in the detailed ECO response. 

 

	 	7.2	 	Supplier shall use its reasonable best efforts to implement an ECO as soon as possible. Neither party shall unreasonably withhold or delay agreement to an ECO and
the parties will endeavor to agree and implement, at the earliest opportunity, change notices relating to personal and product safety or conformance to existing Specifications. 

 

	 	7.3	 	Until the parties have agreed in writing upon an ECO and any associated impact, the parties shall continue to perform their obligations under this Agreement without
implementing the ECO. Notwithstanding the above, if such notice indicates that a change is required due to safety reasons, Supplier shall not continue to manufacture any affected Products without the prior written consent of Sycamore until the
parties have implemented the change notice. 

 

	 	7.4	 	Supplier shall charge Sycamore a one time processing fee to cover the administrative cost to implement the ECO. Additional charges, if any, shall be as set out in
Exhibit B or as otherwise agreed to by the parties in writing. 

 

	8.0	 	SCHEDULING 

 

	 	8.1	 	Supplier is authorized to ship Products to Sycamore only in accordance with a Purchase Order. 

 

	 	8.2	 	Sycamore may make changes to shipping instructions, quantities or delivery schedules specified in any Purchase Order as needed throughout the duration of this
Agreement, in accordance with Table 8.2, or as otherwise mutually agreed by the parties in writing. 

 
Table 8.2 
 

	 Days prior to Ship Date

	 	 Reschedule Terms

	 0 - [ * ]
	 	 0%

	
	 [ * ] - [ * ]
	 	 up to [ * ] of a Purchase Order provided that such rescheduled order is to be delivered within [ * ] days of the
originally scheduled Ship Date.

	
	 [ * ] +
	 	 up to [ * ] of a Purchase Order provided that such rescheduled order is to be delivered within [ * ] days of the
originally scheduled Ship Date.

 
Notwithstanding the foregoing, (i) from and after [ * ] commencing on [ * ], Sycamore shall not be entitled to reschedule any Purchase Order(s) to the extent that such rescheduling would cause Sycamore to fail to [ * ] Purchase
Orders to obtain the [ * ] for the total [ * ] from Schedule [ * ] selected for that [ * ] pursuant to Section [ * ] hereof; and (ii) with respect to any changes 

	*	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested with
respect to the omitted portions. Asterisks within brackets denote omission. 

 

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to a Purchase Order to increase [ * ] within the percentages set forth in the above table,
Supplier shall be required to use its reasonable best efforts to fulfill the same. 
 

	 	8.3	 	If Sycamore desires to reschedule any Purchase Orders in excess of the [ * ], the parties shall mutually agree upon the appropriate remedy for Supplier.

 

	 	8.4	 	Supplier shall accept or reject Purchase Order changes within [ * ] business days or the changes will be deemed accepted. 

 

	9.0	 	CANCELLATION 

 

	 	9.1	 	Sycamore may cancel a Purchase Order, in whole or in part, at any time [ * ] Days or more from the scheduled Ship Date, provided, however, from and after [ * ]
commencing on [ * ], Sycamore shall not be entitled to cancel any Purchase Order(s) to the extent that such cancellation would cause Sycamore to fail to [ * ] for the [ * ] range from Schedule [ * ] selected for that [ * ] pursuant to Section 6.3
hereof. Sycamore shall only be entitled to cancel a Purchase Order, in whole or in part, within [ * ] Days or less prior to the scheduled Ship Date by written agreement of Supplier. 

 

	 	9.2	 	To the extent that Sycamore cancels a Purchase Order, in whole or in part, within [ * ] to [ * ] Days prior to the scheduled Ship Date, Supplier shall, if requested
by Sycamore, attempt to mitigate Sycamore’s liability for components, including but not limited to, any NCNR components, by using reasonable and prudent purchasing practices to minimize Sycamore’s liability to pay for components or
services. Such reasonable and prudent purchasing practices include, without limitation, Supplier’s use of its reasonable best efforts (a) to obtain and secure rights to return, reschedule and/or cancel its purchase or order of such components
or services, (b) to ascertain the restocking charge, if available, for such components, subject to the prior approval of Sycamore, and (c) to return, cancel, reschedule, resell or use such components or services elsewhere in Supplier’s
business. To the extent that Supplier is able to mitigate Sycamore’s liability for components, Sycamore shall compensate Supplier for such efforts by [ * ] Supplier for any [ * ] paid by Supplier which were approved by Sycamore in advance [ * ]
paying Supplier a fee equal to [ * ] of the price of the mitigated components per the then current SPF or SSP pricing file (excluding any [ * ]). The parties agree that the mitigation period shall not exceed [ * ] Days from the cancellation unless
otherwise agreed to by the parties in writing. To the extent that Supplier is unable to mitigate as provided herein, then Sycamore shall direct disposition of those components for which mitigation was not achieved by Supplier pursuant to Section
11.2 below. 

 

	 	9.3	 	To the extent that Sycamore cancels the Purchase Order, in whole or in part, [ * ] Days or more prior to the scheduled Ship Date, then Supplier shall, if requested
by Sycamore, attempt to mitigate Sycamore’s liability for NCNR components by using reasonable and prudent purchasing practices to minimize Sycamore’s liability to pay for components or services. Such reasonable and prudent purchasing
practices include, without limitation, Supplier’s use of its reasonable best efforts (a) to obtain and secure rights to return, reschedule and/or cancel its purchase or order of such components or services, (b) to ascertain the restocking
charge, if available, for such components, subject to the prior approval of Sycamore, and (c) to return, cancel, reschedule, resell or use such components or services elsewhere in Supplier’s business. To the extent that Supplier is able to
mitigate Sycamore’s liability for NCNR components, Sycamore shall compensate Supplier for such efforts by [ * ] Supplier for any [ * ] paid by Supplier which were approved in advance by Sycamore [ * ] paying Supplier a fee equal to [ * ] of the
price of the mitigated components per the then current SPF or SSP pricing file (excluding any [ * ]). The parties agree that the mitigation period shall not exceed [ * ] Days from the cancellation unless otherwise agreed to by the parties in
writing. To the extent that Supplier is unable to mitigate as provided herein, Sycamore shall direct disposition of those NCNR components pursuant to Section 11.2 below. 

 

	 	9.4	 	Supplier shall (a) document and calculate all charges under this Section 9 and (b) provide to Sycamore sufficient documentation in a reasonable format to support all
such charges and calculations. Labor standards, if any will be mutually agreed upon between the parties. 

	*	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested with
respect to the omitted portions. Asterisks within brackets denote omission. 

 

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	 	9.5	 	Supplier shall accept or reject all Purchase Order cancellations in writing within [ * ] business days or the changes will be deemed accepted, provided, however,
that Supplier acknowledges that it must accept cancellations subject to Section 9.1 hereof. 

 

	10.0	 	INVENTORY MANAGEMENT 

 

	 	10.1	 	Supplier will provide an electronic interface to Sycamore’s business enterprise system for the purpose of transferring inventory management, ordering, shipment,
and other information to Sycamore at no additional cost to Sycamore. 

 

	 	10.2	 	Inventory Reconciliation 

 

	 	10.2.1	 	Supplier shall maintain accurate inventory records of Consigned Inventory, Consigned Repairs Components, Direct Fulfillment Inventory, and Component Inventory using
Sycamore’s part numbers. 

 

	 	10.2.2	 	Consigned Inventory and Consigned Repairs Components 

 
Supplier and Sycamore shall reconcile Consigned Inventory and Consigned Repairs Components located at the Supplier on a monthly basis,
the exact timing of which to be set by Sycamore. 
 
a) Supplier shall provide Sycamore a Consigned Inventory and Consigned Repairs Components listing of inventory/repairs components located at the Supplier. The listing must include Sycamore part number and quantity per item.

 
b) Sycamore shall reconcile Supplier’s
balances against Sycamore’s balances. Sycamore shall identify the quantity variances and provide to the Supplier for reconciliation. Supplier shall complete the reconciliation within four (4) working days. 
 
c) Any unreconciled quantity variances shall be invoiced to
Supplier and paid in accordance with Section 16.2 hereof. Notwithstanding the foregoing, if within sixty (60) days of Sycamore’s invoice therefor Supplier is able reconcile a quantity variance to Sycamore’s reasonable satisfaction Sycamore
shall issue a credit to Supplier. 
 

	 	10.2.3	 	Direct Fulfillment Inventory 

 
Supplier and Sycamore shall reconcile Direct Fulfillment Inventory on a weekly basis, the exact timing of which shall be set by Sycamore.

 
a) Supplier shall provide Sycamore a Direct
Fulfillment Inventory listing of material located at the Supplier. The listing must include Sycamore part number and quantity per item. 
 
b) Sycamore shall reconcile Supplier’s balances against Sycamore’s balances. Sycamore shall identify the quantity variances and
provide to the Supplier for reconciliation. Supplier and Sycamore shall use commercially reasonable efforts to complete the reconciliation within three (3) working days. 
 
c) Any unreconciled quantity variances shall be invoiced to Supplier and paid in accordance with Section
16.2 hereof. Notwithstanding the foregoing, if within sixty (60) days of Sycamore’s invoice therefor Supplier is able reconcile a quantity variance to Sycamore’s reasonable satisfaction Sycamore shall issue a credit to Supplier.

 
Direct Fulfillment Inventory manufactured by
Supplier will be invoiced by Supplier upon the same being placed in Sycamore’s finished goods inventory location at Supplier, at which time title and risk of loss to such Direct Fulfillment Inventory shall also pass to Sycamore.
Notwithstanding, Supplier will insure such Direct Fulfillment Inventory held in Supplier’s facilities at the full replacement cost thereof under the terms and conditions of Supplier’s “all risk” insurance coverage. The Direct
Fulfillment Inventory shall remain at Supplier’s facility until Supplier is instructed to ship the same by Sycamore. Supplier will segregate 

	*	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested with
respect to the omitted portions. Asterisks within brackets denote omission. 

 

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the Direct
Fulfillment Inventory from other customer manufactured product and Supplier will not use the Direct Fulfillment Inventory to fill other Supplier customer orders unless otherwise directed by Sycamore. The prices for the Direct Fulfillment Inventory
shall be the prices set forth in those Sycamore Purchase Orders under which such inventory was manufactured. Sycamore has requested that Supplier hold such Product following invoicing in order to provide an inventory management and distribution
service to Sycamore. In the event Product is held by Supplier for more than [ * ] days after title to the same has transferred to Sycamore, Supplier shall ship the Product to Sycamore or its designated agents as provided in Section 12 hereof.
Notwithstanding the foregoing, risk of loss with respect to Consigned Inventory shall remain with Supplier pursuant to Sections 11.3 and 20.3 hereof. 
 

	 	10.2.4	 	Component Inventory 

 
At Sycamore’s request from time-to-time, Supplier and Sycamore shall reconcile Component Inventory as mutually agreed upon.

 

	 	10.3	 	Component Inventory Buy Down 

 
Supplier and Sycamore shall conduct a Component Inventory buy down on a [ * ] basis to coincide with the SPF and Supplier Supplied Pricing
reconciliation process set out in Section 6.2, the exact timing of which will be agreed to by both parties. If the newly mutually established cost of an item(s) in Component Inventory is less than the then-current inventory valuation on the Supplier
Supplied Pricing or SPF file, then upon Sycamore’s written instruction, Supplier shall revalue such item(s). Supplier shall invoice, and Sycamore shall pay (in accordance with Section 16.2 hereof), the difference between the newly mutually
established cost, and the previous valuation in the SFP or Supplier Supplied Pricing file. 
 

	 	10.4	 	Inventory Sellback Process 

 

	 	10.4.1	 	Supplier shall use Consigned Inventory or Consigned Repairs Components before purchasing components from third parties. As Consigned Inventory or Consigned Repairs
Components are owned by Sycamore, the inventory sellback process shall be used to transfer title of these components to Supplier. 

 
a) On a weekly basis, the Supplier shall provide Sycamore with usage report indicating what the Supplier has consumed from Consigned
Inventory or Consigned Repairs Components. The listing should include quantity, Sycamore part number, and unit cost. The unit cost shall be the same price for the components as set forth in the current SPF or Supplier Supplied Pricing price file at
the time of the sellback, without [ * ] or any other [ * ]. The weekly usage report is the record of the transfer of title of Consigned Inventory or Consigned Repairs Components from Sycamore to Supplier 
 
b) Upon receipt of the Supplier usage report, Sycamore shall
verify pricing, transact the inventory out of its stock and invoice the Supplier. Supplier shall pay such invoice(s) in accordance with Section 16.2 hereof. 
 

	 	10.5	 	Disagreement on any aspect of this Inventory Management section shall be resolved through the Dispute Resolution Process set out in Section 31.0.

 

	11.0	 	OBSOLETE OR EXCESS COMPONENT INVENTORY 

 

	 	11.1	 	When Supplier is of the opinion that Component Inventory or components on order have been rendered Obsolete Inventory or Excess Inventory, Supplier shall within [ *
] Days following the [ * ] in which such purported event of obsolescence or excess occurred: 

 

	 	•	 	provide to Sycamore a written notice of Obsolete Inventory or Excess Inventory; 

 

	 	•	 	use reasonable and prudent business practices as set forth in Section 5.2 to mitigate Sycamore’s liability relating to such components; and

	*	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested with
respect to the omitted portions. Asterisks within brackets denote omission. 

 

9 

 

	 	•	 	provide to Sycamore the P.O.(s), the documentation set forth in Section 5.9 for a PPV adjustment and date(s) of the Sycamore action(s) which created the event of
Excess Inventory or Obsolete Inventory; such documentation may be provided electronically. 

 

	 	11.2	 	Upon receipt of the notice of the occurrence of Obsolete Inventory or Excess Inventory defined above, and to the extent that Supplier can reasonably demonstrate by
documentary evidence that it placed all purchase orders in accordance with the terms and conditions of this Agreement, and used reasonable and prudent business practices, as set forth in Section 5.2, Sycamore shall provide written instruction to
Supplier directing it to either: 1) move such Excess or Obsolete Inventory to Consigned Inventory in accordance with Section 11.3, 2) process such Obsolete Inventory or Excess Inventory as scrap in accordance with Section 11.4, or 3) continue to
hold title to the such Excess Inventory in consideration of Sycamore paying a [ * ] of [ * ] each month for a period of up to [ * ] Days, at which point Sycamore must direct disposition of such inventory in accordance with subsections (i) or (ii)
hereof. 

 

	 	11.3	 	If Sycamore’s written instruction is to move the Obsolete or Excess Inventory to Consigned Inventory, Supplier shall: 

 

	 	•	 	hold such components on consignment for Sycamore at Supplier’s premises at no charge for a period not to exceed [ * ] year. Title to the Consigned Inventory
shall pass to Sycamore upon delivery of the components to the consignment location, and risk of loss of or damage to the Consigned Inventory shall remain with Supplier, and 

 

	 	•	 	invoice Sycamore the Supplier’s cost of the components as reflected in the then current SPF or Supplier Supplied Pricing file. Sycamore shall pay such invoice
in accordance with Section 16.2 hereof. 

 
When Sycamore moves such components out of consignment, Sycamore shall direct disposition thereof under either Section 11.4 hereof or shall direct that Supplier utilize the same in the manufacture of Products pursuant to Sycamore
Purchase Orders. 
 

	 	11.4	 	If Sycamore’s written instruction is to scrap the Obsolete Inventory or Excess Inventory, Supplier shall: 

 

	 	•	 	remove and make available such components for delivery to Sycamore. Title to and risk of loss of or damage to the components shall pass to Sycamore upon delivery to
Sycamore F.O.B. Supplier’s dock. 

 

	 	•	 	pack the components to Supplier’s commercial standards and Sycamore’s custom standards for shipment. 

 

	 	•	 	invoice Sycamore the Supplier’s cost of the components as reflected in the then current SPF or Supplier Supplied Pricing file [ * ] for components with a per
unit cost per item of more than [ * ] and [ * ] for components with a per unit cost per item of [ * ] or less. Sycamore shall pay such invoice(s) in accordance with Section 16.2 hereof. 

 

	 	11.5	 	If Supplier does not report to Sycamore all Obsolete Inventory or Excess Inventory within [ * ] Days following the end of the calendar month in which the event of
obsolescence or excess occurred, Supplier waives its right to make any claim against Sycamore for such components. 

 

	 	11.6	 	Disagreement on any aspect of this Obsolete Inventory or Excess Inventory section shall be resolved through the Dispute Resolution Process set out in Section 31.

 

	12.0	 	DELIVERY 

 

	 	12.1	 	Supplier shall include a packing slip with each shipment that lists at a minimum, Sycamore’s part number, Purchase Order Number, the Supplier’s Part
Number, serial number and quantity. Supplier shall follow commercially accepted practices for packaging to protect the components from Electrostatic Discharges (ESD), Sycamore specifications for packaging, and normal handling by the selected freight
forwarder. 

