Document:

indentureforbesenergyser

                                          EXECUTION VERSION           FORBES ENERGY SERVICES LTD.                      AND   WILMINGTON TRUST, NATIONAL ASSOCIATION                    as Trustee                                           INDENTURE              Dated as of March 4, 2019                    $51,767,900    5.00% Subordinated Convertible PIK Notes due 2020                                                            18041480.21  

 

                                FORBES ENERGY SERVICES LTD.                   RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT                     OF 1939 AND INDENTURE, DATED AS OF MARCH 4, 2019   TRUST INDENTURE ACT SECTION                                  INDENTURE SECTION  310    (a)(1)                                            6.08        (a)(2)                                             6.08        (b)                                                6.09  312    (a)                                               7.01        (c)                                                7.02  313    (a)                                               7.03        (c)                                                7.03  314    (a)(4)                                            10.08 (ii)        (c)(1)                                             1.02        (c)(2)                                             1.02        (e)                                                1.02  315   (a)                                                6.01(i)        (b)                                                6.02        (c)                                                6.01(ii)        (d)                                                6.01(iii), 6.03  316    (a)(last sentence)                                1.01 (“Outstanding”)        (a)(1)(A)                                          5.02, 5.12        (a)(1)(B)                                          5.13        (b)                                                5.08        (c)                                                1.04(iv)  317    (a)(1)                                            5.03        (a)(2)                                             5.04        (b)                                                10.03  318    (a)                                               1.11                                                                               i    

 

                                       Table of Contents                                         ARTICLE 1.                DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION  SECTION 1.01 DEFINITIONS. .................................................................................................................................... 1  SECTION 1.02 COMPLIANCE CERTIFICATES AND OPINIONS. ......................................................................... 8  SECTION 1.03 FORM OF DOCUMENTS DELIVERED TO TRUSTEE. ................................................................. 8  SECTION 1.04 ACTS OF HOLDERS. ......................................................................................................................... 9  SECTION 1.05 NOTICES, ETC., TO TRUSTEE AND THE COMPANY. .............................................................. 10  SECTION 1.06 NOTICE TO HOLDERS; WAIVER. ................................................................................................ 10  SECTION 1.07 EFFECT OF HEADINGS AND TABLE OF CONTENTS. ............................................................. 11  SECTION 1.08 SUCCESSORS AND ASSIGNS. ...................................................................................................... 11  SECTION 1.09 SEPARABILITY CLAUSE. .............................................................................................................. 11  SECTION 1.10 BENEFITS OF INDENTURE. .......................................................................................................... 11  SECTION 1.11 GOVERNING LAW. ......................................................................................................................... 11  SECTION 1.12 LEGAL HOLIDAYS. ........................................................................................................................ 11  SECTION 1.13 NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES, OR               STOCKHOLDERS. ........................................................................................................................ 11  SECTION 1.14 COUNTERPARTS. ........................................................................................................................... 12                                         ARTICLE 2.                                       NOTE FORMS  SECTION 2.01 FORMS GENERALLY. .................................................................................................................... 12                                         ARTICLE 3.                                        THE NOTES  SECTION 3.01 TITLE AND TERMS. ....................................................................................................................... 12  SECTION 3.02 DENOMINATIONS. ......................................................................................................................... 13  SECTION 3.03 EXECUTION, AUTHENTICATION, DELIVERY AND DATING. ............................................... 13  SECTION 3.04 TEMPORARY NOTES. .................................................................................................................... 14  SECTION 3.05 REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE. ................................... 14  SECTION 3.06 MUTILATED, DESTROYED, LOST AND STOLEN NOTES. ...................................................... 15  SECTION 3.07 PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED. ................................................. 15  SECTION 3.08 PERSONS DEEMED OWNERS. ...................................................................................................... 16  SECTION 3.09 CANCELLATION. ............................................................................................................................ 16  SECTION 3.10 COMPUTATION OF INTEREST. .................................................................................................... 16  SECTION 3.11 CUSIP NUMBERS. ........................................................................................................................... 16  SECTION 3.12 ISSUANCE OF PIK NOTES. ............................................................................................................ 17  SECTION 3.13 CALCULATION OF PRINCIPAL AMOUNT OF NOTES. ............................................................ 17                                         ARTICLE 4.                                        [RESERVED]                                         ARTICLE 5.                                         REMEDIES  SECTION 5.01 EVENTS OF DEFAULT. .................................................................................................................. 17  SECTION 5.02 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. ................................... 18  SECTION 5.03 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY               TRUSTEE. ...................................................................................................................................... 18  SECTION 5.04 TRUSTEE MAY FILE PROOFS OF CLAIM. ................................................................................. 19  SECTION 5.05 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES. ............................ 19  SECTION 5.06 APPLICATION OF MONEY AND PROPERTY COLLECTED. .................................................... 19  SECTION 5.07 LIMITATION ON SUITS. ................................................................................................................ 20                                              ii    

 

   SECTION 5.08 UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM               AND INTEREST. ........................................................................................................................... 20  SECTION 5.09 RESTORATION OF RIGHTS AND REMEDIES. ........................................................................... 20  SECTION 5.10 RIGHTS AND REMEDIES CUMULATIVE. .................................................................................. 21  SECTION 5.11 DELAY OR OMISSION NOT WAIVER. ........................................................................................ 21  SECTION 5.12 CONTROL BY HOLDERS. .............................................................................................................. 21  SECTION 5.13 WAIVER OF PAST DEFAULTS. .................................................................................................... 21  SECTION 5.14 WAIVER OF STAY OR EXTENSION LAWS. ............................................................................... 22  SECTION 5.15 UNDERTAKING FOR COSTS. ....................................................................................................... 22                                         ARTICLE 6.                                       THE TRUSTEE  SECTION 6.01 CERTAIN DUTIES AND RESPONSIBILITIES. ............................................................................. 22  SECTION 6.02 NOTICE OF DEFAULTS. ................................................................................................................ 23  SECTION 6.03 CERTAIN RIGHTS OF TRUSTEE. ................................................................................................. 24  SECTION 6.04 TRUSTEE NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES. ......................... 25  SECTION 6.05 MAY HOLD NOTES. ....................................................................................................................... 25  SECTION 6.06 MONEY HELD IN TRUST. ............................................................................................................. 25  SECTION 6.07 COMPENSATION AND REIMBURSEMENT. ............................................................................... 25  SECTION 6.08 CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. .................................................................. 26  SECTION 6.09 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR....................................... 26  SECTION 6.10 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. ............................................................... 27  SECTION 6.11 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS. .................. 28                                         ARTICLE 7.                   HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY  SECTION 7.01 COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES. ............................................ 28  SECTION 7.02 DISCLOSURE OF NAMES AND ADDRESSES OF HOLDERS. .................................................. 28  SECTION 7.03 REPORTS BY TRUSTEE. ................................................................................................................ 28                                         ARTICLE 8.                                        [RESERVED]                                         ARTICLE 9.                       SUPPLEMENTS AND AMENDMENTS TO INDENTURE  SECTION 9.01 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS. ................................. 29  SECTION 9.02 SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS........................................... 29  SECTION 9.03 EXECUTION OF SUPPLEMENTAL INDENTURES. .................................................................... 30  SECTION 9.04 EFFECT OF SUPPLEMENTAL INDENTURES. ............................................................................ 30  SECTION 9.05 CONFORMITY WITH TRUST INDENTURE ACT. ...................................................................... 30  SECTION 9.06 REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES. ................................................. 31  SECTION 9.07 NOTICE OF SUPPLEMENTAL INDENTURES. ............................................................................ 31                                         ARTICLE 10.                                        COVENANTS  SECTION 10.01 PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST. ........................................ 31  SECTION 10.02 MAINTENANCE OF OFFICE OR AGENCY. .............................................................................. 31  SECTION 10.03 MONEY FOR NOTE PAYMENTS TO BE HELD IN TRUST. .................................................... 31  SECTION 10.04 CORPORATE EXISTENCE. .......................................................................................................... 32  SECTION 10.05 PAYMENT OF TAXES AND OTHER CLAIMS. ......................................................................... 33  SECTION 10.06 MAINTENANCE OF PROPERTIES. ............................................................................................. 33  SECTION 10.07 COMPLIANCE WITH LAWS. ....................................................................................................... 33  SECTION 10.08 NOTICES TO THE TRUSTEE ....................................................................................................... 33  SECTION 10.09 COMMISSION REPORTS AND REPORTS TO HOLDERS. ....................................................... 33                                             iii    

 

                                         ARTICLE 11.                           REDEMPTION OR REPURCHASE OF NOTES  SECTION 11.01 OPTIONAL REDEMPTION. .......................................................................................................... 34  SECTION 11.02 APPLICABILITY OF ARTICLE. ................................................................................................... 34  SECTION 11.03 ELECTION TO REDEEM; NOTICE TO TRUSTEE. .................................................................... 34  SECTION 11.04 NOTICE OF REDEMPTION. ......................................................................................................... 34  SECTION 11.05 DEPOSIT OF REDEMPTION PRICE. ........................................................................................... 35  SECTION 11.06 NOTES PAYABLE ON REDEMPTION DATE. ........................................................................... 36  SECTION 11.07 SELECTION OF NOTES TO BE REDEEMED. ............................................................................ 36  SECTION 11.08 NOTES REDEEMED IN PART. ..................................................................................................... 36                                         ARTICLE 12.                                      SUBORDINATION  SECTION 12.01 AGREEMENT TO SUBORDINATE. ............................................................................................. 36  SECTION 12.02 OBLIGATION OF THE COMPANY UNCONDITIONAL. .......................................................... 37  SECTION 12.03 NOTICE TO TRUSTEE OF FACTS PROHIBITING PAYMENT. ............................................... 37  SECTION 12.04 APPLICATION BY TRUSTEE OF MONEYS DEPOSITED WITH IT. ....................................... 38  SECTION 12.05 SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS. ......................... 38  SECTION 12.06 SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF               COMPANY OR HOLDERS OF SENIOR INDEBTEDNESS. ...................................................... 38  SECTION 12.07 AUTHORIZATION OF TRUSTEE TO EFFECTUATE SUBORDINATION OF NOTES. .......... 39  SECTION 12.08 [RESERVED] .................................................................................................................................. 39  SECTION 12.09 RIGHT OF TRUSTEE TO HOLD SENIOR INDEBTEDNESS..................................................... 39  SECTION 12.10 NOT TO PREVENT EVENTS OF DEFAULT. .............................................................................. 39  SECTION 12.11 ARTICLE APPLICABLE TO PAYING AGENTS. ........................................................................ 39  SECTION 12.12 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT. ............ 39  SECTION 12.13 TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS. ....................... 39  SECTION 12.14 PAYMENT PERMITTED IF NO DEFAULT. ................................................................................ 40  SECTION 12.15 THIRD PARTY BENEFICIARIES. ................................................................................................ 40                                         ARTICLE 13.                                        [RESERVED]                                         ARTICLE 14.                                       CONVERSION  SECTION 14.01 MANDATORY CONVERSION ..................................................................................................... 40  SECTION 14.02 [RESERVED]. ................................................................................................................................. 40  SECTION 14.03 CONVERSION PROCEDURES. .................................................................................................... 40  SECTION 14.04 NO RESPONSIBILITY OF TRUSTEE FOR CONVERSION PROVISIONS. .............................. 42     SCHEDULE, ANNEX, APPENDIX & EXHIBITS   Exhibit A — Form of Note                                              iv    

 

                INDENTURE, dated as of March 4, 2019 (this “Indenture”), among FORBES ENERGY  SERVICES LTD., a Delaware corporation (the “Company”), and WILMINGTON TRUST, NATIONAL  ASSOCIATION, as trustee (together with its successors and assigns, in such capacity, the “Trustee”).                                 RECITALS OF THE COMPANY          WHEREAS, for its lawful corporate purposes, the Company has duly authorized the issuance of its 5.00%  Subordinated Convertible PIK Notes due 2020 (the “Notes”), initially in an aggregate principal amount of  $51,767,900 (the “Initial Notes”), plus Notes representing paid in kind (“PIK”) interest as set forth herein and to  provide therefor, and in order to provide the terms and conditions upon which the Notes are to be authenticated,  issued and delivered, the Company has duly authorized the execution and delivery of this Indenture; and          WHEREAS, the Form of Note, the certificate of authentication to be borne by each Note, and the Form of  Assignment and Transfer to be borne by the Notes are to be substantially in the forms hereinafter provided; and          WHEREAS, all acts and things necessary to make the Notes, when executed by the Company and  authenticated and delivered by the Trustee or a duly authorized Authenticating Agent, as in this Indenture provided,  the valid, binding and legal obligations of the Company, and this Indenture a valid agreement according to its terms,  have been done and performed, and the execution of this Indenture and the issuance hereunder of the Notes have in  all respects been duly authorized.                 NOW, THEREFORE, THIS INDENTURE WITNESSETH:                For and in consideration of the premises and the purchase of the Notes by the Holders thereof, it is  mutually covenanted and agreed, for the equal and proportionate benefit of all Holders, as follows:                                         ARTICLE 1.                DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION          Section 1.01 DEFINITIONS.                For all purposes of this Indenture, except as otherwise expressly provided or unless the context  otherwise requires:                (i)    the terms defined in this Article have the meanings assigned to them in this Article, and  words in the singular include the plural as well as the singular, and words in the plural include the singular as well as  the plural;                (ii)   all other terms used herein which are defined in the Trust Indenture Act, either directly or  by reference therein, or defined by Commission rule and not otherwise defined herein have the meanings assigned to  them therein, and the terms “cash transaction” and “self-liquidating paper,” as used in TIA Section 3.11, shall have  the meanings assigned to them in the rules of the Commission adopted under the Trust Indenture Act;                (iii)  all accounting terms not otherwise defined herein have the meanings assigned to them in  accordance with GAAP (as herein defined);                (iv)   the words “herein,” “hereof” and “hereunder” and other words of similar import refer to  this Indenture as a whole and not to any particular Article, Section or other subdivision;                (v)    the word “or” is not exclusive;                (vi)   “including” means including without limitation;                (vii)  all references to Articles, Sections, Exhibits and Appendices shall be construed to refer to  Articles and Sections of, and Exhibits and Appendices to, this Indenture;      

 

                (viii) all references to the date the Notes were originally issued shall refer to the Issuance Date;  and                (ix)   provisions of this Indenture apply to successive events and transactions.                “ABL Facility” means the senior secured asset-based revolving credit facility provided pursuant to  that certain Credit Agreement, dated as of November 16, 2018 and as amended, restated, amended and restated,  supplemented and/or otherwise modified from time to time, by and among Forbes and certain of its subsidiaries, as  borrowers, the lenders from time to time party thereto and Regions Bank, as administrative agent, and any  refinancing of such facility.                 “Act” when used with respect to any Holder, means any request, demand, authorization, direction,  notice, consent, waiver or other action provided by the Indenture to be given or taken by Holders, that is embodied  in and evidenced by one or more instruments of substantially similar tenor signed by Holders in person or by agents  duly appointed in writing; except as otherwise expressly provided in the Indenture, such actions becoming effective  when such instruments are delivered to the Trustee and, where it is expressly required, to the Company.                 “Affiliate” of any specified Person means any other Person directly or indirectly controlling or  controlled by or under direct or indirect common control with such specified Person. For purposes of this definition,  “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common  control with”), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to  direct or cause the direction of the management or policies of such Person, whether through the ownership of voting  securities, by agreement or otherwise.                 “Agent” means any Paying Agent, Authenticating Agent, Conversion Agent and Note Registrar  under this Indenture.                “Applicable Procedures” means, with respect to any transfer or exchange of or for beneficial  interests in any Global Note, the rules and procedures of the Depository to the extent applicable to such transaction  and as in effect from time to time.                 “Authenticating Agent” means the Person appointed, if any, by the Trustee as an authenticating  agent pursuant to the last paragraph of Section 3.03.                “Bankruptcy Law” means Title 11, United States Bankruptcy Code of 1978, as amended, or any  similar United States federal or state or foreign law relating to bankruptcy, insolvency, receivership, winding-up,  liquidation, reorganization or relief of debtors or any amendment to, succession to or change in any such law.                 “Board of Directors” means, with respect to any Person, either the board of directors of such  Person or any duly authorized committee thereof.                “Board Resolution” means, with respect to any Person, a copy of a resolution certified by the  Secretary or an Assistant Secretary of such Person to have been duly adopted by the Board of Directors of such  Person or any committee thereof and to be in full force and effect on the date of such certification, and delivered to  the Trustee.                “Business Day” means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a  day on which banking institutions in The City of New York or the place of payment are authorized or obligated by  law or executive order to close.                “Change of Control” means the occurrence of any of the following:                 (i)     any “person” or “group” (as those terms are used in Sections 13(d) and 14(d) of the  Exchange Act), other than the Permitted Holders, becomes the “beneficial owner” (as that term is used in Rule 13d- 3 under the Exchange Act), directly or indirectly, of more than 50% of the total outstanding voting power of all  classes of the Company’s Voting Stock;                                               2  

 

                (ii)     there occurs a sale, transfer, lease, conveyance or other disposition of all or substantially all  of the Company’s property or assets to any “person” or “group” (as those terms are used in Sections 13(d) and  14(d) of the Exchange Act), including any group acting for the purpose of acquiring, holding, voting or disposing of  securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act;                 (iii)     the Company consolidates with, or merges with or into, another person or any person  consolidates with, or merges with or into, the Company, unless the persons that “beneficially owned,” directly or  indirectly, the shares of the Company’s Voting Stock immediately prior to such consolidation or merger  “beneficially own,” directly or indirectly, immediately after such consolidation or merger, shares of the surviving or  continuing corporation’s Voting Stock representing at least a majority of the total outstanding voting power of all  outstanding classes of Voting Stock of the surviving or continuing corporation in substantially the same proportion  as such ownership immediately prior to such consolidation or merger; and                 (iv)     the Company is liquidated or dissolved or holders of the Company’s capital stock approve  any plan or proposal for the Company’s liquidation or dissolution.                 “Change of Control Conversion Date” means the date of the mandatory conversion of the Notes  upon a Change of Control, as determined by the Company, which date shall be no earlier than 20 days and no later  than 35 days from the date notice thereof is sent to Holders.                 “Commission” means the Securities and Exchange Commission, as from time to time constituted,  created under the Exchange Act, or, if at any time after the execution of this Indenture such Commission is not  existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such  duties at such time.                 “Common Stock” means the common stock, par value $0.01 per share, of the Company.                 “Company” means Forbes Energy Services Ltd., until a successor Person shall have become such  pursuant to the applicable provisions of this Indenture, and thereafter “Company” shall mean such successor Person.                 “Company Request” or “Company Order” means a written request or order signed in the name of  the Company by any one of its Chairman, President, Chief Executive Officer, Chief Financial Officer, Chief  Operating Officer, Secretary, or any Vice President and delivered to the Trustee.                 “Conversion Agent” means any office or agency (including the Company acting as Conversion  Agent) where the Notes may be presented for conversion.                 “Conversion Date” has the meaning specified in Section 14.01 of this Indenture.                “Conversion Notice” has the meaning specified in Section 14.03 of this Indenture.                “Conversion Rate” has the meaning specified in Section 14.01 of this Indenture.                “Corporate Trust Office” means the designated corporate trust office of the Trustee, at which at  any particular time its corporate trust business shall be administered, which office at the date of execution of this  Indenture is located at 15950 N. Dallas Parkway, Suite 550, Dallas, TX 75248, except that with respect to  presentation of Notes for payment or for registration of transfer or exchange, such term shall mean any office or  agency of the Trustee at which, at any particular time, its corporate agency business shall be conducted.                 “Custodian” means any receiver, trustee, assignee, liquidator, sequestrator or similar official under  any Bankruptcy Law.                 “Default” means any event that is, or with the passage of time or the giving of notice or both  would be, an Event of Default.                                                3  

 

                “Definitive Note” means a certificated Note issued pursuant to the terms of this Indenture that is  not a Global Note.                “Depository” means The Depository Trust Company, its nominees and successors.                “Event of Default” has the meaning specified in Section 5.01 of this Indenture.                “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and  regulations of the Commission promulgated thereunder.                “Fair Market Value” means fair market value as determined by (A) in the case of a Marketed  Public Offering, the offering price per share paid by public investors in the Marketed Public Offering, (B) in the case  of a Change of Control, the value of the consideration paid per share by the acquirer in the Change of Control  transaction, or (C) in the case of mandatory conversion at the Maturity Date (or such earlier date as the Company  shall elect to redeem the Notes), such value as shall be determined by a nationally recognized investment banking  firm engaged by the Board of Directors of the Company for the purposes of calculating the Conversion Rate.                “FES LLC” means Forbes Energy Services LLC, a Delaware limited liability company.                “Global Notes” means one or more permanent global Notes in definitive, fully registered form.                 “Holder” means the Person in whose name a Note is registered on the books of the Note Registrar.                “Indenture” means this Indenture between the Company and the Trustee dated as of the date  hereof, as originally executed and as it may from time to time be supplemented or amended by one or more  indentures supplemental hereto entered into pursuant to the applicable provisions of this Indenture.                  “Initial Notes” has the meaning specified in the recitals to this Indenture.                “Interest Payment Date” means the Stated Maturity of an installment of interest on the Notes.                “Issuance Date” means the closing date for the sale and original issuance of the Initial Notes  hereunder.                “Marketed Public Offering” means the consummation of the first underwritten public offering of  common equity of the Company resulting in the listing of the Company’s Common Stock on a national securities  exchange.                 “Maturity” means, with respect to any Note, the date on which any principal of such Note  becomes due and payable as therein or herein provided, whether at the Stated Maturity by declaration of  acceleration, call for redemption or purchase or otherwise.                 “Maturity Date” means June 30, 2020.                “National Securities Exchange” means the New York Stock Exchange, NYSE Amex, the  NASDAQ Stock Market or another national securities exchange or any successor to the foregoing.                 “Note Register” and “Note Registrar” have the respective meanings specified in Section 3.05.                “Notes” means any Notes authenticated and delivered under the Indenture. For purposes of the  Indenture, all references to “principal amount” of the Notes shall include any increase in the principal amount  thereof in respect of PIK Interest paid in accordance with the terms of the Indenture.                  “Notes Custodian” means the custodian with respect to a Global Note, or any successor Person  thereto and shall initially be the Trustee.                                               4  

 

                “Obligations” means any principal, interest, penalties, fees, expenses, indemnifications,  reimbursements (including, without limitation, reimbursement obligations with respect to letters of credit and  banker’s acceptances), damages and other liabilities, and guarantees of payment of such principal, interest, penalties,  fees, expenses, indemnifications, reimbursements, damages and other liabilities, payable under the documentation  governing any indebtedness.                 “Officer” means the Chairman of the Board, the Chief Executive Officer, the Chief Financial  Officer, the Chief Operating Officer, the President, any Executive Vice President, Senior Vice President or Vice  President, the Treasurer or the Secretary of the Company.                 “Officer’s Certificate” means a certificate signed on behalf of the Company by an Officer of the  Company, whom must be the President, Chief Executive Officer, Chief Financial Officer, Chief Operating Officer,  Secretary, or any Vice President, stating that, in the opinion of the signers, all conditions precedent, if any, provided  for in this Indenture (including any covenant compliance which constitutes a condition precedent) relating to the  proposed action have been complied with, and shall include: (i) a statement that such individual signing such  certificate has read such covenant or condition; (ii) a brief statement as to the nature and scope of the examination or  investigation upon which the statements or opinions contained in such certificate are based; (iii) a statement that, in  the opinion of each such individual, such individual has made such examination or investigation as is necessary to  enable such individual to express an informed opinion as to whether or not such covenant or condition has been  complied with; and (iv) a statement as to whether, in the opinion of each such individual, such condition or covenant  has been complied with.                 “Opinion of Counsel” means a written opinion of legal counsel addressed to the Trustee  complying with the requirements of Section 1.02.  Unless otherwise required by the TIA, such legal counsel may be  an employee of or counsel to the Company.                “Outstanding,” when used with respect to Notes, means, as of the date of determination, all Notes  theretofore authenticated and delivered under this Indenture, except:                 (i)     Notes theretofore cancelled by the Trustee or delivered to the Trustee for cancellation;                 (ii)     Notes, or portions thereof, for whose payment or redemption money or shares of the  Company’s Common Stock in the necessary amount have been theretofore deposited with the Trustee or any Paying  Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall  act as its own Paying Agent) for the Holders of such Notes; provided that, if such Notes are to be redeemed, notice  of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee  has been made;                 (iii)     Notes paid pursuant to Section 3.06 in exchange for or in lieu of which other Notes have  been authenticated and delivered pursuant to this Indenture, other than any such Notes in respect of which there shall  have been presented to the Trustee proof satisfactory to it that such Notes are held by a bona fide purchaser in whose  hands the Notes are valid obligations of the Company;                 provided, however, that in determining whether the Holders of the requisite principal amount of  Outstanding Notes have given any request, demand, authorization, direction, consent, notice or waiver, and for the  purpose of making the calculations required by TIA Section 313, Notes owned by the Company or any other obligor  upon the Notes or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be  Outstanding (provided, that in connection with any offer by the Company or any obligor to purchase the Notes,  Notes tendered for purchase will be deemed to be Outstanding and held by the tendering Holder until the date of  purchase), except that, in determining whether the Trustee shall be protected in making such calculation or in relying  upon any such request, demand, authorization, direction, notice, consent or waiver, only Notes which a Responsible  Officer of the Trustee actually knows to be so owned shall be so disregarded. Notes so owned which have been  pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the  pledgee’s right so to act with respect to such Notes and that the pledgee is not the Company or any other obligor  upon the Notes or any Affiliate of the Company or such other obligor. In the case of a dispute as to such right, any                                               5  

 

   decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. Upon request of the  Trustee, the Company shall furnish to the Trustee promptly an Officer’s Certificate listing and identifying all Notes,  if any, known by the Company to be owned or held by or for the account of any of the above described Persons; and,  subject to Section 6.01, the Trustee, shall be entitled to accept such Officer’s Certificate as conclusive evidence of  the facts therein set forth and of the fact that all Notes not listed therein are outstanding for the purpose of any such  determination.                 “Paid in Full” or “Payment in Full” when used in connection with (i) the ABL Facility, shall mean  the occurrence of all of the following: (a) termination of all commitments to extend credit that would constitute part  of the ABL Facility, (b) payment in full in cash of all of the Obligations under the ABL Facility (other than  Unasserted Contingent Obligations), and (c) termination, cancellation or cash collateralization of all outstanding  letters of credit and other obligations in connection therewith in form and substance reasonably acceptable to the  agent under the ABL Facility; and (ii) the Term Loan Facility, shall mean the occurrence of all of the following: (a)  termination of all commitments to extend credit that would constitute part of the Term Loan Facility and (b)  payment in full in cash of all of the Obligations under the Term Loan Facility (other than Unasserted Contingent  Obligations).                “Paying Agent” means any Person (including the Company acting as Paying Agent) authorized by  the Company to pay the principal of (and premium, if any) or interest on any Notes on behalf of the Company.                 “Permitted Holder” means (i) Ascribe Capital LLC, FMR LLC, Courage Capital Management,  LLC, Pacific Investment Management Company LLC, Phoenix Investment Adviser LLC, and Solace Capital  Partners, L.P. and any of their respective Affiliates or any successor thereto, and (ii) any officer, director, employee,  partner, member, manager or stockholder of the manager or general partner of the foregoing.                 “Person” means any individual, corporation, limited liability company, partnership, joint venture,  association, joint stock company, trust, unincorporated organization, government or any agency or political  subdivision thereof or any other entity.                 “PIK” has the meaning set forth in the recitals to this Indenture.                “PIK Interest” means interest on the Notes payable by increasing the principal amount of the  Notes or by issuing PIK Notes.                 “PIK Notes” means additional Notes issued under the Indenture on the same terms and conditions  as the Notes originally issued on the date hereof in connection with the payment of PIK Interest. For the avoidance  of doubt, the term “PIK Notes” shall not include any increases to the principal amount of the outstanding Global  Notes as a result of a payment of PIK Interest.                 “PIK Payment” means a payment of PIK Interest in an aggregate amount equal to the amount of  interest that would be payable on the Notes if such interest were paid in cash, by increasing the principal amount of  the Notes or issuing Notes.                  “Prospectus” means the prospectus dated February 13, 2019, as supplemented by any prospectus  supplement, relating to the Rights Offering.                “Ranking Junior to the Notes”, when used with respect to any Obligation of the Company, means  any Obligation of the Company which (a) ranks junior to and not equally with or prior to the Notes in right of  payment upon the happening of any event of the kind specified in the first sentence of the first paragraph of Section  12.01, and (b) is specifically designated as ranking junior to the Notes by express provisions in the instrument  creating or evidencing such obligation. The securing of any Obligations of the Company, otherwise Ranking Junior  to the Notes, is not deemed to prevent such Obligations from constituting Obligations Ranking Junior to the Notes.                “Ranking on a Parity with the Notes”, when used with respect to any Obligation of the Company,  means any Obligation of the Company which (a) ranks equally with and not prior to the Notes in right of payment                                               6  

 

   upon the happening of any event of the kind specified in the first sentence of the first paragraph of Section 12.01,  and (b) is specifically designated as ranking on a parity with the Notes by express provision in the instrument  creating or evidencing such obligation. The securing of any Obligations of the Company, otherwise Ranking on a  Parity with the Notes, is not deemed to prevent such Obligations from constituting Obligations Ranking on a Parity  with the Notes.                “Redemption Date,” when used with respect to any Note to be redeemed, in whole or in part,  means the date fixed for such redemption by or pursuant to this Indenture.                 “Redemption Price,” when used with respect to any Note to be redeemed, means the price at  which it is to be redeemed pursuant to this Indenture.                 “Regular Record Date” for the interest payable on any Interest Payment Date means the June 15 or  December 15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date.                “Responsible Officer,” when used with respect to the Trustee, means any vice president, any  assistant secretary, any assistant treasurer, any trust officer or assistant trust officer or any other officer of the  Trustee customarily performing functions similar to those performed by any of the above-designated officers, and  also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred  because of his knowledge of and familiarity with the particular subject, and who shall in each case have direct  responsibility for the administration of this Indenture.                “Rights Offering” means the offering made to holders of the Company’s Common Stock of  subscription rights to purchase the Notes pursuant to the Prospectus.                “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of  the Commission promulgated thereunder.                “Senior Indebtedness” means (i) the Obligations under the Term Loan Facility and ABL Facility  and all refinancings of such Obligations (ii) any other indebtedness permitted to be incurred by the Company under  the terms of this Indenture that is senior to the Notes.                 “Settlement” has the meaning specified in Section 14.03 of this Indenture.                “Significant Subsidiary” means any Subsidiary that would be a “significant subsidiary” as defined  in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect  on the date hereof.                 “Stated Maturity” when used with respect to any Note or any installment of interest thereon,  means the date specified in such Note as the fixed date on which the principal of such Note or such installment of  interest is due and payable, and, when used with respect to any other indebtedness, means the date specified in the  instrument governing such indebtedness as the fixed date on which the principal of such indebtedness, or any  installment of interest thereon, is due and payable.                 “Subsidiary” means, with respect to any Person, (i) any corporation, association, or other business  entity (other than a partnership, joint venture or limited liability company) of which more than 50% of the total  voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the  election of directors, managers or trustees thereof is at the time of determination owned or controlled, directly or  indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof and  (ii) any partnership, joint venture, limited liability company or similar entity of which more than 50% of the capital  accounts, distribution rights, total equity and voting interests or general or limited partnership interests, as  applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of  that Person or a combination thereof whether in the form of membership, general, special or limited partnership  interests or otherwise.                                                7  

 

                “Term Loan Facility” means the loans provided pursuant to that certain Loan and Security  Agreement, dated as of April 13, 2017 and amended as of November 16, 2018 and as further amended, restated,  amended and restated, supplemented and/or otherwise modified from time to time, by and among FES LLC, as  borrower, Forbes and certain subsidiaries of FES LLC, as guarantors, the lenders from time to time party thereto and  Wilmington Trust, National Association, as administrative agent.                 “Trust Indenture Act” or “TIA” means the Trust Indenture Act of 1939 as amended and in force  on the date as of which this Indenture was executed, except as provided in Section 9.05 hereof.                 “Trustee” means the Person named as the “Trustee” in the first paragraph of the Indenture until a  successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter  “Trustee” shall mean such successor Trustee.                 “Unasserted Contingent Obligations” shall mean contingent indemnification and expense  reimbursement obligations for which no claim giving rise thereto has been asserted.                “Voting Stock” of any Person as of any date means the Capital Stock of such Person that is at the  time entitled to vote in the election of the Board of Directors of such Person.          Section 1.02 COMPLIANCE CERTIFICATES AND OPINIONS.                Upon any application or request by the Company to the Trustee to take or refrain from taking any  action under any provision of this Indenture, the Company and any other obligor on the Notes (if applicable) shall  furnish to the Trustee an Officer’s Certificate stating that, in the opinion of the signer, all conditions precedent, if  any, provided for in this Indenture (including any covenant compliance with which constitutes a condition  precedent) relating to the proposed action have been complied with and, if requested by the Trustee, an Opinion of  Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with,  except that in the case of any such application or request as to which the furnishing of such documents is specifically  required by any provision of this Indenture relating to such particular application or request, no additional certificate  or opinion need be furnished.                Each certificate or opinion with respect to compliance with a condition or covenant provided for in  this Indenture shall include:          (a)   a statement that each individual signing such certificate or opinion has read such covenant or  condition;         (b)    a brief statement as to the nature and scope of the examination or investigation upon which the  statements or opinions contained in such certificate or opinion are based;         (c)    a statement that, in the opinion of each such individual or such firm, such individual or firm has  made such examination or investigation as is necessary to enable such individual or firm to express an informed  opinion as to whether or not such covenant or condition has been complied with; and         (d)    a statement as to whether, in the opinion of such individual, such condition or covenant has been  complied with.         Section 1.03 FORM OF DOCUMENTS DELIVERED TO TRUSTEE.                In any case where several matters are required to be certified by, or covered by an opinion of, any  specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such  Person, or that they be so certified or covered by only one document, but one such Person may certify or give an  opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person  may certify or give an opinion as to such matters in one or several documents.                                               8  

 

                Any certificate or opinion of an Officer of the Company or other obligor on the Notes may be  based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless  such Officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or  representations with respect to the matters upon which his certificate or opinion is based are erroneous.  Any such  certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion  of, or representations by, an Officer or Officers of the Company or other obligor on the Notes stating that the  information with respect to such factual matters is in the possession of the Company or other obligor on the Notes  unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or  representations with respect to such matters are erroneous.                Where any Person is required to make, give or execute two or more applications, requests,  consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be  consolidated and form one instrument.         Section 1.04 ACTS OF HOLDERS.                (i)    Proof of execution of any Act shall be sufficient for any purpose of this Indenture and  conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section 1.04.                (ii)   The fact and date of the execution by any Person of any such instrument or writing may  be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer  authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or  writing acknowledged to him the execution thereof.  Where such execution is by a signer acting in a capacity other  than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of authority.  The fact  and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may  also be proved in any other manner that the Trustee deems sufficient.                (iii)  The principal amount (including, for the avoidance of doubt, any increases in principal as  a result of a PIK Payment of PIK Interest) and serial and/or CUSIP numbers of Notes held by any Person, and the  date of holding the same, shall be proved by the Note Register.                 (iv)   If the Company shall solicit from the Holders any request, demand, authorization,  direction, notice, consent, waiver or other Act, the Company may, at its option, by or pursuant to a Board  Resolution, fix in advance a record date for the determination of Holders entitled to give such request, demand,  authorization, direction, notice, consent, waiver or other Act, but the Company shall have no obligation to do so.   Notwithstanding TIA Section 3.16(c), such record date shall be the record date specified in or pursuant to such  Board Resolution, which shall be a date not earlier than the date 30 days prior to the first solicitation of Holders  generally in connection therewith and not later than the date such solicitation is completed.  If such a record date is  fixed, such request, demand, authorization, direction, notice, consent, waiver or other Act may be given before or  after such record date, but only the Holders of record at the close of business on such record date shall be deemed to  be Holders for the purposes of determining whether Holders of the requisite proportion of Outstanding Notes have  authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other  Act, and for that purpose the Outstanding Notes shall be computed as of such record date; provided that no such  authorization, agreement or consent by the Holders on such record date shall be deemed effective unless it shall  become effective pursuant to the provisions of this Indenture not later than six months after the record date.                Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder  of any Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the  registration of transfer thereof or in exchange therefor or in lieu thereof (including in accordance with Section 3.06)  in respect of anything done, omitted or suffered to be done by the Trustee, any Paying Agent or the Company in  reliance thereon, whether or not notation of such action is made upon such Note.                Without limiting the foregoing, a Holder entitled to take any action hereunder with regard to any  particular Note may do so with regard to all or any part of the principal amount of such Note or by one or more duly  appointed agents, each of which may do so pursuant to such appointment with regard to all or any part of such                                               9  

 

   principal amount. Any notice given or action taken by a Holder or its agents with regard to different parts of such  principal amount pursuant to this paragraph shall have the same effect as if given or taken by separate Holders of  each such different part.                Without limiting the generality of the foregoing, a Holder, including the Depository that is the  Holder of a Global Note, may make, give or take, by a proxy or proxies duly appointed in writing, any request,  demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given  or taken by Holders, and the Depository that is the Holder of a Global Note may provide its proxy or proxies to the  beneficial owners of interests in any such Global Note through such Depository’s standing instructions and  customary practices.                 The Company may fix a record date for the purpose of determining the Persons who are beneficial  owners of interests in any Global Note held by the Depository entitled under the procedures of such Depository to  make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction,  notice, consent, waiver or other action provided in this Indenture to be made, given or taken by the Holders.          Section 1.05 NOTICES, ETC., TO TRUSTEE AND THE COMPANY.                Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other  document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with,         (a)    the Trustee by any Holder or by the Company or any other obligor on the Notes shall be sufficient  for every purpose hereunder if made, given, furnished or delivered in writing (which may be via facsimile or any  other electronic means that the Trustee agrees to accept), to or with the Trustee and received at its Corporate Trust  Office, Attention:  Forbes Energy Notes Administrator, or         (b)    the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder  (unless otherwise herein expressly provided) if made, given, furnished or delivered, in writing (which may include  via facsimile), or mailed, first-class postage prepaid, or delivered by recognized overnight courier, to the Company,  addressed to it at the address of its principal office specified in the first paragraph of this Indenture, or at any other  address previously furnished in writing to the Trustee by the Company.                The Trustee agrees to accept instructions or directions pursuant to this Indenture sent by unsecured  e-mail, pdf, facsimile transmission or other similar unsecured electronic methods: provided, however, that the  Trustee shall have received an incumbency certificate listing persons designated to give such instructions or  directions and containing specimen signatures of such designated persons, which such incumbency certificate shall  be amended and replaced whenever a person is to be added or deleted from the listing. If the Company elects to give  the Trustee e-mail or facsimile instructions (or instructions by a similar electronic method) and the Trustee acts upon  such instructions as required or permitted by this Indenture, then the Trustee shall not be liable for any losses, costs  or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such instructions  notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction. The Company  agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to  the Trustee, including without limitation the risk of the Trustee acting on unauthorized instructions, and the risk or  interception and misuse by third parties.         Section 1.06 NOTICE TO HOLDERS; WAIVER.                Where this Indenture provides for notice of any event to Holders by the Company or the Trustee,  such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first- class postage prepaid, by email or such other applicable customary procedures of the Depository, to each Holder  affected by such event, at such Holder’s address as it appears in the Note Register, not later than the latest date, and  not earlier than the earliest date, prescribed for the giving of such notice.  In any case where notice to Holders is  given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder  shall affect the sufficiency of such notice with respect to other Holders.  Any notice mailed to a Holder in the  manner herein prescribed shall be conclusively deemed to have been received by such Holder, whether or not such                                              10  

 