 

	 	12.2	 	Supplier shall not make partial shipments or over shipments without Sycamore’s prior written consent. 

	*	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested with
respect to the omitted portions. Asterisks within brackets denote omission. 

 

10 

 

	 	12.3	 	Supplier shall ship all Products F.O.B. Supplier’s shipping dock, freight prepaid in accordance with the schedule set forth in Sycamore’s Purchase Order as
accepted by Supplier. Supplier shall use the freight forwarder chosen by Sycamore in its sole discretion. Supplier shall include freight charges as a separate line item on the applicable invoice(s). 

 

	 	12.4	 	Where Supplier causes a delay in the shipment of Products, Supplier shall bear the expense of all additional charges required to expedite shipment in order to meet
the agreed upon shipment schedule. Sycamore shall be responsible only for standard lead-time costs and UPS “surface” freight charges, unless previously approved by Sycamore in writing. 

 

	 	12.5	 	Sycamore may reject Products which (a) were damaged when delivered by Supplier to the carrier for shipment to Sycamore or (b) do not conform to the relevant
Specifications (“Rejected Products”). 

 

	 	12.6	 	Sycamore will notify the Supplier in writing of Rejected Products within [ * ] Days of original delivery and will return via the least expensive method possible
Rejected Products to the Supplier at Supplier’s expense within an additional [ * ] Days. Supplier shall make reasonable best efforts to deliver a return components authorization form (“RMA”) to Sycamore within [ * ] business [ * ]
days after Sycamore’s notice of Rejected Products. If Sycamore does not receive the RMA within such period, Sycamore shall elevate the RMA request to the Strategic Customer Manager and if the matter is not resolved within [ * ] business days,
Sycamore shall have the right to return such Rejected Products. Sycamore will provide Supplier’s Strategic Customer Manager with the tracking number of all shipments sent back to Supplier without an RMA. 

 

	 	12.7	 	Supplier will, at its election, either repair or replace the Rejected Products. The cost associated with any such repair or replacement will be the responsibility of
the Supplier. In the case of replacement, title to the Rejected Products shall pass to the Supplier on delivery to the Supplier. Supplier shall bear the expense of redelivering repaired or replaced Products to Sycamore or its customer.

 

	 	12.8	 	In the absence of earlier notification of rejection, Sycamore will be deemed to have accepted Products [ * ] Days after delivery provided that the related Product
invoice contains all pertinent information relating to Sycamore’s Purchase Order. Sycamore’s acceptance of the Products shall not be deemed a waiver of any warranty claims. 

 

	 	12.9	 	Supplier shall be liable for liquidated damages if Supplier fails to deliver Products on the Ship Dates specified in a Purchase Order which has been accepted in
accordance with Section 4 hereof. In such event, and on and subject to the terms set forth below in this Section 12.9, Supplier shall pay to Sycamore a sum equal to [ * ] of the purchase price of the Products subject to such delay for each business
day (or part thereof) of delay in delivery, up to a maximum of [ * ] of such purchase price. Supplier’s obligation to pay liquidated damages hereunder shall be expressly subject to the following conditions: 

 
(a) In no event shall Supplier be liable for liquidated
damages when its failure to meet any Ship Date is caused by any act or omission of Sycamore; 
 
(b) Sycamore shall not be in default of any of its obligations under this Agreement; 
 
(c) Supplier shall have a grace period of [ * ] business days from the Ship Date during which liquidated damages shall not apply unless
the delay exceeds such grace period, in which case liquidated damages shall be due and owing from the first day of delay from the Ship Date; 
 
(d) If Sycamore does not report to Supplier that it intends to avail itself of this liquidated damages remedy within [ * ] Days following
the failure to deliver Products on the Ship Date, Sycamore waives its right to make any claim for liquidated damages under this Section 12.9 against Supplier for such delay; and 
 
(e) Supplier shall not be liable for Liquidated Damages when its failure to meet any Ship Date is caused
solely by an industry wide component shortage beyond its reasonable control. 
 
In the event that Supplier fails to deliver Products within [ * ] Days of the Ship Date specified in a Purchase Order, then, in addition to the liquidated damages set forth above, Sycamore shall have
the right, in its sole discretion, to cancel the Purchase Order without any liability to Supplier for any costs, including, but not limited to, the cancellation costs set forth in Section 9 

	*	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested with
respect to the omitted portions. Asterisks within brackets denote omission. 

 

11 

above. For avoidance of doubt, Sycamore shall be entitled to cancel such order even if
such cancellation would cause it [ * ] of the then designated [ * ]. 
 

	13.0	 	SUPPLIER WARRANTY 

 

	 	13.1	 	Services. Supplier warrants that all Services will be performed in a workmanlike manner in conformity to [ * ]. Supplier further warrants that the Products
and Services delivered hereunder (a) will be [ * ] and (ii) [ * ]. Supplier further warrants that all Products shall be manufactured [ * ] 

 
This warranty shall apply for a period of [ * ] from the date Products are shipped, or Services are performed by Supplier and may be
enforced by Sycamore. 
 

	 	13.2	 	Remedy. Sycamore’s remedy for breach of this warranty shall be, [ * ]. Prior to [ * ] any Product that Sycamore claims not to be as warranted by
Supplier, Sycamore shall follow Supplier’s reasonable RMA procedures. Supplier shall promptly provide, and shall not unreasonably withhold or delay the issuance of an RMA number. Supplier shall be responsible for all warranty expenses,
including the costs of incoming and outgoing shipment for warranty repair. Supplier will make all repairs and replacements, and return Products to Sycamore or another destination specified by Sycamore, within [ * ] Days of receipt by Supplier.
Supplier shall replace any Products requiring repair [ * ]. In any instance where Supplier fails to deliver repaired or replaced Products within [ * ] Days after receipt of defective Products, Sycamore shall be entitled to a [ * ]. However, if
Supplier fails, on a continuing and material basis, to meet the requirements for repairs set forth herein, Sycamore shall have its full rights and remedies at law or in equity for redress, subject to the limitations of damages as otherwise set forth
in this Agreement. 

 

	 	13.3	 	[ * ] 

 

	 	13.4	 	The warranties provided in this Section 13 will apply in all circumstances except the following: 

 

	 	13.4.1	 	Products that have been (i) misused, modified, damaged, placed in an unsuitable physical or operating environment or maintained improperly, (ii) caused to fail by
any product or service not supplied by the Supplier, or (iii) subjected to any repair not authorized in writing in advance by the Supplier; 

 

	 	13.4.2	 	any defect to the extent caused by (i) Sycamore or (ii) an error or omission or design or other fault in any Sycamore Information or in any other drawings,
documentation, data, software, information, know-how or components provided or specified by Sycamore or (iii) Sycamore supplied inventory; provided, however, that in the event that both parties contribute to any defect, the warranty shall apply to
the extent such defect was contributed to or caused by Supplier; 

 

	 	13.4.3	 	prototypes and pre-production or pilot versions of Products manufactured by Supplier, the warranty for which shall be limited to conformance to the Specifications
supplied by Sycamore; or 

 

	 	13.4.4	 	Products that, at Sycamore’s specific request, did not undergo Supplier’s standard inspection and test procedure. Notwithstanding the foregoing, the
warranties in this Section 13 will apply to the extent that some of Supplier’s standard inspection and test procedures are in place even if such tests and procedures are not considered all of Supplier’s standard inspection and test
procedures, unless and to the extent that any defect in any Product which does not undergo all of Supplier’s standard inspection and test procedure at Sycamore’s request would reasonably have been likely to have been discovered by such
omitted inspection and test procedure. Additionally, the warranties in this Section 13 will apply to assemblies to the extent that Supplier performed work on the assemblies, even if Sycamore or some other third party performs certain finish or
back-end work on the assemblies, provided that any defect in the assemblies is related to a breach of Supplier’s warranties in this Section 13; in the event that both parties contribute to any defect, the warranty shall apply to the extent such
defect was contributed to or caused by Supplier. Subject to the foregoing, Supplier’s warranty that the Products will be free from defects in workmanship will always apply. 

	*	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested with
respect to the omitted portions. Asterisks within brackets denote omission. 

 

12 

 

	 	13.5	 	Supplier shall repair and/or upgrade Products which are outside the warranty period at the direct labor prices and under the terms and conditions set forth in
Exhibit B unless otherwise agreed to in writing by the parties. 

 

	 	13.6	 	THE FORGOING WARRANTIES ARE SOLELY ENFORCEABLE BY SYCAMORE AND ARE SUPPLIER’S SOLE OBLIGATION AND LIABILITY, AND SYCAMORE’S EXCLUSIVE REMEDIES, FOR CLAIMS
BASED ON DEFECTS IN OR FAILURE OF ANY PRODUCT OR SERVICE OR THE SUBJECT MATTER OF ANY SERVICE AND ARE IN LIEU OF ALL OTHER WARRANTIES AND CONDITIONS EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, WARRANTIES OR CONDITIONS OF MERCHANTABILITY,
RESPECTING NON-INFRINGEMENT OR FITNESS FOR A PARTICULAR PURPOSE. 

 

	 	13.7	 	Supplier agrees to maintain in good working order the items contracted for by Sycamore under Non-Recurring Manufacturing Services for the lifetime of this Agreement
or as the parties may otherwise agree. Supplier is not obligated to maintain any such items that Sycamore has declared obsolete or that have deteriorated beyond the scope of general maintenance practices as a result of changes mandated by Sycamore.

 

	14.0	 	SYCAMORE WARRANTY 

 

	 	14.1	 	Sycamore warrants that, [ * ] of [ * ] and [ * ] and [ * ] (collectively, “Sycamore Information”) [ * ]. 

 

	 	14.2	 	Supplier will promptly notify Sycamore of any manufacturing problems that Supplier believes are related to the Sycamore Information. The parties will cooperate to
determine whether such manufacturing problems actually are attributable to the Sycamore Information. Supplier shall not implement any changes to any Sycamore Information without Sycamore’s prior written approval. If the parties determine that a
problem does result from the Sycamore Information and initiate [ * ], Supplier will not be liable for [ * ] to the [ * ] from such Sycamore Information, but only to the [ * ] was [ * ] to or [ * ] by Sycamore. 

 

	15.0	 	INDEMNIFICATION 

 

	 	15.1	 	Sycamore agrees to indemnify Supplier against damages finally awarded by a court of competent jurisdiction arising out of claims for direct losses, damages, costs
and expenses (including reasonable attorney’s fees) on account of personal injury, death, or tangible property damage as the result of Sycamore’s active negligence or willful misconduct in developing the Specifications, or any other
components, information or instructions relating to the Specifications. This indemnification is conditioned upon Supplier giving Sycamore prompt written notice of the claims, sole control over the defense and/or settlement of the claim, and at
Sycamore’s expense, Supplier’s full cooperation [ * ]. 

 

	 	15.2	 	Supplier agrees to indemnify Sycamore against damages finally awarded by a court of competent jurisdiction arising out of claims for direct losses, damages, costs
and expenses (including reasonable attorney’s fees) on account of personal injury, death, or tangible property damage as the result of Supplier’s active negligence or willful misconduct in the performance of Recurring Manufacturing
Services and Non-Recurring Manufacturing Services. This indemnification is conditioned upon Sycamore giving Supplier prompt notice of the claims, [ * ] over the [ * ] of the claims, and at Supplier’s expense, Sycamore’s full cooperation in
the defense of same. 

 

	 	15.3	 	Sycamore agrees to defend at its expense, hold harmless and indemnify Supplier, [ * ], from and against any judgments, liabilities, claims, demands, expenses, or
costs (including attorneys’ fees) to the extent arising from any claim or action asserting that [ * ], or any part thereof, or [ * ], infringes on any intellectual property right, including, without limitation, patent, trademark, copyright,
trade secret, or other proprietary right, of any third party, foreign or domestic. This indemnification is conditioned upon Supplier giving Sycamore prompt written notice of the claims, [ * ] and/or [ * ] of the claim, and at Sycamore’s
expense, Supplier’s [ * ]. 

 

	 	15.4	 	Supplier agrees to defend at its expense, hold harmless and indemnify Sycamore, [ * ], from and against any judgments, liabilities, claims, demands, expenses, or
costs (including attorneys’ fees) to the extent arising from any claim or action asserting that [ * ] infringe on any intellectual property right, including, without limitation, patent, trademark, copyright, trade secret, or other proprietary
right, of any third party, foreign or domestic. This 

	*	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested with
respect to the omitted portions. Asterisks within brackets denote omission. 

 

13 

indemnification is conditioned upon Sycamore giving Supplier prompt written notice of the
claims, [ * ] and/or [ * ] of the claim, and at Supplier’s expense, [ * ]. 
 

	 	15.5	 	The above indemnities also apply to claims covered by such indemnities for [ * ] made by [ * ] for infringement of Intellectual Property rights and for [ * ]).
However, no[ * ] third parties shall be deemed to be third party beneficiaries under such indemnities or this Agreement. 

 

	16.0	 	PAYMENT TERMS 

 

	 	16.1	 	Supplier shall render invoices to Sycamore for all Products provided and Services performed under this Agreement [ * ] of Products to Sycamore or its customer, or
Sycamore’s acceptance of Non-Recurring Manufacturing Services, as applicable. Supplier shall send invoices to Sycamore Networks, Inc., Attention: Accounts Payable, at the address specified on Sycamore’s Purchase Order.

 

	 	16.2	 	Sycamore shall pay Supplier [ * ] Days [ * ] from date of accurate invoice. Sycamore shall be entitled to a [ * ] from date of an accurate invoice. Supplier shall
pay Sycamore [ * ] Days [ * ] from date of accurate invoice. 

 

	 	16.3	 	Supplier’s Invoices shall be in writing and shall contain at least the following information: 

 

	 	•	 	Sycamore’s Purchase Order Number, 

 

	 	•	 	Sycamore’s Part Number and Revision Level, 

 

	 	•	 	Quantity of Products or Services, 

 

	 	•	 	Unit Price of Products or Services, 

 

	 	•	 	Extended Price, 

 

	 	•	 	F.O.B. point 

 

	 	•	 	Delivery location 

 

	 	•	 	Applicable freight and insurance charges reflected as separate line items 

 

	 	•	 	Date of invoice and date of shipment 

 
 
All amounts due are payable to Supplier at its address
specified herein or at such other place as Supplier may hereafter designate in writing to Sycamore. 
 

	 	16.4	 	[ * ] shall pay for those taxes imposed by any jurisdiction where Supplier assembles, tests, inspects, packages and/or manufactures Sycamore’s goods and which
are directly imposed upon the goods or services provided by Supplier to Sycamore before title passes to Sycamore. [ * ] will be solely responsible for and will pay [ * ], as the case may be) for all taxes, including sales taxes (if the item is not
for resale), value-added taxes, duties or other governmental or regulatory charges in any country, resulting from the transfer from Supplier to Sycamore of title to Products, except for any income, corporate or other related taxes based upon [ * ]
income or property for which [ * ] is directly liable. 

 

	 	16.5	 	Supplier accepts the credit liability of any Purchase Order once it is accepted and cannot request Sycamore to pay down any credit amount after such acceptance.

 

	17.0	 	INTELLECTUAL PROPERTY 

 

	 	17.1	 	Sycamore retains all rights to all existing intellectual property, including but not limited to, all patents, applications for patents, copyrights, mask works, trade
secrets and other intellectual property rights (“Intellectual Property”) owned by or licensed to Sycamore. Sycamore grants to Supplier a limited license solely to use and disclose the Intellectual Property to the extent necessary for
Supplier to perform its obligations hereunder. Sycamore warrants that all third-party Intellectual Property licenses to Sycamore are in good standing and include the right to grant Supplier all rights necessary to enable Supplier to perform its
obligations hereunder this Agreement. 

 

	 	17.2	 	Supplier retains all rights to all existing Intellectual Property owned by or licensed to Supplier. Supplier warrants that all third-party Intellectual Property
licenses to Supplier are in good standing and include all necessary rights to permit Supplier to perform its obligations hereunder. 

	*	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested with
respect to the omitted portions. Asterisks within brackets denote omission. 

 

14 

 

	 	17.3	 	Sycamore will own all rights to any Intellectual Property conceived, created or developed by Supplier in the course of performing its obligations hereunder, paid for
by Sycamore, and relating to the design of the Products. Supplier agrees that all designs, production tooling, prototypes, documentation, and any other data or components generated or developed by Supplier under this Agreement, paid for by Sycamore,
and relating to the design of the Products or furnished by Sycamore to Supplier shall be and shall remain the sole property of Sycamore. Supplier specifically agrees that all copyrightable components generated or developed under this Agreement, paid
for by Sycamore, and applicable to the Products (other than solely related to the manufacture of the Products) shall be considered works made for hire and that such components shall, upon creation, be owned exclusively by Sycamore, provided,
however, that to the extent that any such components have general application to Supplier’s manufacturing processes, Sycamore hereby grants to Supplier a non-exclusive, worldwide, royalty-free, non-transferable and irrevocable license to use
such components in connection with Supplier’s regular and customary course of business as a contract manufacturer. To the extent that any such components, under applicable law, may not be considered works made for hire, Supplier hereby assigns
to Sycamore the ownership of copyright in such components, without the necessity of further consideration, and Sycamore shall be entitled to obtain and hold in its own name all copyrights in such components. 

 

	 	17.4	 	If and to the extent Supplier may, under applicable law, be entitled to claim any ownership interest in the Intellectual Property Rights generated or developed by
Supplier and granted to Sycamore under Section 17.3, Supplier hereby transfers, grants, conveys, assigns and relinquishes exclusively to Sycamore all of Supplier’s right, title and interest in and to such Intellectual Property Rights in
perpetuity or for the longest period otherwise permitted by law. Supplier shall perform any acts, at Sycamore’s cost, that may be deemed necessary or desirable by Sycamore to evidence more fully transfer of ownership to Sycamore of all
Intellectual Property rights designated under this subparagraph 17.4 to the fullest extent possible, including but not limited to, the making of further written assignments in a form determined by Sycamore. Supplier agrees that it shall have and
maintain, during performance of this Agreement, written agreements with all employees, contractors, or agents engaged by Supplier in performing hereunder, granting Supplier rights sufficient to support all performance and grants of rights by
Supplier. Supplier shall provide copies of such agreements to Sycamore promptly upon request. 

 

	 	17.5	 	Except to the extent provided in Section 17.3 above, Supplier will own all rights to any Intellectual Property conceived, created or developed by Supplier in the
course of performing its obligations hereunder and solely relating to the manufacturing of the Products. 

 

	 	17.6	 	Except to the extent expressly stated herein or to the extent such Intellectual Property is incorporated into any Product or process related thereto, nothing in this
Agreement grants or can be capable of granting to Sycamore (whether directly or by implication, estoppel or otherwise) any existing Supplier rights to any Intellectual Property owned by or licensed to Supplier. Supplier hereby grants to Sycamore a
non-exclusive, worldwide, royalty-free, non-transferable and irrevocable license to use Intellectual Property owned by or licensed to Supplier and incorporated into any Product or process related thereto in connection with the manufacture, testing
or service of the Products (such license to include Sycamore’s right to use the physical embodiment of such Intellectual Property, whether in the form of tooling or otherwise, for its business purposes). 

 

	 	17.7	 	Sycamore’s know-how, testing components, Intellectual Property or the terms of this Agreement, including but not limited to, prices, Specifications, production
schedules and other performance activities hereunder are subject to the confidentiality provisions of Section 28 below. 

 

	 	17.8	 	To the extent transferable, Supplier shall pass through to Sycamore and its customers all intellectual property rights protection and indemnification secured from
its Vendors. Supplier will use commercially reasonable efforts to obtain: (i) substantially similar intellectual property indemnification from its Vendors and (ii) the Vendors’ agreement to transfer the same to Sycamore and its customers.

 

	18.0	 	CUSTOMER PROPERTY 

 

	 	18.1	 	Supplier shall use Sycamore Information only for the purposes contemplated by this Agreement. 

 

	 	18.2	 	Supplier will treat all Sycamore Information with substantially the same care as it treats its own property of a similar nature, but in no event less than a
reasonable degree of care, and subject to the confidentiality provisions of Section 28 

	*	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested with
respect to the omitted portions. Asterisks within brackets denote omission. 

 

15 

below. Supplier shall sequester and conspicuously mark all Sycamore components and permit
Sycamore to make site inspections to verify the treatment of such components upon reasonable notice. Supplier shall carry insurance coverage appropriate to cover the risk of loss of or damage to Sycamore’s tangible property in Supplier’s
possession and control. 
 

	 	18.3	 	Sycamore shall bear the costs of all maintenance, calibration and repair of Sycamore tooling supplied by Sycamore. Supplier shall bear the costs of all maintenance,
calibration and repair of Sycamore tooling with respect to which Sycamore pays Supplier to obtain on Sycamore’s behalf. Supplier must immediately notify Sycamore in the event that tooling or test equipment is found to be out-of-tolerance during
calibration. The Supplier shall obtain authorization from Sycamore for any maintenance, calibration and repair costs in excess of [ * ] for such services obtained on Sycamore’s behalf. 

 

	19.0	 	QUALITY ASSURANCE 

 

	 	19.1	 	Supplier shall maintain quality assurance systems for the control of components quality, processing, assembly, testing, packaging and shipping in accordance with its
usual policies and practices and reasonably satisfactory to Sycamore. Supplier shall use IPC A-610 Rev. B Class 2, as published by the Institute for Interconnecting and Packaging Electronic Circuits, as the workmanship standard in performing
Services hereunder. Any deficiencies identified by Sycamore in such systems shall be communicated to Supplier in writing. The Supplier is responsible for correcting identified deficiencies in a mutually agreed upon timely fashion. The cost of such
changes shall be the responsibility of Supplier. 

 

	 	19.2	 	Supplier must notify Sycamore in advance of any significant changes to process or equipment, for example, solder chemistries, assembly and test equipment, etc.

 

	 	19.3	 	Supplier shall provide at its cost any required minor test equipment as specified by Sycamore. Minor equipment requirements shall be reviewed with the Supplier as
part of the test process transfer. Minor equipment includes, but is not limited to, digital multimeters, scopes probes, and device programmers. 

 

	 	19.4	 	The Supplier shall maintain an inventory of test consumables as specified by Sycamore. Test consumables requirements shall be reviewed with Supplier as part of the
test process transfer. Test consumables include, but are not limited to test cables, adapters, test fibers, and connector savers. Sycamore shall reimburse Supplier for the costs incurred to maintain such inventory of test consumables as specified by
Sycamore upon Supplier’s written notification. 

 

	 	19.5	 	Supplier shall perform its processes and acceptance tests in accordance with procedures developed by Sycamore and agreed to by Supplier. The parties shall meet on a
quarterly basis to establish minimum acceptable test yields. 

 

	 	19.6	 	Either party may, during normal business hours and following reasonable notice and subject to the other party’s normal security requirements, review the other
party’s facilities and quality control procedures as reasonably necessary for the first party to satisfy itself of the other party’s compliance with its obligations under this Agreement. 

 

	 	19.7	 	The parties shall endeavor to meet quarterly to discuss and resolve any issues that may have arisen, including issues relating to quality, performance, engineering
changes, obsolescence or surpluses. 

 

	 	19.8	 	Supplier shall retain and maintain the following records and supporting documentation for a period of five (5) years beyond the termination of the Agreement, and
Supplier will provide a copy of the same to Sycamore upon request. 

 
The data contained in these records are the sole and exclusive property of Sycamore. 
 

	 	•	 	Quality Data 

 

	 	•	 	FDA Records 

 

	 	•	 	Optical Component Data Sheets 

 

	 	19.9	 	The parties shall evaluate and mutually agree upon any additional quality requirements. 

 

	20.0	 	SUPPLIER’S REPRESENTATIONS AND WARRANTIES 

	*	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested with
respect to the omitted portions. Asterisks within brackets denote omission. 

 

16 

 

	 	20.1	 	Supplier represents and warrants that it maintains insurance coverage with [ * ] rated carrier that is acceptable to Sycamore in the amounts listed below:

 

	 General Liability:
	  	 umbrella of US[ * ] million

	
	 Worker’s Compensation:
	  	 As required by local law of the state in which Supplier’s facility(ies) is(are) located

	
	 Errors and Omissions:
	  	 US[ * ] million per claim and US[ * ] million annual aggregate

	
	 Product Liability:
	  	 US[ * ] million per claim and US[ * ] million annual aggregate

	
	 Property Insurance:
	  	 US[ * ] million

 

	 	20.2	 	Supplier represents and warrants that it will maintain at its sole expense an ISO 9001 or ISO 9002 certified quality system in any of the facilities in which
Products are designed (ISO 9001) or manufactured (ISO 9001 or ISO 9002). In addition, Supplier will provide Sycamore on a quarterly basis information relating to ISO 14000 certified quality system until such time that Supplier registers its own ISO
14000 certified quality system. 

 
Supplier agrees to maintain safety information as required for Sycamore agency approvals. This will include but not be limited to, maintaining the following as defined by Sycamore: UL/CSA/CE agency case files for safety critical
parts, testing (Hi Pot) of Products per UL/CSA/CE defined procedures, labelling of Products per UL/CSA/CE requirements, and record keeping and maintenance per FDA Laser Safety requirements. 
 

	 	20.3	 	Supplier represents and warrants that it shall maintain all Direct Fulfillment Inventory, Consigned Inventory and Consigned Repairs Components on Supplier’s
premises that have been purchased by Sycamore in a secure and separate location, labeled as Sycamore’s property and free of all liens and attachments. Supplier shall retain the risk of loss of all Consignment Inventory and Consigned Repairs
Components while it is on its premises. Direct Fulfillment Inventory manufactured by Supplier will, in accordance with Section 10.2.3 hereof, be invoiced by Supplier upon the same being placed in Sycamore’s finished goods inventory location at
Supplier, at which time title and risk of loss to such Direct Fulfillment Inventory shall pass to Sycamore; notwithstanding, Supplier will insure such Direct Fulfillment Inventory held in Supplier’s facilities at the full replacement cost
thereof under the terms and conditions of Supplier’s “all risk” insurance coverage. 

 

	 	20.4	 	Supplier shall provide Sycamore with a certificate of insurance in a form reasonably acceptable to Sycamore naming Sycamore as a loss payee under Supplier’s
insurance policies as set forth in Section 20.1 and which provides that Sycamore shall have the right to participate directly with the insurance carrier, broker, and Supplier in the negotiation of any claim for a loss made thereunder affecting
Sycamore’s Direct Fulfillment Inventory, Consigned Inventory or Consigned Repairs Components on Supplier’s premises. Such certificate of insurance shall also include a provision whereby thirty (30) Days notice must be received, from
Supplier or the applicable insurer, by Sycamore prior to coverage cancellation or material alteration of the coverage. Such cancellation or material alteration shall not relieve Supplier of its continuing obligation to maintain insurance coverage in
accordance with the provisions of this Section 20. 

 

	21.0	 	HAZARDOUS MATERIAL/TOXIC SUBSTANCES 

 

	 	21.1	 	Supplier shall treat all material subject to the Toxic Substance Control Act, (15 USC 2601 et. seq.), the Resource Conservation and Recovery Act (42 USC 6901 et.
seq.) and the Environmental Protection Agency Hazardous Waste Management Program (40 CFR 260 et. seq.) (“Hazardous Material Laws”) strictly in compliance with such Hazardous Material Laws and as provided herein. Supplier agrees that all
such material shall be SHIPPED, TRANSPORTED, DISPOSED, MARKED, LABELED, TAGGED, PLACARDED, PACKAGED, IDENTIFIED, USED, PRESERVED, AND DOCUMENTED BY SUPPLIER AS REQUIRED BY APPLICABLE FEDERAL REGULATIONS INCLUDING BUT NOT LIMITED TO 49 CFR 172 ET.
SEQ. AND 29 CFR 1910.1200 ET. SEQ. IN ADDITION, SUPPLIER SHALL SUPPLY THE FOLLOWING INFORMATION: DESCRIPTION OF HAZARDOUS 

	*	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested with
respect to the omitted portions. Asterisks within brackets denote omission. 

 
 

17 

MATERIALS AND SHIPPING NAME, HAZARD CLASS OR DIVISION, IDENTIFICATION NUMBERS, PACKING
GROUP AND LABELS PER 49 CFR 172.202 ET SEQ. 
 

	 	21.2	 	Supplier shall comply with the Hazard Communication Standard, 29 CFR 1910.1200. Supplier shall ensure that the names of the items identified on the applicable
Material Safety Data Sheets are identical to the names that appear on the label of the Product shipped to Sycamore or its customer. Supplier shall provide a copy of the applicable Material Safety Data Sheets) with each such shipment.

 

	 	21.3	 	Supplier shall comply with Section 313 of the Emergency Planning and Community Right to Know Act of 1986 and 40 CFR Part 372, if applicable. As part of such
compliance, Supplier shall furnish the following information with the initial shipment of each Product to Sycamore or its customer: 

 

	 	21.3.1	 	A statement that the Products contain chemicals which are subject to Section 313 of Title III of the Superfund Amendments and Reauthorization Act of 1986 and 40 CFR
372.45. 

 

	 	21.3.2	 	The name and associated Chemical Abstract Service Registry number of each chemical which has been incorporated into the Products and which is listed in the specific
Toxic Chemical Listings contained in 40 CFR 372.45. 

 

	 	21.3.3	 	The percentage by weight of each toxic chemical component of the Products shipped. 

 

	 	21.4	 	Supplier shall ship Products containing hazardous components by common carrier authorized to handle the components and in accordance with 49 CFR Parts 100-109 and
the “ATA “Dangerous Goods Regulations” or “International Maritime Dangerous Goods Code” (if applicable). This includes, but is not limited to, compliance with the following requirements: 

 

	 	21.4.1	 	Supplier shall list an emergency contact number on all shipping papers. 

 

	 	21.4.2	 	Supplier shall list on all shipping papers and packages the technical names of all hazardous components in parenthesis format, the association to the basic
description and, in the case of mixtures, the major hazardous components by percentage contributing to the hazard. 

 

	 	21.4.3	 	Supplier shall indicate on the shipping papers whether the components presents Poisonous by Inhalation (“PIH”) hazards. 

 

	 	21.4.4	 	At Sycamore’s request, Supplier shall provide test reports to Sycamore indicating Supplier’s compliance with Performance Oriented Packaging requirements to
facilitate Sycamore’s reshipment of Products to customers. 

 

	 	21.4.5	 	Supplier shall clearly mark on all interior packages and shipping containers the closed cup flash point of flammable and combustible liquids.

 

	 	21.5	 	Supplier may not perform Services hereunder with ozone depleting substances and may not incorporate ozone-depleting substances into the Products unless approved by
Sycamore in advance in writing. In the event of such approval, Supplier shall affix the following warning statement to all affected Products and Services and associated paperwork: “WARNING: Manufactured with CFC-11, 12,13, 111, 112, 113, 114,
115, 211, 212, 213, 214, 215, 216, 217, Halons 12211, 1301, 2402, Carbon Tetrachloride or Methyl Chloroform substances which harm public health and environment by destroying the ozone in the upper atmosphere”. 

 

	 	21.6	 	DESCRIPTION OF HAZARDOUS MATERIALS ON SHIPPING PAPERS—Supplier must list a description of all hazardous material on all shipping papers associated with
Products, as follows: 

 

	 	21.6.1	 	The proper shipping name prescribed for the material in Column 2 of 49 CFR 172. 

	*	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested with
respect to the omitted portions. Asterisks within brackets denote omission. 

 
 

18 

	 	21.6.2	 	The hazard class or division prescribed for the material as shown in Column 3 of 49 CFR 172 (Table) (Class names, IMO class and division numbers or subsidiary hazard
classes may be entered in parentheses following the numerical hazard class). 

 

	 	21.6.3	 	The identification number (preceded by “UN” or “NA” as appropriate) prescribed for the material as shown in Column 4 of 49 CFR 172 (Table).

 

	 	21.6.4	 	The packing group, if any, prescribed for the material in Column 5 of 49 CFR 172 (Table). 

 

	22.0	 	MINORITY/WOMEN BUSINESS ENTERPRISES 

 

	 	22.1	 	Supplier shall use its reasonable best efforts to award subcontracts to minority business enterprises in a monetary amount equal to [ * ] percent [ * ] of its annual
revenue under this Agreement to the extent consistent with the efficient performance of this Agreement. As used in this Agreement, “minority business enterprise” means a business at least fifty percent (50%) of which is owned, controlled
and operated by minority group members or, in the case of publicly-owned business, at least fifty-one percent (51%) of the stock of which is owned by minority group members. A women’s business enterprise means a business which is fifty-one
(51%) owned, controlled and operated by women. For the purpose of this definition, minority group members are Blacks, Hispanics, Asian Pacific Islanders, American Indians and Alaskan Natives. Supplier may rely on written representations by
subcontractors regarding their status as minority or women’s business enterprises in lieu of an independent investigation. Upon Sycamore’s written request, within ten (10) business days of the end of each Sycamore quarter, Supplier shall
provide to Sycamore a written report signed by one of its officers which details the percentage of minority business enterprise subcontracts comprising the revenue generated by Supplier from Sycamore’s business that quarter under this
Agreement. 