   Holder actually receives such notice.  Where this Indenture provides for notice in any manner, such notice may be  waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall  be the equivalent of such notice.  Waivers of notice by Holders shall be filed with the Trustee, but such filing shall  not be a condition precedent to the validity of any action taken in reliance upon such waiver.                In case by reason of the suspension of or irregularities in regular mail service or by reason of any  other cause, it shall be impracticable to mail notice of any event to Holders when such notice is required to be given  pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the  Trustee shall be deemed to be a sufficient giving of such notice for every purpose hereunder.          Section 1.07 EFFECT OF HEADINGS AND TABLE OF CONTENTS.                The Article and Section headings herein and the Table of Contents are for convenience only and  shall not affect the construction hereof.          Section 1.08 SUCCESSORS AND ASSIGNS.                All covenants and agreements in this Indenture by the Company shall bind its successors and  assigns, whether so expressed or not.  All agreements of the Trustee in this Indenture shall bind its successors,  whether so expressed or not.           Section 1.09 SEPARABILITY CLAUSE.                In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the  validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.         Section 1.10 BENEFITS OF INDENTURE.                Nothing in this Indenture or in the Notes, express or implied, shall give to any Person (other than  the parties hereto, any Agent and their successors hereunder and each of the Holders) any benefit or any legal or  equitable right, remedy or claim under this Indenture.         Section 1.11 GOVERNING LAW.                THIS INDENTURE AND    THE NOTES SHALL BE GOVERNED AND CONSTRUED IN  ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.  THIS INDENTURE SHALL BE  SUBJECT TO THE PROVISIONS OF THE TRUST INDENTURE ACT THAT ARE REQUIRED TO BE PART  OF THIS INDENTURE AND SHALL, TO THE EXTENT APPLICABLE, BE GOVERNED BY SUCH  PROVISIONS.         Section 1.12 LEGAL HOLIDAYS.                In any case where any Interest Payment Date, any Redemption Date, Stated Maturity or Maturity  of any Note shall not be a Business Day, then (notwithstanding any other provision of this Indenture or of the Notes)  payment of principal (or premium, if any) or interest need not be made on such date, but may be made on the next  succeeding Business Day with the same force and effect as if made on the Interest Payment Date, Redemption Date,  or at the Stated Maturity or Maturity; provided that no interest shall accrue for purposes of such payment for the  period from and after such Interest Payment Date, Redemption Date, Stated Maturity or Maturity, as the case may  be, to the next succeeding Business Day.         Section 1.13 NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES, OR  STOCKHOLDERS.   No director, officer, employee, incorporator or stockholders, as such, of the Company shall have any liability for any  obligations of the Company under the Notes or this Indenture or for any claim based on, in respect of, or by reason  of, such obligations or their creations.  Each Holder by accepting a Note waives and releases all such liability.  Such                                              11  

 

   waiver and release are part of the consideration for the issuance of the Notes.  Such waiver may not be effective to  waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against  public policy.          Section 1.14 COUNTERPARTS.                This Indenture may be executed in any number of counterparts, each of which shall be original;  but such counterparts shall together constitute but one and the same instrument.                                         ARTICLE 2.                                       NOTE FORMS         Section 2.01 FORMS GENERALLY.                The Notes and the Trustee’s certificate of authentication shall be substantially in the form of  Exhibit A which is hereby incorporated in, and expressly made a part of, this Indenture.  The Notes may have  notations, legends or endorsements required by law, stock exchange rule, agreements to which the Company is  subject, if any, or usage (provided that any such notation, legend or endorsement is in a form reasonably acceptable  to the Company).  Each Note shall be dated the date of its authentication.  The terms of the Note set forth in Exhibit  A are part of the terms of this Indenture.                                         ARTICLE 3.                                        THE NOTES         Section 3.01 TITLE AND TERMS.                The aggregate principal amount of Notes which may be authenticated and issued under this  Indenture is not limited; provided, however that any PIK Notes or additional Notes issued under this Indenture are  issued in accordance with Section 3.03 hereof, as part of the same series as the Initial Notes, form a single class with  the Initial Notes and shall have the same terms as to status, redemption, conversion or otherwise as the Initial Notes.                The Notes shall be known and designated as the “5.00% Subordinated Convertible PIK Notes due  2020” of the Company.  The Stated Maturity of the Notes shall be June 30, 2020.  Interest on the Notes will be  payable semi-annually in arrears on June 30 and December 31 of each year, starting on June 30, 2019, to holders of  record at the close of business on the preceding June 15 and December 15, respectively, with all interest payments  being PIK Interest at a rate of 5.0% per annum. In connection with the payment of PIK Interest in respect of the  Notes, on each Interest Payment Date, the Company is entitled to, without the consent of the Holders, (a) in the case  of Global Notes increase the outstanding principal amount of the Global Notes or (b) in the case of Definitive Notes,  issue additional PIK Notes under this Indenture on the same terms and conditions as the Initial Notes.  PIK Notes  shall be convertible into Common Stock at the same Conversion Rate as the Notes as provided in Article Fourteen  hereof.  Interest will accrue on the Notes from and including the Issuance Date (or, with respect to any PIK Note,  such later date of issuance of such PIK Note) or from, and including, the last date in respect of which interest has  been paid or provided for, as the case may be, to, but excluding, the next Interest Payment Date or the Maturity  Date, as the case may be. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day  months, until the principal thereof is paid or duly provided for. Interest on any overdue principal, interest (to the  extent lawful) or premium, if any, shall be payable on demand in the form of Common Stock as provided in Article  Fourteen hereof.                 The principal of (and premium, if any) and interest on the Notes shall be payable at the office or  agency of the Company maintained for such purpose; provided, however, that, at the option of the Company,  payment of interest may be paid by check mailed to addresses of the Persons entitled thereto as such addresses shall  appear on the Note Register; provided that all payments of principal, premium, if any, and interest with respect to  Notes represented by one or more permanent Global Notes registered in the name of or held by the Depository or its  nominee will be made by wire transfer of immediately available funds to the accounts specified by the Holders  thereof.                                               12  

 

                The Notes shall be convertible into Common Stock pursuant to Article Fourteen.                The Notes shall be redeemable as provided in Article Eleven and in the Notes.         Section 3.02 DENOMINATIONS.                The Notes shall be issuable only in registered form without coupons and only in minimum  denominations of $100.00 and an integral multiples of $100.00 in excess thereof; provided the PIK Notes will be  issued in minimum denominations of $1.00 and integral multiples of $1.00, and thereafter, the minimum  denomination of the Notes will be $1.00 and integral multiples of $1.00 in excess thereof.         Section 3.03 EXECUTION, AUTHENTICATION, DELIVERY AND DATING.                The Notes shall be executed on behalf of the Company by an Officer.  The signature of an Officer  on the Notes may be manual or facsimile signatures of the present or any future such authorized Officer and may be  imprinted or otherwise reproduced on the Notes.                Notes bearing the manual or facsimile signatures of individuals who were at any time the proper  Officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased  to hold such offices prior to the authentication and delivery of such Notes or did not hold such offices at the date of  such Notes.                On or prior to the Issuance Date, the Company shall deliver the Initial Notes in an aggregate  principal amount not to exceed Fifty-One Million, Seven Hundred Sixty Seven Thousand, Nine Hundred Dollars  ($51,767,900) executed by the Company to the Trustee for authentication, together with a Company Order directing  the Trustee to authenticate the Initial Notes and certifying that all conditions precedent to the issuance of Notes  contained herein have been fully complied with, and the Trustee in accordance with such Company Order shall  authenticate and deliver such Initial Notes.  On each Interest Payment Date, (a) in the case of Global Notes, the  Trustee, upon receipt of a Company Order, shall increase the principal amount of any such Global Note by an  amount equal to the interest payable, rounded up to the nearest $1, for the relevant interest period on the principal  amount of such Global Note as of the relevant Regular Record Date for such Interest Payment Date, to be allocated  for the credit of the Holders on such Regular Record Date, pro rata in accordance with their interests and subject to  the procedures of the Depository, and an adjustment shall be made on the books and records of the Trustee (if it is  then the Notes Custodian for such Global Note) with respect to such Global Note, by the Trustee or the Notes  Custodian, as applicable, to reflect such increase, and (b) in the case of Definitive Notes, the Company shall deliver  PIK Notes in the applicable principal amount executed by the Company to the Trustee for authentication, directing  the Trustee to authenticate such PIK Notes and certifying that all conditions precedent to the issuance of such PIK  Notes contained herein have been fully complied with, and the Trustee in accordance with such Company Order  shall authenticate and deliver such PIK Notes.  In each case, the Trustee shall be entitled to receive a Company  Order, an Officer’s Certificate and an Opinion of Counsel of the Company that it may reasonably request in  connection with such authentication of Notes.  Such Company Order shall specify the amount of Notes to be  authenticated, the applicable CUSIP number, if any, and the date on which the original issue of Notes or PIK Notes  is to be authenticated.                Each Note shall be dated the date of its authentication.                No Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any  purpose unless there appears on such Note a certificate of authentication substantially in the form provided for  herein duly executed by the Trustee by manual signature of an authorized signatory, and such certificate upon any  Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered  hereunder and is entitled to the benefits of this Indenture.                The Trustee may appoint an Authenticating Agent acceptable to the Company to authenticate  Notes on behalf of the Trustee.  Unless limited by the terms of such appointment, an Authenticating Agent may  authenticate Notes whenever the Trustee may do so.  Each reference in this Indenture to authentication by the                                              13  

 

   Trustee includes authentication by such Agent.  An Authenticating Agent has the same rights as any Note Registrar  or Paying Agent to deal with the Company and its Affiliates.          Section 3.04 TEMPORARY NOTES.                Pending the preparation of certificates representing Notes, the Company may execute, and upon  receipt of a Company Order the Trustee shall authenticate and deliver, temporary Notes which are printed,  lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of  the tenor of the Definitive Notes in lieu of which they are issued and with such appropriate insertions, omissions,  substitutions and other variations as the Officers executing such Notes may determine, as conclusively evidenced by  their execution of such Notes.                If temporary Notes are issued, the Company will cause Definitive Notes to be prepared without  unreasonable delay.  After the preparation of Definitive Notes, the temporary Notes shall be exchangeable for  Definitive Notes upon surrender of the temporary Notes at the office or agency of the Company designated for such  purpose pursuant to Section 10.02, without charge to the Holder.  Upon surrender for cancellation of any one or  more temporary Notes, the Company shall execute and the Trustee shall, upon receipt of a Company Order,  authenticate and deliver in exchange therefor a like principal amount of Definitive Notes of authorized  denominations.  Until so exchanged, the temporary Notes shall in all respects be entitled to the same benefits under  this Indenture as Definitive Notes.          Section 3.05 REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.                The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the  register maintained in such office and in any other office or agency designated pursuant to Section 10.02 being  herein sometimes referred to as the “Note Register”) in which, subject to such reasonable regulations as it may  prescribe, the Company shall provide for the registration of Notes and of transfers of Notes.  The Note Register shall  be in written form or any other form capable of being converted into written form within a reasonable time.  At all  reasonable times, the Note Register shall be open to inspection by the Trustee.  The Trustee is hereby initially  appointed as security registrar (the Trustee in such capacity, together with any successor of the Trustee in such  capacity, the “Note Registrar”) for the purpose of registering Notes and transfers of Notes as herein provided. The  Trustee is hereby initially appointed to act as the Paying Agent and the Conversion Agent.                Upon surrender for registration of transfer of any Note at the office or agency of the Company  designated pursuant to Section 10.02, the Company shall execute, and the Trustee shall, upon receipt of a Company  Order, authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of  any authorized denomination or denominations of a like aggregate principal amount.  The Trustee shall not be  required to register transfers of Notes or to exchange Notes for a period of 15 days before selection of any Notes to  be redeemed.  The Trustee shall not be required to exchange or register transfers of any Notes called or being called  for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part.  The Trustee  shall not be required to register the transfer of or to exchange a Note between a record date and the next succeeding  Interest Payment Date.                Furthermore, any Holder of a Global Note shall, by acceptance of such Global Note, agree that  transfers of beneficial interests in such Global Note may be effected only through a book-entry system maintained  by the Holder of such Global Note (or its agent), and that ownership of a beneficial interest in the Note shall be  required to be reflected in a book entry.                At the option of the Holder, Notes may be exchanged for other Notes of any authorized  denomination and of a like aggregate principal amount, upon surrender of the Notes to be exchanged at such office  or agency.  Whenever any Notes are so surrendered for exchange, the Company shall execute, and the Trustee shall,  upon receipt of a Company Order, authenticate and deliver, the Notes which the Holder making the exchange is  entitled to receive and the Notes to be exchanged shall be cancelled by the Trustee.                                              14  

 

                All Notes issued upon any registration of transfer or exchange of Notes shall be the valid  obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the  Notes surrendered upon such registration of transfer or exchange.                Every Note presented or surrendered for registration of transfer or for exchange shall (if so  required by the Company or the Note Registrar) be duly endorsed, or be accompanied by a written instrument of  transfer, in form satisfactory to the Company and the Note Registrar, duly executed by the Holder thereof or such  Holder’s attorney duly authorized in writing.                No service charge shall be made for any registration of transfer or exchange or redemption of  Notes, but the Company may require payment of a sum sufficient to cover any taxes, fees or other governmental  charge that may be imposed in connection with any registration of transfer or exchange of Notes, other than  exchanges pursuant to Section 3.04 or Section 9.06, not involving any transfer.                Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and  the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such  Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and  none of the Trustee, any Agent or the Company shall be affected by notice to the contrary.                Each holder of a Note agrees to indemnify the Company and the Trustee against any liability that  may result from the transfer, exchange or assignment of such Holder’s Note by such Holder in violation of any  provision of this Indenture and/or applicable United States federal or state securities laws.                Neither the Trustee nor any Agent of the Trustee shall have any responsibility for any actions  taken or not taken by the Depository.         Section 3.06 MUTILATED, DESTROYED, LOST AND STOLEN NOTES.                If (i) any mutilated Note is surrendered to the Trustee, or (ii) the Company and the Trustee receive  evidence to their satisfaction of the destruction, loss or theft of any Note, and there is delivered to the Company and  the Trustee such security or indemnity bond, in each case, as may be required by them to save each of them and any  Authenticating Agent harmless, then, in the absence of notice to the Company or the Trustee that such Note has been  acquired by a bona fide purchaser, the Company shall execute and upon receipt of a Company Order the Trustee  shall authenticate and deliver, in exchange for any such mutilated Note or in lieu of any such destroyed, lost or  stolen Note, a new Note of like tenor and principal amount, bearing a number not contemporaneously outstanding.                In case any such mutilated, destroyed, lost or stolen Note has become or is about to become due  and payable, the Company in its discretion may, instead of issuing a new Note, pay such Note.                Upon the issuance of any new Note under this Section 3.06, the Company may require the  payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto  and any other expenses (including the fees and expenses of the Trustee) in connection therewith.                Every new Note issued pursuant to this Section 3.06 in lieu of any mutilated, destroyed, lost or  stolen Note shall constitute an original additional contractual obligation of the Company and any other obligor upon  the Notes, whether or not the mutilated, destroyed, lost or stolen Note shall be at any time enforceable by anyone,  and shall be entitled to all benefits of this Indenture equally and proportionately with any and all other Notes duly  issued hereunder.                The provisions of this Section 3.06 are exclusive and shall preclude (to the extent lawful) all other  rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes.         Section 3.07 PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.                Interest on any Note which is payable, and is punctually paid or duly provided for as set forth in  the following paragraph, on any Interest Payment Date shall be paid to the Person in whose name such Note is                                             15  

 

   registered at the close of business on the Regular Record Date for such interest at the office or agency of the  Company maintained for such purpose pursuant to Section 10.02.                On each Interest Payment Date the Company will issue and deliver PIK Notes representing the  amount of the PIK Interest, rounded up to the nearest whole dollar, to the Holder entitled to such payment of PIK  Interest. On any Interest Payment Date on which the Company makes a PIK Payment with respect to a Global Note,  the Trustee will increase the principal amount of such Global Note by an amount equal to the interest payable as PIK  Interest, rounded up to the nearest whole dollar, for the relevant interest period on the principal amount of such  Global Note as of the relevant record date for such Interest Payment Date, to the credit of the Holder on such record  date and an adjustment will be made on the books and records of the Trustee with respect to such Global  Note to  reflect such increase.                Subject to the foregoing provisions of this Section 3.07, each Note delivered under this Indenture  upon registration of transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest  accrued and unpaid, and to accrue, which were carried by such other Note.         Section 3.08 PERSONS DEEMED OWNERS.                Prior to the due presentment of a Note for registration of transfer, the Company, the Trustee and  any Agent of the Company or the Trustee may treat the Person in whose name such Note is registered as the owner  of such Note for the purpose of receiving payment of principal of (and premium, if any) and (subject to Sections  3.05 and 3.07) interest on such Note and for all other purposes whatsoever, whether or not such Note be overdue,  and none of the Company, the Trustee nor any Agent of the Company or the Trustee shall be affected by notice to  the contrary.         Section 3.09 CANCELLATION.                All Notes surrendered for payment, redemption, conversion, registration of transfer or exchange  shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled  by it.  The Company may at any time deliver to the Trustee for cancellation any Notes previously authenticated and  delivered hereunder which the Company may have acquired in any manner whatsoever, and may deliver to the  Trustee (or to any other Person for delivery to the Trustee) for cancellation any Notes previously authenticated  hereunder which the Company has not issued and sold, and all Notes so delivered shall be promptly cancelled by the  Trustee. If the Company shall acquire any of the Notes other than as set forth in the preceding sentence, the  acquisition shall not operate as a redemption, conversion or satisfaction of the indebtedness represented by such  Notes unless and until the same are surrendered to the Trustee for cancellation pursuant to this Section 3.09.  No  Notes shall be authenticated in lieu of or in exchange for any Notes cancelled as provided in this Section 3.09,  except as expressly permitted by this Indenture.  All cancelled Notes held by the Trustee shall be disposed of by the  Trustee in accordance with its customary procedures, and certification of the destruction of all canceled Notes will  be delivered to the Company, at the Company’s written request.         Section 3.10 COMPUTATION OF INTEREST.                Interest on the Notes shall be computed on the basis of a 360-day year of twelve 30-day months.           Section 3.11 CUSIP NUMBERS.                The Company in issuing the Notes may use “CUSIP” numbers, ISINs and “Common Code”  numbers (in each case, if then generally in use) in addition to serial numbers, and, if so, the Trustee shall use such  “CUSIP” numbers, ISINs and “Common Code” numbers in addition to serial numbers in notices of redemption,  repurchase or other notices to Holders as a convenience to Holders; provided that any such notice may state that no  representation is made as to the correctness of such “CUSIP” numbers, ISINs and “Common Code” numbers either  as printed on the Notes or as contained in any notice of a redemption or repurchase and that reliance may be placed  only on the serial or other identification numbers printed on the Notes, and any such redemption or repurchase shall                                              16  

 

   not be affected by any defect in or omission of such numbers.  The Company will promptly notify the Trustee in  writing of any change in the “CUSIP” numbers, ISINs and “Common Code” numbers applicable to the Notes.          Section 3.12 ISSUANCE OF PIK NOTES.                The Initial Notes and any PIK Notes issued after the Issuance Date shall be treated as a single  class for all purposes under this Indenture.         Section 3.13 CALCULATION OF PRINCIPAL AMOUNT OF NOTES.                The aggregate principal amount of the Notes, at any date of determination, shall be the principal  amount of the Notes at such date of determination. With respect to any matter requiring consent, waiver, approval or  other action of the Holders of a specified percentage of the principal amount of all the Notes, such percentage shall  be calculated, on the relevant date of determination, by dividing (a) the principal amount, as of such date of  determination, of Notes, the Holders of which have so consented, by (b) the aggregate principal amount, as of such  date of determination, of the Notes then Outstanding.                                          ARTICLE 4.                                        [RESERVED]                                         ARTICLE 5.                                         REMEDIES         Section 5.01 EVENTS OF DEFAULT.                “Event of Default,” wherever used herein, means any one of the following events (whatever the  reason for such Event of Default or be voluntary or involuntary or be effected by operation of law or pursuant to any  judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):                (i)    the Company’s failure to pay in cash or in shares of the Company’s Common Stock at the  Company’s election the principal of or premium, if any, on any Note when due, whether at maturity, on a  Redemption Date, upon the consummation of a Marketed Public Offering, on a Change of Control Conversion Date  with respect to a Change of Control or otherwise;                 (ii)   the Company’s failure to pay in cash or in shares of the Company’s Common Stock at the  Company’s election an installment of interest on any Note when due, if the failure continues for 30 days after the  date when due;                 (iii)  the Company’s failure to timely provide notice with respect to any conversion or  redemption of the Notes;                 (iv)   the Company’s failure to comply with any other term, covenant or agreement contained  in the Notes or this Indenture, if the failure is not cured within 60 days after written notice to the Company by the  Trustee or to the Trustee and the Company by Holders of at least 25% in aggregate principal amount of the  applicable Notes then outstanding, in accordance with this Indenture;                 (v)    a default by the Company or any of its subsidiaries in the payment when due, after the  expiration of any applicable grace period, of principal of, or premium, if any, or interest on, indebtedness for money  borrowed in the aggregate principal amount then outstanding of $5.0 million or more, or acceleration of the  Company’s or its subsidiaries’ indebtedness for money borrowed in such aggregate principal amount or more so  that, in either such event, it becomes due and payable before the date on which it would otherwise have become due  and payable, if such default is not cured or waived, or such acceleration is not rescinded, within 30 days after notice  to the Company by the Trustee or to the Company and the Trustee by Holders of at least 25% in aggregate principal  amount of Notes then outstanding, in accordance with this Indenture;                                               17  

 

                (vi)   failure by the Company or any of its Subsidiaries, within 45 days, to pay, bond or  otherwise discharge any final, non-appealable judgments or orders for the payment of money the total uninsured  amount of which for the Company or any of its Subsidiaries exceeds $5.0 million, which are not stayed on appeal;                 (vii)  the Company or any of its Significant Subsidiaries, pursuant to or within the meaning of  the United States Bankruptcy Code: (A) commences a voluntary case; (B) consents to the entry of an order for relief  against it in an involuntary case; (C) consents to the appointment of a Custodian of it or for all or substantially all of  its property; (D) makes a general assignment for the benefit of its creditors, or (E) admits in writing that it is  generally not paying its debts (other than debts which are the subject of a bona fide dispute) as they become due; and                 (viii) a court of competent jurisdiction enters an order or decree under any bankruptcy code  that remains unstayed and in effect for 60 days and: (A) is for relief against the Company or any of its Significant  Subsidiaries in an involuntary case; (B) appoints a Custodian of the Company or any of its Significant Subsidiaries  or for all or substantially all of the property of the Company or any of its Significant Subsidiaries; or (C) orders the  liquidation of the Company or any of its Significant Subsidiaries.           Section 5.02 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.                If an Event of Default, other than an Event of Default specified in Section 5.01(vii) or 5.01(viii),  occurs and is continuing, either the Trustee, by notice to the Company, or the Holders of at least 25% in aggregate  principal amount of the Notes Outstanding, by notice to the Company and the Trustee, may declare the principal of,  (and premium, if any) and accrued and unpaid interest on, all the then Outstanding Notes to be immediately due and  payable.  In the case of an Event of Default specified in Section 5.01(vii) or 5.01(viii) occurs and is continuing, then  the principal amount of, and accrued and unpaid interest on, all the Notes shall automatically become and be  immediately due and payable without any notice, declaration or other act on the part of the Trustee or any Holder.                At any time after a declaration of acceleration has been made, the Holders of a majority in  aggregate principal amount of the Notes Outstanding, by written notice to the Trustee, may rescind and annul such  declaration and its consequences if                (i)    the rescission would not conflict with any order or decree;                (ii)   all Events of Default, other than the non-payment of accelerated principal of (or  premium, if any, on) or interest, have been cured or waived; and                (iii)  all amounts due to the Trustee are paid.                The Trustee is not obligated to exercise any of its rights or powers at the request or demand of the  Holders, unless the Holders have offered to the Trustee security or indemnity that is satisfactory to the Trustee  against the costs, expenses and liabilities that the Trustee may incur to comply with the request or demand. Subject  to applicable law and the Trustee’s rights to indemnification, the Holders of a majority in aggregate principal  amount of the Outstanding Notes will have the right to direct the time, method and place of conducting any  proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee.  However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or, if the Trustee,  being advised by counsel, determines that the action or proceeding so directed may not lawfully be taken or if the  Trustee in good faith shall determine that the action or proceeding so directed would involve the Trustee in personal  liability or expense for which it is not adequately indemnified, or that the Trustee determines is unduly prejudicial to  the rights of any other Holder (it being understood that the Trustee does not have an affirmative duty to ascertain  whether or not such actions or forbearances are unduly prejudicial to such Holders).          Section 5.03 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.                If an Event of Default specified in Section 5.01(i) or 5.01(ii) occurs and is continuing, the Trustee,  in its own name as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so  due and unpaid (and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses                                              18  

 

   of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its  agents and counsel) may prosecute such proceeding to judgment or final decree and may enforce the same against  the Company or any other obligor upon the Notes and collect the moneys adjudged or decreed to be payable in the  manner provided by law out of the property of the Company or any other obligor upon the Notes, wherever situated.                If an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect  and enforce its rights and the rights of the Holders under this Indenture by such appropriate judicial proceedings as  the Trustee shall deem most effectual to protect and enforce any such rights or any proper remedy, subject however  to Section 5.13.  No recovery of any such judgment upon any property of the Company shall affect or impair any  rights, powers or remedies of the Trustee or the Holders.         Section 5.04 TRUSTEE MAY FILE PROOFS OF CLAIM.                In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization,  arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor  upon the Notes or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective  of whether the principal of the Notes shall then be due and payable as therein expressed or by declaration or  otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of  overdue principal, premium, if any, or interest) shall be entitled and empowered, by intervention in such proceeding  or otherwise,                       (a)   to file and prove a claim for the whole amount of principal (and premium, if  any) and interest owing and unpaid in respect of the Notes, to take such other actions (including participating as a  member, voting or otherwise, of any official committee of creditors appointed in such matter) and to file such other  papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any  claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its Agents and  counsel) and of the Holders allowed in such judicial proceeding, and                       (b)   to collect, receive and distribute any moneys or other property payable or  deliverable on any such claims and to distribute the same;    and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to  the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to  pay the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the  Trustee, its Agents and counsel, and any other amounts due the Trustee under Section 6.07.                Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or  accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition  affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of  any Holder in any such proceeding; provided, however, that the Trustee may, on behalf of such Holders, vote for the  election of a trustee in bankruptcy or other similar official.          Section 5.05 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES.                All rights of action and claims under this Indenture or the Notes may be prosecuted and enforced  by the Trustee without the possession of any of the Notes or the production thereof in any proceeding relating  thereto, and any such proceeding instituted by the Trustee shall be brought in its own name and as trustee of an  express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation,  expenses, disbursements and advances of the Trustee, its Agents and counsel, be for the ratable benefit of the  Holders in respect of which such judgment has been recovered.         Section 5.06 APPLICATION OF MONEY AND PROPERTY COLLECTED.                Any money and property collected by the Trustee pursuant to this Article shall be applied in the  following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money and property                                              19  

 

   on account of principal (or premium, if any) or interest, upon presentation of the Notes and the notation thereon of  the payment if only partially paid and upon surrender thereof if fully paid:                FIRST:  To the payment of all amounts due the Trustee under Section 6.07;                SECOND:  To the payment of the amounts then due and unpaid for principal of (and premium, if  any) and interest on the Notes in respect of which or for the benefit of which such money has been collected, ratably,  without preference or priority of any kind, according to the amounts due and payable on such Notes for principal  (and premium, if any) and interest, respectively; and                THIRD:  The balance, if any, to the Person or Persons entitled thereto, including the Company or  any other obligor on the Notes, as their interests may appear or as a court of competent jurisdiction may direct in  writing; provided that all sums due and owing to the Holders and the Trustee have been paid in full as required by  this Indenture.                The Trustee may fix a record date and payment date for any payment to Holders of Notes pursuant  to this Section 5.06.          Section 5.07 LIMITATION ON SUITS.                No Holder of any Notes shall have any right to institute any proceeding with respect to its rights,  or for the appointment of a receiver or a Trustee, or for any other remedy hereunder, unless         (a)    such Holder has previously given written notice to the Trustee of a continuing Event of Default;         (b)    the Holders of at least 25% in aggregate principal amount of the Outstanding Notes shall have  made written request to the Trustee to pursue the remedy;         (c)    such Holder or Holders have offered and, if requested, provided to the Trustee indemnity  satisfactory to it against any loss, liability or expense to be incurred in compliance with such request; and         (d)    the Trustee fails to comply with the request within 60 days after the Trustee receives the notice,  request and offer of indemnity and does not receive, during those 60 days, from Holders of a majority in aggregate  principal amount of the Notes then outstanding, a direction that is inconsistent with the request.                However, the above limitations do not apply to a suit by a Holder to enforce:  the Conversion of  that Holder’s Notes into shares of Common Stock of the Company after the Maturity Date, following the date of  effectiveness of a Marketed Public Offering or on any Change of Control Conversion Date.                A Holder may not use this Indenture to prejudice the rights of another Holder to obtain a  preference or priority over another Holder.          Section 5.08 UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND  INTEREST.                Notwithstanding any other provision in this Indenture, the Holder of any Note shall have the right,  which is absolute and unconditional, to receive payment, as provided herein (including, if applicable, Article  Eleven) and in such Note of the principal of (and premium, if any) and (subject to Section 3.07) interest on such  Note on the respective Stated Maturities expressed in such Note (or, in the case of redemption or repurchase, on the  Redemption Date or repurchase date) and to institute suit for the enforcement of any such payment, and such rights  shall not be impaired without the consent of such Holder.          Section 5.09 RESTORATION OF RIGHTS AND REMEDIES.                If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under  this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined                                              20  

 

   adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such  proceeding, the Company, any other obligor on the Notes, the Trustee and the Holders shall be restored severally  and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and the  Holders shall continue as though no such proceeding had been instituted.         Section 5.10 RIGHTS AND REMEDIES CUMULATIVE.                Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed,  lost or stolen Notes in the last paragraph of Section 3.06, no right or remedy herein conferred upon or reserved to the  Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall,  to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or  now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy  hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or  remedy.         Section 5.11 DELAY OR OMISSION NOT WAIVER.                No delay or omission of the Trustee or of any Holder of any Note to exercise any right or remedy  accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event  of Default or an acquiescence therein.  Every right and remedy given by this Article or by law to the Trustee or to  the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the  Holders, as the case may be.         Section 5.12 CONTROL BY HOLDERS.                The Holders of not less than a majority in principal amount of the Outstanding Notes shall have  the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee,  or exercising any trust or power conferred on the Trustee; provided that:         (a)    such direction shall not be in conflict with any rule of law or with this Indenture,         (b)    the Trustee need not take any action which might involve it in personal liability or be unjustly  prejudicial to the Holders not consenting (it being understood that the Trustee does not have an affirmative duty to  ascertain whether or not such actions or forbearances are unjustly prejudicial to such Holders); and         (c)    subject to the provisions of Section 3.15 of the Trust Indenture Act, the Trustee may take any  other action deemed proper by the Trustee which is not inconsistent with such direction.         Section 5.13 WAIVER OF PAST DEFAULTS.                The Holders of a majority in aggregate principal amount of the Outstanding Notes may by notice  to the Trustee waive any past Default or Event of Default and its consequences under this Indenture other than a  Default or Event of Default:                (i)    in the payment of principal of, premium, if any, or interest on, any Note or in the  payment of the Redemption Price;                (ii)   arising from the Company’s failure to convert or redeem any Note in accordance with  this Indenture; or                (iii)  in respect of any provision under this Indenture that cannot be modified or amended  without the consent of the Holders of each Outstanding Note affected.                The Company will promptly notify the Trustee in writing upon its becoming aware of the  occurrence of any Default or Event of Default, its status and what action the Company is taking or proposes to take  in respect thereof. In addition, the Company is required to furnish to the Trustee, on an annual basis within 180 days                                              21  

 

   after December 31 in any year, beginning December 31, 2019, a written certificate by the Company’s Officers  stating whether they have actual knowledge of any Default or Event of Default by the Company in performing any  of its obligations under this Indenture or the Notes and describing any such Default or Event of Default. If a Default  or Event of Default has occurred and the Trustee has received notice of the Default or Event of Default in  accordance with this Indenture, the Trustee must mail to each registered Holder of applicable Notes a notice of the  Default or Event of Default within 90 days after receipt of the notice. However, the Trustee need not mail the notice  if the Default or Event of Default:                       (a)    has been cured or waived; or                       (b)    is not in the payment or delivery of any amounts due (including upon conversion         or redemption) with respect to any Note and the Trustee in good faith determines that withholding the         notice is in the best interests of holders.                Upon any such waiver, such Default shall cease to exist, and any Event of Default arising  therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend  to any subsequent or other Default or Event of Default or impair any right consequent thereon.         Section 5.14 WAIVER OF STAY OR EXTENSION LAWS.                Each of the Company and any other obligors upon the Notes covenants (to the extent that it may  lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the  benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which  may affect the covenants or the performance of this Indenture; and each of the Company and any such obligor (to  the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and  covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will  suffer and permit the execution of every such power as though no such law had been enacted.         Section 5.15 UNDERTAKING FOR COSTS.                All parties to this Indenture agree, and each Holder of any Note by such Holder’s acceptance  thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement  of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or  omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit,  and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees and expenses,  against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made  by such party litigant; but the provisions of this Section 5.15 shall not apply to any suit instituted by the Trustee, to  any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount  of the Outstanding Notes, or to any suit instituted by any Holder for the enforcement of the payment of the principal  of (or premium, if any) or interest on any Note on or after the respective Stated Maturities expressed in such Note  (or, in the case of redemption, on or after the Redemption Date).                                         ARTICLE 6.                                       THE TRUSTEE         Section 6.01 CERTAIN DUTIES AND RESPONSIBILITIES.                (i)    Except during the continuance of an Event of Default,                       (a)   the Trustee undertakes to perform such duties and only such duties as are  specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture  against the Trustee; and                       (b)   in the absence of bad faith or willful misconduct on its part, as determined in a  final and non-appealable decision of a court of competent jurisdiction, the Trustee may conclusively rely, as to the  truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished                                             22  

 

   to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or  opinions, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the  requirements of this Indenture, but not to verify the contents thereof.                (ii)   In case an Event of Default has occurred and is continuing of which written notice of  such  Event of Default shall have been given to the Trustee by the Company, any other obligor of the Notes or by  any Holder, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same  degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the  conduct of such person’s own affairs.                (iii)  No provision of this Indenture shall be construed to relieve the Trustee from liability for  its own negligent action, its own negligent failure to act, or its own willful misconduct, EXCEPT that                       (a)    this paragraph (iii) shall not be construed to limit the effect of paragraph (i) of  this Section 6.01;                       (b)   the Trustee shall not be liable for any error of judgment made in good faith by a  Responsible Officer, unless it shall be proved in a final and non-appealable decision of a court of competent  jurisdiction that the Trustee was negligent in ascertaining the pertinent facts;                       (c)   the Trustee shall not be liable with respect to any action taken or omitted to be  taken by it in good faith in accordance with the direction of the Holders of a majority in aggregate principal amount  of the Outstanding Notes relating to the time, method and place of conducting any proceeding for any remedy  available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture; and                       (d)   no provision of this Indenture shall require the Trustee to expend or risk its own  funds or otherwise incur any liability, financial or otherwise, in the performance of any of its duties hereunder, or in  the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such  funds or adequate indemnity against such risk or liability is not reasonably assured to it.                (iv)   Whether or not therein expressly so provided, every provision of this Indenture relating to  the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this  Section 6.01.                (v)    The Trustee shall not be liable for interest on any money received by it except as the  Trustee may agree in writing with the Company.                (vi)   The Trustee shall not be deemed to have knowledge of any Default or Event of Default or  fact or event which might require the Trustee to take any action or give any notice unless it has received written  notice from the Company, any other obligor of the Notes or any Holder of the circumstances constituting the same  and stating so in such written notification thereof.                (vii)  The Trustee shall have no duty to inquire as to the performance of the Company with  respect to the covenants contained in Article Ten.  Delivery of reports, information and documents to the Trustee is  for information purposes only and the receipt by the Trustee of the foregoing shall not constitute constructive notice  of any information contained therein or determinable from information contained therein, including the Company’s  compliance with any of its covenants hereunder, as to which the Trustee is entitled to rely on Officer’s Certificates.                (viii) Any permissive right or authority granted to the Trustee shall not be construed as a  mandatory duty.          Section 6.02 NOTICE OF DEFAULTS.                Within 90 days after the receipt of written notice from the Company, any other obligor of the  Notes or any Holder of the occurrence of any Default or Event of Default hereunder, the Trustee shall transmit in the  manner and to the extent provided in TIA Section 313(c), mail notice of such Default or Event of Default hereunder                                             23  

 

   known to the Trustee, unless such Default or Event of Default shall have been cured or waived or, is not in the  payment or delivery of any amounts due (including upon conversion) with respect to any Note and the Trustee in  good faith determines that withholding notice is in the best interests of the Holders. In addition, the Trustee shall  have no obligation to accelerate the Notes if in the judgment of the Trustee acceleration is not in the interest of the  Holders of such Notes.          Section 6.03 CERTAIN RIGHTS OF TRUSTEE.                (i)    If an Event of Default has occurred and is continuing, the Trustee shall exercise such of  the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a  prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.                (ii)   Subject to the provisions of TIA Sections 315(a) through 315(d):                       (a)    the Trustee may conclusively rely and shall be fully protected in acting or  refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request,  direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document (whether  in original or facsimile form) believed by it to be genuine and to have been signed or presented by the proper party  or parties;                       (b)    any request or direction of the Company mentioned herein shall be sufficiently  evidenced by a Company Request or Company Order and any resolution of the Board of Directors of the Company  may be sufficiently evidenced by a Board Resolution;                       (c)    whenever in the administration of this Indenture the Trustee shall deem it  desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the  Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, request  and conclusively rely upon an Officer’s Certificate or an Opinion of Counsel, or both;                       (d)    the Trustee may consult with counsel of its selection and any advice of such  counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action  taken, suffered or omitted by it hereunder in good faith and in reliance thereon;                       (e)    the Trustee shall be under no obligation to exercise any of the rights or powers  vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such  Holders shall have offered to the Trustee security or indemnity satisfactory to it against the costs, expenses, losses  and liabilities which might be incurred by it in compliance with such request or direction;                       (f)    the Trustee shall not be bound to make any investigation into the facts or matters  stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order,  bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion,  may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall  determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and  premises of the Company, personally or by agent or attorney at the sole cost of the Company and shall incur no  liability or additional liability of any kind by reason of such inquiry or investigation;                       (g)    the Trustee may execute any of the trusts or powers hereunder or perform any  duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any  misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; and                       (h)    the Trustee shall not be liable for any action taken, suffered or omitted by it in  good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this  Indenture; provided that the Trustee’s conduct does not constitute negligence or willful misconduct.                (iii)  The Trustee shall not be required to expend or risk its own funds or otherwise incur any  liability, financial or otherwise, in the performance of any of its duties hereunder, or in the exercise of any of its                                             24  

 

   rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate  indemnity against such risk or liability is not reasonably assured to it.                (iv)   The rights, privileges, protections, immunities and benefits given to the Trustee,  including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in  each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder.                (v)    In no event shall the Trustee be responsible or liable for special, indirect, or consequential  loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the  Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.                (vi)   The Trustee may make a written request that the Company deliver to the Trustee within  five Business Days a certificate setting forth the names of individuals and/or titles of Officers authorized at such  time to take specified actions pursuant to this Indenture.                (vii)  Unless otherwise required by applicable law, the Trustee shall not have any duty (1) to  see to any recording, filing or depositing of this Indenture or any Indenture referred to herein, or see to the  maintenance of any such recording or filing or depositing or to any rerecording, refiling or redepositing of any  thereof or (2) to see to any insurance.                (viii) Unless otherwise required by applicable law, the Trustee shall not be required to give any  bond or surety in respect of the execution of the powers granted hereunder.         Section 6.04 TRUSTEE NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES.                The recitals contained herein and in the Notes, except for the Trustee’s certificates of  authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their  correctness.  The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Notes,  except that the Trustee represents that it is duly authorized to execute and deliver this Indenture, authenticate the  Notes and perform its obligations hereunder and that the statements made by it in a Statement of Eligibility on Form  T-1 supplied to the Company are true and accurate, subject to the qualifications set forth therein.  The Trustee shall  not be accountable for the use or application by the Company of Notes or the proceeds thereof.          Section 6.05 MAY HOLD NOTES.                The Trustee, any Paying Agent, any Note Registrar, any Authenticating Agent or any other Agent  of the Company or of the Trustee, in its individual or any other capacity, may become the owner or pledgee of Notes  and, subject to TIA Sections 310(b) and 311, may otherwise deal with the Company with the same rights it would  have if it were not Trustee, Paying Agent, Note Registrar, Authenticating Agent or such other Agent; provided  however, that, if it acquires any conflicting interest, it must eliminate such conflict within 90 days, apply to the  Commission for permission to continue or resign.         Section 6.06 MONEY HELD IN TRUST.                All moneys received by the Trustee shall, until used or applied as herein provided, be held in trust  hereunder for the purposes for which they were received, but need not be segregated from other funds except to the  extent required by law.  The Trustee shall be under no liability for interest on any money received by it hereunder  except as otherwise agreed in writing with the Company.         Section 6.07 COMPENSATION AND REIMBURSEMENT.                (i)    The Company agrees to pay to the Trustee from time to time such compensation as shall  be agreed to in writing between the Company and the Trustee for all services rendered by it hereunder (which  compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express  trust);                                              25  