 

	23.0	 	EXCLUSIONS AND LIMITATION OF LIABILITY 

 

	 	23.1	 	Neither party excludes or limits its liability for death or personal injury resulting from its negligence nor liability for breach of any term implied by statute to
the extent that such liabilities cannot by law be limited or excluded. 

 

	 	23.2	 	Subject only to subparagraph 23.1 above, under no circumstances shall either party have any liability in connection with this Agreement, whether in contract or for
negligence or otherwise and whether related to any single event or series of connected events (but not relating to Sycamore’s inventory liabilities or obligations to pay invoices hereunder that are not subject to a bona fide dispute), for any
of the following: 

 

	 	23.2.1	 	any liability in excess of: 

 

	 	23.2.1.1	 	in the case of damage to or loss of tangible property, the value of such property; 

 

	 	23.2.1.2	 	in the case of any warranty claims by Sycamore against Supplier, an amount equal to [ * ]; and 

 

	 	23.2.1.3	 	in any event, and in respect of any other liability, an amount equal to [ * ]. 

 

	 	23.2.2	 	any liability for any incidental, indirect or consequential damages, including those relating to loss of business, loss of records or data, loss of use, loss of
profits, revenue or anticipated savings or other economic loss, whether or not Supplier or Sycamore was informed or was aware of the possibility of such loss. 

 

	 	23.3	 	Neither party may bring an action under this Agreement more than [ * ] after the cause of action arose. 

 

	 	23.4	 	Neither party will have liability to the other for any failure to perform any obligation under this Agreement or any order to the extent such failure was due to the
act or omission of the other party or any agent of the other party. 

 

	24.0	 	TERMINATION 

	*	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested with
respect to the omitted portions. Asterisks within brackets denote omission. 

 

19 

 

	 	24.1	 	After notice of termination is tendered, each party shall cause its Coordinator to prepare (a) an orderly termination of this Agreement and (b) for return to the
owning party of its components, equipment, records, specifications, and confidential information. The parties agree to work together to achieve as orderly a transition as possible. 

 

	 	24.2	 	Sycamore may terminate this Agreement for any reason by providing written notice to Supplier at least [ * ] Days in advance of the requested termination date.
Supplier may terminate this Agreement for any reason by providing written notice to Sycamore at least [ * ] Days in advance of the requested termination date. For avoidance of doubt, if either party resorts to the dispute resolution proceedings sets
forth under Section 31 hereof, it shall not preclude either party from exercising its rights to terminate under Section 24.2 hereof. 

 

	 	24.3	 	Either party may terminate this Agreement at any time for cause in the event that any material default by the other remains uncured for more than [ * ] Days
following written notice or in the event that other party files or has filed against it any bankruptcy, insolvency or receivership proceeding which prevents or presents a reasonable risk of preventing such party from fulfilling is obligations
hereunder, and which is not cured within [ * ] Days of written notice. The non-defaulting party shall specify in the written notice the conditions constituting the default and the corrective action, if any, which must be undertaken to cure such
default. If, on or before the noticed date of termination, the non-defaulting party, in the exercise of good faith, determines that the defaulting party has cured the noticed condition of default or has undertaken satisfactory arrangements to
attempt the cure, then this Agreement shall continue in force and effect. 

 

	 	24.4	 	Upon termination [ * ], Sycamore shall be responsible for: 

 

	 	24.4.1	 	Supplier’s scheduled and actual work-in-process for Sycamore; 

 

	 	24.4.2	 	Finished Products; 

 

	 	24.4.3	 	Any investment incurred by Supplier specifically in relation to this Agreement with the prior written agreement of Sycamore and which has not been recovered by
Supplier from Sycamore through Reasonable and Prudent Purchasing Practices, amortization or other means; 

 

	 	24.4.4	 	All Obsolete Inventory or Excess Inventory reported in accordance with Section 11; 

 

	 	24.4.5	 	Except for Sycamore’s termination due to the default of Supplier, all Purchase Orders placed and accepted by Supplier in accordance with this Agreement; and

 

	 	24.4.6	 	Cancellation or restocking charges for Supplier purchase orders placed on behalf of Sycamore, provided that Supplier has employed Reasonable and Prudent Purchasing
Practices with regard to such components and Supplier can reasonably demonstrate such practices by documentary or other evidence. 

 
Supplier shall bear the expense of all packaging for shipment and Sycamore shall bear the expense of all freight charges in accordance
with Section 12.4. Supplier shall calculate and document all charges under this section and shall provide Sycamore with reasonably sufficient documentation in a reasonable format to support all such charges and calculations. Either party shall be
entitled to set-off against any sums due the other party pursuant to this termination provision any sums, liquidated or contingent, which in the good faith judgment of such party constitute sums owing or direct damages for which the other party
would be responsible under the terms hereof. 
 

	25.0	 	FORCE MAJEURE 

 

	 	25.1	 	Except for the payment of invoices due to Supplier that are not the subject of a bona fide dispute, neither party shall be liable for any delay in performance or
failure to perform obligations, in whole or in part, when due to circumstances beyond its reasonable control, a labor dispute, strike, war or act of war (whether an actual declaration is made or not), acts of terrorism, insurrection, riot, civil
commotion, fire, flood, or other act of God. If an event of Force Majeure 

	*	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested with
respect to the omitted portions. Asterisks within brackets denote omission. 

 

20 

occurs, the party experiencing the Force Majeure event shall immediately notify the other
party of the interruption of scheduled deliveries. 
 

	 	25.2	 	If an event of Force Majeure continues for a period of [ * ] Days, Sycamore shall have the right to terminate this Agreement immediately upon written notice to
Supplier. 

 

	 	25.3	 	If Supplier experiences a Force Majeure event, Supplier shall use its reasonable best efforts immediately to put into effect an alternate plan to continue supplying
Products and Services to Sycamore. Among other things, Supplier’s plan shall grant Sycamore priority treatment in moving the affected operations to another Supplier facility in order to continue production and minimize downtime.

 

	26.0	 	NOTICES 

 

	 	26.1	 	In any case where a notice or other communication is to be given or made pursuant to any provision of this Agreement, such notice or communication will be deemed to
be received when given or made as follows: 

 

	 	26.1.1	 	if by hand delivery, on the day delivered; 

 

	 	26.1.2	 	if by telex, cable, confirmed fax, or telegraph, on the next business day following the date sent; and 

 

	 	26.1.3	 	if by mail, on the third calendar day following posting by certified or registered mail, return receipt requested. 

 

	 	26.2	 	Supplier shall mail all such notices to Sycamore and addressed to: 

 

	 Mr. John Dowling
	 	 Copy to: Law Department

	 Sycamore Networks, Inc.
	 	 Sycamore Networks, Inc.

	 220 Mill Road
	 	 220 Mill Road

	 Chelmsford, MA 01824
	 	 Chelmsford, MA 01824

	 FAX # (978) 256-0022
	 	 FAX # (978) 244-1097

 

	 	26.3	 	Sycamore shall send all such notices to Supplier and addressed to: 

 

	 President
	 	 Copy to: General Counsel

	 Plexus Services Corp.
	 	 Plexus Services Corp.

	 55 Jewelers Park Drive
	 	 55 Jewelers Park Drive

	 Neenah, Wisconsin 54957
	 	 Neenah, Wisconsin 54957

 

	 	26.4	 	Coordinators, are: 

 
For Supplier: 
 
Steve Cohen 
Plexus Services Corp. 
4 Copeland Drive 
Ayer, MA 01432 
 
For Sycamore: 
 
John Breda 
Sycamore Networks, Inc. 
220 Mill Road 
Chelmsford, MA 01824 

	*	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested with
respect to the omitted portions. Asterisks within brackets denote omission. 

 

21 

 

	27.0	 	NON-ASSIGNMENT 

 

	 	27.1	 	Neither party may assign this Agreement without the prior written consent of the other party, which approval shall not be unreasonably withheld or delayed. Either
party may, however, assign this Agreement in the event of a merger, acquisition, consolidation or sale of all or substantially all of such party’s business assets or stock, to which assignment both parties hereby consent.

 

	28.0	 	CONFIDENTIALITY / NON-DISCLOSURE 

 

	 	28.1	 	The parties shall comply with the provisions of the confidentiality agreement between Supplier and Sycamore Networks, Inc. (the “Confidentiality
Agreement”) effective August 16, 2000. 

 

	 	28.2	 	Neither party shall make any public announcement or other disclosure concerning the existence or terms of this Agreement without first obtaining the other
party’s written consent and agreement upon the nature and text of such announcement, such approval and agreement not to be unreasonably withheld. This subparagraph 28.2 shall not apply to (a) any disclosure to a third party which a party
determines is reasonably necessary in connection with any financing, strategic transaction, acquisition or disposition involving such party, provided that the third party signs a nondisclosure agreement with terms and conditions substantially
similar to this subparagraph 28.2, or (b) any disclosure which a party reasonably determines is required by applicable law, regulation, regulatory authority, legal process or the rules of any stock market on which the securities of such party are
listed or quoted for trading. 

 

	29.0	 	SUPERSEDING EFFECT 

 

	 	29.1	 	This Agreement, including all attachments, constitutes the entire Agreement between the parties with respect to the subject matter and supersedes all previous
communications, representations, understandings and agreements, either oral or written, between the parties. This Agreement shall be modified only by an instrument in writing signed by duly authorized representatives of the parties.

 

	 	29.2	 	Any standard or pre-printed terms and conditions set out in any Sycamore Purchase Order form or any Supplier invoice or order acknowledgement shall have no effect
and are superseded by the terms and conditions of this Agreement. 

 

	 	29.3	 	Any rights or obligations under this Agreement which, by their nature and context, continue after termination will remain in effect until fully satisfied or fully
performed. 

 

	 	29.4	 	If there is any conflict or inconsistency between the terms and conditions of any Purchase Order or other documents provided by either party to the other hereunder
and the terms and conditions of this Agreement, the terms and conditions of this Agreement shall prevail. 

 

	30.0	 	GOVERNING LAW 

 

	 	30.1	 	This Agreement shall be interpreted in all respects in accordance with the laws of the State of New York, USA, exclusive of any provisions of the United Nations
Convention on the International Sale of Goods and without regard to principles of conflict of laws. The parties submit to the nonexclusive jurisdiction of the courts of the State of New York. The parties further expressly waive any right they may
have to a jury trial and agree that any proceedings under this Agreement shall be tried by a judge without a jury. 

 

	31.0	 	DISPUTE RESOLUTION PROCESS 

 

	 	31.1	 	Disputes between Supplier and Sycamore will be handled through this Dispute Resolution Process. This process shall be initiated when a party’s Coordinator
completes a Dispute Resolution Form (contained in Exhibit C) and provided it to the other Coordinator. The dispute will be resolved within five (5) business days by the Coordinators and the issue will be closed. 

	*	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested with
respect to the omitted portions. Asterisks within brackets denote omission. 

 

22 

 

	 	31.2	 	In the event that the Coordinators are unable to resolve the dispute within five (5) business days of the notice thereof, either person may request that their Level
1 Managers (as defined herein below) meet to discuss the dispute. A meeting between the Level 1 Managers shall be held within seven (7) Days of the date on which such meeting is requested. In the event the Level 1 Managers are unable to agree on a
plan for resolving the dispute within seven (7) Days of the requested meeting, either Level 1 Manager may raise the issue to the respective Level 2 Managers. In the event the Level 2 Managers are unable to agree on a plan for resolving the dispute
within seven (7) Days of when the dispute is raised by a Level 1 Manager, either Level 2 Manager may raise the dispute to the respective Level 3 Managers. If the Level 3 Managers fail to resolve such dispute within ten (10) business days of when the
dispute is raised by a Level 2 Manager, the Dispute Resolution Process is completed and the parties may exercise any and all rights under this Agreement. 

 
To facilitate the Dispute Resolution Process, the parties agree to the following escalation path:

 

	 Level

	  	 Supplier

	  	 Sycamore

	
	 	  	 Supplier Program Manager
	  	 Sycamore Coordinator

	
	 Level 1
	  	 Supplier Strategic Customer Manager
	  	 Sycamore Business Contact Vice President of Operations

	
	 Level 2
	  	 Supplier CFO
	  	 Sycamore CFO

	
	 Level 3
	  	 Supplier President
	  	 Sycamore CEO

 
Any
level manager may authorize a designee to assume his/her responsibilities under this section provided such designee is given full authority to agree to a resolution of the dispute. During the pendency of the dispute resolution process, Sycamore will
continue to make payments in accordance with the provisions of this Agreement and Supplier will continue to perform Services. So long as both parties follow the dispute resolution process, neither Supplier nor Sycamore shall institute any legal
proceedings or resort to any remedy to enforce its rights under the Agreement, except that either party may apply for an injunction or other equitable relief if it believes in good faith that an injunctive or equitable relief is necessary to prevent
if from incurring serious and irreparable harm. 
 

	32.0	 	GENERAL 

 

	 	32.1	 	Supplier shall comply with all applicable state and federal laws and regulations, including, without limitation, the requirements of the Fair Labor Standards Act of
1938 (as amended), and to provide disclosure as to all hazardous substances utilized in the manufacture of the Products and the performance of Services. The foregoing shall not be deemed, however, to create liability on the part of Supplier for
intellectual property infringement (other than as provided under Section 15 hereof) or for non-compliance where such non-compliance arose out of Supplier’s conformance with the Specifications or Sycamore instructions or directives.

 

	 	32.2	 	The parties are each independent contractors and not joint venturers, partners, agents or representatives of the other. Neither party has any right to create any
obligation on the part of the other party. This Agreement shall not prevent Supplier from marketing, acquiring, or developing components, products or services that are similar or competitive to those of Sycamore. Supplier may pursue activities
independently with any third party, even if similar to the activities under this Agreement. 

 
THE REMAINER OF THIS PAGE IS INTENTIONALLY BLANK. 

	*	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested with
respect to the omitted portions. Asterisks within brackets denote omission. 

 

23 

 

	 	32.3	 	All provisions of this Agreement which by their nature must survive termination in order to achieve the fundamental purposes of this Agreement shall, except as
otherwise provided herein, survive the expiration or earlier termination of this Agreement for any reason, including but not limited to the following Sections: Section 9—Cancellation, Section 10—Inventory Management, Section
11—Obsolete or Excess Component Inventory, Section 13—Supplier Warranty, Section 15—Indemnification, Section 16—Payment Terms, Section 17—Intellectual Property, Section 18—Customer Property, Section 19—Quality
Assurance, Section 20—Supplier’s Representations and Warranties, Section 21—Hazardous Components/Toxic Substances, Section 23—Exclusions and Limitation of Liability, Section 24—Termination, Section 25—Force Majeure,
Section 28—Confidentiality/Non-Disclosure, Section 30—Governing Law, and Section 32—General. 

 
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective duly authorized representatives effective on the date
referenced above. 
 

	 SYCAMORE NETWORKS, INC.
	  	      PLEXUS SERVICES CORP.

	
	 By:
                                        
                            
	  	 By:
                                        
                            

	
	 Name:
                                        
                       
	  	 Name:
                                        
                       

	
	 Title:
                                        
                        
	  	 Title:
                                        
                        

	
	 Date:
                                        
                         
	  	 Date:
                                        
                         

	*	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested with
respect to the omitted portions. Asterisks within brackets denote omission. 

 
 

24 

 
EXHIBIT A

 
VARIANCE AUTHORIZATION FORM 
 

	 Type of Request

	  	 Indicate Y for all that apply

	 PPV
	  	

	 Min Order Qty
	  	

	 NCNR Authorization
	  	

	 SPF Variance
	  	

	 	  	

	 Required for Production Build:
	  	

	 Required for NPI Build:
	  	

	
	 Date:
	  	 
	 Part #:
	  	 SXXX-XXXXX-XX

	 Product Code (where used):
	  	 XXXXXX

	 Component lead-time
	  	 
	
	 Qty for Approval:
	  	 
	 Qty required:
	  	 
	 Min. Order Qty:
	  	 
	
	 Current Quoted Price:
	  	 
	 SPF Price:
	  	 
	 CM STD Price:
	  	 
	 CM Purchase Order
	  	 
	
	 Impact $ (PPV or Excess Inv):
	  	 
	
	 Manufacturer Part #:
	  	 
	 Supplier:
	  	 
	
	 Reason/Comments:
	  	 
	 Buyer Requesting:
	  	 
	 Resolution:
	  	 SPF confirmed, Change SPF, order min., etc.