 

                (ii)   The Company agrees, except as otherwise expressly provided herein, to reimburse the  Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in  accordance with any provision of this Indenture (including the reasonable compensation and the expenses and  disbursements of its agents, professional advisers and counsel and costs and expenses of collection), except any such  expense, disbursement or advance as may be attributable to its willful misconduct or negligence, as determined in a  final and non-appealable decision of a court of competent jurisdiction; and                (iii)  The Company agrees to indemnify each of the Trustee or any predecessor Trustee (and  their respective directors, officers, employees and agents) for, and to hold it harmless against, any and all loss,  damage, claim, liability or expense, including taxes (other than taxes based on the income of the Trustee) incurred  without willful misconduct or negligence on its part, as determined in a final and non-appealable decision of a court  of competent jurisdiction, arising out of or in connection with the acceptance or administration of this Indenture, the  Notes or the trust created hereby, including the reasonable costs and expenses of defending itself against any claim  (regardless of whether such claim is asserted by the Company, a Holder or any other Person) or liability in  connection with the exercise or performance of any of its powers or duties hereunder.                The obligations of the Company under this Section 6.07 to compensate the Trustee, to pay or  reimburse the Trustee for expenses, disbursements and advances and to indemnify and hold harmless the Trustee  shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture.   As security for the performance of such obligations of the Company, the Trustee shall have a lien prior to the Notes  upon all property and funds held or collected by the Trustee as such, except funds held in trust for the payment of  principal of (and premium, if any) or interest on particular Notes.                When the Trustee incurs expenses or renders services in connection with an Event of Default  specified in Section 5.01(vii) or (viii), the expenses (including the reasonable charges and expenses of its counsel) of  and the compensation for such services are intended to constitute expenses of administration under any applicable  Bankruptcy Law.                The provisions of this Section 6.07 shall survive the termination of this Indenture or the earlier  resignation or removal of the Trustee.         Section 6.08 CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.                There shall be at all times a Trustee hereunder which shall be eligible to act as Trustee under TIA  Section 310(a), and which shall have a combined capital and surplus of at least $100,000,000 (or in the case of a  corporation included in a bank holding company system, the related bank holding company shall have a combined  capital and surplus of at least $100,000,000).  If such corporation publishes reports of condition at least annually,  pursuant to law or to the requirements of federal, state, territorial or District of Columbia supervising or examining  authority, then for the purposes of this Section 6.08, the combined capital and surplus of such corporation shall be  deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.  If at  any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 6.08, it shall resign  immediately in the manner and with the effect hereinafter specified in this Article.         Section 6.09 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.                (i)    No resignation or removal of the Trustee and no appointment of a successor Trustee  pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in  accordance with the applicable requirements of this Section 6.09.                (ii)   The Trustee may resign at any time by giving written notice thereof to the Company.   Upon receiving such notice of resignation, the Company shall promptly appoint a successor trustee by written  instrument executed by authority of the Board of Directors of the Company, a copy of which shall be delivered to  the resigning Trustee and a copy to the successor trustee.  If an instrument of acceptance required by this Section  6.09 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the                                              26  

 

   resigning Trustee may, at the expense of the Company, petition any court of competent jurisdiction for the  appointment of a successor Trustee.                (iii)  The Trustee may be removed at any time by Act of the Holders of not less than a majority  in principal amount of the Outstanding Notes, delivered to the Trustee and to the Company.                (iv)   If an instrument of acceptance by a successor Trustee shall not have been delivered to the  Trustee within 30 days after the giving of such notice of removal, the Trustee being removed may petition, at the  expense of the Company, any court of competent jurisdiction for the appointment of a successor Trustee with  respect to the Notes of such series.                (v)    If at any time:                       (a)   the Trustee shall fail to comply with the provisions of TIA Section 310(b) after  written request therefor by the Company or by any Holder who has been a bona fide Holder for at least six months,  or                       (b)   the Trustee shall cease to be eligible under Section 6.08 and shall fail to resign  after written request therefor by the Company or by any Holder who has been a bona fide Holder for at least six  months, or                       (c)   the Trustee shall become incapable of acting or shall be adjudged a bankrupt or  insolvent or a Custodian of the Trustee or of its property shall be appointed or any public officer shall take charge or  control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then,  in any such case, (i) the Company, by a Board Resolution, may remove the Trustee, or (ii) subject to TIA Section  315(e), any Holder who has been a bona fide Holder for at least six months may, on behalf of himself and all others  similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of  a successor Trustee.                (vi)   If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy  shall occur in the office of Trustee for any cause, the Company, by a Board Resolution of the Board of Directors of  the Company, shall promptly appoint a successor Trustee.  If, within one year after such resignation, removal or  incapability, or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a  majority in principal amount of the Outstanding Notes delivered to the Company and the retiring Trustee, the  successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor  Trustee and supersede the successor Trustee appointed by the Company.  If no successor Trustee shall have been so  appointed by the Company or the Holders and accepted appointment in the manner hereinafter provided, any Holder  who has been a bona fide Holder for at least six months may, on behalf of himself and all others similarly situated,  petition any court of competent jurisdiction for the appointment of a successor Trustee.                (vii)  The Company shall give notice of each resignation and each removal of the Trustee and  each appointment of a successor Trustee to the Holders in the manner provided for in Section 1.06.  Each notice  shall include the name of the successor Trustee and the address of its Corporate Trust Office.         Section 6.10 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.                Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the  Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or  removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or  conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request  of the Company or the successor Trustee, such retiring Trustee shall, upon payment of all its charges, execute and  deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee  and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring  Trustee hereunder.  Upon request of any such successor Trustee, the Company shall execute any and all instruments  for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts.                                              27  

 

                No successor Trustee shall accept its appointment unless at the time of such acceptance such  successor Trustee shall be qualified and eligible under this Article.         Section 6.11 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.                Any corporation or national association into which the Trustee may be merged or converted or  with which it may be consolidated, or any corporation or national association resulting from any merger, conversion  or consolidation to which the Trustee shall be a party, or any corporation or national association succeeding to all or  substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder,  provided such corporation or national association shall be otherwise qualified and eligible under this Article, without  the execution or filing of any paper or any further act on the part of any of the parties hereto.  In case any Notes shall  have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or  consolidation to such authenticating Trustee may adopt such authentication and deliver the Notes so authenticated  with the same effect as if such successor Trustee had itself authenticated such Notes.  In case at that time any of the  Notes shall not have been authenticated, any successor Trustee may authenticate such Notes either in the name of  any predecessor hereunder or in the name of the successor Trustee.  In all such cases such certificates shall have the  full force and effect which this Indenture provides for the certificate of authentication of the Trustee shall have;  provided, however, that the right to adopt the certificate of authentication of any predecessor Trustee or to  authenticate Notes in the name of any predecessor Trustee shall apply only to its successor or successors by merger,  conversion or consolidation.                                         ARTICLE 7.                   HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY         Section 7.01 COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES.                The Company will furnish or cause to be furnished to the Trustee                (i)    semi-annually, not more than 10 days after each Regular Record Date, a list, in such form  as the Trustee may reasonably require, of the names and addresses of the Holders as of such Regular Record Date;  and                (ii)   at such other times as the Trustee may reasonably request in writing, within 30 days after  receipt by the Company of any such request, a list of similar form and content to that in paragraph (i) hereof as of a  date not more than 15 days prior to the time such list is furnished; provided, however, that if and so long as the  Trustee shall be the Note Registrar, no such list need be furnished.         Section 7.02 DISCLOSURE OF NAMES AND ADDRESSES OF HOLDERS.                Every Holder, by receiving and holding Notes, agrees with the Company and the Trustee that none  of the Company or the Trustee or any agent of any of them shall be held accountable by reason of the disclosure of  any such information as to the names and addresses of the Holders in accordance with TIA Section 312, regardless  of the source from which such information was derived, and that the Trustee shall not be held accountable by reason  of mailing any material pursuant to a request made under TIA Section 312(b).         Section 7.03 REPORTS BY TRUSTEE.                Within 60 days after March 15 of each year commencing with March 15, 2020, the Trustee shall  transmit to the Holders, in the manner and to the extent provided in TIA Section 313(c), a brief report dated as of  such reporting date if required by TIA Section 313(a).                                              28  

 

                                         ARTICLE 8.                                        [RESERVED]                                         ARTICLE 9.                       SUPPLEMENTS AND AMENDMENTS TO INDENTURE          Section 9.01 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.                Without notice to or the consent of any Holder, the Company and the Trustee, at any time and  from time to time, may amend or supplement this Indenture or the Notes, in form satisfactory to the Trustee, for any  of the following purposes to:         (a)    [Reserved];           (b)   make adjustments in accordance with this Indenture to the right to convert the Notes upon certain  reclassifications in its Common Stock;           (c)   add guarantees with respect to, or secure its obligations in respect of, the Notes;           (d)   add to its covenants for the benefit of the Holders or to surrender any right or power conferred  upon the Company;          (e)   cure any ambiguity, defect, omission or inconsistency in this Indenture;           (f)   comply with the requirements of the Commission in order to effect or maintain the qualification of  this Indenture under the Trust Indenture Act as in effect on the date on which this Indenture is qualified thereunder;           (g)   provide for the issuance of PIK Notes or the increase of the principal amount of the Notes to pay  PIK Interest in accordance with the terms of this Indenture;           (h)   make any change that does not adversely affect the rights of any Holder, subject to the provisions  of this Indenture;           (i)   provide for the appointment of a successor Trustee, Note Registrar, Paying Agent, or Conversion  Agent;           (j)   comply with the rules of any applicable securities depositary in a manner that does not adversely  affect the rights of any Holder; or           (k)   to conform the provisions of this Indenture or the Notes to the “Description of Notes” section of  the Prospectus to the extent that such provision in the “Description of the Notes” was intended (as evidenced by an  Officer’s Certificate of the Company) to be a verbatim recitation of a provision of this Indenture or the Notes.           Section 9.02 SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.                With the written consent of the Holders of at least a majority in aggregate principal amount of the  Outstanding Notes voting as a single class, by Act of said Holders delivered to the Company and the Trustee, the  Company and the Trustee (including consents obtained in connection with a purchase of, or tender offer or exchange  offer for, the Notes), may amend or supplement this Indenture or the Notes for the purpose of adding any provisions  hereto or thereto, changing in any manner or eliminating any of the provisions hereunder or thereunder or of  modifying in any manner the rights of the Holders hereunder or thereunder and any existing Default or Event of  Default or compliance with any provision of this Indenture or the Notes may be waived with the consent of the  Holders of not less than a majority in aggregate principal amount of the Outstanding Notes voting as a single class;  provided, however, that no such amendment, supplement or waiver shall, without the consent of the Holder of each  Outstanding Note affected thereby (with respect to any Notes held by a nonconsenting Holder):                                               29  

 

                (i)    change the stated maturity of the principal of, or the payment date of any installment of  interest on, or any additional amounts with respect to, any Note;                 (ii)   reduce the principal amount of, or any premium or interest on, any Note;                 (iii)  change the manner, consideration or currency of payment of principal of, or any premium  or interest on, any Note;                 (iv)   impair the right to institute a suit for the enforcement of any payment on, or with respect  to, or of the conversion of, any Note;                 (v)    modify, in a manner adverse to the Holders, the provisions of this Indenture relating to  the calculation of the Redemption Price or the Company’s obligation to pay the Redemption Price when due;                 (vi)   modify the ranking provisions of this Indenture relative to other indebtedness of the  Company in a manner adverse to the Holders;                 (vii)  reduce the percentage in aggregate principal amount of Outstanding Notes whose Holders  must consent to a modification or amendment of this Indenture or the Notes;                 (viii) reduce the percentage in aggregate principal amount of Outstanding Notes whose Holders  must consent to a waiver of compliance with any provision of this Indenture or the Notes or a waiver of any Default  or Event of Default; or                 (ix)   modify the provisions of this Indenture with respect to modification and waiver  (including waiver of a Default or Event of Default), except to increase the percentage required for modification or  waiver or to provide for the consent of each affected Holder.                  It shall not be necessary for any Act of Holders under this Section 9.02 to approve the particular  form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance  thereof.          Section 9.03 EXECUTION OF SUPPLEMENTAL INDENTURES.                In executing, or accepting the additional trusts created by, any supplemental indenture permitted  by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall receive, and shall  be fully protected in relying upon, an Officer’s Certificate and an Opinion of Counsel, each stating that the  execution of such supplemental indenture is authorized or permitted by this Indenture and, with respect to such  Opinion of Counsel, that such amended or supplemental indenture is a valid and binding obligation of the Company,  enforceable against it in accordance with its terms (subject to customary conditions).  The Trustee may, but shall not  be obligated to, enter into any such supplemental indenture which affects the Trustee’s own rights, duties, privileges,  protections, indemnities or immunities under this Indenture or otherwise.         Section 9.04 EFFECT OF SUPPLEMENTAL INDENTURES.                Upon the execution of any supplemental indenture under this Article, this Indenture shall be  modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all  purposes; and every Holder theretofore or thereafter authenticated and delivered hereunder shall be bound thereby  (except as provided in Section 9.02).         Section 9.05 CONFORMITY WITH TRUST INDENTURE ACT.                Every supplemental indenture executed pursuant to the Article shall conform to the requirements  of the Trust Indenture Act as then in effect.                                              30  

 

          Section 9.06 REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES.                Notes authenticated and delivered after the execution of any supplemental indenture pursuant to  this Article may, and shall if required by the Trustee, bear a notation in form satisfactory to the Trustee as to any  matter provided for in such supplemental indenture.  If the Company shall so determine, new Notes so modified as  to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared  and executed by the Company and authenticated and delivered by the Trustee, upon receipt of a Company Order in  exchange for Outstanding Notes.                Failure to make the appropriate notation or issue a new Note in accordance with this Section will  not affect the validity and effect of such supplemental indenture.         Section 9.07 NOTICE OF SUPPLEMENTAL INDENTURES.                Promptly after the execution by the Company and the Trustee of any supplemental indenture  pursuant to the provisions of Section 9.02, the Company shall give notice thereof to the Holders of each Outstanding  Note affected, in the manner provided for in Section 1.06, setting forth in general terms the substance of such  supplemental indenture.                                         ARTICLE 10.                                        COVENANTS         Section 10.01 PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST.                The Company covenants and agrees for the benefit of the Holders that it will duly and punctually  pay the principal of (and premium, if any) and interest (including PIK Interest), on the Notes in accordance with the  terms of the Notes and this Indenture. Principal shall be considered paid on the date it is due if the Trustee or Paying  Agent holds, for the benefit of the Holders, as of 10:00 a.m., New York City time on that date U.S. legal tender  designated for and sufficient to pay such principal or interest then due, or the Company consummates the conversion  of Notes in accordance with Article 14 by such date. PIK Interest shall be considered paid on the date due if the  Trustee is directed on or prior to such date to authenticate and deliver PIK Notes or increase the principal amount of  the applicable Global Notes, in each case in an amount equal to the amount of the applicable PIK Interest.           Section 10.02 MAINTENANCE OF OFFICE OR AGENCY.                The Company will maintain an office or agency where the Notes may be surrendered for  registration of transfer or exchange, where the Notes may be presented for payment or conversion and where notices  and demands to or upon the Company in respect of the Notes and this Indenture may be served.  The designated  office of the Trustee shall be such office or agency of the Company, unless the Company shall designate and  maintain some other office or agency for one or more of such purposes.  The Company will give prompt written  notice to the Trustee of any change in the location of any such office or agency.  If at any time the Company shall  fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such  presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee,  and the Company hereby appoints the Trustee as its Agent to receive all such presentations, surrenders, notices and  demands.                The Company may also from time to time designate one or more other offices or agencies where  the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind any such  designation; provided, however, that no such designation or rescission shall in any manner relieve the Company of  its obligation to maintain an office or agency for such purposes.  The Company will give prompt written notice to  the Trustee of any such designation or rescission and any change in the location of any such other office or agency.         Section 10.03 MONEY FOR NOTE PAYMENTS TO BE HELD IN TRUST.                If the Company shall at any time elect to make cash payments in respect of principal of (or  premium, if any) or cash interest, if any, on any of the Notes, and the Company at such time is acting as its own                                             31  

 

   Paying Agent, the Company shall segregate and hold in trust for the benefit of the Persons entitled thereto a sum  sufficient to pay in cash the principal of (or premium, if any) or cash interest so becoming due until such sums shall  be paid in cash to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of  its action or failure to so act.                Whenever the Company elects to make cash payments in respect of principal of (or premium, if  any) or cash interest, if any, on any of the Notes, and at such time has appointed one or more Paying Agents for the  Notes, the Company will, on or before each due date of the principal of (premium, if any) or cash interest on any  Notes, deposit with a Paying Agent a sum in same day funds (or New York Clearing House funds if such deposit is  made prior to the date on which such deposit is required to be made) sufficient to pay the principal (and premium, if  any) or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such  principal, premium or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the  Trustee of such action or any failure to so act.                The Company will cause each Paying Agent (other than the Trustee) to execute and deliver to the  Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this  Section 10.03, that such Paying Agent will:          (a)   hold all sums held by it for the payment of the principal of (and premium, if any) or interest on  Notes in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or  otherwise disposed of as herein provided;          (b)   give the Trustee notice of any default by the Company (or any other obligor upon the Notes) in the  making of any payment of principal (and premium, if any) or interest; and          (c)   at any time during the continuance of any such default, upon the written request of the Trustee,  forthwith pay to the Trustee all sums so held in trust by such Paying Agent.                The Company may at any time pay, or by Company Order direct any Paying Agent to pay, to the  Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the  same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such  payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with  respect to such sums.                Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust  for the payment of the principal of (or premium, if any) or interest on any Note and remaining unclaimed for two  years after such principal, premium or interest has become due and payable shall be paid to the Company on  Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such  Note shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all  liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as  trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being  required to make any such repayment to the Company, may at the written request and expense of the Company  cause to be published once, in a newspaper published in the English language, customarily published on each  Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such  money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date  of such publication, any unclaimed balance of such money then remaining will be repaid to the Company.         Section 10.04 CORPORATE EXISTENCE.                 The Company will do or cause to be done all things necessary to preserve and keep in full force  and effect its corporate existence and the corporate rights (charter and statutory) licenses and franchises of the  Company; provided, however, that the Company shall not be required to preserve any such existence (except that of  the Company), right, license or franchise if the Board of Directors of the Company shall determine that the  preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof is  not, and will not be, disadvantageous in any material respect to the Holders.                                              32  

 

          Section 10.05 PAYMENT OF TAXES AND OTHER CLAIMS.                The Company will pay or discharge or cause to be paid or discharged, before the same shall  become delinquent, (a) all material taxes, assessments and governmental charges levied or imposed upon the  Company or any Subsidiary or upon the income, profits or property of the Company or any Subsidiary prior to the  date on which material penalties attach thereto and (b) all lawful claims for labor, materials and supplies, which, if  unpaid, might by law become a material liability or lien upon the property of the Company or any Subsidiary;  provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any  such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by  appropriate proceedings and for which appropriate accruals, if necessary (in the good faith judgment of management  of the Company) are being maintained in accordance with GAAP.         Section 10.06 MAINTENANCE OF PROPERTIES.                The Company will cause all material properties owned by the Company or used or held for use in  the conduct of its business to be maintained and kept in normal condition, repair and working order, ordinary wear  and tear excepted, and will cause to be made all necessary repairs, renewals, replacements, betterments and  improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in  connection therewith may be properly conducted at all times; provided, however, that nothing in this Section 10.06  shall prevent the Company from discontinuing the maintenance of any of such properties if such discontinuance is,  in the judgment of the Company, desirable in the conduct of its business and not adverse in any material respect to  the Holders.         Section 10.07 COMPLIANCE WITH LAWS.                The Company shall comply with all applicable statutes, rules, regulations, orders and restrictions  of the United States of America, all states and municipalities thereof, and of any governmental regulatory authority,  in respect of the conduct of their respective businesses and the ownership of their respective properties, except such  as may be contested in good faith or as to which a bona fide dispute may exist and except for such noncompliances  as would not in the aggregate have a material adverse effect on the financial condition or results of operations of the  Company and its Subsidiaries, taken as a whole.         Section 10.08 NOTICES TO THE TRUSTEE                (i)    Beginning December 31, 2019, the Company shall provide prompt written notice to the  Trustee of any change to its fiscal year, which as of the date hereof ends on December 31.                (ii)   When any Default has occurred and is continuing under this Indenture, or if the trustee  for or the holder of any other evidence of indebtedness of the Company or any Subsidiary gives any notice or takes  any other action with respect to a claimed default (other than with respect to indebtedness in the principal amount of  less than $5.0 million), the Company shall notify the Trustee in writing of such event, notice or other action within  five Business Days of its occurrence. The Company shall furnish to the Trustee, not less than annually, an Officer’s  Certificate certifying that, to the knowledge of the Company, it is in compliance with all conditions and covenants  under the Indenture.         Section 10.09 COMMISSION REPORTS AND REPORTS TO HOLDERS.                The Company will deliver to the Trustee (without exhibits), within 15 days after it is required to  file them with the Commission copies of: (A) annual reports on Form 10-K (or any successor or comparable form)  containing the information required to be contained therein (or required in such successor or comparable form); (B)  reports on Form 10-Q (or any successor or comparable form); (C) reports on Form 8-K (or any successor or  comparable form); and (D) any other information, documents and other reports which the Company would be  required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act; provided, however, if the  Company is not obligated to file such reports with the Commission or if the Commission does not permit such filing,  the Company shall make available such information to prospective purchasers of the Notes, in addition to providing                                              33  

 

   such information to the Trustee and the holders of the Notes, in each case within 15 days after the time the Company  would have been required to file such information with the Commission, if it were subject to Sections 13 or 15(d) of  the Exchange Act. Delivery of such reports, information and documents to the Trustee is for informational purposes  only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or  determinable from information contained therein, including the Company’s compliance with any of its covenants  hereunder (as to which the Trustee is entitled to rely exclusively on Officer’s Certificates). The Company shall be  deemed to have furnished the reports, documents and information referred to above to the Trustee, the Holders  and/or the prospective purchasers of the Notes, if the Company has filed such reports, documents or information  with the Commission via the EDGAR filing system (or any successor system) and/or posted such reports, documents  or information on the Company’s website and such reports, documents and information are publicly available.  Without limiting the effect of the preceding sentence, the Trustee shall have no obligation to monitor whether the  Company posts such reports, information and documents on the Company’s website or the Commission’s EDGAR  service, or to collect any such information from the Company’s website or the Commission’s EDGAR service. The  Trustee shall have no liability or responsibility for the content, filing or timeliness of any report delivered or filed  under or in connection with this Indenture or the transactions contemplated hereunder.                                          ARTICLE 11.                           REDEMPTION OR REPURCHASE OF NOTES          Section 11.01 OPTIONAL REDEMPTION.                The Company may redeem the Notes, in whole or from time to time in part, at its option at a  Redemption Price equal to the sum of (i) 100.0% of the principal amount of the Notes to be redeemed and  (ii) accrued and unpaid interest thereon to, but excluding, the Redemption Date, which amounts may be payable in  cash or in shares of the Company’s Common Stock, calculated pursuant to Section 14.01 hereto.           Section 11.02 APPLICABILITY OF ARTICLE.                Redemption of Notes at the election of the Company or otherwise, as permitted or required by any  provision of this Indenture or the Notes, shall be made in accordance with such provision and this Article.          Section 11.03 ELECTION TO REDEEM; NOTICE TO TRUSTEE.                The election of the Company to redeem any Notes pursuant to Section 11.01 shall be evidenced by  a Board Resolution of the Board of Directors of the Company.  In case of any redemption at the election of the  Company, the Company shall, at least 3 Business Days prior to the date notice is required to be sent to Holders  (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee in writing of such Redemption Date,  the paragraph of the Notes or Section of this Indenture pursuant to which the Notes are to be redeemed, and of the  principal amount of Notes to be redeemed.          Section 11.04 NOTICE OF REDEMPTION.                Notice of redemption shall be given by the Company in the manner provided for in Section 1.06 at  least 10 but not more than 60 days prior to the Redemption Date, to each Holder to be redeemed at such Holder’s  registered address.                All notices of redemption shall be prepared by the Company and shall state:          (a)   the Redemption Date,          (b)   the Redemption Price and the amount of accrued interest to the Redemption Date payable as  provided in Section 11.06, if any,          (c)   if less than all Outstanding Notes are to be redeemed, the identification (and, in the case of a  partial redemption, the principal amounts) of the particular Notes to be redeemed,                                               34  

 

          (d)   in case any Note is to be redeemed in part only, the notice which relates to such Note shall state  that on and after the Redemption Date, upon surrender of such Note, the Holder shall receive, without charge, a new  Note or Notes of authorized denominations for the principal amount thereof remaining unredeemed,          (e)   whether the Redemption Price will be paid in cash or in shares of the Company’s Common Stock,          (f)   that on the Redemption Date the Redemption Price (and accrued interest, if any, to the  Redemption Date payable as provided in Section 11.06) will become due and payable upon each such Note, or the  portion thereof, to be redeemed, and, unless the Company defaults in making the redemption payment, that interest  on Notes called for redemption (or the portion thereof) will cease to accrue on and after said date,          (g)   the place or places where such Notes are to be surrendered for payment of the Redemption Price  and accrued interest, if any,          (h)   the name and address of the Paying Agent,          (i)   that Notes called for redemption must be surrendered to the Paying Agent to collect the  Redemption Price,          (j)   the CUSIP number, and that no representation is made as to the accuracy or correctness of the  CUSIP number, if any, listed in such notice or printed on the Notes, and          (k)   the paragraph of the Notes or Section of this Indenture pursuant to which the Notes are to be  redeemed.                At the Company’s request, the Trustee will give the notice of redemption in the Company’s name  and at its expense; provided, however, that the Company has delivered to the Trustee, at least 45 days prior to the  Redemption Date, an Officer’s Certificate requesting that the Trustee give such notice and setting forth the  information to be stated in such notice as provided in the preceding paragraph.          Section 11.05 DEPOSIT OF REDEMPTION PRICE.                If the Company elects to pay the Redemption Price in cash, then prior to 10:00 a.m. (New York  City time) on any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the  Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 10.03) an amount of  money sufficient to pay the Redemption Price of, and accrued interest on, all the Notes which are to be redeemed on  that date.                If the Company elects to pay the Redemption Price in shares of the Company’s Common Stock,  then the Board of Directors of the Company shall engage a nationally recognized investment banking firm, which  shall provide a valuation of the Company’s Common Stock to be used as the “Fair Market Value” for the purposes  of determining the number of shares of the Company’s Common Stock in satisfaction of the Redemption Price.                  If the Redemption Date falls after a Record Date and on or prior to the corresponding Interest  Payment Date, the Company will pay the full amount of accrued and unpaid interest due on such Interest Payment  Date to the Holder of record at the close of business on the corresponding Regular Record Date. On and after the  Redemption Date, interest will cease to accrue on the Notes or portions thereof called for redemption as long as the  Company has deposited with the Paying Agent funds (if the Company elects to pay the Redemption Price in cash) in  full satisfaction of the applicable Redemption Price, together with accrued interest thereon to the date of redemption,  pursuant to this Indenture.            If the Company elects to pay the Redemption Price in shares of the Company’s Common Stock, then the  Company shall direct the Trustee by Company Order to make a notation on such Global Note or an adjustment on  the Trustee’s books and records as to the reduction in the principal amount represented thereby, and the Company  shall take all actions as may be necessary or appropriate to effectuate the issuance of shares of the Company’s  Common Stock to the Holders. For the avoidance of doubt, in no event shall the Trustee, in its capacity as Paying                                             35  

 

   Agent, be required to hold shares of the Company’s Common Stock in trust in connection with a redemption of the  Notes.                         Section 11.06 NOTES PAYABLE ON REDEMPTION DATE.                Notice of redemption having been given as aforesaid, the Notes so to be redeemed shall, on the  Redemption Date, become due and payable at the Redemption Price therein specified (together with accrued  interest, if any, to the Redemption Date), and from and after such date (unless the Company shall default in the  payment of the Redemption Price and accrued interest) such Notes shall cease to bear interest.  Upon surrender of  any such Note for redemption in accordance with said notice, such Note shall be paid by the Company at the  Redemption Price, together with accrued interest, if any, to, but not including, the Redemption Date, and such Notes  shall be cancelled by the Trustee; provided, however, that installments of interest whose Stated Maturity is on or  prior to the Redemption Date shall be payable to the Holders of such Notes or one or more Predecessor Notes  registered as such at the close of business on the relevant Regular Record Date according to their terms and the  provisions of Section 3.07.                If any Note called for redemption shall not be so paid upon surrender thereof for redemption, the  principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate borne by the  Notes.         Section 11.07 SELECTION OF NOTES TO BE REDEEMED.                If less than all of the Notes are to be redeemed at any time, the Trustee shall select the Notes to be  redeemed (a) if the Notes are listed on any national securities exchange, in compliance with the requirements of the  principal national securities exchange on which the Notes are listed (and the Company shall notify the Trustee of  any such listing), or (b) if the Notes are not listed on a national securities exchange, (i) on a pro rata basis to the  extent practicable or (ii) by lot or such other similar method in accordance with the procedures of the Depository (to  the extent the Notes are Global Notes).           Section 11.08 NOTES REDEEMED IN PART.                Any Note which is to be redeemed only in part (pursuant to the provision of this Article) shall be  surrendered at the office or agency of the Company maintained for such purpose pursuant to Section 10.01 (with, if  the Company or the Trustee so require, due endorsement by, or a written instrument of transfer in form satisfactory  to the Company and the Trustee duly executed by, the Holder thereof or such Holder’s attorney duly authorized in  writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Note  without service charge, a new Note or Notes, of any authorized denomination as requested by such Holder, in  aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Note so  surrendered.                                         ARTICLE 12.                                      SUBORDINATION         Section 12.01 AGREEMENT TO SUBORDINATE.                The Company, for itself, its successors and assigns, covenants and agrees, and each Holder of a  Note likewise covenants and agrees by its acceptance thereof, that the obligation of the Company to make any  payment on account of the principal and interest on each and all of the Notes shall be subordinate and junior in right  of payment to the Company’s Obligations to the holders of Senior Indebtedness to the extent provided herein, and  that in the case of any insolvency, receivership, conservatorship, reorganization, readjustment of debt, marshalling  of assets and liabilities or similar proceedings or any liquidation or winding-up of or relating to the Company as a  whole, whether voluntary or involuntary, all Obligations to holders of Senior Indebtedness shall be entitled to be  paid in full before any payment shall be made on account of the principal or interest on the Notes.  In the event of  any such proceeding, after payment in full of all sums owing with respect to Senior Indebtedness, the Holders of the                                              36  

 

   Notes, together with the holders of any Obligations of the Company Ranking on a Parity with the Notes, shall be  entitled to be paid from the remaining assets of the Company the amounts at the time due and owing on account of  unpaid principal and interest on the Notes before any payment or other distribution, whether in cash, property or  otherwise, shall be made on account of any capital stock or any Obligations of the Company Ranking Junior to the  Notes.  In addition, subject to the provisions of Section 12.03, in the event of any such proceeding, if any payment  or distribution of assets of the Company of any kind or character, whether in cash, property or Notes, including any  such payment or distribution which may be payable or deliverable by reason of the payment of any other  indebtedness of the Company being subordinated to the payment of the Notes, shall be received by the Trustee or  any Holder of the Notes before all Senior Indebtedness is paid in full and if such Holder or the Trustee, as the case  may be, receiving such payment is aware at the time of receipt that all Senior Indebtedness has not been paid in full,  then such payment or distribution shall, if received by any Holder, be held in trust for the benefit of the holders of  Senior Indebtedness or, if received by the Trustee, shall be held by it and delivered forthwith to the trustee in  bankruptcy, receiver, assignee, agent or other Person making payment or distribution of the assets of the Company,  and, in each case, shall be applied to the payment of all Senior Indebtedness remaining unpaid, until all such Senior  Indebtedness shall have been paid in full, after giving effect to any concurrent payment or distribution to the holders  of such Senior Indebtedness.  For purposes of this paragraph only, the words, “cash, property or Notes” shall not be  deemed to include shares of Common Stock of the Company, or Notes of the Company or any other company  provided for by a plan of reorganization or readjustment which are subordinated in right of payment to all Senior  Indebtedness which may at the time be outstanding to substantially the same extent as, or to a greater extent than,  the Notes are so subordinated as provided in this Article 12.  For the avoidance of doubt, the foregoing provisions  relating to the preference of the Senior Indebtedness shall not be affected by the conversion of the Notes into shares  of Common Stock of the Company.         Until the Senior Indebtedness is Paid in Full, no cash payments shall be made by the Company with respect  to the principal or interest on the Notes.  The provisions of this paragraph shall not apply to any payment with  respect to which the first paragraph of this Section 12.01 would be applicable.         The securing of any Obligations of the Company Ranking on a Parity with the Notes or Ranking Junior to  the Notes shall not be deemed to prevent such Obligations from constituting obligations of the Company Ranking on  a Parity with the Notes or Ranking Junior to the Notes.         The consolidation of the Company with, or the merger of the Company into, another Person or the  liquidation or dissolution of the Company following the conveyance or transfer of its properties and assets  substantially as an entirety to another Person shall not be deemed a dissolution, winding-up, liquidation,  reorganization, assignment for the benefit of creditors or marshalling of assets and liabilities of the Company for the  purposes of this Section 12.01.         Section 12.02 OBLIGATION OF THE COMPANY UNCONDITIONAL.                Nothing contained in this Article 12 or elsewhere in this Indenture is intended to or shall impair,  as between the Company and the Holders of the Notes, the obligation of the Company, which is absolute and  unconditional, to pay the Holders of the Notes the principal and interest on the Notes when, where and as the same  shall become due and payable, all in accordance with the terms of the Notes and this Indenture, or is intended to or  shall affect the relative rights of the Holders of the Notes and creditors other than the holders of Senior  Indebtedness, nor shall anything herein or therein prevent the Trustee or the Holder of any Note from exercising all  remedies otherwise permitted by applicable law upon an Event of Default under this Indenture, subject to the rights,  if any, under this Article 12 of the holders of Senior Indebtedness in respect of cash, property, or securities of the  Company (other than shares of the Company’s Common Stock issued upon conversion of the Notes as contemplated  herein) received upon the exercise of any such remedy.         Section 12.03 NOTICE TO TRUSTEE OF FACTS PROHIBITING PAYMENT.                The Company shall give prompt written notice to a Responsible Officer of the Trustee located at  the Corporate Trust Office of the Trustee of any fact known to the Company which would prohibit the making of  any cash payment to or by the Trustee in respect of the Notes. Notwithstanding the provisions of this Article 12 or                                             37  

 

   any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts  which would prohibit the making of any payment to or by the Trustee in respect of the Notes, unless and until the  Trustee shall have received at its Corporate Trust Office written notice thereof from the Company or a holder of  Senior Indebtedness or from any trustee therefor, and, prior to the receipt of any such written notice, the Trustee,  subject to the provisions of Section 6.01, shall be entitled in all respects to assume that no such facts exist; provided,  however, that if the Trustee shall not have received the notice provided for in this Section 12.03 at least five  Business Days prior to the date upon which by the terms hereof any money may become payable for any purpose  (including, without limitation, the payment of the principal or interest on any Notes), then, anything herein  contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such money and  to apply the same to the purpose for which such money was received and shall not be affected by any notice to the  contrary which may be received by it during or after such five Business Day period.          Subject to the provisions of Section 6.01, the Trustee shall be entitled to rely on the delivery to it of a  written notice by a Person representing itself to be a holder of Senior Indebtedness (or a trustee therefor) to establish  that such notice has been given by a holder of Senior Indebtedness (or a trustee therefor).  In the event that the  Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder  of Senior Indebtedness to participate in any payment or distribution pursuant to this Article 12, the Trustee may  request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior  Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or  distribution and any other facts pertinent to the rights of such Person under this Article 12, and if such evidence is  not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of  such Person to receive such payment.          Section 12.04 APPLICATION BY TRUSTEE OF MONEYS DEPOSITED WITH IT.                Anything in this Indenture to the contrary notwithstanding, any deposit of moneys by the  Company with the Trustee or any other Agent (whether or not in trust) for any payment of the principal or interest  on any Notes shall, except as provided in Section 12.03, be subject to the provisions of Section 12.01.          Section 12.05 SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS.                Subject to the Payment in Full of all Senior Indebtedness, the Holders of the Notes shall be  subrogated to the rights of the holders of Senior Indebtedness to receive payments or distributions of assets of the  Company applicable to such Senior Indebtedness until the principal and interest on the Notes shall be paid in full.   For purposes of such subrogation, none of the payments or distributions to the holders of the Senior Indebtedness to  which the Holders of the Notes or the Trustee would be entitled except for the provisions of this Article 12, or of  payments over pursuant to the provisions of this Article 12 to the holders of Senior Indebtedness by Holders of the  Notes or the Trustee shall, as among the Company, its creditors other than holders of Senior Indebtedness and the  Holders of the Notes, be deemed to be a payment or distribution by the Company to or on account of the Senior  Indebtedness; it being understood that the provisions of this Article 12 are and are intended solely for the purpose of  defining the relative rights of the Holders of the Notes, on the one hand, and the holders of the Senior Indebtedness,  on the other hand.          Section 12.06 SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF  COMPANY OR HOLDERS OF SENIOR INDEBTEDNESS.                No right of any present or future holders of any Senior Indebtedness to enforce subordination as  herein provided shall at any time or in any way be prejudiced or impaired by any act or failure to act on the part of  the Company or any act or failure to act, in good faith, by any such holder, or by any noncompliance by the  Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof with  which any such holder may have or be otherwise charged.                                              38  

 

          Section 12.07 AUTHORIZATION OF TRUSTEE TO EFFECTUATE SUBORDINATION OF NOTES.                Each Holder of a Note, by its acceptance thereof, authorizes and expressly directs the Trustee on  its behalf to take such actions as may be necessary or appropriate to effectuate the subordination provided in this  Article 12 and appoints the Trustee its attorney-in-fact for any and all such purposes.          If, in the event of any proceeding or other action relating to the Company referred to in the first sentence of  Section 12.01, a proper claim or proof of debt in the form required in such proceeding or action is not filed by or on  behalf of the Holders of the Notes prior to fifteen days before the expiration of the time to file such claim or claims,  then the holder or holders of Senior Indebtedness shall have the right to file and are hereby authorized to file  appropriate claim for and on behalf of the Holders of the Notes; provided, that no such filing by any holders of  Senior Indebtedness shall preclude the Trustee from filing such a proof of claim on behalf of the Holders of Notes.          Section 12.08 [RESERVED]          Section 12.09 RIGHT OF TRUSTEE TO HOLD SENIOR INDEBTEDNESS.                The Trustee in its individual capacity shall be entitled to all of the rights set forth in this Article 12  in respect of any Senior Indebtedness at any time held by it in its individual capacity to the same extent as any other  holder of such Senior Indebtedness, and nothing in this Indenture shall be construed to deprive the Trustee of any of  its rights as such holder.  Nothing in this Article shall subordinate to Senior Indebtedness the claims of, or any  payments to, the Trustee under Section 6.07.          Section 12.10 NOT TO PREVENT EVENTS OF DEFAULT.                The failure to make a payment pursuant to the Notes by reason of any provision in this Article 12  shall not be construed as preventing the occurrence of a default or an Event of Default.          Section 12.11 ARTICLE APPLICABLE TO PAYING AGENTS.                In case at any time any Paying Agent other than the Trustee shall have been appointed by the  Company and be then acting hereunder, the term “Trustee” as used in this Article 12 shall in such case (unless the  content otherwise requires) be construed as extending to and including such Paying Agent within its meaning as  fully for all intents and purposes as if such Paying Agent were named in this Article in addition to or in place of the  Trustee; provided, however, that Section 12.09 shall not apply to the Company or any Affiliate of the Company if it  or such Affiliate acts as Paying Agent.         Section 12.12 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT.                Upon any payment or distribution of assets of the Company referred to in this Article 12, the  Trustee, subject to the provisions of Section 6.01, and the Holders of the Notes shall be entitled to rely upon any  order or decree entered by any court of competent jurisdiction in which such insolvency, bankruptcy, receivership,  liquidation, reorganization, dissolution, winding-up or similar case or proceeding is pending, or a certificate of the  trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other  Person making such payment or distribution, delivered to the Trustee or to the Holders of Notes for the purpose of  ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior  Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts  paid or distributed thereon and all other facts pertinent thereto or to this Article 12.          Section 12.13 TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS.                The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness  and shall not be liable to any such holders if it shall in good faith mistakenly pay over or distribute to Holders of  Notes or to the Company or to any other Person, cash, property or securities to which any holders of Senior  Indebtedness shall be entitled by virtue of this Article 12 or otherwise.                                              39  