	 Approval Date:
	  	 
	
	 Requestor
	  	 
	 Requestor Action:
	  	 
	 Date:
	  	 
	
	 Notes:
	  	 

	*	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested with
respect to the omitted portions. Asterisks within brackets denote omission. 

 
EXHIBIT B

NON-RECURRING SERVICES PRICING 
 
[ * ] 

	*	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested with
respect to the omitted portions. Asterisks within brackets denote omission. 

 

26 

 
EXHIBIT C

 
DISPUTE RESOLUTION FORM 
 
Dispute Resolution Form 
Sycamore/Plexus Manufacturing Services Agreement 
 

	 Issue Resolution Number: 

	 	 Date: 

	 Requesting Coordinator

	 	 Organization: 

 
Issue

Description: 

 

 

 
Impact (If Not 
Resolved) 

 

 

 

	 Date Resolution Needed
	  	  

 
Attachments (If Any)

 

 

 

	 Reviewer
	  	  

	  	 Review Completion Date
	  	  

 
Reviewer Comments:

 

 

 
Reviewer
Recommendations:     ( ) Accept    ( ) Reject    ( ) Need More Info.    ( ) Other 
Disposition:                                  ( )
Accepted    ( ) Accept Conditionally    ( ) Rejected 

	 Planned Completion Date:
	  	  

Comments: 
 

 

 

	 Resolved Date
	  	  

 

	 Sycamore Coordinator Signature
	  	  

 

	 Plexus Coordinator Signature
	  	  

	*	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested with
respect to the omitted portions. Asterisks within brackets denote omission. 

 

27 

 
Exhibit D

Sycamore Networks 
Operating/Financial Calendar 
Fiscal 2003 
 

	 	 	 August ’03

	 	 	 	 	 	 February ’03

	 	 
	 	 	 S

	 	 M

	 	 T

	 	 W

	 	 TH

	 	 F

	 	 S

	 	 	 	 	 	 S

	 	 M

	 	 T

	 	 W

	 	 TH

	 	 F

	 	 S

	 	 
	 1
	 	 	 	 	 	 	 	 	 	 1
	 	 2
	 	 3
	 	 QTR
	 	 27
	 	 26
	 	 27
	 	 28
	 	 29
	 	 30
	 	 31
	 	 1
	 	 QTR

	 2
	 	 4
	 	 5
	 	 6
	 	 7
	 	 8
	 	 9
	 	 10
	 	 	 	 28
	 	 2
	 	 3
	 	 4
	 	 5
	 	 6
	 	 7
	 	 8
	 	 
	 3
	 	 11
	 	 12
	 	 13
	 	 14
	 	 15
	 	 16
	 	 17
	 	 	 	 29
	 	 9
	 	 10
	 	 11
	 	 12
	 	 13
	 	 14
	 	 15
	 	 
	 4
	 	 18
	 	 19
	 	 20
	 	 21
	 	 22
	 	 23
	 	 24
	 	 	 	 30
	 	 16
	 	 17
	 	 18
	 	 19
	 	 20
	 	 21
	 	 22
	 	 
	
	 	 	 September ’03

	 	 	 	 	 	 March ’03

	 	 
	 	 	 S

	 	 M

	 	 T

	 	 W

	 	 TH

	 	 F

	 	 S

	 	 	 	 	 	 S

	 	 M

	 	 T

	 	 W

	 	 TH

	 	 F

	 	 S

	 	 
	 5
	 	 25
	 	 26
	 	 27
	 	 28
	 	 29
	 	 30
	 	 31
	 	 	 	 31
	 	 23
	 	 24
	 	 25
	 	 26
	 	 27
	 	 28
	 	 1
	 	 
	 6
	 	 1
	 	 2
	 	 3
	 	 4
	 	 5
	 	 6
	 	 7
	 	 	 	 32
	 	 2
	 	 3
	 	 4
	 	 5
	 	 6
	 	 7
	 	 8
	 	 
	 7
	 	 8
	 	 9
	 	 10
	 	 11
	 	 12
	 	 13
	 	 14
	 	 1
	 	 33
	 	 9
	 	 10
	 	 11
	 	 12
	 	 13
	 	 14
	 	 15
	 	 3

	 8
	 	 15
	 	 16
	 	 17
	 	 18
	 	 19
	 	 20
	 	 21
	 	 	 	 34
	 	 16
	 	 17
	 	 18
	 	 19
	 	 20
	 	 21
	 	 22
	 	 
	
	 	 	 October ’03

	 	 	 	 	 	 April ’03

	 	 
	 	 	 S

	 	 M

	 	 T

	 	 W

	 	 TH

	 	 F

	 	 S

	 	 	 	 	 	 S

	 	 M

	 	 T

	 	 W

	 	 TH

	 	 F

	 	 S

	 	 
	 9
	 	 22
	 	 23
	 	 24
	 	 25
	 	 26
	 	 27
	 	 28
	 	 	 	 35
	 	 23
	 	 24
	 	 25
	 	 26
	 	 27
	 	 28
	 	 29
	 	 
	 10
	 	 29
	 	 30
	 	 1
	 	 2
	 	 3
	 	 4
	 	 5
	 	 	 	 36
	 	 30
	 	 31
	 	 1
	 	 2
	 	 3
	 	 4
	 	 5
	 	 
	 11
	 	 6
	 	 7
	 	 8
	 	 9
	 	 10
	 	 11
	 	 12
	 	 	 	 37
	 	 6
	 	 7
	 	 8
	 	 9
	 	 10
	 	 11
	 	 12
	 	 
	 12
	 	 13
	 	 14
	 	 15
	 	 16
	 	 17
	 	 18
	 	 19
	 	 	 	 38
	 	 13
	 	 14
	 	 15
	 	 16
	 	 17
	 	 18
	 	 19
	 	 
	 13
	 	 20
	 	 21
	 	 22
	 	 23
	 	 24
	 	 25
	 	 26
	 	 	 	 39
	 	 20
	 	 21
	 	 22
	 	 23
	 	 24
	 	 25
	 	 26
	 	 
	
	 	 	 November ’03

	 	 	 	 	 	 May ’03

	 	 
	 	 	 S

	 	 M

	 	 T

	 	 W

	 	 TH

	 	 F

	 	 S

	 	 	 	 	 	 S

	 	 M

	 	 T

	 	 W

	 	 TH

	 	 F

	 	 S

	 	 
	 14
	 	 27
	 	 28
	 	 29
	 	 30
	 	 31
	 	 1
	 	 2
	 	 QTR
	 	 40
	 	 27
	 	 28
	 	 29
	 	 30
	 	 1
	 	 2
	 	 3
	 	 QTR

	 15
	 	 3
	 	 4
	 	 5
	 	 6
	 	 7
	 	 8
	 	 9
	 	 	 	 41
	 	 4
	 	 5
	 	 6
	 	 7
	 	 8
	 	 9
	 	 10
	 	 
	 16
	 	 10
	 	 11
	 	 12
	 	 13
	 	 14
	 	 15
	 	 16
	 	 	 	 42
	 	 11
	 	 12
	 	 13
	 	 14
	 	 15
	 	 16
	 	 17
	 	 
	 17
	 	 17
	 	 18
	 	 19
	 	 20
	 	 21
	 	 22
	 	 23
	 	 	 	 43
	 	 18
	 	 19
	 	 20
	 	 21
	 	 22
	 	 23
	 	 24
	 	 
	
	 	 	 December ’03

	 	 	 	 	 	 June ’03

	 	 
	 	 	 S

	 	 M

	 	 T

	 	 W

	 	 TH

	 	 F

	 	 S

	 	 	 	 	 	 S

	 	 M

	 	 T

	 	 W

	 	 TH

	 	 F

	 	 S

	 	 
	 18
	 	 24
	 	 25
	 	 26
	 	 27
	 	 28
	 	 29
	 	 30
	 	 	 	 44
	 	 25
	 	 26
	 	 27
	 	 28
	 	 29
	 	 30
	 	 31
	 	 
	 19
	 	 1
	 	 2
	 	 3
	 	 4
	 	 5
	 	 6
	 	 7
	 	 	 	 45
	 	 1
	 	 2
	 	 3
	 	 4
	 	 5
	 	 6
	 	 7
	 	 
	 20
	 	 8
	 	 9
	 	 10
	 	 11
	 	 12
	 	 13
	 	 14
	 	 2
	 	 46
	 	 8
	 	 9
	 	 10
	 	 11
	 	 12
	 	 13
	 	 14
	 	 4

	 21
	 	 15
	 	 16
	 	 17
	 	 18
	 	 19
	 	 20
	 	 21
	 	 	 	 47
	 	 15
	 	 16
	 	 17
	 	 18
	 	 19
	 	 20
	 	 21
	 	 
	
	 	 	 January ’03

	 	 	 	 	 	 July ’03

	 	 
	 	 	 S

	 	 M

	 	 T

	 	 W

	 	 TH

	 	 F

	 	 S

	 	 	 	 	 	 S

	 	 M

	 	 T

	 	 W

	 	 TH

	 	 F

	 	 S

	 	 
	 22
	 	 22
	 	 23
	 	 24
	 	 25
	 	 26
	 	 27
	 	 28
	 	 	 	 48
	 	 22
	 	 23
	 	 24
	 	 25
	 	 26
	 	 27
	 	 28
	 	 
	 23
	 	 29
	 	 30
	 	 31
	 	 1
	 	 2
	 	 3
	 	 4
	 	 	 	 49
	 	 29
	 	 30
	 	 1
	 	 2
	 	 3
	 	 4
	 	 5
	 	 
	 24
	 	 5
	 	 6
	 	 7
	 	 8
	 	 9
	 	 10
	 	 11
	 	 	 	 50
	 	 6
	 	 7
	 	 8
	 	 9
	 	 10
	 	 11
	 	 12
	 	 
	 25
	 	 12
	 	 13
	 	 14
	 	 15
	 	 16
	 	 17
	 	 18
	 	 	 	 51
	 	 13
	 	 14
	 	 15
	 	 16
	 	 17
	 	 18
	 	 19
	 	 
	 26
	 	 19
	 	 20
	 	 21
	 	 22
	 	 23
	 	 24
	 	 25
	 	 	 	 52
	 	 20
	 	 21
	 	 22
	 	 23
	 	 24
	 	 25
	 	 26
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 53
	 	 27
	 	 28
	 	 29
	 	 30
	 	 31
	 	 	 	 	 	 

	*	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested with
respect to the omitted portions. Asterisks within brackets denote omission. 

 

28 

 

	*	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested with
respect to the omitted portions. Asterisks within brackets denote omission. 

 

29 

 
Sycamore
Networks 
Operating/Financial Calendar 
Fiscal 2004 
 

	 	 	 August ’04

	 	 	 	 	 	 February ’04

	 	 
	 	 	 S

	 	 M

	 	 T

	 	 W

	 	 TH

	 	 F

	 	 S

	 	 	 	 	 	 S

	 	 M

	 	 T

	 	 W

	 	 TH

	 	 F

	 	 S

	 	 
	 1
	 	 	 	 	 	 	 	 	 	 	 	 1
	 	 2
	 	 QTR
	 	 27
	 	 25
	 	 26
	 	 27
	 	 28
	 	 29
	 	 30
	 	 31
	 	 QTR

	 2
	 	 3
	 	 4
	 	 5
	 	 6
	 	 7
	 	 8
	 	 9
	 	 1
	 	 28
	 	 1
	 	 2
	 	 3
	 	 4
	 	 5
	 	 6
	 	 7
	 	 3

	 3
	 	 10
	 	 11
	 	 12
	 	 13
	 	 14
	 	 15
	 	 16
	 	 	 29
	 	 8
	 	 9
	 	 10
	 	 11
	 	 12
	 	 13
	 	 14
	 
	 4
	 	 17
	 	 18
	 	 19
	 	 20
	 	 21
	 	 22
	 	 23
	 	 	 30
	 	 15
	 	 16
	 	 17
	 	 18
	 	 19
	 	 20
	 	 21
	 
	 	 	 September ’04

	 	 	 	 	 March ’04

	 
	 	 	 S

	 	 M

	 	 T

	 	 W

	 	 TH

	 	 F

	 	 S

	 	 	 	 	 S

	 	 M

	 	 T

	 	 W

	 	 TH

	 	 F

	 	 S

	 
	 5
	 	 24
	 	 25
	 	 26
	 	 27
	 	 28
	 	 29
	 	 30
	 	 	 31
	 	 22
	 	 23
	 	 24
	 	 25
	 	 26
	 	 27
	 	 28
	 
	 6
	 	 31
	 	 1
	 	 2
	 	 3
	 	 4
	 	 5
	 	 6
	 	 	 32
	 	 29
	 	 1
	 	 2
	 	 3
	 	 4
	 	 5
	 	 6
	 
	 7
	 	 7
	 	 8
	 	 9
	 	 10
	 	 11
	 	 12
	 	 13
	 	 	 33
	 	 7
	 	 8
	 	 9
	 	 10
	 	 11
	 	 12
	 	 13
	 
	 8
	 	 14
	 	 15
	 	 16
	 	 17
	 	 18
	 	 19
	 	 20
	 	 	 34
	 	 14
	 	 15
	 	 16
	 	 17
	 	 18
	 	 19
	 	 20
	 
	 	 	 October ’04

	 	 	 	 	 April ’04

	 
	 	 	 S

	 	 M

	 	 T

	 	 W

	 	 TH

	 	 F

	 	 S

	 	 	 	 	 S

	 	 M

	 	 T

	 	 W

	 	 TH

	 	 F

	 	 S

	 
	 9
	 	 21
	 	 22
	 	 23
	 	 24
	 	 25
	 	 26
	 	 27
	 	 	 35
	 	 21
	 	 22
	 	 23
	 	 24
	 	 25
	 	 26
	 	 27
	 
	 10
	 	 28
	 	 29
	 	 30
	 	 1
	 	 2
	 	 3
	 	 4
	 	 	 36
	 	 28
	 	 29
	 	 30
	 	 31
	 	 1
	 	 2
	 	 3
	 
	 11
	 	 5
	 	 6
	 	 7
	 	 8
	 	 9
	 	 10
	 	 11
	 	 	 37
	 	 4
	 	 5
	 	 6
	 	 7
	 	 8
	 	 9
	 	 10
	 
	 12
	 	 12
	 	 13
	 	 14
	 	 15
	 	 16
	 	 17
	 	 18
	 	 	 38
	 	 11
	 	 12
	 	 13
	 	 14
	 	 15
	 	 16
	 	 17
	 
	 13
	 	 19
	 	 20
	 	 21
	 	 22
	 	 23
	 	 24
	 	 25
	 	 	 39
	 	 18
	 	 19
	 	 20
	 	 21
	 	 22
	 	 23
	 	 24
	 
	
	 	 	 November ’04

	 	 	 	 	 	 May ’04

	 	 
	 	 	 S

	 	 M

	 	 T

	 	 W

	 	 TH

	 	 F

	 	 S

	 	 	 	 	 	 S

	 	 M

	 	 T

	 	 W

	 	 TH

	 	 F

	 	 S

	 	 
	 14
	 	 26
	 	 27
	 	 28
	 	 29
	 	 30
	 	 31
	 	 1
	 	 QTR
	 	 40
	 	 25
	 	 26
	 	 27
	 	 28
	 	 29
	 	 30
	 	 1
	 	 QTR

	 15
	 	 2
	 	 3
	 	 4
	 	 5
	 	 6
	 	 7
	 	 8
	 	 2
	 	 41
	 	 2
	 	 3
	 	 4
	 	 5
	 	 6
	 	 7
	 	 8
	 	 4

	 16
	 	 9
	 	 10
	 	 11
	 	 12
	 	 13
	 	 14
	 	 15
	 	 	 42
	 	 9
	 	 10
	 	 11
	 	 12
	 	 13
	 	 14
	 	 15
	 
	 17
	 	 16
	 	 17
	 	 18
	 	 19
	 	 20
	 	 21
	 	 22
	 	 	 43
	 	 16
	 	 17
	 	 18
	 	 19
	 	 20
	 	 21
	 	 22
	 
	 	 	 December ’04

	 	 	 	 	 June ‘04

	 
	 	 	 S

	 	 M

	 	 T

	 	 W

	 	 TH

	 	 F

	 	 S

	 	 	 	 	 S

	 	 M

	 	 T

	 	 W

	 	 TH

	 	 F

	 	 S

	 
	 18
	 	 23
	 	 24
	 	 25
	 	 26
	 	 27
	 	 28
	 	 29
	 	 	 44
	 	 23
	 	 24
	 	 25
	 	 26
	 	 27
	 	 28
	 	 29
	 
	 19
	 	 30
	 	 1
	 	 2
	 	 3
	 	 4
	 	 5
	 	 6
	 	 	 45
	 	 30
	 	 31
	 	 1
	 	 2
	 	 3
	 	 4
	 	 5
	 
	 20
	 	 7
	 	 8
	 	 9
	 	 10
	 	 11
	 	 12
	 	 13
	 	 	 46
	 	 6
	 	 7
	 	 8
	 	 9
	 	 10
	 	 11
	 	 12
	 
	 21
	 	 14
	 	 15
	 	 16
	 	 17
	 	 18
	 	 19
	 	 20
	 	 	 47
	 	 13
	 	 14
	 	 15
	 	 16
	 	 17
	 	 18
	 	 19
	 
	 	 	 January ’04

	 	 	 	 	 July ’04

	 
	 	 	 S

	 	 M

	 	 T

	 	 W

	 	 TH

	 	 F

	 	 S

	 	 	 	 	 S

	 	 M

	 	 T

	 	 W

	 	 TH

	 	 F

	 	 S

	 
	 22
	 	 21
	 	 22
	 	 23
	 	 24
	 	 25
	 	 26
	 	 27
	 	 	 48
	 	 20
	 	 21
	 	 22
	 	 23
	 	 24
	 	 25
	 	 26
	 
	 23
	 	 28
	 	 29
	 	 30
	 	 31
	 	 1
	 	 2
	 	 3
	 	 	 49
	 	 27
	 	 28
	 	 29
	 	 30
	 	 1
	 	 2
	 	 3
	 
	 24
	 	 4
	 	 5
	 	 6
	 	 7
	 	 8
	 	 9
	 	 10
	 	 	 50
	 	 4
	 	 5
	 	 6
	 	 7
	 	 8
	 	 9
	 	 10
	 
	 25
	 	 11
	 	 12
	 	 13
	 	 14
	 	 15
	 	 16
	 	 17
	 	 	 51
	 	 11
	 	 12
	 	 13
	 	 14
	 	 15
	 	 16
	 	 17
	 
	 26
	 	 18
	 	 19
	 	 20
	 	 21
	 	 22
	 	 23
	 	 24
	 	 	 52
	 	 18
	 	 19
	 	 20
	 	 21
	 	 22
	 	 23
	 	 24
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 53
	 	 25
	 	 26
	 	 27
	 	 28
	 	 29
	 	 30
	 	 31
	 

	*	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested with
respect to the omitted portions. Asterisks within brackets denote omission. 