 

          Section 12.14 PAYMENT PERMITTED IF NO DEFAULT.                Nothing contained in this Article 12 or elsewhere in this Indenture or in any of the Notes shall  prevent the Company, at any time except during the case of any insolvency, receivership, conservatorship,  reorganization, readjustment or debt, marshalling of assets and liabilities or similar proceedings or any liquidation or  winding-up of or relating to the Company referred to in Section 12.01 or as provided in the second paragraph of  Section 12.01, and except as required by any regulatory enforcement action of any governmental body relating to the  Company, from making payments at any time of principal or interest on the Notes.          Section 12.15 THIRD PARTY BENEFICIARIES.                 The subordination provisions in this Article 12 are for the benefit of the holders of the Senior  Indebtedness, and the holders of the Senior Indebtedness shall be deemed to be third party beneficiaries of the  provisions in this Article 12. There shall be no amendments, supplements, waivers, consents or other modifications  of any provisions in this Article 12 without the prior written consent of Regions Bank, as agent for the lenders under  the ABL Facility, and Wilmington Trust, National Association, as agent for the lenders under the Term Loan  Facility, and any other agent for any ABL Facility, any Term Loan Facility or other Senior Indebtedness.                                          ARTICLE 13.                                        [RESERVED]                                                  ARTICLE 14.                                       CONVERSION         Section 14.01 MANDATORY CONVERSION.                Upon the earliest to occur of (i) the consummation of a Marketed Public Offering, (ii) a Change of  Control and (iii) the Maturity Date (or such earlier date as the Company shall elect to redeem the Notes for the  Company’s Common Stock pursuant to Section 11.01 of this Indenture) (the earliest such date, the “Conversion  Date”), the Notes shall mandatorily convert at a conversion rate (the “Conversion Rate”) into a number of shares  equal to: (X) the aggregate principal amount of the Notes Outstanding (including, for the avoidance of doubt, any  Outstanding PIK Notes issued as a result of the payment of PIK Interest) divided by (Y) (1) the Fair Market Value  of a share of the Company’s Common Stock at such time multiplied by (2) 85%.         Section 14.02 [RESERVED].         Section 14.03 CONVERSION PROCEDURES.         (a)    Notice of conversion (the “Conversion Notice”) shall be given by the Company in the manner  provided for in Section 1.06 at least 10 but not more than 60 days prior to the Conversion Date, to each Holder to be  converted at such Holder’s registered address.                All notices of conversion shall be prepared by the Company and shall state:                (i)    the Conversion Date,                (ii)   the aggregate principal amount of the Notes Outstanding and the amount of accrued  interest to the Conversion Date, if any,                (iii)  that on the Conversion Date, all Notes Outstanding will convert into shares of the  Company’s Common Stock, and, unless the Company defaults in such conversion, that interest on Notes called for  conversion will cease to accrue on and after said date,                (iv)   the place or places where such Notes are to be surrendered for conversion,                                              40  

 

                (v)    the name and address of the Paying Agent, if any,                (vi)   that Notes called for conversion must be surrendered to the Paying Agent to receive the  shares of the Company’s Common Stock,                 (vii)  whether any such conversion or notice of any conversion is, at the Company’s discretion,  subject to one or more conditions precedent, including, but not limited to, completion of a Marketed Public Offering,  Change of Control or redemption at the Maturity Date. If such conversion or notice is subject to satisfaction of one  or more conditions precedent, such notice shall describe each such condition, and if applicable, shall state that, in the  Company’s discretion, the conversion date may be delayed until such time as any or all such conditions shall be  satisfied, or such conversion may not occur and such notice may be rescinded in the event that any or all such  conditions shall not have been satisfied by the conversion date, or by the conversion date as so delayed. Notice of  any conversion in respect of a Marketed Public Offering may be given prior to the completion thereof; and                (viii) the CUSIP number, and that no representation is made as to the accuracy or correctness  of the CUSIP number, if any, listed in such notice or printed on the Notes.                At the Company’s written request, the Trustee will give the notice of conversion in the Company’s  name and at its expense; provided, however, that the Company has delivered to the Trustee, at least three Business  Days prior to the date notice is required to be given to Holders, an Officer’s Certificate requesting that the Trustee  give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph.                (ix)   On and after the Conversion Date, the conversion of all Holders’ Notes, as set forth in the  Conversion Notice, shall become irrevocable.                (x)    Notes shall be deemed to have been converted immediately upon the opening of business  on the Conversion Date, and at such time the rights of the Holders of such Notes as Holders will cease, and the  Person or Persons entitled to receive the shares of Common Stock payable and issuable upon conversion will be  treated for all purposes as the payee or payees of such payment and the record holder or holders of such Common  Stock at such time.         (b)    Following any Conversion Date, the Company shall satisfy its obligations with respect to such  conversion by either:                (i)    delivering to the Conversion Agent, for delivery to the Holder (or such other Person as  may be named in the relevant Conversion Notice), the cash payment, if any, together with certificates representing  the number of shares of Common Stock, payable and issuable upon the conversion; or                (ii)   delivering to such Holder (or such other Person as may be named in the relevant  Conversion Notice) the cash payment, if any, together with such number of shares of Common Stock payable and  issuable upon such conversion in accordance with the Applicable Procedures, in each case, together with payment in  lieu of fractional shares, if any, as provided in Section 14.03(d) below (such cash payment and delivery of shares, if  any, the “Settlement”); provided that shares of Common Stock only will be deliverable in certificated form if the  Company determines that delivery is required in certificated shares either because (i) delivery to the Holder (or such  other Person named in the relevant Conversion Notice) is not practicable in accordance with the Applicable  Procedures or (ii) in the opinion of legal counsel, delivery is required in certificated form in order to comply with the  requirements of applicable securities laws.  Settlement shall occur within 5 Business Days.         (c)    No fractional shares of Common Stock shall be issued upon conversion of any Note or Notes.  If  more than one Note shall be surrendered for conversion at one time by the same Holder, the number of full shares  which shall be issuable upon conversion thereof shall be computed on the basis of the aggregate principal amount of  the Notes (or specified portions thereof) so surrendered.  Instead of any fractional share of Common Stock that  would otherwise be issuable upon conversion of any Note or Notes (or specified portions thereof), the Company  shall calculate and pay a cash adjustment for the fractional amount (calculated to the nearest 1/100th of a share)  based upon the applicable Conversion Rate.  The amount of the cash adjustment payable in lieu of issuing such                                              41  

 

   fractional share shall be equal to such fractional share otherwise issuable multiplied by the Fair Market Value of one  share of Common Stock.          (d)   Upon conversion, a Holder shall not receive any payment of an installment of interest for accrued  and unpaid interest except as set forth below.  The Settlement shall be deemed to satisfy the Company’s obligation  to pay the principal amount of the Notes and accrued and unpaid interest to, but not including, the Conversion Date.  As a result, accrued and unpaid interest to, but not including, the Conversion Date shall be deemed to be paid in full  rather than cancelled, extinguished or forfeited.  If Notes are converted after a Regular Record Date for the payment  of an installment of interest, notwithstanding such prior Regular Record Date, such interest shall be included in the  calculation of the shares of the Company’s Common Stock to be issued on the Conversion Date.          (e)   [Reserved.]          (f)   Upon the conversion of an interest in a Global Note, the Trustee, or the Notes Custodian at the  direction of the Trustee, shall make a notation on such Global Note or an adjustment on the Trustee’s books and  records as to the reduction in the principal amount represented thereby. The Company shall notify the Trustee in  writing of any conversion of Notes effected through any Conversion Agent other than the Trustee.          Section 14.04 NO RESPONSIBILITY OF TRUSTEE FOR CONVERSION PROVISIONS.                The Company is responsible for all calculations under the Indenture and the Notes, including the  determination of Conversion Rate, and the Fair Market Value of the Common Stock, provided, however, that the  Board of Directors of the Company shall engage a nationally recognized investment banking firm, which shall  provide a valuation of the Company’s Common Stock to be used as the Fair Market Value for the purposes of  calculating the Conversion Rate other than in the case of a conversion upon a Marketed Public Offering or a Change  of Control, as described above. The Company shall make all such calculations in good faith.  In the absence of  manifest error, such calculations shall be final and binding on all Holders. The Company shall provide a copy of  such calculations to the Trustee and the Conversion Agent, as required hereunder, and, the Trustee and the  Conversion Agent shall be entitled to conclusively rely on the accuracy of any such calculation without independent  verification.                The Trustee shall not be under any responsibility to perform any calculations under the Indenture.  The Trustee makes no representation as to the validity or value of any securities or assets issued upon conversion of  the Notes, and the Trustee shall not be responsible for the Company’s failure to comply with any provision of this  Article 14. The Conversion Agent shall have the same protection under this Section 14.04 as the Trustee.                                                     [Signature page follows]                                              42  

 

                IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of  the day and year first above written.                                           FORBES ENERGY SERVICES LTD.                                           By:    /s/ L. Melvin Cooper                                                                                                   Name: L. Melvin Cooper                                                 Title: Senior Vice President and Chief Financial                                                 Officer                                                                                      WILMINGTON TRUST, NATIONAL ASSOCIATION, as                                          Trustee                                           By:    /s/ Shawn Goffinet                                                                                                   Name: Shawn Goffinet                                                 Title: Assistant Vice President                     

 

                                         EXHIBIT A                                       FORM OF NOTE                                   [FORM OF FACE OF NOTE]                       [INCLUDE FOLLOWING LEGEND IF A GLOBAL NOTE]       [UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE  DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS  AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE  ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED  BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREUNDER IS MADE TO  CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE  OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO  ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS  AN INTEREST HEREIN.]                                                                             1     

 

                                FORBES ENERGY SERVICES LTD.                          5.00% Subordinated Convertible PIK Notes due 2020   No. [            ]                                                                                                       [Initially]1 $[            ]   CUSIP No. 345143 AD3       FORBES ENERGY SERVICES LTD., a corporation duly organized and validly existing under the laws of the  State of Delaware (the “Company,” which term includes any successor corporation or other entity under the  Indenture referred to on the reverse hereof), for value received hereby promises to pay to [CEDE & CO.]2 or  registered assigns, the principal sum [as set forth in the “Schedule of Exchanges of Notes” attached hereto]3 [of  $[•]]4, in accordance with the rules and procedures of the Depositary, on June 30, 2020, and interest thereon as set  forth below.        This Note shall bear interest at the rate of 5.00% per year from March 4, 2019, or from the most recent date to  which interest had been paid or provided for to, but excluding, the next scheduled Interest Payment Date until  June 30, 2020.  Interest is payable semi-annually in arrears on each June 30 and December 31, commencing on  June 30, 2019, to Holders of record at the close of business on the preceding June 15 and December 15 (whether or  not such day is a Business Day), respectively. For any interest period, the Company will pay interest on the Notes by  increasing the principal amount of the outstanding Notes or by issuing PIK Notes (“PIK Interest”).       1  Include if a global note.    2  Include if a global note.         3  Include if a global note.  4  Include if a physical note.                                                                             2     

 

       Reference is made to the further provisions of this Note set forth on the reverse hereof, including, without  limitation, provisions pursuant to which this Note shall be mandatorily converted into shares of Common Stock of  the Company on the terms and subject to the limitations set forth in the Indenture. Such further provisions shall for  all purposes have the same effect as though fully set forth at this place.       This Note, and any claim, controversy or dispute arising under or related to this Note, shall be  construed in accordance with and governed by the laws of the State of New York (without regard to the  conflicts of laws provisions thereof).       In the case of any conflict between this Note and the Indenture, the provisions of the Indenture shall control  and govern.       This Note shall not be valid or become obligatory for any purpose until the certificate of authentication hereon  shall have been signed manually or by facsimile by the Trustee or a duly authorized authenticating agent under the  Indenture.                              [Remainder of page intentionally left blank]                                               3     

 

                 IN WITNESS WHEREOF, the Company has caused this Note to be duly executed.                                                                                                        FORBES ENERGY SERVICES LTD.                                                                                                        By: /s/ L. Melvin Cooper                                                      Name: L. Melvin Cooper                                                     Title: Senior Vice President and Chief                                                      Financial Officer                                                                                   1                    

 

   Dated:  TRUSTEE’S CERTIFICATE OF AUTHENTICATION   WILMINGTON TRUST, NATIONAL ASSOCIATION  as Trustee, certifies that this is one of the Notes described  in the within-named Indenture.           By: /s/ Shawn Goffinet      Authorized Officer                                                                             2      

 

                                 [FORM OF REVERSE OF NOTE]                                FORBES ENERGY SERVICES LTD.                         5.00% Subordinated Convertible PIK Notes due 2020       This Note is one of a duly authorized issue of Notes of the Company, designated as its 5.00% Subordinated  Convertible PIK Notes due 2020 (the “Notes”), issued under and pursuant to an Indenture dated as of March 4, 2019  (the “Indenture”), between the Company and WILMINGTON TRUST, NATIONAL ASSOCIATION (the  “Trustee”), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of  the rights, limitations of rights, obligations, duties, privileges, protections, indemnities and immunities thereunder of  the Trustee, the Company and the Holders of the Notes. Additional PIK Notes may be issued in an unlimited  aggregate principal amount, subject to certain conditions specified in the Indenture. Capitalized terms used in this  Note and not defined in this Note shall have the respective meanings set forth in the Indenture.       In case certain Events of Default shall have occurred and be continuing, the principal of, and interest on, all  Notes may be declared, by either the Trustee or Holders of at least 25% in aggregate principal amount of Notes then  Outstanding, and upon said declaration shall become, due and payable, in the manner, with the effect and subject to  the conditions and certain exceptions set forth in the Indenture.       The Indenture contains provisions permitting the Company and the Trustee in certain circumstances, without  the consent of the Holders of the Notes, and in certain other circumstances, with the consent of the Holders of not  less than a majority in aggregate principal amount of the Notes at the time Outstanding, evidenced as in the  Indenture provided, to execute supplemental indentures modifying the terms of the Indenture and the Notes as  described therein. It is also provided in the Indenture that, subject to certain exceptions, the Holders of a majority in  aggregate principal amount of the Notes at the time Outstanding may on behalf of the Holders of all of the Notes  waive any past Default or Event of Default under the Indenture and its consequences.       Each Holder shall have the right to receive payment or delivery, as the case may be, of (x) the principal of,  (y) accrued and unpaid interest, if any, on, and (z) the consideration due upon conversion of, this Note at the place,  at the respective times, at the rate and in the lawful money or shares of Common Stock, as the case may be, as  prescribed in the Indenture. For any interest period, the Company will pay interest on the Notes by increasing the  principal amount of the Outstanding Notes or by issuing PIK Notes (“PIK Interest”).        At all times, PIK Interest on the Notes shall be payable: (i) with respect to Notes represented by one or more  Global Notes registered in the name of, or held by, the Depository (or any successor depository) or its nominee on  the relevant Record Date, by increasing the principal amount of the Outstanding Global Notes, effective as of the  applicable interest payment date, by an amount equal to the amount of PIK Interest for the applicable interest period  (rounded up to the nearest whole dollar) (“PIK Payment”) at the written request of the Company to increase the  principal amount of the Outstanding Global Note and (ii) with respect to certificated Notes, if any, by issuing PIK  Notes in certificated form, dated as of the applicable interest payment date, in an aggregate principal amount equal  to the amount of the PIK Interest for the applicable interest period (rounded up to the nearest whole dollar), and the  Trustee will, upon receipt of a Company Order, authenticate and deliver such PIK Notes in certificated form for  original issuance to the Holders on the relevant Record Date, as shown by the records of the register of Holders.       Following an increase in the principal amount of the Outstanding Global Notes as a result of a PIK Payment,  the Global Notes will bear interest on such increased principal amount from and after the interest payment date in  respect of which such PIK Payment was made. Any PIK Notes issued in certificated form will be dated as of the  applicable interest payment date and will bear interest from and after such date. All Notes issued pursuant to a PIK  Payment will mature on the same Maturity Date as the Notes issued on the Issue Date and will be governed by, and  subject to the terms, provisions and conditions of, the Indenture and shall have the same rights and benefits as the  Notes issued on the Issue Date. Any certificated PIK Notes will be issued with the description “PIK” on the face of  such PIK Note.                                                      3      

 

       The Notes are initially issuable in registered form without coupons in minimum denominations of $100  principal amount and integral multiples in excess thereof; provided that PIK Notes may be issued in minimum  denominations of $1.00 and integral multiples of $1.00 in excess thereof. At the office or agency of the Company  referred to on the face hereof, and in the manner and subject to the limitations provided in the Indenture, Notes may  be exchanged for a like aggregate principal amount of Notes of other authorized denominations, without payment of  any service charge but, if required by the Company or Trustee, with payment of a sum sufficient to cover any  transfer or similar tax that may be imposed in connection therewith as a result of the name of the Holder of the new  Notes issued upon such exchange of Notes being different from the name of the Holder of the old Notes surrendered  for such exchange.                                                                            4      

 

                                       ABBREVIATIONS       The following abbreviations, when used in the inscription of the face of this Note, shall be construed as  though they were written out in full according to applicable laws or regulations:   TEN COM = as tenants in common  UNIF GIFT MIN ACT = Uniform Gifts to Minors Act  CUST = Custodian  TEN ENT = as tenants by the entireties  JT TEN = joint tenants with right of survivorship and not as tenants in common      Additional abbreviations may also be used though not in the above list.                                                                             5      

 

                                                                             SCHEDULE A7                             SCHEDULE OF EXCHANGES OF NOTES                                FORBES ENERGY SERVICES LTD.                         5.00% Subordinated Convertible PIK Notes due 2020       The initial principal amount of this Global Note is             DOLLARS ($[            ]). The following increases or  decreases in this Global Note have been made:                                                                                                                                     Principal amount  Signature of                          Amount of         Amount of      of this Global Note authorized                          decrease in       increase in     following such    signatory of                         principal amount principal amount   decrease or      Trustee or      Date of issuance  of this Global Note of this Global Note increase      Custodian                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                7  Include if a global note.                                                                                   6      

 

                                                                              SCHEDULE B                                 SCHEDULE OF PIK PAYMENTS                                FORBES ENERGY SERVICES LTD.                         5.00% Subordinated Convertible PIK Notes due 2020       The initial principal amount of this Global Note is             DOLLARS ($[            ]). The following increases or  decreases in this Global Note have been made:                                                                                                                                     Principal amount  Signature of                          Amount of         Amount of      of this Global Note authorized                          decrease in       increase in     following such    signatory of                         principal amount principal amount   decrease or      Trustee or     Date of PIK Payment of this Global Note of this Global Note increase     Custodian                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              7      

 

                                                                              ATTACHMENT 1                            [FORM OF ASSIGNMENT AND TRANSFER]   For value received                     hereby sell(s), assign(s) and transfer(s) unto                     (Please insert name and  social security or Taxpayer Identification Number of assignee) the within Note, and hereby irrevocably constitutes  and appoints                     attorney to transfer the said Note on the books of the Company, with full power of  substitution in the premises.   Dated:                                             Signature(s)    Signature Guarantee   Signature(s) must be guaranteed by an  eligible Guarantor Institution (banks, stock  brokers, savings and loan associations and  credit unions) with membership in an approved  signature guarantee medallion program pursuant  to Securities and Exchange Commission  Rule 17Ad-15 if Notes are to be delivered, other  than to and in the name of the registered holder.  NOTICE: The signature on the assignment must correspond with the name as written upon the face of the Note in  every particular without alteration or enlargement or any change whatever.                                                  8Exhibit

	
		
	 
	EXECUTION VERSION

JOINT STOCK COMPANY "RUSNANO"
and
LIMITED LIABILITY COMPANY "RNI"
as the Purchasers 
and
NEOPHOTONICS CORPORATION
as the Seller

FRAMEWORK PURCHASE AGREEMENT

DATED 14 December 2018

Table of Contents
1.    DEFINITIONS AND INTERPRETATION    1
2.    PURCHASE AND SALE OF THE PARTICIPATORY INTEREST    9
3.    COMPLETION    11
4.    WARRANTIES AND UNDERTAKINGS    13
5.    POST-COMPLETION COVENANTS    14
6.    EXPENSES    18
7.    NOTICES    18
8.    VALIDITY; TERMINATION    19
9.    GOVERNING LAW AND JURISDICTION    19
10.    CONFIDENTIALITY; ANNOUNCEMENTS    20
11.    GENERAL PROVISIONS    21

Schedule 1     Agreement and Acknowledgement regarding Penalty Payment
Schedule 2    Budget of the Company
Schedule 3    Components Supply Agreement
Schedule 4    Manufacturing License Agreement
Schedule 5    Notarized SPA
Schedule 6    Particulars of the Company
Schedule 7     Forms of Standard Purchase Orders
Schedule 8    List of Documentation for Production Process
Schedule 9    Seller’s Production Specification and Yield Targets
Schedule 10    Technical Services Agreement
Schedule 11    List and Valuation of Equipment constituting Equipment Contribution
Schedule 12    Seller’s Protection
Schedule 13     Seller’s Warranties
Schedule 14     Management Accounts 
 

THIS FRAMEWORK PURCHASE AGREEMENT (this "Agreement") is entered into on 14 December 2018 by and between:
		
	(1)
	JOINT STOCK COMPANY "RUSNANO", a company incorporated under the laws of the Russian Federation, main state registration number (OGRN) 1117799004333, whose registered office is at: office 708.1, 10A Prospect 60-letiya Oktyabrya, Moscow, 117036, Russian Federation  ("Purchaser 1"); 

		
	(2)
	LIMITED LIABILITY COMPANY "RNI", a company incorporated under the laws of the Russian Federation, main state registration number (OGRN) 5147746226304, whose registered office is at: office 511, 10A Prospect 60-letiya Oktyabrya, Moscow, 117036, Russian Federation ("Purchaser 2" and together with Purchaser 1 the “Purchasers”) and 

		
	(3)
	NEOPHOTONICS CORPORATION, a company incorporated under the laws of Delaware, the United States of America, registration number 2670850, located at 2911 Zanker Road, San Jose, CA 95134, United States of America (the "Seller")

(each a "Party" and collectively the "Parties").
WHEREAS: 
		
	(A)
	The Seller is the legal and beneficial owner of the Participatory Interest comprising the whole of the issued share capital of the Company. 

		
	(B)
	The Seller wishes to sell and the Purchasers wish to purchase the Participatory Interest on the terms and conditions set out herein. 

NOW IT IS HEREBY AGREED as follows:
		
	1.
	DEFINITIONS AND INTERPRETATION

		
	1.1
	Definitions 

In this Agreement, including the recitals, the following words will have the following meanings unless the context otherwise requires:
“AAWG (100 GHz)” means Athermal Arrayed Waveguide Grating (Finished Goods Product Number (PN) 1000042377 (WIDEBAND, 40CH, 100GHZ, DMUX, 1530.33, LC/UPC). 
"Affiliate" or "Affiliated" means in relation to a person (a) a person directly or indirectly Controlled by, or under common Control with that person; or (b) a person owning or controlling fifty (50) per cent or more of the issued voting securities or beneficial interests of the first person; or (c) a director, partner or member of the immediate family of a director or partner, of the first person and in the case of a trust, any trustee or beneficiary (actual or potential) of that trust.
"Agreement" means this Agreement (together with all its recitals and schedules), as amended from time to time. 
"Agreement and Acknowledgement Regarding Penalty Payment" means the agreement to be entered into between the Seller and Purchaser 1 substantially in the form and substance set out in Schedule 1.
"Applicable Law" means all applicable provisions of all (a) constitutions, treaties, statutes, laws (including the common law), codes, rules, regulations, ordinances or orders of any Governmental Authority, (b) governmental approvals and (c) orders, decisions, injunctions, judgments, awards and decrees of or agreements with any Governmental Authority.
"Budget" means the operating budget of the Company for the period through the Review Date as set out in Schedule 2 hereto.
"Business Day" means a day (other than a Saturday and a Sunday) on which banks generally are open for business in the Russian Federation or the United States. 
"Capital Stock" means (a) in the case of a corporation, its shares of capital stock, (b) in the case of a partnership or limited liability company, its partnership or membership interests or units (whether general or limited), and (c) any other interest that confers on a person the right to receive a share of the profits and losses, or distribution of assets, of the issuing entity.
"Cash Shortage" has the meaning set out in Clause 5.7(a).
"CFP2 – LR4" means a 100G form factor pluggable transceiver module which is either (a) Finished Goods Product Number (PN) 1000042366 (PT-C24C3LECL, CFP2 TVR, 100G CFP2, TELECOM AND DATACOM, 10KM C-TEMP SINGLE-RATE G2) or (b) Finished Goods Product Number (PN) 1000042365 (PT-C24C3LDCL, CFP2 TVR, 100G CFP2, TELECOM AND DATACOM, 10KM C-TEMP DUAL-RATE G2).
"Commitment" means (a) options, warrants, convertible securities, exchangeable securities, subscription rights, conversion rights, exchange rights, or other Contracts that could require a person to issue any of its Equity Securities or to sell any Equity Securities it owns in another person; (b) any other securities convertible into, exchangeable or exercisable for, or representing the right to subscribe for any Equity Securities of a person or owned by a person; and (c) profit participation, or other similar rights with respect to a person.
"Company" means limited liability company NeoPhotonics Corporation, LLC, incorporated under the laws of the Russian Federation under the basic state registration No. 1127746681710, registered address at Volgogradsky Prospekt 42, building 5, Moscow 109316, Russia.
"Completion" has the meaning set out in Clause ‎3.
"Completion Date" has the meaning set out in Clause ‎3. 
"Components Supply Agreement” means an agreement to be entered into between the Company and NeoPhotonics China or NeoPhotonics Dongguan substantially in the form and substance set out in Schedule 3.
"Consent" means any consent, approval, notification, waiver, or other similar action (including by a Governmental Authority) that is necessary under Applicable Law.
"Constitutive Documents" means in respect of a person (other than a natural person) the permit for its establishment (if applicable), its articles and memorandum of association (if applicable), its charter, its foundation agreement (if applicable), its by-laws, its certificate of registration and its other organisational documents.
"Contract" means any contract, agreement (including leases), deed, arrangement, commitment, letter of intent, memorandum of understanding, heads of agreement, promise, obligation, right, instrument, document, or other similar understanding, whether written or oral, including any sales order or purchase order.
"Control" means, in relation to a company or other entity: (i) the legal power to secure directly or indirectly that the affairs of such entity are conducted in accordance with his or its wishes, including to direct or cause the direction of its general management and policies; (ii) the ability to appoint, directly or indirectly, the majority of its directors or executive officers; (iii) the ability to exercise, directly or indirectly, a majority of the votes exercisable at a general meeting; or (iv) the right to receive, directly or indirectly, a majority of the proceeds arising from: (a) any declaration of a dividend; or (b) a distribution arising in the course of winding up, whether solvent or insolvent, or any return of capital to shareholders or members; and the expressions Controlled and Controlling shall be construed accordingly.
“Counterparty” has the meaning set out in Clause ‎5.9(b).
"EGRUL" means the unified state register of legal entities maintained pursuant to Russian Federation federal law No. 129-FZ dated 8 August 2001 (as amended from time to time). 
"Encumbrance" means a mortgage, charge, pledge, lien, option, restriction, right of first refusal, right of pre-emption, assignment by way of security, third party right or interest, other encumbrance or security interest or derivative interest of any kind whatsoever, created or arising under any Applicable Law or any other type of preferential arrangement (including a title transfer or retention arrangement) having similar effect (and, where used in respect of any Equity Security, voting trust and any voting agreements or arrangements).
"Equipment Contribution" has the meaning set out in Clause ‎2.5(a).
"Equity Securities" means the issued (a) shares of Capital Stock, and (b) options, warrants, purchase rights, subscription rights, conversion rights, exchange rights or other contracts that, directly or indirectly, could require the issuer thereof to issue, sell or otherwise cause to become outstanding shares of Capital Stock.
"Escrow Account" means an account to be opened at the Escrow Agent pursuant to the Escrow Agreement for the purpose of depositing therein the Purchase Price – Cash Portion and disbursing the funds therein as set out in this Agreement.
"Escrow Agent" means a bank to be selected by the Seller and Purchaser 1 for the purpose of opening, maintaining and operating the Escrow Account.
"Escrow Agreement" means an agreement substantially in the standard form used by the Escrow Agent, to be entered into by the Escrow Agent, the Seller and Purchaser 1 on the terms satisfactory to the parties thereto, for the purpose of governing the opening, maintenance, operation and closing of the Escrow Account.
"FAS Consent" means the Consent of the Federal Antimonopoly Service of the Russian Federation to the purchase by Purchaser 1 of Participatory Interest 1.
"Governmental Authority" means any parliament, government, ministry, committee, inspectorate, authority, agency, commission, official or other competent authority of the Russian Federation, or any other country or any state, as well as any county, city or other administrative subdivision of any of the foregoing.
"Intellectual Property Contribution" has the meaning set out in Clause ‎2.5(b).
"Liability Limit" has the meaning set out in Clause 2.6(a).
"LLC Law" means Federal Law of the Russian Federation No. 14-FZ "On Limited Liability Companies" dated February 8, 1998 (as amended).
"Long Stop Date" means 31 January 2019.
"Manufacturing License Agreement" means an agreement to be entered into between the Seller and the Company substantially in the form and substance set out in Schedule 4.
"Material Adverse Effect" means any event, change or effect in the condition (financial or otherwise), properties, assets, liabilities, rights, obligations, operations, business, or prospects, which event, fact, circumstance or condition or change (or effect), individually or in the aggregate (together will all other changes, events, facts and conditions that have occurred prior to the date of determination), could reasonably be expected to be materially adverse to:
		
	(a)
	rights of either Party under this Agreement or any other Transaction Document;

		
	(b)
	the business, results of operations, workforce, prospects, financial position, properties, assets, liabilities or condition (financial or otherwise) of the Company;

		
	(c)
	ability of any Party to perform the transactions contemplated hereby or to perform and comply with their respective obligations hereunder; or

		
	(d)
	the validity, legality or enforceability of this Agreement and/or any other Transaction Document.

"NeoPhotonics China" means NeoPhotonics (China) Co., Ltd. (PRC).
"NeoPhotonics Dongguan" means NeoPhotonics Dongguan Co., Ltd. (PRC).
"Notarized SPA" means a Russian law-governed participatory interest sale agreement in the agreed form set out in Schedule 5.
“Notifying Counterparty” has the meaning set out in Clause ‎5.9(b).
"Order" means any order, ruling, decision, verdict, decree, writ, subpoena, mandate, precept, command, directive, consent, approval, award, judgment, injunction, or other similar determination or finding by, before, or under the supervision of any Governmental Authority, arbitrator, or mediator.
"Outstanding Indebtedness to Company" means, as of the Signing Date, the indebtedness of the Seller to the Company in the amount of one hundred fifty thousand six hundred ninety five US Dollars and four cents (USD 150,695.04) in respect of goods furnished by the Company to the Seller.
"Participatory Interest" means a participatory interest representing one hundred percent (100%) of the charter capital of the Company with a nominal value of RUB 9,814,867 owned by the Seller, as more particularly described in Schedule 6.
"Participatory Interest 1" means a participatory interest representing ninety nine percent (99%) of the charter capital of the Company with a nominal value of RUB 9,716,718.33.
"Participatory Interest 2" means a participatory interest representing one percent (1%) of the charter capital of the Company with a nominal value of RUB 98,148.67.
"Parties" has the meaning set out in the preamble to this Agreement.
"Production Purchase" has the meaning set out in Clause 5.5(a).
"Purchase Order" means the standard purchase order of NeoPhotonics China or NeoPhotonics Dongguan in the respective forms set out in Schedule 7.
"Purchase Price – Cash Portion" means the amount of two million US Dollars (USD 2,000,000). 
"Purchase Price – Penalty Offset Portion" means the amount of one million US Dollars (USD 1,000,000) which shall be paid by Purchaser 1 by performing the offset as set out in more detail in the Agreement and Acknowledgement Regarding Penalty Payment.
"Purchase Price - Total" means three million US Dollars (USD 3,000,000), comprised of Purchase Price – Cash Portion and Purchase Price – Penalty Offset Portion (of which two million nine hundred seventy thousand US Dollars (USD 2,970,000) shall be attributable to Participatory Interest 1 and thirty thousand US Dollars (USD 30,000) shall be attributable to Participatory Interest 2).
"Purchaser 1" has the meaning set out in the preamble to this Agreement.
"Purchaser 2" has the meaning set out in the preamble to this Agreement.
"Purchasers" has the meaning set out in the preamble to this Agreement.
"Refund Amount" means two hundred fifty thousand US Dollars (USD 250,000).
"Register" means the register of members held by the Company.
“Responding Counterparty” has the meaning set out in Clause ‎5.9(b).
"Review Date" means 31 March 2019.
"Seller" has the meaning set out in the preamble to this Agreement.
"Seller’s Warranties" has the meaning set out in Clause 4.2.
"Signing Date" means the date of this Agreement.
"Subsidiary" means, with respect to any person: (a) any company of which more than fifty (50) percent of the total voting power of all classes of the Equity Securities entitled (without regard to the occurrence of any contingency) to vote in the election of directors is owned by such person directly or through one or more other Subsidiaries of such person and (b) any person other than a corporation of which at least a majority of the Equity Securities (however designated) entitled (without regard to the occurrence of any contingency) to vote in the election of the governing body, partners, managers or others that will control the management of such entity is owned by such person directly or through one or more other Subsidiaries of such person.
"Surviving Provisions" means Clause ‎1 and Clauses ‎6 through ‎11.
"Target Date" has the meaning set out in Clause 5.7(a).
"Tax" or "Taxation" means all federal, statutory, governmental, state, local governmental, provincial, community, municipal or regional taxes, levies, imposts, duties, customs duties, charges, fees, tariffs, deductions, withholdings and contributions and their derivatives (including in all cases advance payments of same), whether direct or indirect and whether levied by reference to income, salaries, or other payments to the employees, profits, gains, excess profits, net wealth, asset value, turnover, added value, real estate or other reference, and mandatory payments to social funds and pension funds, in all cases of any kind arising in the Russian Federation or any part of the world together with all penalties, charges, costs, fines, surcharges and interest relating thereto.
"Tech Transfer" means the completion of all of the following items:
		
	(i)
	the Manufacturing License Agreement has been entered into by both parties thereto and is in full force and effect;

		
	(ii)
	the documentation of the production process for CFP2– LR4 and AAWG (100 GHz), listed in Schedule 8, has been provided to the Company. To confirm the delivery of the respective documentation, the Company and the Seller should execute a corresponding act of acceptance; 

		
	(iii)
	Company personnel has been trained on the production process for CFP2– LR4 and AAWG (100 GHz). To confirm the training, the Seller shall cause the Company to produce a training accomplishment summary showing names of personnel training, duration of training, technologies subject to training and relevant manufacturing processes trained;

		
	(iv)
	the Equipment Contribution per Schedule 11 has been delivered to the Company and is reflected in the books of the Company;

		
	(v)
	the respective equipment constituting the Equipment Contribution has become duly owned by the Company, has been properly installed, is fully operative and functional and capable of producing AAWGs (100GHz) and CFP2-LR4s, as confirmed by the Company and the Purchasers following respective testing at the premises of the Company. To confirm that the equipment is fully operational and functional, the Company shall provide to the Seller and Purchaser 1 a corresponding report;

		
	(vi)
	10 or more pilot units of CFP2– LR4 and 10 or more pilot units of AAWG (100 GHz) have been produced (for the avoidance of doubt, at the premises of the Company and by its own employees) to demonstrate operation of equipment per subclause (v) above, and these units meet the Seller’s production specification;

		
	(vii)
	Units ​of CFP2-LR4 and of AAWG (100 GHz) have demonstrated target yield as statistically set forth in Schedule 9 as the “Target Yield”. For the Tech Transfer the yield shall be statistically defined per Schedule 9.  For CFP2-LR4 the LCL is 72 and for AAWG the LCL is 82;

		
	(viii)
	The Company will provide a corresponding report that shall contain number of CFP2-LR4 and AAWG (100 GHz) ​manufactured, production specification test results and resulting yield; and

		
	(ix)
	Purchase Orders for 50 units of CFP2– LR4 and 100 units of AAWG (100 GHz) have been placed with the Company by NeoPhotonics China or NeoPhotonics Dongguan, as detailed in Clause 5.5, and remain in full force and effect.

"Technical Services Agreement" means an agreement to be entered into between the Company and the Seller substantially in the form and substance set out in Schedule 10.
"Termination Date" means the date on which this Agreement is terminated pursuant to Clause 8.2.
"Transactions" means (a) the sale of the Participatory Interest by the Seller to the Purchasers and Purchaser 1’s delivery of the Purchase Price - Total therefor; (b) the execution, delivery, and performance of all of the documents, instruments and agreements to be executed, delivered, and performed in connection herewith; and (c) the performance by the Parties of their respective covenants and obligations under this Agreement. 
"Transaction Documents" means
		
	(a)
	this Agreement;

		
	(b)
	the Escrow Agreement;

		
	(c)
	the Notarized SPA;

		
	(d)
	the Technical Services Agreement;

		
	(e)
	the Manufacturing License Agreement;

		
	(f)
	the Components Supply Agreement;

		
	(g)
	the Agreement and Acknowledgement Regarding Penalty Payment; and

		
	(h)
	any other document or agreement so designated by the Parties in writing. 

"VAT" means the Russian Federation value added tax.
		
	1.2
	Interpretation

Unless otherwise provided, in this Agreement:
		
	(a)
	references to "person" mean any natural person, firm, company, corporation, society, trust, foundation, government, state or agency of a state or any other entity or any association or partnership (whether or not having separate legal personality) of two or more of such entities;

		
	(b)
	references to "recitals" or "Clauses" or "Schedules" mean recitals in or Clauses of or Schedules to this Agreement, unless otherwise indicated;

		
	(c)
	references to "USD" or "US Dollars" mean the lawful currency of the United States of America;

		
	(d)
	references to "RUB" or "Rubles" mean the lawful currency of the Russian Federation;

		
	(e)
	references to "writing" or "written" includes faxes but not email;

		
	(f)
	the Clause and Schedule headings contained in this Agreement are inserted for convenience only and do not affect in any way the meaning or interpretation of this Agreement; 

		
	(g)
	a reference to "assets" is a reference to real property, machinery, stock, and other tangible or intangible assets; 

		
	(h)
	a reference to "liability" includes any actual or contingent liability; 

		
	(i)
	a reference to "shares" includes, where relevant, participatory interests or quotas;

		
	(j)
	words in a singular form at the same time include the plural and vice versa and words of one gender include the words of any other gender;

		
	(k)
	the rule known as the ejusdem generis rule shall not apply and accordingly general words introduced by the word "other" shall not be given a restrictive meaning by reason of the fact that they are preceded by words indicating a particular class of acts, matters or things;

		
	(l)
	any phrase introduced by the words "include", "including" or "in particular" or any similar words or expression shall be construed as illustrative and shall not be given a restrictive meaning by reason of the fact that they are followed by particular examples intended to be embraced by the general words;

		
	(m)
	references to any US or Delaware law legal term (including terms for any action, remedy, method or judicial proceeding, legal document, legal status, court, official or any legal concept or thing) will in respect of any jurisdiction other than the state of Delaware be deemed to include what most nearly approximates in that jurisdiction to the Delaware state legal term;

		
	(n)
	any reference to this Agreement or any other agreement or document shall be construed as a reference to that agreement or document as it may have been, or may from time to time be, amended, varied, novated, replaced or supplemented; 

		
	(o)
	words importing the singular include the plural and vice versa and words importing a gender shall include every gender;

		
	(p)
	if a period is specified by reference to dates from a given day or from the day of an act or event, it is to be calculated exclusively of that day unless otherwise expressly provided;

		
	(q)
	references to writing include any mode of reproducing words in a legible form and reduced or reducible to paper, but does not include e-mail communications;

		
	(r)
	references to this Agreement will include the Schedules, which comprise schedules and exhibits to this Agreement and form part of this Agreement.