 

30 

 
EXHIBIT E

 
[ * ] 

	*	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested with
respect to the omitted portions. Asterisks within brackets denote omission. 

 

31 

 
Schedule 1

 
[ * ] 

	*	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested with
respect to the omitted portions. Asterisks within brackets denote omission. 

 

32<PAGE>

                                                                     EXHIBIT 4.1

                  AMENDMENT, REDEMPTION AND EXCHANGE AGREEMENT

        This AMENDMENT, REDEMPTION AND EXCHANGE AGREEMENT ("Agreement") is made
as of this 4th day of June, 2003 by and between GENOME THERAPEUTICS CORP., a
Massachusetts corporation (the "Company"), and Smithfield Fiduciary LLC (the
"Investor").

                              W I T N E S S E T H:

                WHEREAS, pursuant to that certain Purchase Agreement, dated as
of March 5, 2002 (the "Purchase Agreement"), by and among the Company, the
Investor and The Tail Wind Fund, Ltd. (the "Other Investor," and collectively
with the Investor, the "Investors"), the Company sold and issued to the
Investor, and the Investor purchased from the Company, (i) $12 million in
principal amount of the Company's 6% Convertible Notes (the "Note"), which Note
is convertible into shares of common stock of the Company, $0.10 par value per
share (the "Common Stock"), in accordance with the terms of the Note and (ii)
warrants ("Initial Warrants") to purchase up to 390,000 shares of Common Stock;
capitalized terms used herein and not otherwise defined shall have the meanings
ascribed thereto in the Purchase Agreement;

                WHEREAS, a registration statement (file no. 333-85500) (the
"Current Registration Statement") was originally filed by the Company with the
SEC under the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (the "1933 Act"), on April 4, 2002, and was declared
effective April 18, 2002;

                WHEREAS, the Investor has not converted or sold any of the Note;

                WHEREAS, the Investor wishes to sell to the Company, and the
Company wishes to redeem and purchase from the Investor, two-thirds (2/3) of the
outstanding principal amount of Notes held by the Investor at a redemption price
equal to the portion of the outstanding principal amount of such Note so
redeemed plus accrued and unpaid interest thereon through the Closing Date (as
defined below); and

                WHEREAS, in order to induce the Investor to convert the
remaining Note not redeemed hereunder, the Company has agreed to reduce the
Conversion Price under the Note and to exchange the Initial Warrants for
warrants in the form of Exhibit A attached hereto (the "Exchange Warrants") as
more fully described herein;

                NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants set forth in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

        1. Redemption. The Investor hereby sells, assigns, transfers and conveys
to the Company, and the Company hereby redeems and purchases from the Investor,
$8,000,000 of the outstanding principal amount of the Note held by the Investor
at a redemption price (the "Redemption Price") equal to $8,203,836, which
represents the

<PAGE>

outstanding principal amount of the Note plus accrued and unpaid interest
thereon through and including the date hereof. Simultaneous with the execution
hereof, the Company shall pay the Redemption Price by wire transfer to the
account designated in writing by the Investor.

        2. Amendment. Notwithstanding anything contained in the Note, effective
upon execution hereof and receipt of the Redemption Price, the Conversion Price
(as defined in the Note) of the Note is hereby amended to equal $2.5686 (the
"New Conversion Price").

        3. Conversion. Simultaneously with the Investor's receipt of the
Redemption Price, the remaining $4,000,000 outstanding principal amount of the
Note plus accrued and unpaid interest thereon held by the Investor after the
redemption pursuant to Section 1 above at the Redemption Price shall be
converted at the New Conversion Price as if the Investor delivered the
Conversion Notice (as defined in the Notes) attached to the Note. As a result,
the Investor is converting a total of $4,101,918 principal amount of Notes plus
accrued and unpaid interest thereon into 1,596,947 shares of Common Stock (the
"Conversion Shares"). The Company and the Investor acknowledge that, upon the
Investor's receipt of the Redemption Price, the foregoing constitutes valid
delivery of the applicable Conversion Notice to the Company as of the date
hereof. By execution hereof, the Company hereby waives the requirements under
Section 3(a) of the Note and Section 9.4 of the Purchase Agreement that the
Investor email three designees of the Company confirming delivery of such
Conversion Notice. Simultaneously with the delivery by the Company of the
Redemption Price, the Company shall cause its transfer agent to electronically
transmit the Conversion Shares to the Investor, by crediting the account of the
Investor's prime broker with DTC through its Deposit Withdrawal Agent Commission
system designated in writing by the Investor to the Company concurrently
herewith. Upon the receipt by the Investor of the Redemption Price and the
Conversion Shares, the Purchase Agreement and the Note shall be deemed
terminated and of no further force or effect.

        4. Warrant Exchange. As of the date hereof, the Company will issue to
the Investor the Exchange Warrants to subscribe for 389,317 shares of Common
Stock ("Warrant Shares") at an initial exercise price of $3.71 per share, in
exchange for the surrender of the Initial Warrants currently held by such
Investor.

        5. Simultaneous Signing and Closing. The transactions contemplated by
this Agreement shall be consummated on the date hereof (such event referred to
as the "Closing" and the date of such Closing, the "Closing Date"). At the
Closing, the Investor shall surrender to the New York office of Ropes & Gray
LLP, counsel to the Company, at 885 Third Avenue, Suite 3200, New York, New York
10022, the Note and Initial Warrants held by the Investor or in lieu of the
foregoing an indemnification undertaking reasonably satisfactory to the Company.
On the Closing Date and as a condition to the Closing, the Company shall have
entered into a separate but substantially identical redemption, amendment and
exchange agreement with the Other Investor (the "Other Investor Agreement") and
shall consummate the transactions contemplated by

                                        2

<PAGE>

the Other Investor Agreement concurrently with the consummation of the
transactions contemplated by this Agreement.

        6. Registration Rights.

                (a) Prospectus Supplement. On or before the date which is one
        (1) day following the Closing Date, the Company shall, to the extent
        required or advisable by law, at its sole cost and expense and in
        accordance with the 1933 Act, file a prospectus supplement to the
        Current Registration Statement with the SEC describing the change of the
        conversion price to the Notes to the New Conversion Price and the
        exchange of the Initial Warrants with the Exchange Warrants as described
        herein.

                (b) New Warrant Shares. Promptly following the Closing Date,
        (but by no later than 30 calendar days following the Closing Date), the
        Company shall, at its sole cost and expense and in accordance with the
        1933 Act, use its best efforts to prepare and file a registration
        statement (the "Exchange Warrants Registration Statement") on Form S-3
        (or other appropriate form acceptable to the Investor) under the 1933
        Act with the SEC covering all the shares of Common Stock issued or
        issuable upon exercise of the Exchange Warrants. The Company shall use
        its best efforts to have such Exchange Warrants Registration Statement
        declared effective as soon thereafter as possible (but by no later than
        120 calendar days following the Closing Date). All the terms and
        conditions of the Registration Rights Agreement, dated as of March 5,
        2002 (the "Registration Rights Agreement"), by and among the Company and
        the Investors shall apply mutatis mutandis to the registration of such
        shares issued or issuable upon exercise of the Exchange Warrants,
        including without limitation the indemnification and contribution
        provisions contained therein, and all such terms are incorporated by
        reference herein. Therefore, the Warrant Shares underlying the Exchange
        Warrants shall be deemed to be Warrant Shares constituting Registrable
        Securities for all purposes of the Registration Rights Agreement and the
        Exchange Warrants Registration Statement shall be deemed to be a
        Registration Statement for all purposes of the Registration Rights
        Agreement. Notwithstanding the foregoing and in lieu of the amount set
        forth as liquidated damages under Section 3(c) of the Registration
        Rights Agreement, the amount which shall be paid to the Investor, if the
        Company breaches the provisions of this Section 6(b), subject to the
        provisions of Section 2(c)(ii) of the Registration Rights Agreement, and
        the applicable provisions of Section 3(c) of the Registration Rights
        Agreement, for each month (or portion thereof) following any such
        breach, shall equal 2% of the product of (x) the number of Warrant
        Shares issued and issuable upon exercise of the Exchange Warrants and
        not available for resale under the Exchange Warrants Registration
        Statement multiplied by (y) the greater of (I) the Warrant Price (as
        defined in the Exchange Warrant) and (II) the closing price of the
        Common Stock as reported by the NASDAQ National Market (or other
        exchange or market on which the Common Stock is principally traded) on
        the date of determination.

                                        3

<PAGE>

        7. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investor that:

                (a) Organization, Good Standing and Qualification. The Company
        is a corporation duly incorporated, validly existing and in good
        standing under the laws of the jurisdiction of its incorporation and has
        all requisite corporate power and authority to carry on its business as
        now conducted and own its properties. The Company is duly qualified to
        do business as a foreign corporation and is in good standing in each
        jurisdiction in which the conduct of its business or its ownership or
        leasing of property makes such qualification or licensing necessary
        unless the failure to so qualify would not be reasonably likely to
        result in a Material Adverse Effect. All of the Company's subsidiaries
        are listed by name and jurisdiction on Schedule 4.1 attached to the
        Purchase Agreement.

                (b) Authorization. The Company has full corporate power and
        authority and has taken all requisite action on the part of the Company,
        its officers, directors and stockholders necessary for (i) the
        authorization, execution and delivery of this Agreement and the Exchange
        Warrants, (ii) authorization of the performance of all obligations of
        the Company hereunder and thereunder, and (iii) the authorization,
        issuance (or reservation for issuance) and delivery of the Conversion
        Shares and Warrant Shares. Each of this Agreement and the Exchange
        Warrant constitutes the legal, valid and binding obligations of the
        Company, enforceable against the Company in accordance with their
        respective terms, subject to bankruptcy, insolvency, fraudulent
        transfer, reorganization, moratorium and similar laws of general
        applicability, relating to or affecting creditors' rights generally.

                (c) Capitalization. Set forth on Schedule 7(c) hereto is (a) the
        authorized capital stock of the Company on the date hereof; (b) the
        number of shares of capital stock issued and outstanding on the date
        hereof; (c) the number of shares of capital stock issuable pursuant to
        the Company's stock plans; and (d) the number of shares of capital stock
        issuable and reserved for issuance pursuant to securities (other than
        the Exchange Warrants) exercisable for, or convertible into or
        exchangeable for any shares of capital stock. All of the issued and
        outstanding shares of the Company's capital stock have been duly
        authorized and validly issued and are fully paid, nonassessable and free
        of preemptive rights. Except as set forth on Schedule 7(c), no Person is
        entitled to preemptive or similar statutory or contractual rights with
        respect to any securities of the Company. Except as set forth on
        Schedule 7(c), there are no outstanding warrants, options, convertible
        securities or other rights, agreements or arrangements of any character
        under which the Company is or may be obligated to issue any equity
        securities of any kind and except as contemplated by this Agreement, the
        Other Investor Agreement or set forth on Schedule 7(c), the Company is
        not currently in negotiations for the issuance of any equity securities
        of any kind. Except as set forth on Schedule 7(c), the Company has no
        knowledge of any voting agreements, buy-sell agreements, option or right
        of first purchase agreements or other agreements of any kind among any
        of the securityholders of the Company relating

                                        4

<PAGE>

        to the securities of the Company held by them. Except pursuant to the
        Registration Rights Agreement, this Agreement, the Other Investor
        Agreement and as set forth on Schedule 7(c), the Company has not granted
        any Person the right to require the Company to register any securities
        of the Company under the 1933 Act, whether on a demand basis or in
        connection with the registration of securities of the Company for its
        own account or for the account of any other Person.

                (d) Valid Issuance. As of the Closing, the Company has reserved
        a sufficient number of shares of Common Stock for the issuance upon
        exercise of the Exchange Warrants. The Exchange Warrants are duly
        authorized, and the Conversion Shares, the Exchange Warrants and the
        Warrant Shares (collectively, the "Securities"), respectively, when
        issued in accordance herewith and with the terms of the Note, the
        Exchange Warrants and this Agreement, will be duly authorized, validly
        issued, fully paid, non-assessable and free and clear of all
        encumbrances and restrictions, except for restrictions on transfer
        imposed by applicable securities laws. The number of shares to be
        reserved hereunder shall be determined without regard to any
        restrictions on beneficial ownership contained in this Agreement or in
        the Exchange Warrants.

                (e) Consents. The execution, delivery and performance by the
        Company of this Agreement and the Exchange Warrants and the offer,
        issuance and sale of the Securities, require no consent of, action by or
        in respect of, or filing with, any Person, governmental body, agency, or
        official other than filings that will have been made pursuant to
        applicable state securities laws and post-sale filings pursuant to
        applicable state and federal securities laws and the additional listing
        application requirements of the NASDAQ National Market, which the
        Company undertakes to file within the applicable time periods.

                (f) Delivery of SEC Filings; Business. The SEC Filings represent
        all filings required of the Company pursuant to the 1934 Act since
        August 31, 2000. The SEC Filings complied as to form in all material
        respects with the requirements of the 1934 Act and did not contain any
        untrue statement of a material fact or omit to state any material fact
        necessary in order to make the statements made therein, in the light of
        the circumstances under which they were made, not misleading. The
        Company is engaged only in the business described in the SEC Filings and
        the SEC Filings contain a complete and accurate description of the
        business of the Company in all material respects. The Company has not
        provided to the Investor (i) any information required to be filed under
        the 1934 Act that has not been so filed or (ii) any non-public
        information.

                (g) No Material Adverse Change. Since the filing of the
        Company's Annual Report on Form 10-K for the fiscal year ended December
        31, 2002, no event, transaction or condition has occurred that,
        individually or in the aggregate, has had or could reasonably be
        expected to have a Material Adverse Effect.

                                        5

<PAGE>

                (h) Registration Statements; Material Contracts.

                                (1) During the preceding two years, each
                registration statement and any amendment thereto filed by the
                Company pursuant to the 1933 Act, as of the date such statement
                or amendment became effective, complied as to form in all
                material respects with the 1933 Act and did not contain any
                untrue statement of a material fact or omit to state any
                material fact required to be stated therein or necessary in
                order to make the statements made therein, in the light of the
                circumstances under which they were made, not misleading; and
                each prospectus filed pursuant to Rule 424(b) under the 1933
                Act, as of its issue date and as of the closing of any sale of
                securities pursuant thereto did not contain any untrue statement
                of a material fact or omit to state any material fact required
                to be stated therein or necessary in order to make the
                statements made therein, in the light of the circumstances under
                which they were made, not misleading.