		
	1.3
	Other Matters 

The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event that an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favouring or disfavouring any Party by virtue of the authorship of any provisions of this Agreement. 
		
	1.4
	Obligations of the Purchasers

The obligations of the Purchasers under this Agreement shall be several and not joint.
		
	2.
	PURCHASE AND SALE OF THE PARTICIPATORY INTEREST

		
	2.1
	Purchase and Sale of the Participatory Interest

Subject to the terms of this Agreement, the Seller hereby agrees to sell to Purchaser 1 the Participatory Interest 1, and to Purchaser 2 the Participatory Interest 2, in each case free from all Encumbrances and together with all rights that attach (or may in the future attach) to it, and Purchaser 1 agrees to pay for the Participatory Interest as set out in Clause ‎2.2.  
		
	2.2
	The Purchase Price 

The total consideration for the Participatory Interest shall be the Purchase Price - Total, which shall be payable by Purchaser 1 as follows:
		
	(a)
	The Purchase Price – Cash Portion shall be paid by Purchaser 1 by transferring the full amount thereof by wire transfer into the Escrow Account not later than the Completion Date. However, Purchaser 1 shall not be required to proceed with this wire transfer unless the conditions to Completion indicated in Clause 3.1 hereof are met.   

		
	(b)
	The Purchase Price – Penalty Offset Portion shall be paid by Purchaser 1 at Completion by entering into the Agreement and Acknowledgement Regarding Penalty Payment and performing the offset provided for therein.

		
	2.3
	The Escrow Account and Release of Funds

The Parties agree as follows:
		
	(a)
	the amount of one million seven hundred fifty thousand Dollars (USD 1,750,000) shall be released from the Escrow Account to the Seller upon the transfer of ownership of the entire Participatory Interest in the Company to the Purchasers (which shall be, in accordance with Applicable Law, the moment of making in the EGRUL of a respective entry as to same), and the Parties shall jointly instruct the Escrow Agent to so release such amount to the Seller as soon as such entry is made in the EGRUL; and

		
	(b)
	the Refund Amount shall be disbursed from the Escrow Account in accordance with the provisions of Clauses 2.4, 5.2 and 5.7, and the Parties shall jointly instruct the Escrow Agent to release all or any portions of the Refund Amount (up to the amount remaining in the Escrow Account) in accordance with such Clauses.

		
	2.4
	Partial Refund of the Purchase Price

		
	(a)
	The Purchase Price (Purchase Price – Cash Portion) may be subject to a full or partial refund as provided in this Clause 2.4 or in Clauses 5.2 or 5.7.  Any such refund shall operate as a reduction in the Purchase Price – Total paid for the Participatory Interest.

		
	(b)
	All of the Refund Amount or, if less, the portion of it then remaining in the Escrow Account, shall be paid to Purchaser 1 pursuant to the provisions of Clause 5.2 if the Tech Transfer is not completed by the Review Date. 

		
	(c)
	All or a portion of the Refund Amount (up to the total amount then remaining in the Escrow Account) shall be paid to Purchaser 1 if the Company experiences a Cash Shortage as determined pursuant to Clause 5.7.

		
	(d)
	If on the Review Date, the Tech Transfer has been completed and any part of the Refund Amount remains in the Escrow Account, all such remaining funds shall be paid to the Seller by the provision to the Escrow Agent of the relevant joint instructions not later than five (5) Business Days after the Review Date.

		
	2.5
	Equipment Contribution and Intellectual Property Contribution by Seller

		
	(a)
	Prior to Completion, the Seller shall irrevocably and unconditionally contribute to the Company, as a contribution to its assets (under article 27 of the LLC Law), the equipment listed in Schedule 11 hereto (which schedule is in the Russian language), which is comprised of one set of production and test equipment needed to produce CFP2– LR4 and one set of production and test equipment needed to produce AAWG (100 GHz) (the "Equipment Contribution").

		
	(b)
	Prior to Completion, the Seller shall irrevocably and unconditionally contribute to the Company, as a contribution to its assets (under article 27 of the LLC Law), the rights to use intellectual property under the Manufacturing License Agreement (the "Intellectual Property Contribution").

		
	(c)
	For the avoidance of doubt, the Seller shall not be entitled to demand any payment from the Company or the Purchasers in connection with the Equipment Contribution or Intellectual Property Contribution. 

		
	2.6
	Limitation of Liability of Seller

For the avoidance of doubt, this Clause 2.6 and Schedule 12 shall not apply to any obligations of the Seller or its subsidiaries pursuant to the Escrow Agreement (or this Agreement with regard to the Refund Amount), the Technical Services Agreement, the Manufacturing License Agreement, the Components Supply Agreement, or any Purchase Order placed pursuant to Clause 5.5.  The limitation of liability of the Seller pursuant to this Clause 2.6 also shall not apply in case of fraud on the part of the Seller.
		
	(a)
	The aggregate liability of the Seller under any provision of this Agreement (except the provisions of Clause 5.5) is limited to the sum of two hundred fifty thousand US Dollars (USD 250,000) plus any amounts paid to Purchaser 1 as the Refund Amount (such sum the “Liability Limit”). 

		
	(b)
	The Purchasers hereby consent and agree that with the exception of the provisions of Clause 5.5, after Completion neither the Seller nor any Affiliate of the Seller shall have any liability to the Purchasers whatsoever in excess of the Liability Limit for any obligation under this Agreement.  The Purchasers shall indemnify and hold harmless the Seller from any losses, damages, liabilities, costs, charges and expenses (including all legal costs and consultants’ fees) arising out of, or in connection with, any breach by the Purchasers of this Clause 2.6.

		
	(c)
	The liability of the Seller pursuant to the Seller’s Warranties is further limited by the provisions of Schedule 12 (Seller’s Protection) hereto.

		
	3.
	COMPLETION

		
	3.1
	Completion

		
	(a)
	Subject to the terms and conditions of this Agreement, the signing of the Notarized SPA with respect to the Participatory Interest (the "Completion") will take place at a location to be agreed by the Parties and on such date as the Parties may mutually determine (the "Completion Date").  No Party shall be required to proceed to Completion unless:

		
	(i)
	the Notarized SPA covers the purchase of the entire Participatory Interest simultaneously in accordance with the terms and conditions set forth in this Agreement; 

		
	(ii)
	all Transaction Documents (including Non-Assert Covenant in the form of Exhibit D to the Manufacturing License Agreement) are executed by all parties thereto at or prior to the Completion, and

		
	(iii)
	the Long Stop Date has not yet occurred.

		
	(b)
	The Purchasers shall not be required to proceed with Completion unless: 

		
	(i)
	the Equipment Contribution and the Intellectual Property Contribution are completed and the Purchasers receive appropriate evidence thereof, in form and substance satisfactory to the Purchasers;

		
	(ii)
	the FAS Consent is received by Purchaser 1;

		
	(iii)
	EGRUL does not contain any entry on the incorrectness of information contained therein with regard to the Company; 

		
	(iv)
	there are no circumstances that are reasonably likely to result, under Applicable Law, in the Russian Tax authorities refusing to register the transfer of ownership of the Participation Interest to the Purchasers pursuant to the Notarized SPA; and

		
	(v)
	no Material Adverse Effect occurs with respect to the Company.

		
	(c)
	The Seller shall not be required to proceed with Completion unless the Seller receives evidence of the payment by Purchaser 1 of the Purchase Price – Cash Portion to the Escrow Account.

		
	3.2
	Seller's Deliveries on Completion Date

Immediately prior to Completion, the Seller shall deliver the following to the Purchasers:
		
	(a)
	an original extract from the EGRUL dated not earlier than fourteen (14) days before the Completion Date in respect of the Company;

		
	(b)
	the appropriate corporate approvals of the Seller approving the sale of the Participatory Interest to the Purchasers; 

		
	(c)
	evidence that the Seller has completed the Equipment Contribution and the Intellectual Property Contribution to the Company, in form and substance satisfactory to the Purchasers; 

		
	(d)
	the decision of the Seller, as the sole participant in the Company, on the termination of the powers of the current board of directors of the Company and the appointment of new members of the board of directors as nominated by Purchaser 1; 

		
	(e)
	evidence that the Seller has paid the Outstanding Indebtedness to the Company, in form and substance satisfactory to the Purchasers;

		
	(f)
	written confirmation of the Seller that the warranties indicated in Schedule 13 hereof are true and correct as of the Completion Date;

		
	(g)
	written confirmation of the Seller that no Material Adverse Effect has occurred with respect to the Company.

		
	3.3
	Purchasers’ Deliveries on Completion Date

Immediately prior to Completion, the Purchasers shall deliver copies of the following documents to the Seller (in the Russian language only):
		
	(a)
	the Constitutive Documents of each Purchaser;

		
	(b)
	the appropriate corporate approvals of such Purchaser approving the purchase of the relevant portion of the Participatory Interest by such Purchaser from the Seller; and

		
	(c)
	the FAS Consent.

		
	3.4
	Notarized SPA

At Completion, the Parties shall execute and cause to be notarized by a Russian notary the Notarized SPA and shall direct the notary to file the respective application to the Russian tax authorities in connection with the transfer of ownership under the Notarized SPA.
		
	3.5
	Payments

Payment of the Purchase Price – Total shall be made in accordance with Clause 2.2 hereof.
		
	3.6
	 Notice to the Company

The Seller shall notify the Company of the sale of the Participatory Interest in writing within five (5) Business Days after the Completion Date.
		
	4.
	WARRANTIES AND UNDERTAKINGS

		
	4.1
	Parties' Warranties 

Each Party to this Agreement hereby warrants to the other Parties that as at the date of this Agreement (each warranty being deemed to be repeated as at the Completion Date):
		
	(a)
	it is duly organised, validly existing and in good standing under the Applicable Laws of the jurisdiction of its incorporation and has full corporate power and authority to enter into and perform its obligations under this Agreement and all actions (corporate or otherwise, including the approval by the board of directors) have been taken by it that are necessary for it to execute and perform its obligations under this Agreement. The signatories hereof on its behalf have been duly authorised by such Party to sign, execute and deliver this Agreement;

		
	(b)
	the execution of and performance of its obligations under this Agreement do not:

		
	(i)
	breach any provision of any Applicable Laws, which breach may have a Material Adverse Effect on its ability to perform its obligations under this Agreement; or

		
	(ii)
	breach any order, judgment or decree of any Governmental Authority or any agreement or instrument by which it is bound, which breach may have a Material Adverse Effect on its ability to perform its obligations under this Agreement;

		
	(c)
	its obligations under this Agreement are legal, valid and binding obligations enforceable against it in accordance with its terms subject to Applicable Law of general application; and

		
	(d)
	it has obtained all Consents and other third parties' consents and approvals which are required under Applicable Laws and which are necessary for it to enter into and perform its obligations under this Agreement, and all such consents and approvals are in full force and effect and all conditions thereof have been complied with. 

		
	4.2
	Additional Warranties 

In addition to the warranties set out in Clause ‎4.1, the Seller warrants to the Purchasers in terms of the warranties set out in Schedule 12 (the "Seller’s Warranties") on the Signing Date which shall be deemed to be repeated as at the Completion Date.
		
	4.3
	Purchasers’ Warranties

Each Purchaser warrants to the Seller that such Purchaser is in compliance with all applicable anti-money laundering regulations and procedures within its jurisdiction with respect to the source of funds used to purchase its respective share of the Participatory Interest.
		
	4.4
	Conduct after the Signing Date

Between (a) the Signing Date and (b) the earlier of the transfer of ownership of the Participatory Interest to the Purchasers or the Termination Date, the Seller shall not dispose of or encumber the Participatory Interest (or any part thereof) and shall not exercise any rights (including voting rights) with respect to the Participatory Interest (or any part thereof) or take any actions pertaining to the Participatory Interest (or any part thereof) (other than actions directly contemplated in this Agreement) without the approval of Purchaser 1.
		
	5.
	POST-COMPLETION COVENANTS

		
	5.1
	Transition 

After the Completion, Purchaser 1 will be entitled to possession of all documents, books, records, agreements, and financial data of any sort relating to the Company.  The Seller shall also ensure that the Company receives the relevant Russia customer list and contacts for CFPS-LR4 not later than the Completion Date.
		
	5.2
	Completion of Tech Transfer and Reduction of the Purchase Price for failure to complete 

		
	(a)
	As an inducement to the Purchasers to enter into this Agreement and purchase the Participatory Interest, the Seller undertakes to use its best efforts to procure consummation and completion of the Tech Transfer from the Seller to the Company by the Review Date, to enable the Company produce AAWGs (100GHz) and 50 CFP2-LR4s.

		
	(b)
	Without the prejudice to the generality of the obligation of the Seller to use its best efforts to procure completion of the Tech Transfer as soon as possible, the Seller shall use its best efforts to provide the following assistance to the Company (which list, for the avoidance of doubt, is not exhaustive):

		
	(i)
	technology transfer and manufacturing assembly and test training as required for the Company to support its production in Moscow at the Company's facility of AAWGs (100GHz) and CFP2-LR4s;

		
	(ii)
	logistics to transfer the equipment constituting the Equipment Contribution to the Company's Moscow, Russia facility;

		
	(iii)
	technical support and assistance at the Company's Moscow, Russia facility to set up and operate the equipment constituting the Equipment Contribution at Moscow facility; and

		
	(iv)
	ongoing, reasonable, remote technical support and assistance as requested by the Company through the Review Date in support of the Tech Transfer.

		
	(c)
	The Seller undertakes to provide the abovementioned assistance to the Company and other assistance as reasonably required to complete the Tech Transfer as an inducement for the Purchasers to enter into this Agreement. For the avoidance of doubt, neither the Company nor any of the Purchasers shall be required to make any separate payment to the Seller in connection with the Seller's assistance, actions and services related to the Tech Transfer, including the assistance expressly mentioned in this Clause 5.2. For the further avoidance of doubt, the Technical Services Agreement does not and shall not cover any services and assistance from the Seller to the Company in connection with the Seller's obligations to procure consummation and completion of the Tech Transfer and shall only govern the relations of the Company and the Seller after the Tech Transfer is completed.

		
	(d)
	If by the Review Date, the Tech Transfer has not been completed, the Seller and Purchaser 1 shall instruct the Escrow Agent to return the Refund Amount, or any portion thereof then remaining in the Escrow Account, to Purchaser 1 not later than seven (7) Business Days after the Review Date.

		
	(e)
	For the avoidance of doubt, the Tech Transfer will not be deemed completed unless and until each and every item listed in the definition of "Tech Transfer" indicated in Clause 1.1 hereof is completed and respective confirming documents (including those expressly indicated in the definition of "Tech Transfer") are provided to Purchaser 1.

		
	5.3
	Use of NeoPhotonics Name 

By 30 September 2019, Purchaser 1 shall 
		
	(a)
	cause the Company to cease the use of any trademark or trade name containing the word “NeoPhotonics”; and

		
	(b)
	use its reasonable efforts to cause the name of the Company to be changed to exclude the word “NeoPhotonics”.

 Purchaser 1 shall provide the Seller with documentary evidence or written confirmation thereof.
		
	5.4
	Company Operations

Until the earlier of (i) the Review Date, (ii) completion of the Tech Transfer, or (iii) complete depletion of funds in the Escrow Account, Purchaser 1 shall use its reasonable efforts to cause the Company (to the extent within control of Purchaser 1): 
		
	(a)
	to provide to the Seller, within 10 Business Days of the end of each calendar month, copies of (i) management financial statements of the Company for such month in the same format and containing the same types of information as the financial reports produced by the Company in 2018 prior to the date hereof, as soon as such reports become available and (ii) bank statements with respect to each bank account of the Company open during such calendar month, and

		
	(b)
	to substantially adhere to the Budget or to receive the prior approval of the Seller for substantial deviations from the Budget.

		
	5.5
	Production Purchase Obligation

		
	(a)
	If, by the earlier of (i) 90 calendar days from the Review Date or (ii) 90 calendar days from the completion of the Tech Transfer, the Company produces AAWGs (100GHz) and CFP2-LR4s that meet the Seller’s production specifications and yield targets set out in Schedule 9, then the Seller shall cause NeoPhotonics China or NeoPhotonics Dongguan (or any combination thereof) to purchase up to 100 such AAWGs (100 GHZ) and up to 50 CFP2 – LR4s, in each case in the amount produced by such date (for the avoidance of doubt, not less than the amount produced by such date but not more than 100 AAWGs (100 GHZ) and 50 CFP2 – LR4s), at the following prices:  

		
	(i)
	USD 285 per AAWG (100 GHZ) and 

		
	(ii)
	USD 1,150 per CFP2-LR4 

(collectively the “Production Purchase”) pursuant to the terms of the applicable Purchase Order, the forms of which are attached hereto as Schedule 7.  For the avoidance of doubt, the Seller shall have no obligation to purchase (or to cause any of its subsidiaries to purchase) any production completed after such date.  
		
	(b)
	For the avoidance of doubt, the Seller shall cause NeoPhotonics China and NeoPhotonics Dongguan not to require any special terms for the Production Purchase other than those expressly set out herein or in the attached Schedule 7 and shall cause them to execute any further documents, including the entry into separate purchase and sale agreements, if required by Applicable Law and/or reasonably requested by the Company to complete the Production Purchase. 

		
	(c)
	If any prepayment is made in connection with the Production Purchase but no (or insufficient) AAWGs (100GHz) or CFP2-LR4s are produced by the Company within the timeframes indicated therefor in the relevant purchase order from NeoPhotonics China or NeoPhotonics Dongguan, such purchase order or relevant purchase-sale agreement shall provide for the immediate refund of all or a pro-rata portion of such prepayment, and Purchaser 1 shall use reasonable efforts to cause the Company to so refund any such prepayment or portion thereof. 

		
	(d)
	The Parties agree that the Company is a third party beneficiary of the provisions of this Clause 5.5 and may enforce them against the Seller in its own name.  In any such enforcement action against the Seller, the Company shall follow the arbitration provisions hereof mutatis mutandis, but as if the term “Purchasers” or “Purchaser 1” therein referred to the Company. 

		
	5.6
	Anti-Money-Laundering Compliance 

The Purchasers acknowledge that due to anti-money laundering regulations within their respective jurisdictions, the Seller and/or any person acting on behalf of the Seller may require further documentation verifying either Purchaser's identity and the source of funds used to purchase such Purchaser’s share of the Participatory Interest, and each Purchaser further agrees to provide the Seller at any time with such information as the Seller determines to be necessary and appropriate to verify compliance with the anti-money laundering regulations of any applicable jurisdiction or to respond to requests for information concerning the identity of the Purchasers from any Governmental Authority, self-regulatory organization or financial institution in connection with its anti-money laundering compliance procedures, and to update such information as necessary.
		
	5.7
	Company cash monitoring

		
	(a)
	The Seller and Purchaser 1, acting through their representatives, shall hold monthly meetings (whether in person or via electronic means) on or about 14 December 2019, 15 January 2019, 15 February 2019 and 15 March 2019 (each – a "Target Date") in order to review whether the cash flow and cash balances of the Company are enough to secure the Company’s operations throughout the month until the next Target Date based on the objective to accomplish the Tech Transfer no later than the Review Date. Each monthly meeting shall result in a decision on whether the Company needs additional funds to continue operations and timely complete the Tech Transfer (a “Cash Shortage”). 

		
	(b)
	If the Parties determine that the Company faces a Cash Shortage, then the Seller and Purchaser 1 shall (i) in good faith agree on the amount of funds to be released from the Escrow Account to Purchaser 1 for further financing by Purchaser 1 of the Company (such amount not to exceed the balance of the Escrow Account at such time and not to exceed the Refund Amount in any event), and (ii) issue respective instructions to the Escrow Agent for the immediate release of such amount to Purchaser 1 not later than three (3) Business Days after the respective meeting.

		
	5.8
	Components Supply Agreement Provisions 

		
	(a)
	The Seller agrees that an agreement substantially in the form of the Components Supply Agreement will be executed between NeoPhotonics China or NeoPhotonics Dongguan, on the one hand, and the Company, on the other hand.  The initial product and price list under the Components Supply Agreement will be in effect for the 2019 and 2020 calendar years and will include all (i) “Bill of Materials” items and (ii) payment terms of 30 days from invoice (which invoice shall not be issued by the seller until shipment); after such period the Company and the seller under the Components Supply Agreement will need to negotiate annual prices.

		
	(b)
	In the event of a change of control of the Company such that Purchaser 1 is no longer the owner of at least 50.1% of the equity in the Company, the Company will need to undergo an evaluation of its credit and ability to pay by the seller of the components. Such evaluation may result in the change of payment terms, including the institution of a requirement for prepayment (but, for the avoidance of doubt, the purchase price for the relevant components agreed for that year shall not be increased).

		
	5.9
	Anti-Corruption Compliance 

		
	(a)
	In performing their obligations under this Agreement, the Parties, their affiliates, employees or agents shall not: 

		
	(i)
	pay, offer to pay and not allow to pay any monetary funds or values, directly or indirectly, to any persons to influence the actions or decisions of such persons in order to obtain any undue advantages or for other unlawful purposes, or 

		
	(ii)
	perform any actions qualified by anticorruption law as giving/receiving bribes, commercial bribery, and actions that violate the requirements of Applicable Law on counteracting the legalization (laundering) of proceeds from crime.

		
	(b)
	For the purposes of this Clause 5.9, “Counterparty” shall mean the Seller, on the one hand, or the Purchasers collectively, on the other hand, and the Purchasers collectively shall be represented by Purchaser 1. In the event that a Counterparty becomes suspicious that a violation of any provisions of this Clause has occurred or may occur, such Counterparty (the “Notifying Counterparty”) shall notify the other Counterparty (the “Responding Counterparty”) in writing. In the written notification, the Notifying Counterparty shall refer to the facts or provide materials that reliably confirm or give grounds for believing that a violation of any provisions of anticorruption legislation or Applicable Law on counteracting the legalization (laundering) of proceeds from crime was committed or may be committed by the Responding Counterparty, its affiliates, employees or agents.

		
	(c)
	After written notification, the Notifying Counterparty shall have the right to suspend performance of its obligations under this Agreement until it receives written confirmation from the Responding Counterparty that no violation has occurred or will occur.  

		
	(d)
	In the absence of such written confirmation from the Responding Counterparty within ten (10) Business Days of the receipt of the notice from the Notifying Counterparty, the Notifying Counterparty shall have the right to commence a dispute resolution proceeding pursuant to Clause 9.2 for the purpose of terminating this Agreement.

		
	(e)
	Each Counterparty agrees to provide documents and information reasonably requested by the other Counterparty for the purposes of such other Counterparty’s anticorruption compliance.

		
	6.
	EXPENSES

		
	(a)
	Unless otherwise provided for herein, each of the Parties will pay all its own costs, including legal, accounting and other fees, costs and expenses incurred by such Party (including any Taxes) in connection with its negotiation of, and performance under, this Agreement. 

		
	(b)
	Purchaser 1 shall pay the fees and expenses charged by the Russian notary public in connection with notarizing the Notarized SPA.

		
	7.
	NOTICES

Purchaser 1 shall act as agent for Purchaser 2 with respect to any notices to be given to or received by Purchaser 2 under this Agreement. Any notice and other communication given or made under or in connection with this Agreement will be in writing in the English language, and will be deemed to have been duly given or made on the date of delivery, only if delivered by hand, by fax or by courier, or made by electronic mail if its receipt is confirmed by the recipient, provided however that if such notice or other communication is sent on a day that is not a Business Day or after 4:00 p.m. at the time of the recipient on a Business day, it will instead be deemed to have been given or made on the next Business Day to the following addresses (or such other addresses as may be from time to time notified by the Parties pursuant to this Clause ‎7):
If to either or both of the Purchasers: 
Address:     office 708.1, 10A, Prospekt 60-letiya Oktyabrya
Moscow 117036, the Russian Federation
Attention:     Yuri Udaltsov, Dmitry Akhanov 
		
	Email:
	Dmitry.Akhanov@rusnano.com

 
Yurii.Udaltsov@rusnano.com
Facsimile No.:    +7 495 988 5399

If to the Seller:
Address:     2911 Zanker Road, San Jose, CA  95134, USA
Facsimile No.:    +1 (408) 321-5018
Attention:     General Counsel
Email:        Legal@neophotonics.com
		
	8.
	VALIDITY; TERMINATION

		
	8.1
	Effectiveness

This Agreement will enter into force on the date hereof and (other than obligations that have already been fully performed) will remain in full force and effect after Completion. 
		
	8.2
	Termination

This Agreement will terminate and the Transactions contemplated hereby will be abandoned at any time prior to Completion by mutual written agreement of the Parties or, after the Long-Stop Date, by written notice given to the other Parties by either the Seller or Purchaser 1.
		
	8.3
	Effect of Termination

If this Agreement is validly terminated pursuant to Clause 8.2, this Agreement will forthwith become null and void and there will be no liability or obligation on the part of the Seller or the Purchasers (or any of their respective officers, directors, employees, agents or other representatives or Affiliates), except that the Surviving Provisions will continue to apply following any such termination. 
		
	9.
	GOVERNING LAW AND JURISDICTION

		
	9.1
	Governing Law

This Agreement and any agreement or document entered into pursuant to this Agreement and any dispute or claim arising out of or in connection with any of them (including any contractual or non-contractual obligation, dispute, controversy or claim arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination on-contractual disputes or claims) and the relationship of the Parties shall be governed by and construed in accordance with the laws of the State of Delaware, United States of America, unless the relevant agreement or document expressly provides otherwise.
		
	9.2
	Arbitration 

		
	(a)
	This Agreement and any disputes or claims arising out of or in connection with its subject matter or formation (including any contractual or non-contractual obligation, dispute, controversy or claim arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination on-contractual disputes or claims), including any question regarding its existence, validity or termination will be referred to and finally resolved by Arbitration Institute of the Stockholm Chamber of Commerce under Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce (the "Rules").  The place of arbitration shall be Stockholm.  The arbitration shall be in English. There shall be 3 arbitrators appointed in accordance with the Rules, provided that Purchaser 1 shall be the Party responsible for the appointment of an arbitrator for both Purchasers.  

		
	(b)
	The Parties agree that they will not deprive any court or other Governmental Authority of their respective countries of the right to make injunctions or in enforcement of arbitral awards; however, the Parties agree that they may seek temporary court or administrative decisions or injunctions only if a request for arbitration shall have been made under the Rules and such injunctions are not in conflict with their arrangements regarding dispute resolution set out in this Clause ‎9.2. 

		
	10.
	CONFIDENTIALITY; ANNOUNCEMENTS

		
	10.1
	Confidentiality 

		
	(a)
	Each Party shall at all times:

		
	(i)
	use its reasonable endeavours to keep all data or information (whether technical, commercial or financial) acquired under or pursuant to this Agreement (including information relating to the other Party's products, operations, processes, plans or intention, product information, know-how, design rights, trade secrets, market opportunities and business affairs, as the case may be) strictly confidential and shall not disclose this to any other person; and

		
	(ii)
	not use any data or information referred to in paragraph (i) above for any purpose other than in relation to the proper performance of its obligations and exercise of its rights under this Agreement.

		
	(b)
	The provisions of this Clause shall not apply to:

		
	(i)
	any information in the public domain otherwise than by breach of this Agreement;

		
	(ii)
	information in the possession of a Party before that information was disclosed to it by or on behalf of the other Party and which was not obtained under any obligation of confidentiality; or

		
	(iii)
	information obtained from a Party who is free to disclose it, and which is not obtained under any obligation of confidentiality.

		
	(c)
	A Party shall be entitled to disclose any data or information referred to above without the prior written consent of the other Party if such disclosure is made in good faith:

		
	(i)
	to any Affiliate of such Party, having made it aware of the requirements of this Clause 10; 

		
	(ii)
	to any outside consultants or advisers engaged by or on behalf of such Party and acting in that capacity, having made them aware of the requirements of this Clause 10; 

		
	(iii)
	to the extent required by any Applicable Laws or pursuant to an order of any court of competent jurisdiction or in connection with a planned or current offering and/or listing of securities or derivative instruments of it or any of its Affiliate on any stock exchange (including foreign stock exchanges) or other securities trading venues in the securities market in accordance with the rules of such stock exchange or securities trading venue; 

		
	(iv)
	to any insurer under a policy of insurance; or

		
	(v)
	to directors, employees and officers of such Party having made them aware of the requirements of this Clause 10.

		
	(d)
	Any Party shall be entitled to disclose this Agreement to the Company.

		
	(e)
	Purchaser 1 shall be entitled to disclose this Agreement and any information pertaining to this Agreement (including schedules hereto and agreements concluded pursuant to this Agreement) to a prospective purchaser of a participatory interest in the capital of the Company or a prospective investor in the Company.

		
	10.2
	Announcements

No Party may make or send a public announcement, communication or circular concerning the transactions referred to in this Agreement or in relation to its provisions unless: 
		
	(a)
	it has first obtained the other Party's written consent (not to be unreasonably withheld, conditioned or delayed) as to its content and the manner and extent of its publication;

		
	(b)
	it is required to do so under Applicable Laws to the extent required by any Applicable Laws or pursuant to an order of any court of competent jurisdiction or in connection with a planned or current offering and/or listing of securities or derivative instruments of it or any of its Affiliate on any stock exchange (including foreign stock exchanges) or other securities trading venues in the securities market in accordance with the rules of such stock exchange or securities trading venue.

		
	11.
	GENERAL PROVISIONS

		
	11.1
	Further Assurances

Each of the Parties agrees to perform (or procure the performance of) all further acts and things and execute and deliver (or procure the execution and delivery of) such further documents, as may be required by Applicable Laws or as may be necessary or reasonably required by the other Party to implement and give effect to this Agreement and the transactions contemplated hereby for the purpose of vesting in and securing to such Party the full benefit of this Agreement (including the execution of all deeds and documents, procuring the convening of all meetings, the giving of all necessary waivers and consents and the passing of all resolutions and otherwise exercising all powers and rights available to it). 
		
	11.2
	Assignments

		
	(a)
	Each Party is entering into this Agreement for its benefit and not for the benefit of another person. 

		
	(b)
	Except as set out herein, no Party may, without the prior written consent of the other Parties, transfer or assign to any other person any of its rights and obligations hereunder, provided that each Purchaser may assign any of its rights under this Agreement to any member of such Purchaser's group from time to time or to the purchaser of the majority Participatory Interest in the Company provided such purchase occurs on or prior to 31 December 2019. 

		
	(c)
	A Party may not subcontract the performance of any of its obligations under this Agreement without having first obtained the other Party's written consent.

		
	(d)
	This Agreement shall be binding upon, and inure to the benefit of the Parties and their respective successors and their permitted assignees.  Subject to and upon any succession or assignment permitted by this Agreement, any successor or permitted assignee shall in its own right be able to enforce any term of this Agreement in accordance with its terms as if it were in all respects a party hereto.

		
	11.3
	Entire Agreement

The Parties agree that the Transaction Documents, together with any other documents executed in furtherance thereof, constitute, in the absence of fraud, the whole and only agreement between the Parties and supersede all previous agreements whether written or oral between all or any of the Parties in relation to the subject matter of the Transaction Documents.
		
	11.4
	Amendments

No variation of this Agreement will be valid unless it is in writing and signed by or on behalf of each of the Parties.
		
	11.5
	No Waiver

No waiver by a Party of any breach of a provision of this Agreement will be effective unless in writing duly executed by a duly authorised representative of the Party granting such waiver. Any such waiver will relate only to the breach to which it expressly relates and will not apply to any subsequent or other breach, and the giving of any time or indulgence will not constitute a waiver.
		
	11.6
	Liabilities, Rights and Remedies

		
	(a)
	Except where this Agreement expressly provides to the contrary, the rights and remedies contained in this Agreement are cumulative and not exclusive of rights and remedies provided by law. 

		
	(b)
	The failure to exercise or delay in exercising a right or remedy under this Agreement will not constitute a waiver of the right or remedy or a waiver of any other rights or remedies and no single or partial exercise of any right or remedy under this Agreement will prevent any further exercise of the right or remedy or the exercise of any other right or remedy.

		
	(c)
	Without prejudice to any other rights or remedies that a Party may have against any other Party, each Party acknowledges and agrees that damages alone would not be an adequate remedy for any breach by it of the provisions of this Agreement and that accordingly the other Parties shall be entitled, without proof of special damages, to the remedies of injunction, specific performance or other equitable relief for any threatened or actual breach of the provisions of this Agreement. 

		
	11.7
	Relationship of the Parties

This Agreement shall not be construed to create a partnership between the Parties or to impose any partnership obligation or liability upon any of the Parties and none of the Parties shall have any right, power or authority to enter into any agreement or undertaking for, or act on behalf of, or to act as or be an agent or representative of, or to otherwise bind, the other Party.
		
	11.8
	Severance

The invalidity, illegality or unenforceability of any provision (or part of a provision) of this Agreement will not affect or impair the enforceability of the remainder of this Agreement. If any invalid, illegal or unenforceable provision would be valid, enforceable or legal if some part of it were deleted, the provision shall apply with whatever modification is necessary to give effect to the commercial intention of the Parties.
		
	11.9
	Language

The language of this Agreement is English and, unless otherwise indicated herein, all documents, waivers and all other written communication or otherwise between the Parties in connection with this Agreement shall be in English.
		
	11.10
	Agreement Survives Completion 

Except to the extent that they have been performed and except where this Agreement provides otherwise, the obligations contained in this Agreement remain in force after Completion.
		
	11.11
	Payments

		
	(a)
	Save as otherwise provided herein, any payment to be made by any Party under this Agreement shall be made in full without any set off, restriction, condition or deduction for or on account of any counterclaim including without limitation any withholding or deduction for the account of any Tax save where such withholding is required by Applicable Law. 

		
	(b)
	If any Party is required by law to withhold or make a deduction in respect of Tax on any sum payable under this agreement, the Party shall, at the same time as the sum which is the subject of the deduction or withholding is payable, make a payment to the other party of such additional amount as shall be required to ensure that the net amount received by the other Party will equal the full amount which would have been received by it had no such deduction or withholding been required to be made.

		
	(c)
	Where under the terms of this Agreement one Party is liable to reimburse another Party in respect of any costs, charges or expenses, the payment shall include an amount equal to any VAT thereon not otherwise recoverable by the other Party, subject to that Party using all reasonable endeavours to recover such amount of VAT as may be practicable.

		
	(d)
	If any payment under this Agreement constitutes the consideration for a taxable supply for VAT purposes, then in addition to that payment the payer shall pay any VAT due.

		
	11.12
	Counterparts

This Agreement may be executed in one or more counterparts, each of which when executed and delivered will be deemed to be an original and all of which together will constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered as a deed on the date first above written.
(Signatures on the last page)

Draft 14 December 2018

SCHEDULE 1 
 
AGREEMENT AND ACKNOLEDGEMENT REGARDING PENALTY PAYMENT
This Agreement and Acknowledgement Regarding Penalty Payment (this “Agreement”), is entered into on the date last signed below by and between NeoPhotonics Corporation, having a principal place of business at 2911 Zanker Road, San Jose, CA  95134 USA (“Company”) and Joint Stock Company “RUSNANO” (Principal State Registration Number 1117799004333, with registered office at Prospect 60-letiya Oktabrya 10a, 117036 Moscow, Russian Federation) (“Rusnano”), (each a “Party” and collectively the “Parties”).
Recitals
Whereas, the Parties hereto have previously executed that certain Rights Agreement, dated and effective as of April 27, 2012, the Extension to Milestone Date, dated and effective February 26, 2015, the Amendment to Rights Agreement, dated and effective as of June 30, 2015, and Amendment Two to Rights Agreement, dated and effective as of August 2, 2016, (collectively as amended, the “Rights Agreement”); 
Whereas, Rusnano and its affiliate are acquiring NeoRussia (as defined below) pursuant to that certain Framework Purchase Agreement dated [•] (the “Acquisition Agreement”); 
Whereas, after completion of the Acquisition Transaction (as defined below) the Company will not invest any further funds for the development of NeoRussia initially envisaged by the Rights Agreement and thus will not fulfill its obligation to invest in the Company an amount not less than USD 30,000,000 by the end of 2019, accordingly triggering the penalty obligation set forth in Section 6(e)(iii) (D)(h) of the Rights Agreement in the amount of USD 2,000,000 (the "Penalty Payment");
Whereas, in connection with the sale transaction contemplated by the Acquisition Agreement, the Parties have mutually agreed to enter into this Agreement to confirm their mutual agreement regarding the treatment and full satisfaction of the Penalty Payment;
All capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Rights Agreement.
Agreement
Definitions:
“Acquisition Transaction” shall mean the acquisition of NeoRussia by Rusnano and its affiliate pursuant to the Acquisition Agreement.
"Completion" shall mean completion of the transfer of ownership of the entire participatory interest in charter capital of NeoRussia to Rusnano and its affiliate (meaning registration of the relevant transfer of ownership in the Russian unified state register of legal entities) pursuant to the Acquisition Agreement.
“NeoRussia” shall mean NeoPhotonics Corporation Limited Liability Company, Principal State Registration Number 1127746681710, with registered offices at Volgogradsky Prospekt 42, building 5, Moscow 109548, Russia.

3

Draft 14 December 2018

TREATMENT OF THE PENALTY PAYMENT
a.Immediately upon Completion, the Company shall be obligated to pay Rusnano USD 1,000,000 in partial settlement of the Penalty Payment. Payment of this amount shall be made by offsetting the Purchase Price – Penalty Offset Portion (as defined in the Acquisition Agreement) from the transaction consideration payable by Rusnano to the Company under the Acquisition Agreement (the “Offset”).
b.The remainder of the Penalty Payment in the amount of USD 1,000,000 is hereby waived and released by Rusnano effective as of the date of Completion as consideration for the Company’s obligations to provide manufacturing process transition to NeoRussia pursuant to the Acquisition Agreement and related agreements (the “Obligation Settlement”).
c.By virtue of the Offset and the Obligation Settlement: (1) no further penalty or other damages shall be payable by the Company under Section 6(e) of the Rights Agreement, and (2) the Company shall not have any further obligations to Rusnano pursuant to Section 6(e) of the Rights Agreement.
II.MISCELLANEOUS:
a.No Other Modifications.  Except as otherwise expressly set forth in this Agreement, the Rights Agreement shall remain in full force and effect without any modification thereto.
b.Entire Agreement.  This Agreement, the Rights Agreement and the Acquisition Agreement constitute the full and entire understanding and agreement between the Parties hereto pertaining to the subject hereof.
c.Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument.
d.Effectiveness.  This Agreement shall be effective as of the date of Completion. If the Completion does not occur for any reason, this Agreement shall have no legal effect and shall be null and void. For the avoidance of doubt, if the Completion does not occur, the obligations of the Company pursuant to the Rights Agreement (including the penalty payment obligations) shall be in full force an effect.
[Signature page follows]

In witness whereof, the parties hereto have each caused this Agreement and Acknowledgement Regarding Penalty Payment to be signed and delivered by its respective duly authorized officer, all as of the date last signed below.