                                (2) Except as set forth on Schedule 4.3 to the
                Purchase Agreement, there are no agreements or instruments
                currently in force and effect that constitute a warrant, option,
                convertible security or other right, agreement or arrangement of
                any character under which the Company is or may be obligated to
                issue any material amounts of any equity security of any kind,
                or to transfer any material amounts of any equity security of
                any kind.

                (i) Form S-3 Eligibility. The Company is currently eligible to
        register the resale of its Common Stock on a registration statement on
        Form S-3 under the 1933 Act. The Current Registration Statement is
        effective and available for the sale of at least all of the Registrable
        Securities required to be included in such Current Registration
        Statement.

                (j) No Conflict, Breach, Violation or Default.

                                (1) The execution, delivery and performance of
                this Agreement and the Exchange Warrants by the Company and the
                issuance and sale of the Securities will not conflict with or
                result in a breach or violation of any of the terms and
                provisions of, or constitute a default under (i) the Company's
                Restated Articles of Organization (including any certificates of
                designation) or the Company's Bylaws, both as in effect on the
                date hereof (copies of which have been provided to the Investor
                before the date hereof to the extent there have been any changes
                since execution of the Purchase Agreement) and the date of
                issuance of such securities, or (ii) except where it would not
                have a Material Adverse Effect, (A) any statute, rule,
                regulation or order of any governmental agency or body or any
                court, domestic or foreign, having jurisdiction over the Company
                or any of its properties, or (B) any agreement or instrument to
                which the

                                        6

<PAGE>

                Company is a party or by which the Company is bound or to which
                any of the properties of the Company is subject.

                                (2) Except where it would not have a Material
                Adverse Effect, the Company (i) is not in violation of any
                statute, rule or regulation applicable to the Company or its
                assets, (ii) is not in violation of any judgment, order or
                decree applicable to the Company or its assets, and (iii) is not
                in breach or violation of any agreement, note or instrument to
                which it or its assets are a party or are bound or subject. The
                Company has not received notice from any Person of any claim or
                investigation that, if adversely determined, would render the
                preceding sentence untrue or incomplete.

                (k) Tax Matters. The Company has timely prepared and filed all
        tax returns required to have been filed by the Company with all
        appropriate governmental agencies and timely paid all taxes owed by it.
        The charges, accruals and reserves on the books of the Company in
        respect of taxes for all fiscal periods are adequate in all material
        respects, and there are no material unpaid assessments against the
        Company nor, to the knowledge of the Company, any basis for the
        assessment of any additional taxes, penalties or interest for any fiscal
        period or audits by any federal, state or local taxing authority except
        such as which are not material and except as set forth on Schedule 4.12
        to the Purchase Agreement. All material taxes and other assessments and
        levies that the Company is required to withhold or to collect for
        payment have been duly withheld and collected and paid to the proper
        governmental entity or third party when due. There are no material tax
        liens or claims pending or, to the Company's knowledge, threatened
        against the Company or any of its respective assets or property. There
        are no outstanding tax sharing agreements or other such arrangements
        between the Company and any other corporation or entity.

                (l) Title to Properties. Except as disclosed in the SEC Filings,
        the Company has good and marketable title to all real properties and all
        other properties and assets owned by it, in each case free from liens,
        encumbrances and defects, except for such liens, encumbrances and
        defects which could not reasonably be expected to have a Material
        Adverse Effect; and except as disclosed in the SEC Filings, the Company
        holds any leased real or personal property under valid and enforceable
        leases with no exceptions that would materially interfere with the use
        made or currently planned to be made thereof by them.

                (m) Certificates, Authorities and Permits. The Company possesses
        adequate certificates, authorities or permits issued by appropriate
        governmental agencies or bodies necessary to conduct the business now
        operated by it and has not received any notice of proceedings relating
        to the revocation or modification of any such certificate, authority or
        permit that, if determined adversely to the Company, would individually
        or in the aggregate have a Material Adverse Effect.

                                        7

<PAGE>

                (n) No Labor Disputes. No material labor dispute with the
        employees of the Company exists or, to the knowledge of the Company, is
        imminent.

                (o) Intellectual Property. The Company owns or possesses
        adequate rights or licenses to the inventions, know-how, patents, patent
        rights, copyrights, trademarks, trade names, licenses, approvals,
        governmental authorizations, trade secrets confidential information and
        other intellectual property rights (collectively, "Intellectual Property
        Rights"), free and clear of all liens, security interests, charges,
        encumbrances, equities and other adverse claims, necessary to conduct
        the business now operated by it, or presently employed by it and
        presently contemplated to be operated by it as described in the SEC
        Filings, and the Company has not received any notice of infringement of
        or conflict with asserted rights of others with respect to any
        Intellectual Property Rights except as disclosed in the SEC Filings.
        None of the Company's Intellectual Property Rights have expired or
        terminated, or are expected to expire or terminate within three years
        from the date of this Agreement, except where such expirations or
        termination would not result, either individually or in the aggregate,
        in a Material Adverse Effect. To the knowledge of the Company, the
        Company's patents and other Intellectual Property Rights and the present
        activities of the Company do not infringe any patent, copyright,
        trademark, trade name or other proprietary rights of any third party
        where such infringement may cause a Material Adverse Effect on the
        Company, and there is no claim, action or proceeding being made or
        brought against, or to the Company's knowledge, being threatened
        against, the Company or its subsidiaries regarding its Intellectual
        Property Rights (other than as set forth in the SEC Filings filed at
        least ten (10) day prior to the date hereof), and the Company and its
        subsidiaries are unaware of any facts or circumstances which could
        reasonably be expected to give rise to any of the foregoing. The Company
        has no knowledge of the material infringement of its Intellectual
        Property Rights by third parties and has no reason to believe that any
        of its Intellectual Property Rights is unenforceable, and the Company
        and its subsidiaries are unaware of any facts or circumstances which
        might give rise to any of the foregoing. The Company and its
        subsidiaries have taken reasonable security measures to protect the
        secrecy, confidentiality and value of all of their intellectual
        properties.

                (p) Environmental Matters. The Company is not in violation of
        any statute, rule, regulation, decision or order of any governmental
        agency or body or any court, domestic or foreign, relating to the use,
        disposal or release of hazardous or toxic substances or relating to the
        protection or restoration of the environment or human exposure to
        hazardous or toxic substances (collectively, "Environmental Laws"), does
        not own or operate any real property contaminated with any substance
        that is subject to any Environmental Laws, is not liable for any
        off-site disposal or contamination pursuant to any Environmental Laws,
        and is not subject to any claim relating to any Environmental Laws,
        which violation, contamination, liability or claim would individually or
        in the aggregate have a Material Adverse Effect; and the Company is not
        aware of any pending investigation that might lead to such a claim.

                                        8

<PAGE>

                (q) Litigation. Except as disclosed in the SEC Filings, there
        are no pending actions, suits or proceedings against or affecting the
        Company or any of its properties that, if determined adversely to the
        Company, would individually or in the aggregate have a Material Adverse
        Effect; and to the Company's knowledge, no such actions, suits or
        proceedings are threatened or contemplated.

                (r) Financial Statements. The financial statements included in
        each SEC Filing present fairly and accurately in all material respects
        the consolidated financial position of the Company as of the dates shown
        and its consolidated results of operations and cash flows for the
        periods shown, and such financial statements have been prepared in
        conformity with generally accepted accounting principles applied on a
        consistent basis. Since December 31, 2002, no event has occurred that
        would cause a Material Adverse Effect on the financial condition of the
        Company except as otherwise reflected in the SEC Filings since such
        date, and there has not been any material adverse change in the
        consolidated assets, liabilities, financial condition or operating
        results of the Company from that reflected in the financial statements
        included in the Company's most recent Quarterly Report on Form 10-Q,
        except changes in the ordinary course of business which have not had, in
        the aggregate, a Material Adverse Effect.

                (s) Insurance Coverage. The Company maintains in full force and
        effect insurance coverage that the Company reasonably believes to be
        adequate against all liabilities, claims and risks against which it is
        customary for comparably situated companies to insure.

                (t) Compliance with NASDAQ Continued Listing Requirements. The
        Company is in material compliance with all applicable NASDAQ National
        Market continued listing requirements and is in good standing on such
        exchange. There are no proceedings pending or, to the Company's
        knowledge, threatened against the Company relating to the continued
        listing of the Common Stock on the NASDAQ National Market and the
        Company has not received any notice of, nor to the knowledge of the
        Company is there any basis for, the delisting of the Common Stock from
        the NASDAQ National Market.

                (u) Brokers and Finders. The Investor shall have no liability or
        responsibility for the payment of any commission or finder's fee to any
        third party in connection with or resulting from this Agreement or the
        transactions contemplated by this Agreement by reason of any agreement
        of or action taken by the Company.

                (v) No General Solicitation; 1933 Act Exemption. Neither the
        Company nor any Person acting on its behalf has conducted any general
        solicitation or general advertising (as those terms are used in
        Regulation D) in connection with the offer or sale of any of the
        Exchange Warrants or any of the Securities. The issuance of the
        Conversion Shares and the exchange of the Initial Warrants for the
        Exchange Warrants are exempt from registration under the 1933 Act
        pursuant to Section 3(a)(9) of the 1933 Act.

                                        9

<PAGE>

                (w) No Integrated Offering. Neither the Company nor any of its
        Affiliates, nor any Person acting on its or their behalf has, directly
        or indirectly, made any offers or sales of any security or solicited any
        offers to buy any security, under circumstances that would require
        registration of the Exchange Warrants or the Securities under the 1933
        Act; or would require the integration of this offering with any other
        offering of securities for purposes of determining the need to obtain
        stockholder approval of the transactions contemplated hereby under the
        rules of the NASDAQ National Market.

                (x) Disclosures. For purposes of this Agreement and the
        transactions contemplated hereby, none of the representations or
        warranties made by the Company in this Agreement or in the Exchange
        Warrants and no information furnished by the Company pursuant hereto or
        thereto, or in any other document, certificate or statement furnished by
        the Company to the Investor or any authorized representative of the
        Investor, pursuant hereto or thereto or in connection therewith, contain
        any untrue statement of a material fact or omit to state a material fact
        necessary in order to make the statements contained herein and therein,
        in the light of the circumstances under which they were made, not
        misleading.

                (y) Rights Plan. None of the acquisition of the Exchange
        Warrants or any of the Securities nor the deemed beneficial ownership of
        shares of Common Stock issuable upon, or the acquisition of such shares
        pursuant to the exercise of the Exchange Warrants will in any event
        under any circumstances in and of itself trigger the poison pill
        provisions of any stockholder rights or similar agreements, or plan
        having a similar effect, to which the Company is a party.

        8. Representations and Warranties of the Investor. The Investor hereby
represents and warrants on the date hereof to that Company that:

                (a) Organization and Existence. The Investor is a validly
        existing entity and has all requisite power and authority to enter into
        this Agreement.

                (b) Authorization. The execution, delivery and performance by
        the Investor of this Agreement has been duly authorized and this
        Agreement will constitute the valid and legally binding obligation of
        the Investor, enforceable against the Investor in accordance with its
        terms, subject to bankruptcy, insolvency, fraudulent transfer,
        reorganization, moratorium and similar laws of general applicability,
        relating to or affecting creditors' rights generally.

                (c) Legends. It is understood that, until registration for
        resale pursuant to the Registration Rights Agreement or until sales
        under Rule 144 are permitted, certificates evidencing the Exchange
        Warrants and the Warrant Shares may bear one or all of the following
        legends or legends substantially similar thereto:

                                (1) "THE SHARES REPRESENTED BY THIS CERTIFICATE
MAY NOT BE TRANSFERRED WITHOUT (I) THE OPINION OF

                                       10

<PAGE>

COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION (IF REQUESTED) THAT SUCH
TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF
1933; OR (II) SUCH REGISTRATION OR QUALIFICATION."

                                (2) If required by the authorities of any state
in connection with the issuance of sale of the Securities, the legend required
by such state authority.

                Upon registration for resale pursuant hereto and the
Registration Rights Agreement or upon Rule 144(k) under the 1933 Act becoming
available, the Company shall promptly cause certificates evidencing the Warrant
Shares previously issued to be replaced with certificates which do not bear such
restrictive legends, and all Warrant Shares subsequently issued shall not bear
such restrictive legends. Certificates evidencing the Warrant Shares issued
following the registration for resale of such shares pursuant hereto and the
Registration Rights Agreement or Rule 144(k) under the 1933 Act becoming
available for the sale of such shares shall be issued without any restrictive
legends.

                (d) Title to Note and Initial Warrants. The Investor has good
        and valid title to the Note and the Initial Warrants, free of any
        encumbrances, has not transferred the Note or the Initial Warrants, and
        has not converted the Note into shares of Common Stock or exercised the
        Initial Warrants for shares of Common Stock.

        9. Covenants and Agreements of the Company.

                (a) Additional Financings. From the date hereof until the second
        anniversary of the Closing Date, the Investor will have a right of
        participation with respect to any sales of any of the Company's
        securities in a non-registered or "shelf" offering (subject to the
        exclusions set forth in the definition of "Excluded Transaction" in the
        Purchase Agreement) capital raising transaction on and subject to the
        terms and conditions set forth in this Section 9(a). During such period,
        the Company shall give written notice (a "Financing Notice") to the
        Investor within five (5) business days following any non-registered or
        "shelf" sale (subject to the exclusions set forth in the definition of
        "Excluded Transaction") of any of the Company's equity securities or any
        securities convertible into or exchangeable or exercisable for such
        securities in a capital raising transaction (including, without
        limitation, any Variable Rate Transaction or MFN Transaction) (a
        "Participation Transaction"); provided, however, that if the approval of
        the Company's shareholders is required by the rules and regulations of
        NASDAQ or any other applicable market, exchange, regulatory authority,
        agency or commission in order to enter into such Participation
        Transaction, then the Company shall provide the Financing Notice to the
        Investor at least 10 business days prior to the filing of any proxy or
        information statement with the SEC seeking shareholder approval of such
        Participation Transaction in order to provide the Investor a reasonable
        period of time to exercise its rights hereunder and to have the
        securities the Investor elects to purchase included in such proxy or

                                       11

<PAGE>

        information statement. Such Financing Notice shall describe the
        significant business terms of such transaction and be accompanied by a
        copy of all transaction documents pertaining to such transaction. The
        Investor shall have the right (pro rata with the Other Investor (based
        on a 4:1 ratio for the Investor and the Other Investor) respectively, or
        together with other investors selected by the Investor and reasonably
        acceptable to the Company) to purchase, in accordance with the
        procedures set forth below, an amount of identical securities issued in
        such transaction equal to the Investor's pro rata portion of 33 1/3% of
        the amount purchased by such other investors (i.e., 25% of the aggregate
        amount of such securities issuable to the Investors and such other
        investors together) for the same consideration and on the same terms and
        conditions as such third party sale, provided that if the aggregate
        amount of net proceeds raised by the Company in any such transaction
        exceeds $15 million, then for such portion of such transaction which
        exceeds $15 million the Investor shall have the right to purchase only
        its pro rata portion of 20% of such excess amount purchased by such
        other investors (i.e., 16 2/3% of the aggregate amount of such excess
        securities issuable to the Investors and such other investors together),
        and provided further that, notwithstanding the foregoing, the Investor
        shall be accorded the right to purchase not less than $1 million of
        securities of the Company on the same terms as the securities issued in
        such Participation Transaction. The Company shall not consummate any
        such third party transaction unless following such consummation the
        Investor is permitted to purchase such percentage under the terms of all
        transaction documents for such other transaction and under all
        applicable laws and regulations. Without limiting the foregoing (a) the
        Company shall authorize and reserve a sufficient number and amount of
        such securities, or class or series thereof, in order to enable full
        participation by the Investor in such securities, class or series that
        is purchased by such third party, and (b) the Company shall not issue in
        excess of such number of shares of Common Stock (or securities which are
        convertible, exchangeable or exercisable into such number of shares of
        Common Stock) which, together with the maximum amount of securities
        otherwise permitted to be purchased by the Investor and the other
        Investor hereunder, would cause the Company to violate any shareholder
        approval or other requirements of NASDAQ or any other applicable market,
        exchange, regulatory authority, agency or commission. The Investor may
        elect to participate in such transaction by delivering written notice of
        such election to the Company within ten (10) business days following
        receipt of the Financing Notice. If, subsequent to the Company giving
        any Financing Notice to the Investor hereunder, any material term or
        condition of such third-party sale is changed from that disclosed in the
        Financing Notice and the accompanying transaction documents, the Company
        shall be required to provide a new Financing Notice to the Investor
        hereunder and the Investor shall again have the right to exercise its
        rights to purchase a percentage of the securities in such transaction on
        such changed terms and conditions as provided hereunder. The rights and
        obligations of this Section 9(a) shall in no way diminish the other
        rights of the Investor pursuant to this Section 9. Notwithstanding
        anything to the contrary contained herein, the number of shares of
        Common Stock that may be acquired by the

                                       12

<PAGE>

        Investor pursuant to any Participation Transaction shall not exceed a
        number that, when added to the total number of shares of Common Stock
        deemed beneficially owned by the Investor (other than by virtue of the
        ownership of securities or rights to acquire securities that have
        limitations on the Investor's right to convert, exercise or purchase
        similar to the limitation set forth herein), together with all shares of
        Common Stock deemed beneficially owned by the Investor's "affiliates"
        (as defined in Rule 144 of the 1933 Act) that would be aggregated for
        purposes of determining whether a group under Section 13(d) of the 1934
        Act, exists, would exceed 4.99% of the total issued and outstanding
        shares of the Common Stock; provided, that the limitation set forth in
        this sentence shall not limit the ability of the Company to engage in a
        Participation Transaction. The rights of participation of the Investor
        set forth in this Section 9(a) will not apply to any Excluded
        Transaction. All rights of the Investor under this Section 9(a) shall
        cease and be of no further effect upon the consummation of a Change in
        Control Transaction (as defined in the Notes).