4

Draft 14 December 2018

	
		
	NEOPHOTONICS CORPORATION

Signature:___________________________

Printed Name:______________________________

Date:________________________________

	JOINT STOCK COMPANY “RUSNANO”

Signature:____________________________

Printed Name:_________________________

Date:________________________________

 
SCHEDULE 2
BUDGET
Neo Russia Budget

 
SCHEDULE 3
COMPONENTS SUPPLY AGREEMENT

5

Draft 14 December 2018

COMPONENTS SUPPLY AGREEMENT

BETWEEN 

[NEO CHINA]

6

Draft 14 December 2018

and  

NEOPHOTONICS CORPORATION, LLC

 
Effective Date:                                 
 
 

7

Draft 14 December 2018

This Components Supply Agreement (this “Agreement”), effective as of the Effective Date set forth on the cover page, is entered into by and between 
NEOPHOTONICS CORPORATION, LLC, a company registered in the Russian Federation, main state registration number 1127746681710, located at Volgogradsky Prospekt 42, building 5, Moscow 109548, Russia (hereinafter – the “Buyer”);
[NEO CHINA], a company incorporated under the laws of [•], registration number [•], located at [•] (hereinafter – “NeoPhotonics”). 
Recitals
Whereas, Buyer seeks to purchase  products pursuant to one or more purchase orders; and
Whereas, NeoPhotonics wishes to cooperate with Buyer in order to fulfill Buyer’s requirements to purchase NeoPhotonics’ products. 
Agreement
Now, therefore, subject to the terms and conditions of this Agreement, in consideration of the foregoing premises and the covenants herein contained, the Parties hereby agree as follows:
1.Definitions.
The following terms are integral to this Agreement and shall have the following meaning: 
1.1.    "Affiliate" or "Affiliated" means in relation to a person (a) a person directly or indirectly Controlled by, or under common Control with that person; or (b) a person owning or controlling fifty (50) per cent or more of the issued voting securities or beneficial interests of the first person; or (c) a director, partner or member of the immediate family of a director or partner, of the first person and in the case of a trust, any trustee or beneficiary (actual or potential) of that trust.
1.2.    "Control" means, in relation to a company or other entity: (i) the legal power to secure directly or indirectly that the affairs of such entity are conducted in accordance with his or its wishes, including to direct or cause the direction of its general management and policies; (ii) the ability to appoint, directly or indirectly, the majority of its directors or executive officers; (iii) the ability to exercise, directly or indirectly, a majority of the votes exercisable at a general meeting; or (iv) the right to receive, directly or indirectly, a majority of the proceeds arising from: (a) any declaration of a dividend; or (b) a distribution arising in the course of winding up, whether solvent or insolvent, or any return of capital to shareholders or members; and the expressions Controlled and Controlling shall be construed accordingly.
1.3.    “Delivery Date” means the date of delivery for ordered Products as set forth in a Purchase Order or as otherwise agreed by the Parties in writing. 
1.4.    “Delivery Location” means the destination(s) set forth in a Purchase Order to which NeoPhotonics shall deliver the Products ordered therein or other location agreed by the Parties in writing.
1.5.    “Effective Date” means the date set forth on the cover page hereof.

8

Draft 14 December 2018

1.6.     “Party” shall mean any one of the signatories to this Agreement; “Parties” shall mean all of the signatories to this Agreement.
1.7.    “Product” or “Products” means the product or products specifically described by title and part number in Exhibit A and in their respective specifications in effect as of the Effective Date. 
1.8.    “Purchase Order” means any individual purchase order that has been issued pursuant to the terms of this Agreement. 
2.    Scope of Agreement.
2.1.    The terms and conditions of the Agreement apply to all quotations for Products issued by NeoPhotonics to Buyer.  
2.2.    Subject to Section 3.3 and provided that Buyer is not in breach of this Agreement, NeoPhotonics will provide Products under this Agreement under Purchase Orders submitted by Buyer.  Buyer shall be liable to NeoPhotonics for any obligation incurred under a Purchase Order or this Agreement by Buyer. 
3.    Prices and Purchase Orders.
3.1.    The price caps listed in Exhibit A shall be valid throughout the calendar years 2019 and 2020.  For any period beyond the end of the 2020 calendar year, the Buyer shall request product pricing caps from NeoPhotonics.
3.2.    All prices quoted shall be exclusive of transportation, insurance, federal, state, local, excise, value-added, use, sales, property (ad valorem) and similar taxes or duties now in force or hereafter enacted.  
3.3.    Buyer shall submit a Purchase Order to NeoPhotonics to order Products at the prices quoted.  Purchase Orders may be submitted by mail, facsimile, Electronic Mail (“e-mail”) or Electronic Data Interchange.  Each Purchase Order shall include the name and part number of the Product ordered, product description, he quantity of Products ordered, the Delivery Location(s) and the requested Delivery Date(s) for the Products.
3.4.    NeoPhotonics shall accept or reject a Purchase Order generally within three (3) business days of receipt. NeoPhotonics must act reasonably in rejecting any Purchaser Order from Buyer and must state its reasons for such rejection in writing, provided that for the avoidance of doubt, the Parties agree that NeoPhotonics shall be acting reasonably in rejecting a Purchase Order from the Buyer if at the time of such Purchase Order or delivery thereunder, the Buyer is owned or controlled, directly or indirectly, by a competitor of NeoPhotonics or any of its affiliates.  NeoPhotonics’ acceptance of a Purchase Order shall be evidenced by a written acknowledgement of the Purchase Order sent to Buyer.
3.5.    NeoPhotonics will generally invoice the Buyer for purchases of Products immediately upon shipment.  All invoices shall include the following information: invoice number, invoice/ship date, Purchase Order number, NeoPhotonics part number, number of units shipped, unit price, extended price, tax (if applicable) and invoice total. 
3.6.    Buyer shall pay all taxes, fees or charges of any nature whatsoever imposed by any governmental authority on, or measured by, the transaction between Buyer and NeoPhotonics, in addition to the prices quoted or invoiced.  In the event that NeoPhotonics is required to collect the foregoing, such amounts will appear as separate items on NeoPhotonics’ invoice and paid by Buyer unless Buyer provides NeoPhotonics with a valid 

9

Draft 14 December 2018

tax exemption certificate authorized by the appropriate taxing authority.  Buyer shall provide NeoPhotonics with a valid resale certificate for the Products purchased for resale.
4.    Payment Terms.
4.1.    Except as set out below, Buyer shall pay all invoices issued under this Agreement in U.S. Dollars within thirty (30) days from date of invoice.  In the event of a change of the Buyer such that Joint Stock Company “Rusnano” is no longer the direct or indirect owner of at least 50.1% of the equity in the Buyer, the Buyer will need to undergo an evaluation of its credit and ability to pay by NeoPhotonics. Such evaluation may result in the institution of a requirement for prepayment (but, for the avoidance of doubt, the purchase price for the relevant components set forth in the relevant price caps list for that year shall not be increased). Interest on late payments shall accrue at the rate of one and one half percent (1.5%) per month or the highest legal rate, whichever is lower.  Buyer shall pay all of NeoPhotonics’ costs and expenses (including reasonable attorneys’ fees) to enforce and preserve NeoPhotonics’ rights under this Subsection 4.1.  Payment terms herein are subject to annual review of the current credit worthiness of Buyer as judged by NeoPhotonics as well as to review in the event that any payment is not received by NeoPhotonics when due.
4.2.    Until the purchase price and all other charges payable to NeoPhotonics hereunder have been received in full, NeoPhotonics hereby retains and Buyer hereby grants to NeoPhotonics a security interest on the products delivered to Buyer and any proceeds therefrom.  Buyer agrees to promptly execute all documents reasonably requested by NeoPhotonics to perfect and protect such security interest.  In the event Buyer fails promptly to execute such documents, Buyer hereby appoints NeoPhotonics attorney-in-fact for the sole purpose of executing such documents, which appointment shall be a power coupled with an interest and shall be irrevocable.
4.3.    Should Buyer become delinquent in the payment of any sum due hereunder, NeoPhotonics shall not be obligated to continue performance hereunder, including without limitation shipment of any previously accepted Purchase Orders.
4.4.    Buyer warrants to NeoPhotonics that Buyer is financially solvent on the date on which it places an order and expects such entity to be solvent on the date of receipt of shipment.  NeoPhotonics reserves the right to change the credit terms provided herein, when in NeoPhotonics’ opinion the financial condition or previous payment record of Buyer so warrants.
5.    Delivery Dates.
5.1.    NeoPhotonics will use commercially reasonable efforts to meet any delivery date(s) requested in a Purchase Order; provided however, that NeoPhotonics will not be liable under any circumstances for its failure to meet such delivery date(s).  Any delivery dates provided by NeoPhotonics to Buyer are best estimates only.
5.2.    NeoPhotonics shall have the right to make partial shipments and payment therefore shall be made in the manner described in Section 4.1 above.
5.3.    NeoPhotonics shall have the right to make shipments five (5) calendar days before or after the requested delivery date and payment therefore shall be made in the manner described in Section 4.1 above.
6.    Packing.

10

Draft 14 December 2018

All Products shall be suitably packed, if appropriate, for air freight shipment in NeoPhotonics’ standard shipping cartons.  All packing will conform to requirements of carrier’s tariffs.  When special or export packaging is requested or, in the opinion of NeoPhotonics, required under the circumstances, the cost of such special import packaging, if not set forth on the invoice, will be separately invoiced and paid by Buyer.
7.    Shipment & Acceptance.
7.1.    All Products delivered pursuant to the terms of this Agreement shall be marked for shipment to the location of the Buyer, and delivered to Buyer or its carrier agent [F.O.B. origin] unless otherwise agreed.
7.2.    Method of Shipment.  Unless otherwise instructed in the Purchase Order, NeoPhotonics shall select the carrier.
7.3.    Title and Risk of Loss.  At the time of delivery to the [F.O.B. point], (subject to Subsection 4.2) title to such Products and risk of loss shall pass to Buyer. All freight, insurance, and other shipping expenses, as well as any special packing expense, shall be paid by Buyer.  Buyer shall also bear all applicable taxes, duties, and similar charges that may be assessed against the Products.
8.    Changes and Cancellations.
Buyer may utilize written change orders or cancel Purchase Orders without penalty for Purchase Orders that have not yet been accepted by NeoPhotonics.  
9.    Term and Termination.
9.1.    Term.  This Agreement will govern in all Buyer’s purchases of the Products from NeoPhotonics for the period until 31 December 2020.  Any extension of this Agreement beyond this term shall require the affirmative consent of both Parties.
9.2.    Termination for Insolvency.  This Agreement shall terminate, without notice, upon:
9.2.1.    The institution by or against Buyer of insolvency, receivership or bankruptcy proceedings or any other proceedings for the settlement of Buyer's debts,
9.2.2.    Buyer’s making an assignment for the benefit of creditors, or
9.2.3.    Buyer’s written cancellation per 9.4
9.3.    Termination for Cause.  If Buyer defaults in the performance of any provision of this Agreement, then NeoPhotonics may give written notice to Buyer that if the default is not cured within thirty (30) days of receipt of such notice, this Agreement and/or applicable Purchase Order will be terminated.  If NeoPhotonics gives such notice and the default is not cured during the thirty-day period, then the Agreement and/or applicable Purchase Order shall automatically terminate at the end of that period.
9.4.    Termination for Convenience.  Prior to the termination of this Agreement pursuant to Clause 9.1, the Buyer may terminate this Agreement at any time for any or no reason upon ninety (90) days notice to NeoPhotonics, and NeoPhotonics may terminate this Agreement at any time upon ninety (90) days notice to Buyer if Buyer has not purchased any Products from NeoPhotonics in the preceding 12 calendar months.  The termination of this Agreement under this Section 9.4 shall not affect the obligations of either Party to the other 

11

Draft 14 December 2018

under an Purchase Order existing at the time of such termination, but such Purchase Order shall continue in effect and be subject to the terms and conditions of this Agreement as if this Agreement had not been terminated.  
10.    Limitation of Liability.
NEOPHOTONICS’ LIABILITY ARISING OUT OF THIS AGREEMENT AND/OR SALE OF THE PRODUCTS SHALL BE LIMITED TO THE AMOUNT PAID BY BUYER FOR THE PRODUCTS.  IN NO EVENT SHALL NEOPHOTONICS BE LIABLE FOR COSTS OF PROCUREMENT OF SUBSTITUTE GOODS BY ANYONE.  IN NO EVENT SHALL NEOPHOTONICS BE LIABLE TO BUYER, OR ANY OTHER ENTITY FOR ANY SPECIAL, CONDITIONAL, CONSEQUENTIAL, INCIDENTAL, OR INDIRECT DAMAGES (INCLUDING, WITHOUT LIMITATION, LOSS OF PROFITS), HOWEVER CAUSED, ON ANY THEORY OF LIABILITY (INCLUDING, WITHOUT LIMITATION, NEGLIGENCE, BREACH OF CONTRACT OR OTHERWISE) AND WHETHER OR NOT NEOPHOTONICS HAS BEEN NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGE).
11.    Import and Export Requirements.  
Buyer shall, at its own expense, pay all import and export licenses and permits, pay customs charges and duty fees, and take all other actions required to accomplish the export and import of the Products purchased by Buyer.  
12.    Miscellaneous.
12.1.    Any notice required to be given hereunder shall be given in writing at the address of each party set forth in an attached quotation or purchase order, or to such other address as either party may substitute by written notice to the other. 
12.2.    The Buyer may assign this Agreement to any third party upon consent of NeoPhotonics; such consent not to be unreasonably withheld or delayed. The Buyer may assign and/or transfer this Agreement and all rights and obligations of the Buyer hereunder without the consent of NeoPhotonics to (i) an Affiliate of the Buyer, or (ii) a person or entity acquiring all or substantial all of the assets of the Buyer, whether by sale, acquisition, merger, operation of law or otherwise, provided that in either case such person is not a competitor of NeoPhotonics or its Affiliates (it being understood and agreed that a "competitor" means an entity deemed by NeoPhotonics and its Affiliates to be a threat to its core business (principally outside of the Russian Federation) due to technology, products or related competitive actions or strategies). For the avoidance of doubt, consent of NeoPhotonics shall not be required for such assignment and/or transfer. 
12.3.    For the avoidance of doubt, change of Control over the Buyer shall not affect the rights and obligations of the Parties hereunder provided that the person acquiring Control over the Buyer is not a competitor of NeoPhotonics or its Affiliates.  
12.4.    NeoPhotonics’ failure to exercise any of its rights hereunder shall not constitute or be deemed a waiver or forfeiture of such rights.
12.5.    Governing law and dispute resolution.

12

Draft 14 December 2018

12.5.1.    This Agreement shall be governed by the law of the state of Delaware, USA. The application of the United Nations Convention on Contracts for the International Sale of Goods is expressly excluded.  
12.5.2.    This Agreement and any disputes or claims arising out of or in connection with its subject matter or formation (including any contractual or non-contractual obligation, dispute, controversy or claim arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination on-contractual disputes or claims), including any question regarding its existence, validity or termination will be referred to and finally resolved by Arbitration Institute of the Stockholm Chamber of Commerce under Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce (the "Rules").  The place of arbitration shall be Stockholm.  The arbitration shall be in English.  There shall be 3 arbitrators appointed in accordance with the Rules.
12.6.    Language.
12.6.1.    This Agreement shall be made in the English language, which language shall be controlling in all respects, and all versions hereof in any other language shall not be binding on the parties hereto.  All communications and notices to be made or given pursuant to this Agreement shall be in the English language.
12.6.2.    The parties hereto confirm that it is their wish that this Agreement, as well as other documents relating hereto, including notices, have been and shall be written in the English language only.
12.7.    The terms and conditions set forth herein represent the entire agreement between NeoPhotonics and Buyer with respect to the subject matter and Buyer agrees that all prior quotations, invoices, negotiations, understandings, representations and/or agreements of the parties relating to the subject matter hereof, whether oral or written, are merged herein and superseded in their entirety.  Buyer acknowledges that it has not entered into this Agreement in reliance on any warranty or representation by any person or entity except for the warranties and representations specifically set forth herein.  No change or modification of any of the terms or conditions herein shall be valid or binding on either Party unless in writing and signed by an authorized representative of each Party.
12.8.    Non-performance of either Party shall be excused to the extent that performance is rendered impossible by strike, fire, flood, governmental acts or orders or restrictions, failure of suppliers, acts of terrorism or war, or any other reason where failure to perform is beyond the reasonable control of and is not caused by the negligence of the non-performing Party. Such excuse shall be effective only for the period of existence of the relevant circumstance rendering performance of this Agreement impossible.

13

Draft 14 December 2018

In witness whereof, NeoPhotonics and Buyer have each caused this Agreement to be signed and delivered by its respective duly authorized officer, all as of the Effective Date.

	
		
	Buyer – NeoPhotonics Corporation, LLC
	Seller – [Neo China]

	

_____________________________
	

_____________________________

	Signature

_____________________________
	Signature

_____________________________

	Printed Name

_____________________________
	Printed Name

_____________________________

	Title
	Title

Exhibit A: Product Components Price Caps for 2019 and 2020

Products

		
	1.
	100G CFP2  Transceiver Components Price Caps for 2019 and 2020 (v1)

	
										
	CFP2 Component Item
	Component Item Description
	Unit Total Cost
	Usage
	Unit
	Total cost per module

	1000038861
	GREASE,THERMALLY CONDUCTIVE GREASE,GAP FILLER 3500LV,CFP DCO
	

	$0.50
	

	0.8
	ml
	

	$0.40
	

	1000039008
	SPRING, WIRE DIA 0.2MM ,CFP2 MODULE
	

	$0.01
	

	2
	EA
	

	$0.03
	

	1000027627
	PAD,THERMAL PAD,100G-M, 1.0MM THICKNESS
	

	$11.46
	

	0.067
	EA
	

	$0.77
	

	1000027777
	GASKET, EMI GASKET FOR LC RECEPTACLE
	

	$0.07
	

	2
	EA
	

	$0.14
	

	1000030380
	COVER, FRONT COVER, FOR 520115064
	

	$0.84
	

	1
	EA
	

	$0.84
	

	1000030386
	INSERT, MODULE SLIDER, FOR 520115064
	

	$0.40
	

	2
	EA
	

	$0.79
	

	1000030390
	LATCH, FOR 520115064
	

	$0.43
	

	1
	EA
	

	$0.43
	

	1000030391
	SHRAPNEL, LC RECEPTACLE SHRAPNEL, FOR 520115064
	

	$0.19
	

	2
	EA
	

	$0.37
	

	1000034469
	SCREW, SOCKET HEAD CAP SCREW HEX DRIVE M1.6 X 9MM STAINLESS STEEL
	

	$0.03
	

	4
	EA
	

	$0.12
	

	1000034471
	SCREW, SOCKET HEAD CAP SCREW HEX DRIVE M1.6 X 3MM STAINLESS STEEL
	

	$0.03
	

	3
	EA
	

	$0.08
	

	1000035064
	SPACER, ISOLATION SPACER FOR DIE CASTING OF 536155065
	

	$0.25
	

	1
	EA
	

	$0.25
	

	1000035452
	BASE, MODULE BASE FOR DIE CASTING OF 536155065
	

	$4.72
	

	1
	EA
	

	$4.72
	

	1000035453
	LID, MODULE LID FOR DIE CASTING OF 536155065
	

	$4.47
	

	1
	EA
	

	$4.47
	

	1000035459
	SCREW, SOCKET HEAD CAP SCREW HEX DRIVE M1.6 X 5MM STAINLESS STEEL FOR DIE CASTING
	

	$0.03
	

	2
	EA
	

	$0.06
	

	1000035460
	COVER, RF ABSORB COVER FOR 536155065
	

	$83.87
	

	0.029
	EA
	

	$2.43
	

	301-8704-201
	PLUG, 10G XFP-40KM(PT765F-81-2TD)RUBBER PLUG
	

	$0.06
	

	1
	EA
	

	$0.06
	

	1000027621
	LABEL, LATCH LABEL,LIGHT BLUE
	

	$0.01
	

	1
	EA
	

	$0.01
	

	502-0705-001
	SOLDER, M705 RMA98 SUPER P3 0.5MM
	

	$0.08
	

	0.05
	g
	

	$0.00
	

	1000025547
	LABEL, THE BLANK LABEL, WITH NEO LOGO, 38X15MM
	

	$0.03
	

	1
	EA
	

	$0.03
	

	1000001761
	LABEL, IMPLEMENTATION LABEL, ROLL
	

	$0.01
	

	0.03
	EA
	

	$0.00
	

	1000026612
	PACKAGING BOX, PLASTIC TRAY FOR CFP2_LID
	

	$0.21
	

	1
	EA
	

	$0.21
	

	1000026613
	PACKAGING BOX, PLASTIC TRAY FOR CFP2_BASE
	

	$0.21
	

	1
	EA
	

	$0.21
	

	1000026614
	PACKING FOAM, CFP2 PACKING FOAM
	

	$0.02
	

	2
	EA
	

	$0.04
	

	1000026615
	BOX, CFP2 PACKING BOX
	

	$0.22
	

	1
	EA
	

	$0.22
	

	350-0201-001
	LABEL, TUV AUTHENTICATE LABEL
	

	$0.01
	

	1
	EA
	

	$0.01
	

	1000037316
	LABEL, UL LABEL, 64.5X14.5, LN50
	

	$0.02
	

	1
	EA
	

	$0.02
	

	350-1210-001
	LABEL, ROHS6 LABEL
	

	$0.01
	

	1
	EA
	

	$0.01
	

	1000033093
	LABEL, LASER LABEL, ENGLISH, 60X40
	

	$0.03
	

	1
	EA
	

	$0.03
	

	1000003543
	LABEL,NEW ATTENTION LABEL
	

	$0.01
	

	0.03
	EA
	

	$0.00
	

	1000042371
	OL3183M, COMPONENTS, 100G Q-TOSA, 100G CFP4 LR4, TELECOM&DATACOM, Q-TOSA, PQT-C44C3ELCL-KD, NSZ STD
	

	$303.35
	

	1
	EA
	

	$303.35
	

	1000042372
	PQR-C44C7PLCL-KS,COMPONENT, Q-ROSA,100G CFP4 LR4,TELECOM&DATACOM,100G 25X4 ROSA,10KM,NSZ STD
	

	$152.20
	

	1
	EA
	

	$152.20
	

	1000042374
	SPECIALTY PRODUCTS, PCBA, CFP2-LR4 G2.PCBA+
With pre-installed firmware
	

	$174.50
	

	1
	EA
	

	$174.50
	

		
	2.
	100G CFP2  Transceiver Components Price Caps for 2019 and 2020 (v2)

	
														
	FP2 Component Item
	Component Item Description
	Unit Total Cost
	Usage
	Unit
	Total cost per module
	Qty for 70pcs CFP2
	PO amount for 70pcs CFP2

	1000038861
	GREASE,THERMALLY CONDUCTIVE GREASE,GAP FILLER 3500LV,CFP DCO
	

	$0.50
	

	0.8
	ml
	

	$0.40
	

	0
	

	$0.0
	

	1000039008
	SPRING, WIRE DIA 0.2MM ,CFP2 MODULE
	

	$0.01
	

	2
	EA
	

	$0.03
	

	200
	

	$2.5
	

	1000027627
	PAD,THERMAL PAD,100G-M, 1.0MM THICKNESS
	

	$11.46
	

	0.067
	EA
	

	$0.77
	

	10
	

	$114.6
	

	1000027777
	GASKET, EMI GASKET FOR LC RECEPTACLE
	

	$0.07
	

	2
	EA
	

	$0.14
	

	140
	

	$9.7
	

	1000030380
	COVER, FRONT COVER, FOR 520115064
	

	$0.84
	

	1
	EA
	

	$0.84
	

	70
	

	$59.1
	

	1000030386
	INSERT, MODULE SLIDER, FOR 520115064
	

	$0.40
	

	2
	EA
	

	$0.79
	

	140
	

	$55.6
	

	1000030390
	LATCH, FOR 520115064
	

	$0.43
	

	1
	EA
	

	$0.43
	

	70
	

	$30.4
	

	1000030391
	SHRAPNEL, LC RECEPTACLE SHRAPNEL, FOR 520115064
	

	$0.19
	

	2
	EA
	

	$0.37
	

	140
	

	$26.1
	

	1000034469
	SCREW, SOCKET HEAD CAP SCREW HEX DRIVE M1.6 X 9MM STAINLESS STEEL
	

	$0.03
	

	4
	EA
	

	$0.12
	

	1000
	

	$30.2
	

	1000034471
	SCREW, SOCKET HEAD CAP SCREW HEX DRIVE M1.6 X 3MM STAINLESS STEEL
	

	$0.03
	

	3
	EA
	

	$0.08
	

	1000
	

	$27.4
	

	1000035064
	SPACER, ISOLATION SPACER FOR DIE CASTING OF 536155065
	

	$0.25
	

	1
	EA
	

	$0.25
	

	70
	

	$17.4
	

	1000035452
	BASE, MODULE BASE FOR DIE CASTING OF 536155065
	

	$4.72
	

	1
	EA
	

	$4.72
	

	70
	

	$330.1
	

	1000035453
	LID, MODULE LID FOR DIE CASTING OF 536155065
	

	$4.47
	

	1
	EA
	

	$4.47
	

	70
	

	$312.7
	

	1000035459
	SCREW, SOCKET HEAD CAP SCREW HEX DRIVE M1.6 X 5MM STAINLESS STEEL FOR DIE CASTING
	

	$0.03
	

	2
	EA
	

	$0.06
	

	1000
	

	$28.0
	

	1000035460
	COVER, RF ABSORB COVER FOR 536155065
	

	$83.87
	

	0.029
	EA
	

	$2.43
	

	2
	

	$167.7
	

	301-8704-201
	PLUG, 10G XFP-40KM(PT765F-81-2TD)RUBBER PLUG
	

	$0.06
	

	1
	EA
	

	$0.06
	

	70
	

	$4.0
	

	1000027621
	LABEL, LATCH LABEL,LIGHT BLUE
	

	$0.01
	

	1
	EA
	

	$0.01
	

	80
	

	$0.4
	

	502-0705-001
	SOLDER, M705 RMA98 SUPER P3 0.5MM
	

	$0.08
	

	0.05
	g
	

	$0.00
	

	0
	

	$0.0
	

	1000025547
	LABEL, THE BLANK LABEL, WITH NEO LOGO, 38X15MM
	

	$0.03
	

	1
	EA
	

	$0.03
	

	200
	

	$5.8
	

	1000001761
	LABEL, IMPLEMENTATION LABEL, ROLL
	

	$0.01
	

	0.03
	EA
	

	$0.00
	

	1000
	

	$11.8
	

	1000026612
	PACKAGING BOX, PLASTIC TRAY FOR CFP2_LID
	

	$0.21
	

	1
	EA
	

	$0.21
	

	162
	

	$33.9
	

	1000026613
	PACKAGING BOX, PLASTIC TRAY FOR CFP2_BASE
	

	$0.21
	

	1
	EA
	

	$0.21
	

	162
	

	$33.9
	

	1000026614
	PACKING FOAM, CFP2 PACKING FOAM
	

	$0.02
	

	2
	EA
	

	$0.04
	

	600
	

	$11.7
	

	1000026615
	BOX, CFP2 PACKING BOX
	

	$0.22
	

	1
	EA
	

	$0.22
	

	100
	

	$21.9
	

	350-0201-001
	LABEL, TUV AUTHENTICATE LABEL
	

	$0.01
	

	1
	EA
	

	$0.01
	

	500
	

	$2.6
	

	1000037316
	LABEL, UL LABEL, 64.5X14.5, LN50
	

	$0.02
	

	1
	EA
	

	$0.02
	

	500
	

	$10.0
	

	350-1210-001
	LABEL, ROHS6 LABEL
	

	$0.01
	

	1
	EA
	

	$0.01
	

	500
	

	$6.2
	

	1000033093
	LABEL, LASER LABEL, ENGLISH, 60X40
	

	$0.03
	

	1
	EA
	

	$0.03
	

	1000
	

	$34.7
	

	1000003543
	LABEL,NEW ATTENTION LABEL
	

	$0.01
	

	0.03
	EA
	

	$0.00
	

	2000
	

	$20.2
	

	1000042371
	OL3183M, COMPONENTS, 100G Q-TOSA, 100G CFP4 LR4, TELECOM&DATACOM, Q-TOSA, PQT-C44C3ELCL-KD, NSZ STD
	

	$303.35
	

	1
	EA
	

	$303.35
	

	70
	

	$21,234.5
	

	1000042372
	PQR-C44C7PLCL-KS,COMPONENT, Q-ROSA,100G CFP4 LR4,TELECOM&DATACOM,100G 25X4 ROSA,10KM,NSZ STD
	

	$152.20
	

	1
	EA
	

	$152.20
	

	70
	

	$10,654.0
	

	1000042374
	SPECIALTY PRODUCTS, PCBA, CFP2-LR4 G2.PCBA+
With pre-installed firmware
	

	$174.50
	

	1
	EA
	

	$174.50
	

	70
	

	$12,215.0
	

	1000042365
	PT-C24C3LDCL, CFP2 TVR, 100G CFP2, TELECOM AND DATACOM, 10KM C-TEMP DUAL-RATE G2, RUSSIA
	

	$989.69
	

	1
	EA
	

	$989.69
	

	8
	

	$7,917.5
	

	1000042366
	PT-C24C3LECL, CFP2 TVR, 100G CFP2, TELECOM AND DATACOM, 10KM C-TEMP SINGLE-RATE G2, RUSSIA
	

	$989.57
	

	1
	EA
	

	$989.57
	

	9
	

	$8,906.1
	

	CFP2 Total
	 
	 
	 
	 
	 
	 
	

	$62,335.8
	

		
	3.
	 AAWG Components Price Caps for 2019 and 2020

	
									
	 
	

	 
	 
	 
	 
	 
	 
	 

 
SCHEDULE 4
MANUFACTURING LICENSE AGREEMENT

MANUFACTURING LICENSE AGREEMENT
ON
FIBER-OPTIC NETWORK COMPONENTS

This Agreement, including appended Exhibits, is made and entered into as of the latest date indicated on the signatures page (“Effective Date”), by and between:

NEOPHOTONICS CORPORATION (“NeoPhotonics” or “Licensor”), a corporation duly organized and existing under the laws of Delaware and having its registered office at 2911 Zanker Road, San Jose, California 95134, USA; and

NEOPHOTONICS CORPORATION, LLC (“NeoPhotonics, LLC” or “Licensee”), located at Kaleidoscope Business Center, 56 Shodnenskaya Ulitsa, Moscow, Russia 125363, 

each a “Party” and together the “Parties” to this Agreement.

WHEREAS, NeoPhotonics has hereinafter defined Intellectual Property supporting and enabling the manufacture of hereinafter defined Licensed Products; and
WHEREAS, NeoPhotonics has established a manufacturing facility at NeoPhotonics, LLC suitable for and capable of producing Licensed Products; and
WHEREAS, Licensee desires to receive Intellectual Property rights from NeoPhotonics to manufacture and sell Licensed Products for Licensee’s own business; 
NOW THEREFORE, in consideration of the mutual covenants and premises contained herein, the Parties hereto agree as follows:

ARTICLE 1.    DEFINITIONS

For the purpose of this Agreement, the following terms shall have the respective meanings as set forth below:

1.1“Affiliate” means any legal entity (such as a corporation, partnership, or limited liability company) that controls, is under common control with or is controlled by the party to which affiliation is claimed, for so long as such control exists.  For the purposes of this definition, the term “control” means (a) beneficial ownership of at least fifty percent (50%) of the voting securities of a corporation or other business organization with voting securities, (b) a fifty percent (50%) or greater interest in the net assets or profits of a partnership or other business organization without voting securities or (c) the ability to direct the general business activities of a corporation, partnership or other business organization
1.2“Categorical Licensed Patents” means all patents explicitly listed or described in Exhibit B of this Agreement.
1.3“Confidential Information” means all information, inventions, trade secrets, know-how, and data disclosed by one Party (“Disclosing Party”) to the other Party (“Receiving Party”) pursuant to this Agreement, including information relating to licensed patents, research and development plans, experiments, results, trade secrets and manufacturing, marketing, financial, regulatory, personnel and other business information and plans, whether in oral, written, graphic or electronic form and whether in existence as of the Effective Date or developed or acquired in the future.  Such information already provided to NeoPhotonics LLC by NeoPhotonics prior to the Effective Date should be treated by both Parties as Confidential Information of the other. Information of the following types shall not be considered Confidential Information: (a) is public knowledge at the time of disclosure by the Disclosing Party; (b) becomes public knowledge through no fault of the Receiving Party; (c) was in the possession of the Receiving Party at the time of disclosure by the Disclosing Party as evidenced by proper business records; (d) is disclosed to the Receiving Party by a Third Party as evidenced by proper business records, to the extent such Third Party’s disclosure was not in violation of any obligation of confidentiality; or (e) is independently developed by the Receiving Party without use of or reference to the Disclosing Party’s Confidential Information, as evidenced by contemporaneous written documentation.
1.4“Customer” means any Third Party, to the extent such Third Party is a purchaser or recipient of Licensed Products and/or Licensed Processes for such Third Party’s consumption and/or end use and/or resale and/or redistribution
1.5“Improvement” means any refinements or enhancements to the information of the licensed patents, Confidential Information, or the Technical Information, partially or fully developed or conceived by either Party prior to the termination of this Agreement
1.6“Intellectual Property” or “IP” means any intellectual property of the respective Party as indicated; including but not limited to national and regional patents, utility models designs, trade secrets, trademarks, trade names, works of authorship, copyrights, moral rights, and any derivatives thereof
1.7“Intellectual Property Rights” or “IPR” means the legal rights attendant to the Intellectual Property.
1.8“Licensable IPR” shall mean any and all Licensor’s national and regional patents, utility models, design patents and application thereof relating to the manufacture, use, and sale of a corresponding Licensed Product that are: (a) applications having a first filing or priority date in any country on or prior to the Effective Date, all patents claiming priority to such applications, or any patents which eventually issue from such patent applications; and (b) which are owned by Licensor or a Licensor Affiliate and that Licensor has the right to grant Licensee the licenses set forth herein without any royalty payments to any third party.
1.9“Licensed Product” means a product or product class mutually agreed to be covered by this license Agreement and duly described, including qualifying conditions and limitations and license-fee schedules, in Exhibit-A of this Agreement, or appended thereto by agreement approved and signed by both Parties.
1.10“Net Sales” means the gross amount billed by Licensee or its sales designees for sales of Licensed Product, less the following: (a) customary trade, quantity, allowances or cash discounts to the extent actually allowed and taken; (b) amounts repaid or credited by reason of rejection, return, or retroactive price reductions; (c) all taxes and other governmental charges, and e-commerce transactional charges, levied on the sale, transportation, delivery, or use of such Licensed Products and Licensed Processes which are actually paid by or on behalf of Licensee; (d) transportation and shipping costs and costs of insurance in transit; (e) reasonable commissions paid to individuals who are independent contractors; and (f) reasonable cost of collections. For certainty, sale or other transfer of Licensed Products to Licensor or a Licensor Affiliate is not subject to royalties and does not contribute to Net Sales.
1.11“Qualifying Licensee Transfer” means a transaction where the Licensee will acquire, be acquired by, or come under common control with a suitable commercial entity, including the entity FiberTrade Co. Ltd, occurring before December 31, 2019.
1.12“Rules” has the meaning provided in Article 10.12.
1.13“Subsidiary” means an Affiliate that is controlled by the respective Party to this Agreement and whose confidentiality obligations are at least of the same scope as provided in Article 5.
1.14“Technical Information” means any and all technical information which is furnished or made available to Licensee by NeoPhotonics under this Agreement or any concurrent technical-services agreement, training agreement, or technology-transfer agreement between the Parties.  Technical Information includes but is not limited to manufacturing technology documents, design technology documents, bills of materials, financial models, internal product specifications, process training, and other technology Confidential Information of NeoPhotonics.  

ARTICLE 2.    GRANT OF LICENSES

2.1For Licensed Products.  Subject to the terms and conditions as set forth in this Agreement, including all terms and conditions set forth for each corresponding Licensed Product, Licensor hereby grants to Licensee during the term of this Agreement a non-exclusive, perpetual, world-wide license, under the Technical Information and any relevant Licensable IPR, to develop, design, manufacture, use, sell, offer for sale, lease, export, and otherwise dispose of Licensed Products.  Said license of this Article 2.1 is furthermore (a) sublicenseable solely as expressly set forth subsequently in this Article 2, (b) transferable and royalty and/or fee bearing solely according to the provisions set forth in Article 3 of this Agreement, and (c) revocable solely according to the termination provisions set forth in Article 7 of this Agreement.  All the Licensed Products sold by Licensee under the license set forth above shall display such marks representing and denoting unambiguously that Licensee is the manufacturer of such Licensed Product.
2.2For Additional Purposes.  Subject to the terms and conditions as set forth in this Agreement, Licensor hereby grants to Licensee during the term of this Agreement a non-exclusive, perpetual, fully-paid-up and royalty-free, world-wide license under the Categorical Licensed Patents to develop, design, manufacture, use, sell, offer for sale, lease, export, and otherwise dispose of any products or services of the Licensee.  Said license of this Article 2.2 is furthermore (a) sublicenseable solely as set forth subsequently in this Article 2, (b) transferable solely according to the transfer provisions set forth in Article 3 of this Agreement, and (c) revocable solely according to the termination provisions set forth in Article 7 of this Agreement.
2.3Exceptions.  Isolated elements of Licensor’s IPR may be “essential claims” to the practice of a community-accepted product standard or multi-source agreement (“MSA”), wherein Licensor has an obligation to license the essential claims under (fair) reasonable and non-discriminatory (“(F)RAND”) terms to anyone desiring to practice, and willing to agree to the terms and conditions of, the standard or MSA.  In such cases, the licenses granted herein will not apply and Licensee may need to request a separate license from Licensor to practice that standard or MSA.  When so requested, Licensor agrees to provide Licensee with the appropriate (F)RAND license at least as favorable as the most favorable terms provided any third-party licensee of the same essential claims.
2.4Sublicense to Subsidiaries.  Notwithstanding the foregoing, the licenses granted herein shall include the right of Licensee to sublicense the rights granted under Article 2.1 or Article 2.2 to its Subsidiaries and disclose to any such sublicensed Subsidiary only that portion the Technical Information that is essential for the sublicensed activity.  Licensee shall be fully responsible to Licensor with respect to any act or omission or breach of the terms of this Agreement by such Subsidiaries.  Any sublicense granted to the Subsidiary shall terminate on the date such Subsidiary ceases to be a Subsidiary.  A sublicensed Subsidiary may not further sublicense its rights under this Agreement. 
2.5Continued use of Technical Information.  On or after the expiration of the term of this Agreement in accordance with Article 7.1, the licenses granted to Licensee by Licensor under Article 2.1 and 2.2 shall continue without any additional payment to Licensor, provided that Licensee shall maintain the Technical Information in confidence in accordance with Article 5.
2.6Trademarks and Tradenames.  Unless within the conditions of an approved waiver signed by NeoPhotonics, Licensee may not use any NeoPhotonics registered trademark, any NeoPhotonics common-use trademark in use prior to the Effective Date, or any NeoPhotonics common-use trademark with established use prior to any public use by Licensee.
2.7No implied licenses.  Nothing contained in this Agreement shall be construed as granting by implication, estoppel or otherwise, upon any party licensed hereunder, any license of other right under any patent, utility model, copyright, mask work right, trade secret or the like, except the licenses and rights expressly granted hereunder.

ARTICLE 3    LICENSE PROVISIONS

		
	3.1
	Transferable.  This Agreement will be transferable by Licensee to a third party as successor Licensee only with explicit written consent of Licensor.  Licensor shall not unreasonably withhold or delay such consent.    NeoPhotonics commits that for one (but not more than one) Qualifying Licensee Transfer, it shall  approve the assignment of rights under this Agreement to  that first successor Licensee without material changes.  It should be anticipated that subsequent transfer requests with NeoPhotonics as Licensor and a NeoPhotonics competitor as new Licensee would be denied or be granted with significant conditions and/or modifications.

		
	3.2
	Fees and Royalties.  There are no fees or royalties for the rights granted to the Categorical Licensed Patents.  As of the Effective Date, for the license rights granted for Licensed Products, the license fee is zero US Dollars ($0) and the royalty rate is zero per-cent (0%).  The fee and royalty rate cannot be changed except by mutual written agreement of the Parties.  Future transfers of this Agreement to a new Licensee, beyond the first expected transfer, may require agreeing to a greater fee and/or royalty rate for Licensed Products.  Regardless of whether there are fees or royalties due, reporting sales of Licensed Products is required per Article 3.3 .

		
	3.3
	Reporting.  Within 45 days after each end of Licensee’s fiscal quarter, Licensee shall provide Licensor with a confidential detailed reporting for sales of Licensed Product during that quarter, and for any other significant commercial activities having benefit of the licenses herein.  Such reports should include at least for each Licensed Product: a list of customers; number of units sold to each customer; and the average selling price during the quarter. 

ARTICLE 4.    PROPRIETARY RIGHTS

This Agreement does not provide or specify any change in the ownership of any Intellectual Property or Technical Information.  All ownership of, and title to NeoPhotonics Intellectual Property and Technical Information shall remain with NeoPhotonics and NeoPhotonics shall retain the rights for itself and its Affiliates to utilize or furnish to others the Technical Information in any way whatsoever and in any countries of the world.
ARTICLE 5.    CONFIDENTIAL TREATMENT

Treatment of Confidential Information is primarily governed by the confidentiality agreement between the Parties having an effective date of 30-SEP-2018, and by any subsequently valid confidentiality agreement between the Parties.  If any valid confidentiality agreements between the Parties expire prior to the termination of this Agreement, Parties will continue during the Term of this Agreement to protect the Confidential Information relevant to the purposes of this Agreement with at least the same degree of care specified in the most-recently valid confidentiality agreement.  Furthermore, Confidential Information provided for the purposes of this Agreement shall be additionally subject to the following terms:

5.1Licensee agrees not to disclose the Confidential Information to any third party whether an individual, corporation, or other entity without the prior written consent of NeoPhotonics and will limit its disclosure to its employees having a need to know such Confidential Information for the purpose herein. Licensee shall not use the Confidential Information for any purpose other than those contemplated by this Agreement. Licensee shall use the same degree of care as it uses to protect its own confidential information, but no less than reasonable care, to prevent the unauthorized use, dissemination or publication of the Confidential Information.
5.2The obligation herein shall not apply to any information which: (a) was generally available to the public before disclosure to Receiving Party; (b) becomes generally available to the public other than by a breach of this Agreement by Receiving Party; (c) is rightfully received by Receiving Party from a third party without confidential limitations; (d) is independently developed by or for Receiving Party by individuals who have not received directly or indirectly the Confidential Information disclosed under this Agreement; (e) was known to Receiving Party prior to the receipt of same from Disclosing Party; or (f) is hereafter publically disclosed by Disclosing Party. The obligations contained in this Article 5 shall survive any termination of this Agreement or any rights granted hereunder.
5.3Notwithstanding the foregoing, Licensee may disclose the Technical Information to its Subsidiaries to whom Licensor granted sublicense rights pursuant to Article 2.4 for the purpose and to the extent provided for in Article 2.4; provided that Licensee shall ensure that such Technical Information is used for the sole purpose expressly provided in Article 2, and that it is not used for any other purposes. Furthermore, Licensee shall be fully responsible for the compliance by such Subsidiaries with the terms and conditions of this Agreement, including, but not limited to the confidentiality obligations contained in this Article 5.

ARTICLE 6.    REPRESENTATIONS, COVENANTS AND DISCLAIMERS

6.1Each Party represents that it is (a) a corporation duly organized, validly existing, and in good standing under the laws of the state or territory in which it is incorporated, (b) has full corporate power and authority and the legal right to own and operate its property and assets and to carry on business as it is now being conducted and as contemplated in this Agreement, and (c) has the full corporate power and authority and the legal right to enter into this Agreement and perform its obligations hereunder.
6.2NeoPhotonics represents that it or its Affiliate is the owner and/or assignee of all rights, title, and interest to and in the Technical Information and the NeoPhotonics Intellectual Property Rights therein and that it has the right to grant Licensee the rights and licenses granted in this Agreement
6.3If NeoPhotonics transfers its interest in any of the Technical Information or Intellectual Property Rights to a third party, NeoPhotonics shall ensure that the rights granted to Licensee in this Agreement shall remain effectively whole.
6.4NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, THE FOREGOING IS IN LIEU OF ALL WARRANTIES, EXPRESS OR IMPLIED, WHETHER ARISING BY LAW, CUSTOM, OR CONDUCT.  NeoPhotonics has no responsibility of any kind for the correctness of any Technical Information (other than reasonable care in its preparation and furnishing) or the ability of Licensee to utilize the Technical Information for any products made by Licensee to meet any functional specifications or any particular purpose of merchantability.  NeoPhotonics makes no representation or warrants that any products, including but not limited to the Licensed Products, manufactured utilizing the NeoPhotonics Technical Information or the NeoPhotonics Intellectual Property Rights therein licensed under this Agreement, will not infringe any patents or utility models or other IPR of any third parties.  NeoPhotonics shall in no event be liable for any claim or demand against Licensee or any related party by any other party arising out of or resulting from the Technical Information provided or made available to Licensee pursuant to this Agreement and/or NeoPhotonics Intellectual Property Rights therein licensed, including, but not limited to any claims or actions based on any actual or alleged infringement of any patents, trademarks, utility models, design patents, copyrights, mask works, trade secrets, or other intellectual property rights owned or controlled by any third party.  LICENSEE ASSUMES SOLE AND COMPLETE RESPONSIBILITY FOR ANY AND ALL USE OF THE TECHNICAL INFORMATION FURNISHED OR MADE AVAILABLE TO LICENSEE BY NEOPHOTONICS HEREUNDER AND THE RESULTS THEREOF, AND ANY AND ALL THE LICENSED PRODUCTS MANUFACTURED AND/OR SOLD BY OR FOR LICENSEE.
6.5TO THE MAXIMUM EXTENT PERMITTED BY LAW, IN NO EVENT SHALL NEOPHOTONICS BE LIABLE TO LICENSEE OR ANY THIRD PARTY FOR ANY INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES, OR ANY OTHER DAMAGES WHATSOEVER (INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOSS OF BUSINESS PROFITS, BUSINESS INTERRUPTION, LOSS OF BUSINESS INFORMATION, OR OTHER PECUNIARY LOSS) ARISING OUT OF THE USE OR INABILITY TO USE THE TECHNICAL INFORMATION, WHETHER OR NOT THE POSSIBILITY OR CAUSE OF SUCH DAMAGES WAS KNOWN TO NEOPHOTONICS.

ARTICLE 7.    TERM AND TERMINATION

7.1This Agreement shall commence on the Effective Date. Unless otherwise terminated for cause or mutual agreement according to subsequent paragraphs of this Article 7, this Agreement shall continue in full force so long as there are unexpired patents in either the Licensable IPR or the Categorical Licensed Patents.  The license grants of this Agreement shall survive ordinary termination under this Article 7.1 according to Article 2.5.
7.2If either Party shall fail, refuse or neglect to fully and faithfully keep, observe or perform any covenant contained in this Agreement to be kept, observed or performed by such Party, then the other Party may give notice to the breaching Party in writing of such breach, stating in such notice the covenant or covenants of this Agreement which the breaching Party shall have failed, refused or neglected to keep, observe, or perform, and if the breaching Party shall, for a period of sixty (60) days after such notice is given, continue to fail, refuse or neglect to keep, observe or perform any such covenants, then the other Party may terminate this Agreement, by serving upon the other Party notice of termination; but such act shall not prejudice the right of the terminating Party to recover any sum due or owing at the time of termination or any damages or costs incurred due to the non-compliance or non-performance by the other Party.
7.3Licensor may terminate this Agreement or require the renegotiation of this Agreement under threat of termination if Licensee acquires a direct competitor of NeoPhotonics that has manufacturing facilities outside the Russian Federation.
7.4Either Party may terminate this Agreement immediately upon giving notice in the event of one or more of the following; (a) appointment of a trustee or receiver for all or any part of the assets of the other Party; (b) insolvency or bankruptcy of the other Party; (c) attachment of all or a substantial part of the assets of the other Party; (d) expropriation of the business assets of the other Party; (e) nationalization of the other Party; or (f) dissolution or liquidation of the other Party.  If either Party becomes involved in any of events enumerated in (a) through (f), such Party shall give the other prompt notice.
7.5In the event of termination of this Agreement by Licensor pursuant to Articles 7.2 through 7.4:
		
	(I).
	Licensee shall, at its own expense, return all Technical Information documents received under this Agreement and all copies thereof, and all materials embodying or derived from the Technical Information;

		
	(II).
	Licensee shall promptly discontinue the manufacture of the Licensed Product and shall discontinue the sale thereof, except that after termination of this Agreement by Licensor pursuant to Article 7.4 Licensee may (a) sell, lease or dispose of Licensed Products that were in inventory or are manufactured from work in process that existed at the time of termination, (b) perform after termination contractual obligations that existed at the time of termination and (c) repair, replace and otherwise support Licensed Products in the ordinary course of business after termination;

		
	(III).
	Licensee shall make payment of all due license fees and royalties that have not been paid at the time of termination; and

		
	(IV).
	Licensor shall, in no event, be required to refund any license fees or royalties already paid by Licensee at the time of termination.

7.6Termination for convenience.  Parties may terminate this agreement at any time by written mutual agreement, and according to any terms, conditions, or activities specified in such agreement.  Each Party shall give reasonable and fair consideration to a mutual-termination request presented by the other Party.
7.7Survival: Notwithstanding any contrary provisions herein, the provisions of all of Article 1, Articles 2.3, 2.5, 2.6, and 2.7, and all of Articles 4, 5, 6, 9, and 10 shall survive termination of this Agreement for any reason.  In addition, the “perpetual” qualifier of the licenses granted in Articles 2.1 and 2.2 ensures that articles made, acquired, and/or sold under valid license, and services provided under valid license, shall remain licensed after termination of this Agreement.  All other license rights granted in Articles 2.1 and 2.2 shall be revoked upon termination.

ARTICLE 8.    PAYMENTS

8.1All payments due Licensor pursuant to this Agreement shall be made to the following bank account via wire transfer without deductions or charges of any kind:
[No royalty or fee payments are expected to be due hereunder as of the Effective Date.]
8.2Licensee shall pay Licensor interest on any and all amounts overdue at a rate and schedule to be determined in accord with any mutual agreement to a non-zero royalty and/or fee structure.  Licensee will be additionally liable to Licensor for all costs of collecting past due amounts, including reasonable attorney’s fees and costs.

ARTICLE 9.    SUPPLY OF PARTS AND/OR COMPONENTS

Licensee may purchase NeoPhotonics-proprietary parts and/or components for the Licensed Products, excluding required NeoPhotonics content of the Licensed Product, from NeoPhotonics suppliers.  NeoPhotonics will not prohibit nor hamper Licensee’s procurement of said parts and/or components from the suppliers so far as such parts and/or components are utilized for Licensed Products.  Notwithstanding the foregoing, NeoPhotonics shall in no event be liable to Licensee or any other party for supply of such parts and/or components by such suppliers for any reason.

ARTICLE 10.    MISCELLANEOUS PROVISIONS

10.1Exhibits: All exhibits and schedules annexed hereto are expressly made part of this Agreement as though fully set forth herein, including:
(I).Exhibit A, and any mutually-approved supplements thereto, shall describe all Licensed Products or Licensed Product categories.
(II).Exhibit B shall list the Categorical Licensed Patents
10.2Assignment: Neither Party will assign or transfer this Agreement, or any rights or obligations under this Agreement, without the prior written consent of the other Party (which consent shall not be unreasonably conditioned, delayed or withheld), except that Licensor may, with prior notice to the Licensee but without Licensee’s consent, assign or transfer this Agreement with all its rights and obligations hereunder to a successor of all or substantially all Licensor’s assets, stock or business to which this Agreement relates, whether by sale, acquisition, merger, operation of law or otherwise.  For certainty of intent, Licensee may not assign this Agreement to a successor without explicit written consent, whether conditional or unconditional, from Licensor.
10.3Independent Contractors:  The Parties are independent contractors. This Agreement does not create and shall not be considered to create the relationship of principal-and-agent or master-and-servant or a partnership between the Parties.  Neither Party shall be liable in any way to any third party for any engagement, obligation, contract, representation, or transaction or for any negligent act or omission to act on the part of the other Party.
10.4Severability:  If any provision of this Agreement is held by a court of law to be illegal, invalid or unenforceable, (a) that provision shall be deemed amended, if possible, to achieve as nearly as possible the same economic effect as the original provision consistent with the Parties’ intent when entering into this Agreement, and (b) the legality, validity and enforceability of the remaining provisions of this Agreement shall not be affected or impaired thereby.
10.5Confidential Agreement:  Each Party shall keep the terms of this Agreement confidential and shall not now or hereafter divulge the terms of this Agreement or any part thereof to any third party except according to any of: (a) with prior written consent of the other Party; (b) to any governmental body having jurisdiction to call therefor; (c) as otherwise may be required by law; or (d) to legal counsel and auditors representing either Party.
10.6Modification and Amendment:  This Agreement and its provisions may be modified, amended, or waived only by additional written mutual agreement specifying such modifications, amendments, or waivers executed by both parties
10.7No Waiver:  Any failure of either Party to enforce, at any time and for any period of time, any of the provisions of this Agreement shall not be construed as a waiver of such provisions or of the right of the Party thereafter to enforce each and every such provision.
10.8Export:  The obligations of NeoPhotonics to export the Technical Information and rights granted therein shall at all times be subject to such restrictions and limitations as may be imposed upon NeoPhotonics by the laws, regulations, and other administrative acts, now or hereafter in effect, of the US Government and any departments and agencies thereof.  Licensee shall not export, directly or indirectly the Licensed Products or the Technical Information to any country or person for which the receipt of such products or information requires an export license or other government approval, without first obtaining such license or approval.
10.9Notice and Communication:  Any notice required or permitted to be given under this Agreement shall be in written English and shall be delivered by hand or mailed by registered mail, or sent by facsimile or e-mail with a confirmation copy sent within three (3) days thereafter by another method of notification specified herein, to the corresponding address  set forth below:
To NeoPhotonics:
NeoPhotonics Corporation
2911 Zanker Road
San Jose, California, 95134 USA

To Licensee:
                    
                    
                    
                    

10.10Force Majeure:  Neither Party will be responsible for delays resulting from causes beyond the reasonable control of such Party, including fire, explosion, flood, war, strike, or riot, provided that the nonperforming Party uses commercially reasonable efforts to avoid or remove such causes of nonperformance and continues performance under this Agreement with reasonable dispatch whenever such causes are removed.
10.11Construction:  As used in this Agreement, (a) neutral pronouns and any derivations thereof shall be deemed to include the feminine and masculine and all terms used in the singular shall be deemed to include the plural and vice versa, as the context may require; (b) the words “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole, including all exhibits and schedules as the same may be from time to time amended or supplemented and not to any subdivision of this Agreement; (c) the word “including” is not intended to be exclusive and means “including without limitation”; and (d) descriptive headings are inserted for convenience of reference only and do not constitute a part of and shall not be utilized in interpreting this Agreement.  This Agreement shall be fairly interpreted in accordance with its terms and without any strict construction in favor of or against either party.
10.12Governing Law and Jurisdiction:  This Agreement shall be governed by and construed in accordance with the laws of Delaware, USA without regards to its principles of conflicts of law.  The United Nations Convention on Contracts for the International Sale of Goods is specifically disclaimed.  This Agreement and any disputes or claims arising out of or in connection with its subject matter or formation (including any contractual or non-contractual obligation, dispute, controversy or claim arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination on-contractual disputes or claims), including any question regarding its existence, validity or termination will be referred to and finally resolved by Arbitration Institute of the Stockholm Chamber of Commerce under Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce (the "Rules").  The place of arbitration shall be Stockholm.  The arbitration shall be in English.  There shall be 3 arbitrators appointed in accordance with the Rules.  
10.13Entirety:  This Agreement, including annexed exhibits and schedules, sets forth the entire agreement and understanding between the parties as to the subject matter hereof, and supersedes all prior or contemporaneous agreements, proposals and negotiations, whether oral, written and concerning such subject matter.  This Agreement imposes no obligation on, and constitutes no offer by, either Party to purchase, sell, license or transfer or otherwise dispose of any technology, intellectual property, services, or products, or to enter into any business relationship other than that set expressly forth in writing in this Agreement
10.14Compliance:  In performance of this Agreement, both Parties agree to comply with all applicable laws and governmental rules and regulations.  Both Parties hereby acknowledge that they are not expected or authorized to take any action in the name of or on behalf of the other which would violate any such laws, rules, or regulations.

The Parties have executed this Agreement as of the latest date set forth below:

NEOPHOTONICS CORPORATION

By: _________________________________

Name:     
(print)

Title:     

Address:

Date:     

 
LICENSEE

By:     

Name:     
(print)

Title:     

Address:

Date:     

EXHIBIT A
LICENSED PRODUCTS

Licensed Product #1
CFP2-LR4

Description: CFP2 100G 4x25 LAN-WDM Transceiver
Required to use: NeoPhotonics ROSA and TOSA
Customers: Any
Licensed Versions:  NeoPhotonics design provided per contracts during Technical Services Support for the initial production of Deliverables, and minor revisions thereof. 
Exceeds License:  Any product having different form-factor, higher data rate, functionally-different or incompatible operational characteristics, or major re-design will not be Licensed Product.
Royalty Schedule:
All Sales    0%

Licensed Product #2
AAWG

Description: Athermal AWG, 100GHz or 50GHz channel spacing, various # channels
Required to use: NeoPhotonics AAWG engine
Customers: Any
Licensed Versions: NeoPhotonics design provided per contracts during Technical Services Support for the initial production of Deliverables. 
Exceeds License: Any product having: different form-factor; functionally-different or incompatible operational characteristics; or major re-design will not be Licensed Product.
Royalty Schedule:
All Sales    0%

Licensed Product #3
SPLITTERS

Description: Standard power splitters, channel counts vary
Required to use: NeoPhotonics PLC splitter chips
Customers: Any
Licensed Versions: Products complying with any splitter-product designs provided by NeoPhotonics, and minor revisions thereof.
Exceeds License: Any product having: different form-factor; functionally-different or incompatible operational characteristics; or major re-design will not be Licensed Product.
Royalty Schedule:
All Sales    0%

EXHIBIT B
CATEGORICAL LICENSED PATENTS

The patents listed in the following table are the Categorical Licensed Patents of this Agreement as of the date of execution.  Although Licensor believes this list to be complete, the list shall further include any other patents or applications owned by Licensor that claim priority to the listed patents or applications, or any patents which eventually issue therefrom.  Licensor does not herein assume any obligation to maintain or further pursue the validity of these patents. Licensor does not represent that it does not or will not grant similar rights under these patents to other parties.  Licensor does covenant that it will use reasonable best efforts to ensure that any transfer of ownership or control of any valid patents or applications of this list will include transfer of the corresponding rights granted to Licensee herein. 

	
					
	Family
	CC
	Pat/App.
	Expiration
	Title

	A007
	US
	6,671,450
	22-Mar-21
	APPARATUS AND METHOD TO METALLIZE, REINFORCE, AND HERMETICALLY SEAL MULTIPLE OPTICAL FIBERS

	A010
	US
	6,498,882
	28-Nov-20
	ASSEMBLY AND METHOD FOR REORGANIZING PLANAR LIGHTWAVE CIRCUIT CHANNELS

	A018
	US
	6,618,514
	11-Oct-21
	PASSIVE PIGTAIL ATTACHMENT FOR PLANAR LIGHTWAVE CIRCUITS

	A071
	US
	6,603,892
	24-Oct-21
	MECHANICAL BEAM STEERING FOR OPTICAL INTEGRATED CIRCUITS

	CN
	2821167.7
	29-Sep-22

	DE
	60206188.1
	30-Sep-22

	DK
	EP1438612
	30-Sep-22

	FR
	EP1438612
	30-Sep-22

	GB
	EP1438612
	30-Sep-22

	IT
	EP1438612
	30-Sep-22

	JP
	4719417
	30-Sep-22

	KR
	10-0696228
	30-Sep-22

	SE
	EP1438612
	30-Sep-22

	A084
	US
	6,787,868
	20-Jan-22
	MICROLENSES FOR INTEGRATED OPTICAL DEVICES

	A289
	US
	6,975,793
	07-Nov-22
	METHOD AND APPARATUS FACILITATING MECHANICAL BEAM STEERING FOR OPTICAL INTEGRATED CIRCUITS

	US
	7,539,364
	17-May-23

	 
	 
	 
	 
	 

	A293
	US
	6,738,545
	07-Oct-22
	ATHERMAL AWG AND AWG WITH LOW POWER CONSUMPTION USING GROOVE OF CHANGEABLE WIDTH

	CN
	200480043452.2
	03-May-24

	EP
	EP04775948.5
	 

	HK
	HK1110396
	05-May-24

	JP
	4688869
	05-May-24

	KR
	10-0795736
	05-May-24

	US
	7,062,127
	07-Oct-22

	A330
	US
	7,272,273
	21-Jan-25
	PHOTODETECTOR COUPLED TO A PLANAR WAVEGUIDE

	US
	7,574,084
	21-Jan-25

	A334
	US
	7,587,138
	15-Nov-27
	BROADBAND 2X2 OPTICAL SPLITTER

	CN
	200780009997.5
	22-Feb-27

	EP
	7757435.8
	 

	JP
	5135234
	23-Feb-27

	KR
	10-1347510
	23-Feb-27

	US
	8,442,369
	16-Dec-28

	F0003
	US
	9,544,668
	13-Dec-30
	OPTICAL NETWORK COMMUNICATION SYSTEM WITH OPTICAL LINE TERMINAL TRANSCEIVER AND METHOD OF OPERATION THEREOF

	CN
	201180067424.4
	29-Nov-31

	EP
	11848405.4
	 

	IN
	4023/CHENP/2013
	 

	JP
	6117110
	30-Nov-31

	KR
	10-2013-7018377
	 

	RU
	2564100
	30-Nov-31

	F0009
	US
	9,391,695
	28-Aug-34
	OPTICAL NETWORK COMMUNICATION SYSTEM WITH EMBEDDED OPTICAL TIME DOMAIN REFLECTOMETER AND METHOD OF OPERATION THEREOF

	OPTNT01
	US
	7,492,992
	08-Aug-23
	BI-DIRECTIONAL PLC TRANSCEIVER DEVICE

	NG0005
	KR
	10-0890981
	26-Oct-21
	MULTILAYERED OPTICAL STRUCTURES

	US
	9,939,579
	16-Dec-25

	NG0006
	US
	7,164,818
	03-May-22
	INTEGRATED GRADIENT INDEX LENSES

	US
	7,391,940
	03-May-22

	NG0007
	US
	7,224,882
	20-Nov-22
	OPTICAL MATERIALS WITH SELECTED INDEX OF REFRACTION

	US
	7,437,047
	17-Jan-22

	NG0008
	TW
	198300
	30-Oct-18
	PHOSPHORS

	US
	7,423,512
	04-Jul-22

	NG0013
	US
	6,193,936
	09-Nov-18
	REACTANT DELIVERY APPARATUSES

	JP
	4524410
	08-Nov-19

	US
	6,508,855
	03-Jan-21

	NG0015
	US
	6,482,374
	16-Jun-19
	METHODS FOR PRODUCING LITHIUM METAL OXIDE PARTICLES

	US
	7,323,158
	09-Nov-18

	NG0019
	US
	6,749,648
	19-Jun-20
	LITHIUM METAL OXIDES

	JP
	5286582
	14-Jun-21

	KR
	100816116
	15-Feb-23

	NG0021
	US
	6,692,660
	27-Jun-21
	HIGH LUMINESCENCE PHOSPHOR PARTICLES AND RELATED PARTICLE COMPOSITIONS

	NG0035
	US
	6,890,624
	25-Apr-20
	SELF-ASSEMBLED STRUCTURES

	NG0037
	US
	6,788,866
	11-Feb-22
	LAYER MATERIALS AND PLANAR OPTICAL DEVICES

	NG0050
	US
	6,849,334
	26-Jun-22
	OPTICAL MATERIALS AND OPTICAL DEVICES

	CN
	2820384.4
	14-Aug-22

	JP
	5401000
	15-Aug-22

	KR
	100930557
	15-Aug-22

	TW
	I318693
	15-Aug-22

	US
	7,306,845
	15-Mar-22

	CN
	200610136169.5
	14-Aug-22

	US
	7,776,406
	15-Mar-22

	NG0052
	US
	6,723,435
	28-Aug-22
	OPTICAL FIBER PREFORMS

	US
	7,905,114
	28-Aug-22

	NG0054
	US
	6,952,504
	18-Apr-22
	THREE DIMENSIONAL ENGINEERING OF PLANAR OPTICAL STRUCTURES

	TW
	I266090
	12-Dec-22

	US
	8,673,407
	11-Apr-27

	NG0064
	US
	8,865,271
	03-Mar-28
	HIGH RATE DEPOSITION FOR THE FORMATION OF HIGH QUALITY OPTICAL COATINGS

	EP
	4753377.3
	 

	KR
	1276391
	27-May-24

 
SCHEDULE 5
NOTARIZED SPA
	
		
	SALE AND PURCHASE AGREEMENT FOR A PARTICIPATORY INTEREST IN THE CHARTER CAPITAL OF A LIMITED LIABILITY COMPANY
	ДОГОВОР КУПЛИ-ПРОДАЖИ ДОЛИ В УСТАВНОМ КАПИТАЛЕ ОБЩЕСТВА С ОГРАНИЧЕННОЙ ОТВЕТСТВЕННОСТЬЮ

	THIS PARTICIPATORY INTEREST SALE AND PURCHASE AGREEMENT (the “Agreement”) is made on [●], in the City of Moscow
	НАСТОЯЩИЙ ДОГОВОР КУПЛИ-ПРОДАЖИ ДОЛИ В УСТАВНОМ КАПИТАЛЕ («Договор») заключен [●] года в городе Москва.

	BETWEEN
	Между

	[●], a company organized and existing under the laws of [●], with its registered address at [●], represented by ______________________, passport ________________________, residing at ____________________, acting on the basis of ____________ (the “Seller”), 
	[●], компанией, учрежденной и осуществляющей деятельность по законодательству [●], с местом нахождения по адресу по адресу: [●], в лице ______________________________ («Продавец»),

	[●], incorporated and existing under the laws of [●], registration No. [●], with its registered address at [●], represented by ______________________, passport ________________________, residing at ____________________, acting on the basis of ____________ (the “Purchaser 1”), and
[●], incorporated and existing under the laws of [●], registration No. [●], with its registered address at [●], represented by ______________________, passport ________________________, residing at ____________________, acting on the basis of ____________ (the “Purchaser 2”). 
	[●], компанией, учрежденной и осуществляющей деятельность по законодательству [●], с местом нахождения по адресу: [●], в лице _______________________________ («Покупатель 1»), и

 
[●], компанией, учрежденной и осуществляющей деятельность по законодательству [●], с местом нахождения по адресу: [●], в лице _______________________________ («Покупатель 2»).

	WHEREAS, the Seller owns a participatory interest representing 100% of the charter capital of the Company (as defined below;
	ПРИНИМАЯ ВО ВНИМАНИЕ, что Продавец является собственником доли, составляющей 100% уставного капитала Общества (как определено ниже);

	NOW, THEREFORE, the Purchasers and the Seller (collectively – the “Parties”, and each individually, a “Party”) have agreed as follows:
	С УЧЕТОМ ВЫШЕИЗЛОЖЕННОГО,   Покупатели и Продавец (совместно именуемые «Стороны», а по отдельности – «Сторона») договорились о нижеследующем:

	1.    DEFINITIONS AND INTERPRETATION
	1.    ПОНЯТИЯ И ТОЛКОВАНИЕ

	In addition to the terms defined above, the following terms shall have the following meanings, except where the context expressly provides otherwise:
	Следующие термины имеют следующие значения, за исключением случаев, когда из контекста прямо следует иное:

	Company means [●], incorporated and existing under the laws of the Russian Federation, registered on [●] with the Inspectorate of the Ministry for tax and levies of the Russian Federation in the city of [●] with the unified state registration number [●], TIN [●], KPP [●], with its registered address at [●]; 
	Общество означает [●], учрежденное и действующее в соответствии с законодательством Российской Федерации, зарегистрированное [●] года Инспекцией Министерства Российской Федерации по налогам и сборам по [●] за основным государственным регистрационным номером [●],  ИНН [●], КПП [●], расположенное по адресу: [●];  

	Completion Date means the date of this Agreement;
	Дата закрытия означает дату настоящего Договора;

	FAS means the Federal Antimonopoly Service of the Russian Federation;
	ФАС означает Федеральную антимонопольную службу Российской Федерации;

	LLC Law means Federal Law of the Russian Federation No. 14-FZ “On Limited Liability Companies,” dated February 8, 1998 (as amended);
	Закон об ООО означает Федеральный закон «Об обществах с ограниченной ответственностью» No 14-ФЗ от 08.02.1998 (с последующими изменениями); 

	Notary has the meaning specified in Clause 4.1 of this Agreement;
	Нотариус имеет значение, предусмотренное в пункте 4.1 настоящего Договора;

	Purchase Price means USD 3,000,000;

 
Purchase Price 1 means USD 2,970,000;

 
Purchase Price 2 means USD 30,000;
	Покупная цена означает 3.000.000 Долларов США;
Покупная цена 1 означает 2.970.000 Долларов США;
Покупная цена 2 означает 30.000 Долларов США;

	Participatory Interest 1 means a participatory interest representing 99% of the charter capital of the Company with a nominal value of RUB 9,716,718.33 owned by the Seller;

 
Participatory Interest 2 means a participatory interest representing 1% of the charter capital of the Company with a nominal value of RUB 98,148.67 owned by the Seller;
	Приобретаемая доля 1 означает долю, составляющую 99% уставного капитала Общества, номинальной стоимостью 9.716.718,33  рублей, принадлежащую на праве собственности Продавцу;
Приобретаемая доля 2 означает долю, составляющую 1% уставного капитала Общества, номинальной стоимостью 98.148,67 рублей, принадлежащую на праве собственности Продавцу;

	In this Agreement, a reference to any clause shall be construed as a reference to a clause of this Agreement.
	Ссылки на любые пункты Договора являются ссылками на соответствующие пункты настоящего Договора.

	2.    SALE OF THE PARTICIPATORY INTEREST
	2.    Продажа доли в уставном капитале

	2.1  The Seller shall transfer 
(a) the Participatory Interest 1 to Purchaser 1, together with all rights attached thereto, and Purchaser 1 shall purchase and accept the Participatory Interest 1 from the Seller for the Purchase Price 1, 
(b) the Participatory Interest 2 to Purchaser 2, together with all rights attached thereto, and Purchaser 2 shall purchase and accept the Participatory Interest 2 from the Seller for the Purchase Price 2, 
all in accordance with the terms and conditions of this Agreement. 
	2.1   Продавец обязуется передать в собственность 
(a) Покупателя 1 Приобретаемую долю 1 (включая все связанные с ней права), а Покупатель 1 обязуется купить и принять у Продавца Приобретаемую долю 1 за Покупную цену 1, и 
(б) Покупателя 2 Приобретаемую долю 2 (включая все связанные с ней права), а Покупатель 2 обязуется купить и принять у Продавца Приобретаемую долю 2 за Покупную цену 2, 
всё вышеперечисленное осуществляется в соответствии с условиями настоящего Договора.

	2.2   The rights of the Seller to the Participatory Interest were granted to the Seller by [Minutes of the Extraordinary General Meeting of the Participants of the Company No. [●] and are confirmed by the Extract from the Unified State Register of Legal Entities with respect to the Company dated [____________ No. ___________], and [payment order issued by the Seller on [●] to pay the contribution to the charter capital of the Company], all confirming that the Participatory Interest was fully paid for.
	2.2   Права Продавца на Приобретаемую долю принадлежат Продавцу на основании [Протокола внеочередного общего собрания участников Общества No [●] от [●] года] и подтверждаются Выпиской из Единого государственного реестра юридических лиц в отношении Общества от [________] года за No [________], а также платежным поручением Продавца [от [●] года об оплате вклада в уставный капитал Общества], подтверждающими, что Приобретаемая доля в уставном капитале Общества полностью оплачена.

	2.3   The Seller represents and warrants to the Purchasers that: (i) the Seller is the sole owner of the Participatory Interest; (ii) the Participatory Interest is free from any encumbrance, has not been sold, is not subject to any pending investigation or court proceeding; and that (iii) the execution of this Agreement and the performance by the Seller of any of its obligations hereunder do not and will not violate or conflict with any provisions of applicable laws, constitutional documents, statutory or contractual obligations of the Seller.
	2.3   Продавец дает Покупателям заверения об обстоятельствах, что (1) Продавец является единственным собственником Приобретаемой доли; (2) Приобретаемая доля не обременена, не была продана, не является предметом незавершенного расследования или судебного разбирательства; и что (3) заключение настоящего Договора и исполнения Продавцом своих обязательств по нему не нарушают и не будут нарушать или не противоречат с какими-либо положениями применимого законодательства, учредительных документов, законных и договорных обязательств Продавца. 

	2.4   The Purchasers have obtained the approval of FAS to enter into and perform this Agreement.
	2.4   Покупатели получил одобрение ФАС на заключение и исполнения настоящего Договора.

	2.5   Each of the Seller and the Purchasers has obtained necessary corporate approvals to authorize the execution of the Agreement and performance by it of its obligations under the Agreement, including, without limitation, obtaining the approval of the boards of directors of the Purchasers (Minutes w/n of [●] and Minutes w/n of [●]) and the board of directors the Seller (Minutes w/n of [●]; Resolution of the Seller w/n of [●]).
	2.5   Продавец и Покупатели получили необходимые корпоративные одобрения для заключения настоящего Договора и исполнения обязательств по нему, включая, среди прочего, получение одобрения совета директоров каждого Покупателя (протокол б/н от [●] и протокол б/н от [●]) и совета директоров Продавца (протокол б/н от [●], решение Продавца б/н от [●]). 

	3.    Purchase Price and Payment Procedure
	3.    ПОКУПНАЯ ЦЕНА И УСЛОВИЯ ОПЛАТЫ

	3.1   Purchaser 1 shall pay the entire purchase price to the Seller in accordance with the terms of a separate agreement entered into by the Purchasers and the Seller.
	3.1   Покупатель 1 заплатит Продавцу всю Покупную цену в соответствии с условиями отдельного соглашения между Покупателями и Продавцом.

	4. Transfer of the Participatory Interest
	4.    ПЕРЕДАЧА ПРИОБРЕТАЕМОЙ ДОЛИ 

	4.1   On the date hereof, the Seller and the Purchasers shall execute this Agreement and provide for its notarial certification by notary of the city of Moscow, [●] (the “Notary”), at his office at [●].
	4.1   В дату настоящего Договора Продавец и Покупатели осуществляют подписание настоящего Договора и обеспечивают его нотариальное удостоверение у нотариуса города Москвы [●] («Нотариус»), в помещении нотариальной конторы по адресу: [●].

	4.2   The Purchasers exercises the rights and bears the obligations of participants of the Company as of the moment of the relevant entry being made in the State Register of Legal Entities of the Russian Federation.
	4.2   Покупатели осуществляют права и несут обязанности участников Общества с момента внесения соответствующей записи в Единый государственный реестр юридических лиц Российской Федерации.

	4.3   The Seller shall notify the Company of the sale of the Participatory Interest in writing within five (5) business days after the date of entry into force of this Agreement (Clause 6.1).
	4.3   Продавец обязан письменно уведомить Общество о продаже Приобретаемой доли в уставном капитале Общества в течение 5 (пяти) рабочих дней с даты вступления настоящего Договора в силу (пункт 6.1).

	4.4. In accordance with paragraph 5 of Article 488 of the Civil Code of the Russian Federation, the Parties have agreed that until paid by the Purchasers, the Participatory Interest shall not be deemed pledged to the Seller.
	4.4 В соответствии с п. 5 ст. 488 Гражданского кодекса Российской Федерации Стороны согласовали, что до момента оплаты Покупателями Приобретаемая доля не находится в залоге у Продавца.

	5.    GOVERNING LAW AND DISPUTE RESOLUTION
	5.    ПРИМЕНИМОЕ ПРАВО И РАЗРЕШЕНИЕ СПОРОВ

	5.1   This Agreement shall be governed by, and construed in accordance with, the laws of the Russian Federation.
	5.1   Настоящий Договор подчиняется праву Российской Федерации и толкуется в соответствии с ним.

	5.2   Any dispute arising out of or in connection with this Agreement shall be settled by the Arbitrazh Court of the City of Moscow.
	5.2   Любой спор, вытекающий из настоящего Договора или связанный с ним, должен разрешаться в Арбитражном суде города Москвы.

	6.    MISCELLANEOUS
	6.    ОБЩИЕ ПОЛОЖЕНИЯ

	6.1   This Agreement shall come into force on the date of its execution by the Parties and certification by the Notary.
	6.1   Настоящий Договор вступает в силу с даты его подписания Сторонами и удостоверения Нотариусом.

	6.2   The Parties signing this Agreement shall confirm in the presence of the Notary that they are not limited in their legal capacity, are not under custody, are capable to execute and protect their rights and perform their obligations by themselves, do not suffer from illnesses impeding them from understanding the essence of signed agreement and circumstances of its execution, and are not in any state where they are incapable of understanding the meaning of their actions and/or control their actions, that there are no circumstances forcing them to enter into this deal on extremely unfavorable terms and conditions.
	6.2   Лица, подписавшие Договор, подтверждают в присутствии Нотариуса, что они в дееспособности не ограничены, под опекой, попечительством не состоят, по состоянию здоровья могут самостоятельно осуществлять и защищать свои права и исполнять обязанности, не страдают заболеваниями, препятствующими осознавать суть подписываемого договора и обстоятельств его заключения, а также не находятся в ином таком состоянии, когда они не способны понимать значение своих действий и (или) руководить ими, что у них отсутствуют обстоятельства, вынуждающие совершить указанную сделку на крайне невыгодных для сторон условиях.

	6.3   The expenses of certification of this Agreement shall be borne by Purchaser 1. 
	6.3   Расходы по удостоверению настоящего Договора несет Покупатель 1.

	6.4. This Agreement is made and executed in four bilingual counterparts, each in English and Russian languages, one of which is stored with the Notary, and one handed to each of the Parties, and each counterpart is equally binding. The text of the Agreement has been read aloud. In the event of any conflict between English and Russian versions, the Russian language version shall prevail.
	6.4. Настоящий Договор заключен в четырех двуязычных экземплярах, каждый на английском и русском языках, один из которых хранится у Нотариуса, и по одному передается каждой из Сторон, и каждый такой экземпляр имеет полную и равную силу. В случае расхождений между русской и английской версиями настоящего Договора, приоритет имеет русская версия.

	IN WITNESS WHEREOF this Agreement was executed by the Seller and the Purchasers represented by their duly authorized representatives:
	В ПОДТВЕРЖДЕНИЕ ВЫШЕИЗЛОЖЕННОГО, Продавец и Покупатели, в лице своих должным образом уполномоченных представителей, подписали настоящий Договор:

	for the Seller
__________________________________________________________________________
	за Продавца
__________________________________________________________________________

	For Purchaser 1
__________________________________________________________________________
For Purchaser 2
__________________________________________________________________________
	За Покупателя 1
__________________________________________________________________________
За Покупателя 2
__________________________________________________________________________

 
SCHEDULE 6 
 
PARTICULARS OF THE COMPANY
	
		
	Name of Company:
	NeoPhotonics Corporation, LLC

	Main state registration number:
	1127746681710

	Tax Identification Number:
	7714882784

	Place of incorporation:
	Russian Federation

	Address of registered office:
	Volgogradsky Prospekt 42, building 5, Moscow 109316, Russia

	Type of company:
	Limited liability company

	Authorised capital:
	RUB 9,814,867

	Issued capital:
	RUB 9,814,867

	Type of the Participatory Interest:
	Participatory interest

	General director:
	Novica Mrdovic

	Chief accountant:
	Anna Dmitrieva

 
SCHEDULE 7
FORMS OF STANDARD PURCHASE ORDERS

	
														
	

NEOPHOTONICS (CHINA) CO., LTD. AEOCODE:AEOCN4403041797, USCI 91440300618836109Y NEO BLD NO.8,12TH SOUTH KEJI RD,SOUTH HI-TECH PARK SHENZHEN, GUANGDONG,
518057
CHINA

Phone: 86 755 26748181/26748182
Fax: 86 755 26748187

VENDOR:

	PURCHASE ORDER

	PURCHASE ORDER NUMBER

	REVISION
0
	PAGE
1 of 2

	This Purchase Order Number must appear on all order acknowledgements, packing lists, cartons, invoices and correspondence related to this order.

	BILL TO:
NEOPHOTONICS (CHINA) CO., LTD. AEOCODE:AEOCN4403041797, USCI 91440300618836109Y NEO BLD NO.8,12TH SOUTH KEJI RD,SOUTH HI-TECH PARK

SHENZHEN, GUANGDONG,
518057
CHINA

	

All invoices should be sent electronically in pdf format to ap.sz@neophotonics.com. There may be a delay in processing if invoices are sent via Postal Service.