                (b) Reservation of Common Stock issuable upon Exercise of the
        Exchange Warrants. The Company hereby agrees at all times to reserve and
        keep available out of its authorized but unissued shares of Common
        Stock, solely for the purpose of providing for the full exercise of the
        Exchange Warrants, such number of shares of Common Stock as shall from
        time to time equal 100% of the number of shares sufficient to permit the
        full exercise of the Exchange Warrants in accordance with the terms of
        the Exchange Warrants. All calculations pursuant to this paragraph shall
        be made without regard to restrictions on beneficial ownership.

                (c) Press Releases; Form 8-K.

                                        (1) Other than the press release
                described in the next sentence, any press release or other
                publicity concerning this Agreement, the Other Investor
                Agreement or the transactions contemplated by this Agreement
                shall be submitted to the Investor for comment at least two (2)
                business days prior to issuance, unless the release is required
                to be issued within a shorter period of time by law or pursuant
                to the rules of the NASDAQ National Market or a national
                securities exchange. The Company shall issue a press release
                concerning the fact and material terms of this Agreement
                promptly upon execution hereof but in any event within one
                business day hereof in the form attached hereto as Exhibit B.

                                        (2) On or before 8:30 a.m. (New York
                City time), on the first business day following the date hereof,
                the Company shall file a Current Report on Form 8-K describing
                the terms of the transactions contemplated by (i) this Agreement
                and the Exchange Warrants and (ii) the Other Investor Agreement
                and the warrants issuable pursuant thereto on the Closing Date
                (collectively, the "Other Investor Documents"), in each case, in
                the form required by the 1934 Act, and

                                       13

<PAGE>

                attaching the material transaction documents (including, without
                limitation, this Agreement and the Other Investor Documents) as
                exhibits to such filing (including all attachments, the "8-K
                Filing", and the description and attachments, the "8-K
                Materials"). The 8-K Materials shall be subject to the
                Investor's prior approval, not to be unreasonably withheld or
                delayed. From and after the filing of the 8-K Filing with the
                SEC, the Investor shall not be in possession of any material,
                nonpublic information received from the Company, any of its
                Subsidiaries or any of its respective officers, directors,
                employees or agents, that is not disclosed in the 8-K Filing.
                The Company shall not, and shall cause each of its officers,
                directors, employees and agents, not to, provide the Investor
                with any material, nonpublic information regarding the Company
                from and after the filing of the 8-K Filing with the SEC without
                the express written consent of the Investor.

                (d) No Conflicting Agreements. The Company will not take any
        action, enter into any agreement or make any commitment that would
        conflict or interfere in any material respect with the obligations to
        the Investor under this Agreement or the Exchange Warrants.

                (e) Listing of Conversion Shares, Warrant Shares and Related
        Matters. The Company hereby agrees, promptly following the Closing of
        the transactions contemplated by this Agreement, to take such action to
        cause the Conversion Shares (if necessary) and the Warrant Shares to be
        listed on the NASDAQ National Market as promptly as possible but no
        later than the effective date of the registration contemplated by this
        Agreement. The Company further agrees that if the Company applies to
        have its Common Stock or other securities traded on any other principal
        stock exchange or market, it will include in such application the
        Conversion Shares and the Warrant Shares and will take such other action
        as is necessary to cause such Common Stock to be so listed. Neither the
        Company nor any of its Affiliates, nor any Person acting on its or their
        behalf, shall directly or indirectly make any offers or sales of any
        security or solicit any offers to buy any security which may cause the
        integration of the offering hereunder with any other offering of
        securities for purposes of determining the need to obtain stockholder
        approval of the transactions contemplated hereby under the rules of the
        NASDAQ National Market.

                (f) Corporate Existence. So long as any Exchange Warrants remain
        outstanding, the Company shall maintain its corporate existence, except
        in the event of a merger, consolidation or sale of all or substantially
        all of the Company's assets, as long as the surviving or successor
        entity in such transaction (a) assumes the Company's obligations
        hereunder and under the agreements and instruments entered into in
        connection herewith, regardless of whether or not the Company would have
        had a sufficient number of shares of Common Stock authorized and
        available for issuance in order to fulfill its obligations hereunder and
        effect the exercise in full of all Exchange Warrants outstanding as of
        the date of such transaction; (b) has no legal, contractual or other
        restrictions on its ability

                                       14

<PAGE>

        to perform the obligations of the Company hereunder and under the
        agreements and instruments entered into in connection herewith; and (c)
        is a publicly traded corporation whose common stock and the shares of
        capital stock issuable upon exercise of the Exchange Warrants are (or
        would be upon issuance thereof) listed for trading on an Approved
        Market, provided that this clause (c) shall not apply in the event of a
        merger, consolidation or sale of all or substantially all of the
        Company's assets with or to an unaffiliated third party in an arm's
        length transaction pursuant to which all holders, other than the
        acquiring entity, of outstanding shares of Common Stock receive
        consideration consisting solely of cash.

        10. Miscellaneous.

                (a) Full Force and Effect. Except as otherwise expressly
        provided herein, the Registration Rights Agreement shall remain in full
        force and effect.

                (b) Survival. All representations, warranties, covenants and
        agreements contained in this Agreement shall be deemed to be
        representations, warranties, covenants and agreements as of the date
        hereof and shall survive the execution and delivery of this Agreement.

                (c) Successors and Assigns; Amendment. This Agreement may not be
        assigned by a party hereto without the prior written consent of the
        other party hereto which consent may not be unreasonably withheld or
        delayed, except that without the prior written consent of the Company,
        but after notice duly given, the Investor may assign its rights and
        delegate its duties hereunder in whole or in part to an affiliate of the
        Investor or to the Other Investor. The terms and conditions of this
        Agreement shall inure to the benefit of and be binding upon the
        respective permitted successors and assigns of the parties. Nothing in
        this Agreement, express or implied, is intended to confer upon any party
        other than the parties hereto or their respective successors and assigns
        any rights, remedies, obligations, or liabilities under or by reason of
        this Agreement, except as expressly provided in this Agreement. No
        provision of this Agreement or the Exchange Warrant may be amended other
        than by an instrument in writing signed by the Company and the Investor
        and no amendment may be made to the Other Investor Documents without the
        written consent of the Investor if such amendment would be adverse to
        the rights of the Investor relative to the Other Investor or
        preferential to the Other Investor relative to the Investor. No
        consideration shall be offered or paid to any Person to amend or consent
        to a waiver or modification of any provision of this Agreement, the
        Purchase Agreement, the Registration Rights Agreement or the Exchange
        Warrants unless the same consideration also is offered to all of the
        parties to such agreements or holders of the Exchange Warrants, as the
        case may be. The Company has not entered into and does not currently
        contemplate entering into, directly or indirectly, any transaction with
        the Other Investor except as set forth in the Other Investor Documents.

                                       15

<PAGE>

                (d) Counterparts. This Agreement may be executed in two or more
        counterparts, each of which shall be deemed an original, but all of
        which together shall constitute one and the same instrument. This
        Agreement shall not become effective unless and until it is executed and
        delivered by each of the Company and the Investor.

                (e) Titles and Subtitles. The titles and subtitles used in this
        Agreement are used for convenience only and are not to be considered in
        construing or interpreting this Agreement.

                (f) Notices. Unless otherwise provided, any notice required or
        permitted under this Agreement shall be given in writing and shall be
        deemed effectively given only upon delivery to each party to be notified
        by (i) personal delivery, (ii) telecopier, upon receipt of confirmation
        of complete transmittal, or (iii) an internationally recognized
        overnight air courier, addressed to the party to be notified at the
        address as follows, or at such other address as such party may designate
        by ten days' advance written notice to the other party:

                         If to the Company:

                         Genome Therapeutics Corp.
                         100 Beaver Street
                         Waltham, Massachusetts 02453
                         Telephone: (781) 398-2300
                         Fax: (781) 893-9535
                         Attention: Stephen Cohen, CFO

                         with a copy to:

                         Ropes & Gray LLP
                         One International Place
                         Boston, Massachusetts 02110-2624
                         Telephone:  (617) 951-7000
                         Fax: (617)951-7050
                         Attention: Patrick O'Brien, Esquire

                         If to the Investor, to the address set forth on the
                         signature page hereto.

                (g) Expenses. Promptly following the Closing Date, the Company
        shall pay for reasonable legal fees and expenses incurred by the
        Investor in connection with the transactions contemplated by this
        Agreement and the preparation and negotiation of this Agreement and the
        Exchange Warrants in an amount up to $12,500.

                (h) Severability. If one or more provisions of this Agreement
        are held to be unenforceable under applicable law, such provision shall
        be excluded from this

                                       16

<PAGE>

        Agreement and the balance of this Agreement shall be interpreted as if
        such provision were so excluded and shall be enforceable in accordance
        with its terms.

                (i) Entire Agreement. This Agreement, including the Exhibits and
        Schedules hereto, the Registration Rights Agreement, the Purchase
        Agreement, the Notes and the Exchange Warrants and other documents
        contemplated hereby constitute the entire agreement among the parties
        hereof with respect to the subject matter hereof and thereof and
        supersede all prior agreements and understandings, both oral and
        written, between the parties with respect to the subject matter hereof
        and thereof.

                (j) Further Assurances. The parties shall execute and deliver
        all such further instruments and documents and take all such other
        actions as may reasonably be required to carry out the transactions
        contemplated hereby and to evidence the fulfillment of the agreements
        herein contained.

                (k) APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
        CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
        REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

                (l) Remedies.

                                (1) The Investor shall be entitled to specific
                performance of the Company's obligations under the Agreements.

                                (2) The Company on the one hand, and the
                Investor on the other hand, shall indemnify the other and hold
                it harmless from any loss, cost, expense or fees (including
                attorneys' fees and expenses) arising out of any breach of any
                representation, warranty, covenant or agreement in this
                Agreement or the Exchange Warrants, or arising out of the
                enforcement of this Section.

                (m) JURISDICTION. THE PARTIES HEREBY AGREE THAT ALL ACTIONS OR
        PROCEEDINGS ARISING DIRECTLY OR INDIRECTLY FROM OR IN CONNECTION WITH
        THIS AGREEMENT OR THE OTHER AGREEMENTS SHALL BE LITIGATED ONLY IN THE
        SUPREME COURT OF THE STATE OF NEW YORK OR THE UNITED STATES DISTRICT
        COURT FOR THE SOUTHERN DISTRICT OF NEW YORK LOCATED IN NEW YORK COUNTY,
        NEW YORK. THE PARTIES CONSENT TO THE JURISDICTION AND VENUE OF THE
        FOREGOING COURTS AND CONSENT THAT ANY PROCESS OR NOTICE OF MOTION OR
        OTHER APPLICATION TO EITHER OF SAID COURTS OR A JUDGE THEREOF MAY BE
        SERVED INSIDE OR OUTSIDE THE STATE OF NEW YORK OR THE SOUTHERN DISTRICT
        OF NEW YORK BY REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO
        THE PARTY BEING SERVED AT ITS ADDRESS SET FORTH IN THIS AGREEMENT (AND

                                       17

<PAGE>

        SERVICE SO MADE SHALL BE DEEMED COMPLETE THREE (3) DAYS AFTER THE SAME
        HAS BEEN POSTED AS AFORESAID) OR BY PERSONAL SERVICE OR IN SUCH OTHER
        MANNER AS MAY BE PERMISSIBLE UNDER THE RULES OF SAID COURTS. THE PARTIES
        HEREBY WAIVE ANY RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY LITIGATION
        PURSUANT TO THIS AGREEMENT OR THE OTHER AGREEMENTS.

                (n) Payment Set Aside. To the extent that the Company makes a
        payment or payments to any Investor hereunder or pursuant to the
        Registration Rights Agreement or the Exchange Warrants or the Investor
        enforces or exercises its rights hereunder or thereunder, and such
        payment or payments or the proceeds of such enforcement or exercise or
        any part thereof are subsequently invalidated, declared to be fraudulent
        or preferential, set aside, recovered from, disgorged by or are required
        to be refunded, repaid or otherwise restored to the Company, a trustee,
        receiver or any other person or entity under any law (including, without
        limitation, any bankruptcy law, state or federal law, common law or
        equitable cause of action), then to the extent of any such restoration
        the obligation or part thereof originally intended to be satisfied shall
        be revived and continued in full force and effect as if such payment had
        not been made or such enforcement or setoff had not occurred.

                (o) Like Treatment of Investors and Holders. For so long as any
        Exchange Warrants remain outstanding, neither the Company nor any of its
        affiliates shall, directly or indirectly, pay or cause to be paid any
        consideration (immediate or contingent), whether by way of interest,
        fee, payment for the redemption, exchange or exercise of the Securities,
        or otherwise, to any Investor, Other Investor or holder of Securities,
        for or as an inducement to, or in connection with the solicitation of,
        any consent, waiver or amendment of any terms or provisions of the
        Agreement or the Exchange Warrants, unless such consideration is
        required to be paid to all Investors or holders of Securities bound by
        such consent, waiver or amendment. The Company shall not, directly or
        indirectly, redeem or exchange any Securities unless such offer of
        redemption or exchange is made pro rata to all Investors or holders of
        Securities, as the case may be, on identical terms.

                (p) Independent Nature of Investor's Obligations and Rights. The
        obligations of the Investor hereunder and under the documents
        contemplated hereby are several and not joint with the obligations of
        the Other Investor, and the Investor shall not be responsible in any way
        for the performance of the obligations of the Other Investor under any
        such document. Nothing contained herein or in any other document
        contemplated hereby, and no action taken by the Investor pursuant hereto
        or thereto, shall be deemed to constitute any of the Investors as a
        partnership, an association, a joint venture or any other kind of
        entity, or create a presumption that the Investors are in any way acting
        in concert or as a group with respect to such obligations or the
        transactions contemplated hereby or thereby. The Investor confirms that
        it has independently participated in

                                       18

<PAGE>

        the negotiation of the transaction contemplated hereby with the advice
        of its own counsel and advisors. The Investor shall be entitled to
        independently protect and enforce its rights, including, without
        limitation, the rights arising out of this Agreement or out of any other
        document contemplated hereby, and it shall not be necessary for any
        other Investor to be joined as an additional party in any proceeding for
        such purpose.

                          *** Signature Pages Follow***

                                       19

<PAGE>

        IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

The Company:                             GENOME THERAPEUTICS CORP.

                                         By: /s/ Steven M. Rauscher
                                             -------------------------------
                                         Name:   Steven M. Rauscher
                                         Title:  Chairman, President and CEO

                                       20

<PAGE>

                                         THE INVESTOR

                                         SMITHFIELD FIDUCIARY LLC

                                         By: /s/ Adam J. Chill
                                             -----------------------------
                                         Name:   Adam J. Chill
                                         Title:  Authorized Signatory

Address for Notices:                     c/o Highbridge Capital Management, LLC,
                                         9 West 57th Street, 27th Floor
                                         New York, New York  10019
                                         Tel: (212) 287-4720
                                         Fax: (212) 751-0755
                                         Attention: Ari J. Storch/Adam J. Chill

                                         with a copy to:

                                         Schulte Roth & Zabel LLP
                                         919 Third Avenue
                                         New York, New York 10022
                                         Attn: Eleazer N. Klein, Esq.
                                         Telephone: (212) 756-2000
                                         Facsimile: (212) 593-5955

<PAGE>

Exhibits:

Exhibit A       Form of Exchange Warrants
Exhibit B       Press Release

Schedules:

Schedule 7(c)   Capitalization

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