	VENDOR NUMBER

	DATE OF ORDER / BUYER

	REVISED DATE / BUYER

	PAYMENT TERMS

	SHIP VIA
	 

	FREIGHT TERMS

	REQUESTOR / DELIVER TO

	CONFIRM TO / TELEPHONE

	

ITEM
	PART NUMBER / DESCRIPTION /
MFR PART NUMBER / MANUFACTURER NAME / CANCELLED
	

REV
	

SHIP TO LOCATION
	PROMISED DATE / NEED BY DATE
	

QUANTITY
	

UNIT
	UNIT PRICE (USD)
	EXTENDED PRICE (USD)
	

TAX

	

1
	

	

	

	

	

	

Each
	

	

	

N

	 

	

1. This document was duplicated electronically. Approvals obtained electronically, no signature required. Purchasing personnel must authorize all changes.

2. Vendors are reminded to check the ordered item revision, the latest drawing revision and your related production Doc to make sure they are consistent. Otherwise vendors would be responsible for all the loss caused from the discrepancy.

3. This Purchase Order is subject to NeoPhotonics Corporation Terms and Conditions which are incorporated here in and made a part of this agreement. *** NeoPhotonics Corporation Confidential Information***.
	

TOTAL (USD):
	

	 

	

AUTHORIZED SIGNATURE

Notes: All prices and amounts on this order are expressed in USD

14

Draft 14 November 2018

Aeocode:Aeocn4403041797, Usci 91440300618836109Y, 518057 Phone: 86 755 26748181/26748182 Fax: 86 755 26748187

SUPPLIER – TERMS AND CONDITIONS

1. Entire Agreement; Inconsistencies; Acceptance of Order. This Purchase Order ("Order") contains the entire terms and conditions of the agreement between the Seller named on the front side hereof ("Seller") and NeoPhotonics Corporation, a Delaware corporation ("NeoPhotonics") regarding the articles, materials, parts and work covered by this Order ("Goods"). NeoPhotonics hereby objects to all additional terms or modifications to this Order proposed by Seller contained in any communication from Seller or proposed by any course of dealing or performance between Seller and NeoPhotonics, and no such additional terms or modifications shall be binding on NeoPhotonics without NeoPhotonics's prior express written consent thereto. NeoPhotonics's failure to further object to any such additional terms or modifications contained in any communication from Seller or proposed by any course of dealing or performance between Seller and NeoPhotonics shall not be deemed a waiver of the provisions hereof or an approval of the terms or modifications therein. Unless NeoPhotonics has provided prior express written consent to the contrary, any term or condition of the reverse side of this Order shall prevail in the event that there is an inconsistency between it and any term or condition of the front side of this Order. Any term or condition of this Order shall prevail in the event that there is an inconsistency between it and any term or condition of any communication from Seller or of any course of dealing or performance between Seller and NeoPhotonics. Seller shall be deemed to have accepted, and shall be bound by, this Order and its terms and conditions upon the earliest of: (a) the date Seller returns to NeoPhotonics a written acknowledgement thereof; (b) the date Seller ships to NeoPhotonics any of the Goods; and (c) the date five (5) business days after NeoPhotonics's delivery to Seller of this Order unless Seller has notified NeoPhotonics within such time that Seller shall not be so bound.

2. Price. This Order shall not be filled at prices higher than those shown on the front side hereof unless such increased prices have been authorized in writing by NeoPhotonics. If there is no price stated on the front side hereof, the price shall be deemed to be the price last quoted to NeoPhotonics (as evidenced by NeoPhotonics's business records) or the prevailing market price for the Goods, whichever is lower. Seller warrants that the price for Goods sold to NeoPhotonics under this Order is not greater than the price for comparable goods sold in comparable quantities to any other purchaser thereof. If Seller decreases prices to any other purchaser for any Goods to be furnished hereunder, the price of all Goods yet unshipped to NeoPhotonics shall be deemed adjusted to such lower prices. Unless otherwise specifically agreed to by NeoPhotonics, prices shown on this Order are deemed to include all charges associated with the sale, and delivery to NeoPhotonics, of the Goods, including without limitation charges for shipping, packing, insurance, and taxes imposed by any taxing authority with respect to the transfer to NeoPhotonics of possession, title or both to the Goods, including, but not limited to, sales, use, property and value added taxes, but excluding taxes determined with respect to the net income of NeoPhotonics.

3. Packing and Shipment. Goods shall be prepared for shipment in a manner that is in accordance with standard commercial practice and is adequate to ensure safe arrival of the Goods to a designated destination Unless otherwise specifically provided on the front side of this Order, the Goods shall be delivered to NeoPhotonics F.O.B. destination. Shipments will be made freight prepaid at the lowest freight charges available, using the carrier selected by NeoPhotonics.

4. Delivery. Seller shall deliver the completed Goods in strict accordance with the scheduled delivery date and in the exact quantities and at the exact specifications set forth on the front side hereof, and the obligations of Seller to meet the delivery dates, quantities, and specifications set forth herein are of the essence of this Order. Goods that are delivered in advance of the scheduled delivery date are delivered at the risk of Seller and may, at NeoPhotonics's option, be returned at Seller's expense for proper delivery and/or have payment therefore withheld by NeoPhotonics until the date that payment would have been due had the Goods been actually delivered on their scheduled delivery date. In addition to any other rights or remedies provided to NeoPhotonics by law or under this Order, NeoPhotonics may in the case of any delay: (a) extend Seller's time of performance and upon request of NeoPhotonics, Seller shall ship Goods not delivered on time via expedited routing necessary to recover the maximum possible time lost by failure to deliver on schedule; Seller to pay the extra cost of the expedited routing; or (b) immediately terminate the undelivered portion of the Order at no cost to NeoPhotonics.

5. Invoices and Payment. Unless otherwise expressly provided in this Order, no invoices shall be issued nor payments made prior to delivery. Within twenty-four (24) hours after shipment of any Goods pursuant to this Order, Seller shall mail to NeoPhotonics copies of all packing slips together with a separate invoice for each Order in duplicate or bearing the NeoPhotonics Order number. Unless freight and other charges are itemized, any discount will be taken on the full amount of invoices. All payments are subject to adjustment for shortage or rejection. Payment shall be made no earlier than thirty (30) days after acceptance by NeoPhotonics of the associated Goods unless otherwise specifically provided on the front side of this Order.

6. Warranties. Notwithstanding NeoPhotonics's inspection and acceptance of the Goods, Seller warrants that all Goods delivered pursuant to this Order will (i) be free from defects in material and workmanship, (ii) be merchantable, (iii) conform to applicable samples or other descriptions furnished or adopted by Seller, (iv) comply with Seller's published specifications in effect as of the effective date of this Agreement unless such specifications have been superseded by other specifications, drawings, samples or descriptions agreed to between NeoPhotonics and Seller, and (v) to the extent such Goods are not manufactured pursuant to detailed designs furnished by NeoPhotonics, be free from defects in design, suitable for the intended purposes, and free from infringement of third party rights (including without limitation patent, copyright, trade secret, trademark, and other proprietary rights).  The  foregoing  warranties  are  in  addition  to  all  other  warranties,  whether  express  or  implied,  given  by  Seller  to NeoPhotonics or imposed by law. All warranties of Seller, together with the services warranties and guarantees, if any, shall run to NeoPhotonics and its customers.

7. Quality Control and Inspection. NeoPhotonics shall have the right to inspect, test, and approve at any time, and Seller shall provide all reasonable facilities and assistance to NeoPhotonics in connection therewith, (a) at the place of manufacture and prior to shipment, all Goods ordered, and (b) the facilities at which Goods are manufactured. Notwithstanding any prior inspections or payments made hereunder by NeoPhotonics, all Goods shall be subject to final inspection and acceptance at NeoPhotonics's facility within not less than thirty (30) days after delivery of the Goods at NeoPhotonics's facility. In the event that NeoPhotonics receives Goods whose defects or nonconformities are not apparent on initial examination, the time for final inspection and acceptance of such Goods shall be extended to a reasonable period of time after such defects or nonconformities become apparent. No inspection or test made prior to final inspection and acceptance shall relieve Seller from responsibility for defects or other failure to meet the requirements of this Order. The criteria for acceptance and/or approval of all Goods and facilities at which Goods are manufactured shall be, at NeoPhotonics's option, (a) NeoPhotonics's judgment and/or (b) compliance with Seller's published specifications in effect as of the date of this Order unless such specifications have been superseded by other specifications, drawings, samples or descriptions agreed to between NeoPhotonics and Seller. If NeoPhotonics determines that any Goods are defective or do not meet all specifications (either before acceptance or under the terms of Paragraph 6 - "Warranties"), NeoPhotonics shall have the right, at its sole option, to (i) reject such Goods and obtain a refund of the purchase price or (ii) require repair or replacement of the Goods by and at Seller's expense and risk. If Seller fails to repair or replace defective Goods within thirty (30) days after NeoPhotonics's request thereof, NeoPhotonics may, at its sole option (i) repair or replace such Goods and charge to the Seller any cost incurred by NeoPhotonics, which charge Seller shall pay NeoPhotonics, or (ii) without further notice, terminate this Order for default in accordance with Paragraph 12 – "Termination and Cancellation; Survival" hereof, or (iii) require an appropriate reduction in the price. Payment for any Goods hereunder shall not be deemed an acceptance thereof. Failure to inspect the Goods shall not be deemed to constitute (i) acceptance of any defective or nonconforming Goods, or (ii) a waiver of NeoPhotonics's rights or remedies arising by virtue of any defect or nonconformity with the requirements of this Order. NeoPhotonics's rights under this Paragraph 7 shall be in addition to all other rights of NeoPhotonics under this Order and applicable law. If any Goods subject to this Order, or any components thereof, are to be manufactured by subcontractor(s), Seller shall require such subcontractors to comply with this provision.

8. Changes. Any changes, waivers or additions to the terms and conditions of this Order shall bind NeoPhotonics only if they are in a writing signed by a duly authorized employee of NeoPhotonics. NeoPhotonics shall have the right at any time, by written order, to make changes within the general scope of this Order, in one or more of the following: (1) drawings, designs, specifications, and/or instructions for any of the Goods, (2) method of shipping or packing, (3) place of inspection, delivery or acceptance, (4) quantities, and/or (5) delivery schedules. Seller shall comply with all such changes. If any such change causes a decrease or increase in Seller's cost and/or in the time required for Seller's performance, an equitable adjustment in the price and/or delivery schedule, as applicable, will be made by the parties in writing. Unless Seller provides NeoPhotonics with an itemized statement of adjustment to the cost and/or time for performance within ten (10) business days after Seller's receipt of NeoPhotonics's change notice, Seller shall be conclusively deemed to have waived all claims against NeoPhotonics with respect thereto. NeoPhotonics may act upon any such claim at any time prior to final payment under this Order. Failure of the parties to agree upon any adjustment to be made under this clause shall not excuse Seller from proceeding with this Order as changed.

 
9. Responsibility for NeoPhotonics's Property. All Goods produced by Seller pursuant to NeoPhotonics's designs or specifications, and all inventions, improvements, developments and discoveries conceived, discovered, made, developed or first reduced to tangible work product by Seller and relating to Goods produced by Seller pursuant to NeoPhotonics's designs or specifications, shall be the sole property of NeoPhotonics. Seller hereby does and will assign fully to NeoPhotonics all such inventions, improvements, developments and discoveries. Unless otherwise provided in this Order, Seller, upon delivery to it or acquisition by it of any supplies, tooling, molds, patterns, drawings or other materials or equipment, the title to which is in NeoPhotonics (collectively the "Materials"), assumes the risk of, and shall be responsible for, any loss thereof or damage thereto, and shall return such Materials in good condition (except for reasonable wear and tear and except to the extent that such Materials have been incorporated in the Goods delivered under this Order or have been consumed in normal performance of work under this Order), to NeoPhotonics upon NeoPhotonics's request or upon completion, termination or cancellation of this Order.

10. Indemnities; Insurance. Seller shall, at its own expense, defend, indemnify and hold harmless NeoPhotonics and its customers from any damage, liabilities, claims, losses, and expenses (including without limitation attorneys' fees) with respect to any action, claim or proceeding to the extent such damage, liabilities, claims, losses, and expenses are related to or caused by (a) any act or omission by Seller, its agents, employees or contractors, or (b) any breach of any of Seller's warranties or obligations under this Order. If Goods become, or are likely to become, the subject of any claim of infringement of any patent, trademark, copyright or other proprietary right, Seller shall, at Seller's expense, (i) procure the right for NeoPhotonics and its customers to continue using the Goods, (ii) replace or modify the Goods so that they become non-infringing or (iii) at NeoPhotonics's option, refund to NeoPhotonics the amount paid for the items. If neither of the forgoing alternative is available on terms that in NeoPhotonics's judgment are reasonable, NeoPhotonics may, in addition to any other remedies it may have, terminate this Agreement without further liability to Seller. Seller shall maintain such public liability insurance (including without limitation products liability, completed operations, contractors' liability and protective liability, automobile liability (including without limitation non-owned automobile liability), workers' compensation, employers' liability, and infringement insurance) as will adequately protect NeoPhotonics against such damage, liabilities, claims, losses, and expenses. Seller agrees to submit certificates of insurance, evidencing coverage in accordance with this paragraph, when requested by NeoPhotonics.

11. Titles and Risk of Loss. Unless otherwise expressly provided in this Order, Seller shall have title to and bear the risk of any loss or damage to the Goods until the Goods are delivered and accepted in conformity with this Order. Upon such delivery and acceptance, title shall pass from Seller and Seller's responsibility for loss or damage shall cease, except for that resulting from Seller's negligence or failure to comply with this Order.

12. Termination and Cancellation; Survival. NeoPhotonics may terminate the whole or any part of this Order for convenience at any time prior to the delivery of the Goods by delivering written notice of termination to Seller. NeoPhotonics may, without liability, by written notice to Seller, cancel the whole or any part of this Order immediately: (i) if Seller fails to effect delivery hereunder, (ii) if Seller fails to make progress in work so as to endanger performance, (iii) if Seller fails to provide adequate assurances of its performance hereunder in a form acceptable to NeoPhotonics no later than five (5) business days after NeoPhotonics's delivery to Seller of a written request therefore, (iv) in the event that any voluntary or involuntary proceedings are filed by or against Seller pursuant to the provisions of any bankruptcy or insolvency law or (v) in the event of the appointment with or without the Seller's consent, of an assignee for the benefit of creditors or of a receiver. If NeoPhotonics cancels this Order in whole or in part pursuant to this Paragraph 12 – "Termination and Cancellation", in addition to any other remedies provided herein or by law, NeoPhotonics may procure, upon terms and in such manner as NeoPhotonics may deem appropriate, items or services similar to those terminated, and Seller shall be liable to NeoPhotonics for any excess cost for such similar items or services. Seller shall continue with the performance of this Order to the extent, if any, the Order is not terminated or cancelled under the provisions of this Paragraph 12. NeoPhotonics may also require Seller to transfer title and deliver to NeoPhotonics, in the manner and to the extent directed by NeoPhotonics, any fully or partially completed Goods that Seller has specifically produced or specifically used for the performance of such part of this Order as has been terminated. Payment for completed Goods delivered to and accepted by NeoPhotonics shall be at the Order price; payment for partially completed Goods delivered and accepted by NeoPhotonics shall be in an amount to be agreed upon by NeoPhotonics and Seller. Seller's obligations under Paragraphs 6, 9, 10, 13, 14, and 15 shall survive any termination or cancellation of this Order.

13. Disclosures and Use of Information and Items. Seller shall keep confidential all designs, processes, drawings, specifications, reports, data and other technical or proprietary information, and all Materials and the features for all Materials, furnished or disclosed to the Seller by NeoPhotonics in connection with this Order (collectively "Confidential Materials"). Unless otherwise provided herein or authorized by NeoPhotonics in writing, Seller (a) shall not use any such Confidential Materials, except in the performance of this Order, and (b) shall not disclose any such Confidential Materials to anyone who has not agreed to obligations no less restrictive than those set forth in this Paragraph, and (c) shall treat all such Confidential Materials with no less than reasonable care. Upon completion or termination or cancellation of this Order, Seller shall return to NeoPhotonics all tangible media that contain or in which are fixed any such Confidential Materials or make such other disposition thereof as may be directed or approved by NeoPhotonics. Seller may not use NeoPhotonics's name in

14. Liability of NeoPhotonics; Seller Exclusive Remedy. NeoPhotonics's entire liability to Seller, and Seller's exclusive remedy, for any cancellation or termination of this Order, shall not exceed the lesser of a pro rata portion of the Order price, or the cost, of finished Goods to be delivered within 30 days after such cancellation or termination, of 30 days of work in progress, and of
30 days of raw materials that Seller demonstrates cannot be diverted to other uses, each of the cost and pro rata portion as set forth in a written, detailed claim for such amount that is delivered by Seller to NeoPhotonics within ten (10) business days after NeoPhotonics's notice of cancellation or termination. If NeoPhotonics fails to pay Seller, Seller's exclusive remedy shall be to recover the Goods or, in the event the Goods have been sold to a third party, to recover from NeoPhotonics an amount equal to the purchase price paid by such third party

15. General: Neither party shall have the right to make commitments of any kind for or on behalf of any other party without the prior written consent of such other party. Seller shall not assign or transfer this Order, or any rights or obligations under this Order, without the prior written consent of NeoPhotonics. This Order shall be governed in all respects by the laws of the United States of America and by the laws of the State of California; as such laws are applied to agreements entered into and to be performed entirely within California between California residents. Except for actions seeking to enforce any order or any judgment of any federal or state court(s) located in California, each of the parties irrevocably consents to the exclusive personal jurisdiction of such federal and state court(s), as applicable, for any matter arising out of or relating to this Order. If any dispute arises between the parties with respect to the matters covered by this Order which leads to a proceeding to resolve such dispute, the prevailing party in such proceeding shall be entitled to receive such prevailing party's reasonable attorneys' fees, expert witness fees and out-of-pocket costs incurred in connection with such proceeding, in addition to any other relief to which such prevailing party may be entitled. A breach by Seller of any of the promises or agreements contained herein will result in irreparable and continuing damage to NeoPhotonics for which there will be no adequate remedy at law, and NeoPhotonics shall be entitled to injunctive relief and/or a decree for specific performance, and such other relief as may be proper (including monetary damages if appropriate). The rights and remedies provided by NeoPhotonics herein shall be cumulative and in addition to any other rights and remedies provided by law or equity or those provide under the Uniform Commercial Code. All claims for monies due or to become due from NeoPhotonics under this Order are subject to deduction by NeoPhotonics for any setoff or counterclaim that NeoPhotonics may have against Seller. If any provision of this Order is held by a court of law to be illegal, invalid or unenforceable, (i) that provision shall be deemed amended to achieve as nearly as possible the same economic effect as the original provision, and (ii) the legality, validity and enforceability of the remaining provisions of this Order shall not be affected or impaired thereby. This Order and its provisions shall not be modified, amended or waived, except in a writing executed by both parties. Seller shall not subcontract or permit anyone other than Seller's employees to manufacture the Goods or perform any other work required to be performed by Seller under this Order without the prior written consent of NeoPhotonics. NeoPhotonics may delay payment and/or acceptance under this Order if such payment and/or acceptance are made impossible or impractical by causes beyond NeoPhotonics's control. Whenever Seller has knowledge that any actual or potential labor dispute is delaying or threatens to delay the timely performance of this Order, Seller shall immediately give notice thereof, including all  relevant information with  respect thereto, to  NeoPhotonics. Seller warrants that  no  law  or regulation of any governmental authority (including without limitation any federal, state or local law or regulation) has been violated by Seller in performance of its obligations under this Order. If the goods ordered herein are purchased for incorporation into products sold under United States Government contract or subcontract, the terms required or reasonably desired to be inserted by NeoPhotonics shall be deemed to apply to this Order. Seller shall comply with NeoPhotonics's corporate ethics and other relevant policies, copy(ies) of which are available from the office from which this Order was received

16. As per «FRAMEWORK OF STANDARDS TO SECURE AND FACILITATE GLOBAL TRADE », supplier should optimize the supply chain security continually to higher AEO lever.

	
														
	

NEOPHOTONICS DONGGUAN CO., LTD.
B9 BUILDING,CONRAD HI-TECH PARK, SHANG SHA SECTION OF ZHEN AN ROAD, CHANG AN TOWN,
DONGGUAN, GUANGDONG,
523850
CHINA

Phone: 769-89393000/18925248860
Fax:

VENDOR:

	PURCHASE ORDER

	PURCHASE ORDER NUMBER

	REVISION
0
	PAGE
1 of 2

	This Purchase Order Number must appear on all order acknowledgements, packing lists, cartons, invoices and correspondence related to this order.

	BILL TO:
NEOPHOTONICS DONGGUAN CO., LTD.
B9 BUILDING,CONRAD HI-TECH PARK, SHANG SHA SECTION OF ZHEN AN ROAD, CHANG AN TOWN,

DONGGUAN, GUANGDONG,
523850
CHINA

	

All invoices should be sent electronically in pdf format to ap.dg@neophotonics.com. There may be a delay in processing if invoices are sent via Postal Service.

	VENDOR NUMBER

	DATE OF ORDER / BUYER

	REVISED DATE / BUYER

	PAYMENT TERMS

	SHIP VIA
	 

	FREIGHT TERMS

	REQUESTOR / DELIVER TO

	CONFIRM TO / TELEPHONE

	

ITEM
	PART NUMBER / DESCRIPTION /
MFR PART NUMBER / MANUFACTURER NAME / CANCELLED
	

REV
	

SHIP TO LOCATION
	PROMISED DATE / NEED BY DATE
	

QUANTITY
	

UNIT
	UNIT PRICE (USD)
	EXTENDED PRICE (USD)
	

TAX

	

1
	

	

	

	

	

	

Each
	

	

	

N

	 

	

1. This document was duplicated electronically. Approvals obtained electronically, no signature required. Purchasing personnel must authorize all changes.

2. Vendors are reminded to check the ordered item revision, the latest drawing revision and your related production Doc to make sure they are consistent. Otherwise vendors would be responsible for all the loss caused from the discrepancy.

3. This Purchase Order is subject to NeoPhotonics Corporation Terms and Conditions which are incorporated here in and made a part of this agreement. *** NeoPhotonics Corporation Confidential Information***.
	

TOTAL (USD):
	

	 

	

AUTHORIZED SIGNATURE

Notes: All prices and amounts on this order are expressed in USD

B9 Building,Conrad Hi-Tech Park, Shang Sha Section, 523850 Phone: 769-89393000/18925248860 Fax:

SUPPLIER – TERMS AND CONDITIONS

1. Entire Agreement; Inconsistencies; Acceptance of Order. This Purchase Order ("Order") contains the entire terms and conditions of the agreement between the Seller named on the front side hereof ("Seller") and NeoPhotonics Corporation, a Delaware corporation ("NeoPhotonics") regarding the articles, materials, parts and work covered by this Order ("Goods"). NeoPhotonics hereby objects to all additional terms or modifications to this Order proposed by Seller contained in any communication from Seller or proposed by any course of dealing or performance between Seller and NeoPhotonics, and no such additional terms or modifications shall be binding on NeoPhotonics without NeoPhotonics's prior express written consent thereto. NeoPhotonics's failure to further object to any such additional terms or modifications contained in any communication from Seller or proposed by any course of dealing or performance between Seller and NeoPhotonics shall not be deemed a waiver of the provisions hereof or an approval of the terms or modifications therein. Unless NeoPhotonics has provided prior express written consent to the contrary, any term or condition of the reverse side of this Order shall prevail in the event that there is an inconsistency between it and any term or condition of the front side of this Order. Any term or condition of this Order shall prevail in the event that there is an inconsistency between it and any term or condition of any communication from Seller or of any course of dealing or performance between Seller and NeoPhotonics. Seller shall be deemed to have accepted, and shall be bound by, this Order and its terms and conditions upon the earliest of: (a) the date Seller returns to NeoPhotonics a written acknowledgement thereof; (b) the date Seller ships to NeoPhotonics any of the Goods; and (c) the date five (5) business days after NeoPhotonics's delivery to Seller of this Order unless Seller has notified NeoPhotonics within such time that Seller shall not be so bound.

2. Price. This Order shall not be filled at prices higher than those shown on the front side hereof unless such increased prices have been authorized in writing by NeoPhotonics. If there is no price stated on the front side hereof, the price shall be deemed to be the price last quoted to NeoPhotonics (as evidenced by NeoPhotonics's business records) or the prevailing market price for the Goods, whichever is lower. Seller warrants that the price for Goods sold to NeoPhotonics under this Order is not greater than the price for comparable goods sold in comparable quantities to any other purchaser thereof. If Seller decreases prices to any other purchaser for any Goods to be furnished hereunder, the price of all Goods yet unshipped to NeoPhotonics shall be deemed adjusted to such lower prices. Unless otherwise specifically agreed to by NeoPhotonics, prices shown on this Order are deemed to include all charges associated with the sale, and delivery to NeoPhotonics, of the Goods, including without limitation charges for shipping, packing, insurance, and taxes imposed by any taxing authority with respect to the transfer to NeoPhotonics of possession, title or both to the Goods, including, but not limited to, sales, use, property and value added taxes, but excluding taxes determined with respect to the net income of NeoPhotonics.

3. Packing and Shipment. Goods shall be prepared for shipment in a manner that is in accordance with standard commercial practice and is adequate to ensure safe arrival of the Goods to a designated destination Unless otherwise specifically provided on the front side of this Order, the Goods shall be delivered to NeoPhotonics F.O.B. destination. Shipments will be made freight prepaid at the lowest freight charges available, using the carrier selected by NeoPhotonics.

4. Delivery. Seller shall deliver the completed Goods in strict accordance with the scheduled delivery date and in the exact quantities and at the exact specifications set forth on the front side hereof, and the obligations of Seller to meet the delivery dates, quantities, and specifications set forth herein are of the essence of this Order. Goods that are delivered in advance of the scheduled delivery date are delivered at the risk of Seller and may, at NeoPhotonics's option, be returned at Seller's expense for proper delivery and/or have payment therefore withheld by NeoPhotonics until the date that payment would have been due had the Goods been actually delivered on their scheduled delivery date. In addition to any other rights or remedies provided to NeoPhotonics by law or under this Order, NeoPhotonics may in the case of any delay: (a) extend Seller's time of performance and upon request of NeoPhotonics, Seller shall ship Goods not delivered on time via expedited routing necessary to recover the maximum possible time lost by failure to deliver on schedule; Seller to pay the extra cost of the expedited routing; or (b) immediately terminate the undelivered portion of the Order at no cost to NeoPhotonics.

5. Invoices and Payment. Unless otherwise expressly provided in this Order, no invoices shall be issued nor payments made prior to delivery. Within twenty-four (24) hours after shipment of any Goods pursuant to this Order, Seller shall mail to NeoPhotonics copies of all packing slips together with a separate invoice for each Order in duplicate or bearing the NeoPhotonics Order number. Unless freight and other charges are itemized, any discount will be taken on the full amount of invoices. All payments are subject to adjustment for shortage or rejection. Payment shall be made no earlier than thirty (30) days after acceptance by NeoPhotonics of the associated Goods unless otherwise specifically provided on the front side of this Order.

6. Warranties. Notwithstanding NeoPhotonics's inspection and acceptance of the Goods, Seller warrants that all Goods delivered pursuant to this Order will (i) be free from defects in material and workmanship, (ii) be merchantable, (iii) conform to applicable samples or other descriptions furnished or adopted by Seller, (iv) comply with Seller's published specifications in effect as of the effective date of this Agreement unless such specifications have been superseded by other specifications, drawings, samples or descriptions agreed to between NeoPhotonics and Seller, and (v) to the extent such Goods are not manufactured pursuant to detailed designs furnished by NeoPhotonics, be free from defects in design, suitable for the intended purposes, and free from infringement of third party rights (including without limitation patent, copyright, trade secret, trademark, and other proprietary rights).  The  foregoing  warranties  are  in  addition  to  all  other  warranties,  whether  express  or  implied,  given  by  Seller  to NeoPhotonics or imposed by law. All warranties of Seller, together with the services warranties and guarantees, if any, shall run to NeoPhotonics and its customers.

7. Quality Control and Inspection. NeoPhotonics shall have the right to inspect, test, and approve at any time, and Seller shall provide all reasonable facilities and assistance to NeoPhotonics in connection therewith, (a) at the place of manufacture and prior to shipment, all Goods ordered, and (b) the facilities at which Goods are manufactured. Notwithstanding any prior inspections or payments made hereunder by NeoPhotonics, all Goods shall be subject to final inspection and acceptance at NeoPhotonics's facility within not less than thirty (30) days after delivery of the Goods at NeoPhotonics's facility. In the event that NeoPhotonics receives Goods whose defects or nonconformities are not apparent on initial examination, the time for final inspection and acceptance of such Goods shall be extended to a reasonable period of time after such defects or nonconformities become apparent. No inspection or test made prior to final inspection and acceptance shall relieve Seller from responsibility for defects or other failure to meet the requirements of this Order. The criteria for acceptance and/or approval of all Goods and facilities at which Goods are manufactured shall be, at NeoPhotonics's option, (a) NeoPhotonics's judgment and/or (b) compliance with Seller's published specifications in effect as of the date of this Order unless such specifications have been superseded by other specifications, drawings, samples or descriptions agreed to between NeoPhotonics and Seller. If NeoPhotonics determines that any Goods are defective or do not meet all specifications (either before acceptance or under the terms of Paragraph 6 - "Warranties"), NeoPhotonics shall have the right, at its sole option, to (i) reject such Goods and obtain a refund of the purchase price or (ii) require repair or replacement of the Goods by and at Seller's expense and risk. If Seller fails to repair or replace defective Goods within thirty (30) days after NeoPhotonics's request thereof, NeoPhotonics may, at its sole option (i) repair or replace such Goods and charge to the Seller any cost incurred by NeoPhotonics, which charge Seller shall pay NeoPhotonics, or (ii) without further notice, terminate this Order for default in accordance with Paragraph 12 – "Termination and Cancellation; Survival" hereof, or (iii) require an appropriate reduction in the price. Payment for any Goods hereunder shall not be deemed an acceptance thereof. Failure to inspect the Goods shall not be deemed to constitute (i) acceptance of any defective or nonconforming Goods, or (ii) a waiver of NeoPhotonics's rights or remedies arising by virtue of any defect or nonconformity with the requirements of this Order. NeoPhotonics's rights under this Paragraph 7 shall be in addition to all other rights of NeoPhotonics under this Order and applicable law. If any Goods subject to this Order, or any components thereof, are to be manufactured by subcontractor(s), Seller shall require such subcontractors to comply with this provision.

8. Changes. Any changes, waivers or additions to the terms and conditions of this Order shall bind NeoPhotonics only if they are in a writing signed by a duly authorized employee of NeoPhotonics. NeoPhotonics shall have the right at any time, by written order, to make changes within the general scope of this Order, in one or more of the following: (1) drawings, designs, specifications, and/or instructions for any of the Goods, (2) method of shipping or packing, (3) place of inspection, delivery or acceptance, (4) quantities, and/or (5) delivery schedules. Seller shall comply with all such changes. If any such change causes a decrease or increase in Seller's cost and/or in the time required for Seller's performance, an equitable adjustment in the price and/or delivery schedule, as applicable, will be made by the parties in writing. Unless Seller provides NeoPhotonics with an itemized statement of adjustment to the cost and/or time for performance within ten (10) business days after Seller's receipt of NeoPhotonics's change notice, Seller shall be conclusively deemed to have waived all claims against NeoPhotonics with respect thereto. NeoPhotonics may act upon any such claim at any time prior to final payment under this Order. Failure of the parties to agree upon any adjustment to be made under this clause shall not excuse Seller from proceeding with this Order as changed.

 
9. Responsibility for NeoPhotonics's Property. All Goods produced by Seller pursuant to NeoPhotonics's designs or specifications, and all inventions, improvements, developments and discoveries conceived, discovered, made, developed or first reduced to tangible work product by Seller and relating to Goods produced by Seller pursuant to NeoPhotonics's designs or specifications, shall be the sole property of NeoPhotonics. Seller hereby does and will assign fully to NeoPhotonics all such inventions, improvements, developments and discoveries. Unless otherwise provided in this Order, Seller, upon delivery to it or acquisition by it of any supplies, tooling, molds, patterns, drawings or other materials or equipment, the title to which is in NeoPhotonics (collectively the "Materials"), assumes the risk of, and shall be responsible for, any loss thereof or damage thereto, and shall return such Materials in good condition (except for reasonable wear and tear and except to the extent that such Materials have been incorporated in the Goods delivered under this Order or have been consumed in normal performance of work under this Order), to NeoPhotonics upon NeoPhotonics's request or upon completion, termination or cancellation of this Order.

10. Indemnities; Insurance. Seller shall, at its own expense, defend, indemnify and hold harmless NeoPhotonics and its customers from any damage, liabilities, claims, losses, and expenses (including without limitation attorneys' fees) with respect to any action, claim or proceeding to the extent such damage, liabilities, claims, losses, and expenses are related to or caused by (a) any act or omission by Seller, its agents, employees or contractors, or (b) any breach of any of Seller's warranties or obligations under this Order. If Goods become, or are likely to become, the subject of any claim of infringement of any patent, trademark, copyright or other proprietary right, Seller shall, at Seller's expense, (i) procure the right for NeoPhotonics and its customers to continue using the Goods, (ii) replace or modify the Goods so that they become non-infringing or (iii) at NeoPhotonics's option, refund to NeoPhotonics the amount paid for the items. If neither of the forgoing alternative is available on terms that in NeoPhotonics's judgment are reasonable, NeoPhotonics may, in addition to any other remedies it may have, terminate this Agreement without further liability to Seller. Seller shall maintain such public liability insurance (including without limitation products liability, completed operations, contractors' liability and protective liability, automobile liability (including without limitation non-owned automobile liability), workers' compensation, employers' liability, and infringement insurance) as will adequately protect NeoPhotonics against such damage, liabilities, claims, losses, and expenses. Seller agrees to submit certificates of insurance, evidencing coverage in accordance with this paragraph, when requested by NeoPhotonics.

11. Titles and Risk of Loss. Unless otherwise expressly provided in this Order, Seller shall have title to and bear the risk of any loss or damage to the Goods until the Goods are delivered and accepted in conformity with this Order. Upon such delivery and acceptance, title shall pass from Seller and Seller's responsibility for loss or damage shall cease, except for that resulting from Seller's negligence or failure to comply with this Order.

12. Termination and Cancellation; Survival. NeoPhotonics may terminate the whole or any part of this Order for convenience at any time prior to the delivery of the Goods by delivering written notice of termination to Seller. NeoPhotonics may, without liability, by written notice to Seller, cancel the whole or any part of this Order immediately: (i) if Seller fails to effect delivery hereunder, (ii) if Seller fails to make progress in work so as to endanger performance, (iii) if Seller fails to provide adequate assurances of its performance hereunder in a form acceptable to NeoPhotonics no later than five (5) business days after NeoPhotonics's delivery to Seller of a written request therefore, (iv) in the event that any voluntary or involuntary proceedings are filed by or against Seller pursuant to the provisions of any bankruptcy or insolvency law or (v) in the event of the appointment with or without the Seller's consent, of an assignee for the benefit of creditors or of a receiver. If NeoPhotonics cancels this Order in whole or in part pursuant to this Paragraph 12 – "Termination and Cancellation", in addition to any other remedies provided herein or by law, NeoPhotonics may procure, upon terms and in such manner as NeoPhotonics may deem appropriate, items or services similar to those terminated, and Seller shall be liable to NeoPhotonics for any excess cost for such similar items or services. Seller shall continue with the performance of this Order to the extent, if any, the Order is not terminated or cancelled under the provisions of this Paragraph 12. NeoPhotonics may also require Seller to transfer title and deliver to NeoPhotonics, in the manner and to the extent directed by NeoPhotonics, any fully or partially completed Goods that Seller has specifically produced or specifically used for the performance of such part of this Order as has been terminated. Payment for completed Goods delivered to and accepted by NeoPhotonics shall be at the Order price; payment for partially completed Goods delivered and accepted by NeoPhotonics shall be in an amount to be agreed upon by NeoPhotonics and Seller. Seller's obligations under Paragraphs 6, 9, 10, 13, 14, and 15 shall survive any termination or cancellation of this Order.

13. Disclosures and Use of Information and Items. Seller shall keep confidential all designs, processes, drawings, specifications, reports, data and other technical or proprietary information, and all Materials and the features for all Materials, furnished or disclosed to the Seller by NeoPhotonics in connection with this Order (collectively "Confidential Materials"). Unless otherwise provided herein or authorized by NeoPhotonics in writing, Seller (a) shall not use any such Confidential Materials, except in the performance of this Order, and (b) shall not disclose any such Confidential Materials to anyone who has not agreed to obligations no less restrictive than those set forth in this Paragraph, and (c) shall treat all such Confidential Materials with no less than reasonable care. Upon completion or termination or cancellation of this Order, Seller shall return to NeoPhotonics all tangible media that contain or in which are fixed any such Confidential Materials or make such other disposition thereof as may be directed or approved by NeoPhotonics. Seller may not use NeoPhotonics's name in

14. Liability of NeoPhotonics; Seller Exclusive Remedy. NeoPhotonics's entire liability to Seller, and Seller's exclusive remedy, for any cancellation or termination of this Order, shall not exceed the lesser of a pro rata portion of the Order price, or the cost, of finished Goods to be delivered within 30 days after such cancellation or termination, of 30 days of work in progress, and of
30 days of raw materials that Seller demonstrates cannot be diverted to other uses, each of the cost and pro rata portion as set forth in a written, detailed claim for such amount that is delivered by Seller to NeoPhotonics within ten (10) business days after NeoPhotonics's notice of cancellation or termination. If NeoPhotonics fails to pay Seller, Seller's exclusive remedy shall be to recover the Goods or, in the event the Goods have been sold to a third party, to recover from NeoPhotonics an amount equal to the purchase price paid by such third party

15. General: Neither party shall have the right to make commitments of any kind for or on behalf of any other party without the prior written consent of such other party. Seller shall not assign or transfer this Order, or any rights or obligations under this Order, without the prior written consent of NeoPhotonics. This Order shall be governed in all respects by the laws of the United States of America and by the laws of the State of California; as such laws are applied to agreements entered into and to be performed entirely within California between California residents. Except for actions seeking to enforce any order or any judgment of any federal or state court(s) located in California, each of the parties irrevocably consents to the exclusive personal jurisdiction of such federal and state court(s), as applicable, for any matter arising out of or relating to this Order. If any dispute arises between the parties with respect to the matters covered by this Order which leads to a proceeding to resolve such dispute, the prevailing party in such proceeding shall be entitled to receive such prevailing party's reasonable attorneys' fees, expert witness fees and out-of-pocket costs incurred in connection with such proceeding, in addition to any other relief to which such prevailing party may be entitled. A breach by Seller of any of the promises or agreements contained herein will result in irreparable and continuing damage to NeoPhotonics for which there will be no adequate remedy at law, and NeoPhotonics shall be entitled to injunctive relief and/or a decree for specific performance, and such other relief as may be proper (including monetary damages if appropriate). The rights and remedies provided by NeoPhotonics herein shall be cumulative and in addition to any other rights and remedies provided by law or equity or those provide under the Uniform Commercial Code. All claims for monies due or to become due from NeoPhotonics under this Order are subject to deduction by NeoPhotonics for any setoff or counterclaim that NeoPhotonics may have against Seller. If any provision of this Order is held by a court of law to be illegal, invalid or unenforceable, (i) that provision shall be deemed amended to achieve as nearly as possible the same economic effect as the original provision, and (ii) the legality, validity and enforceability of the remaining provisions of this Order shall not be affected or impaired thereby. This Order and its provisions shall not be modified, amended or waived, except in a writing executed by both parties. Seller shall not subcontract or permit anyone other than Seller's employees to manufacture the Goods or perform any other work required to be performed by Seller under this Order without the prior written consent of NeoPhotonics. NeoPhotonics may delay payment and/or acceptance under this Order if such payment and/or acceptance are made impossible or impractical by causes beyond NeoPhotonics's control. Whenever Seller has knowledge that any actual or potential labor dispute is delaying or threatens to delay the timely performance of this Order, Seller shall immediately give notice thereof, including all  relevant information with  respect thereto, to  NeoPhotonics. Seller warrants that  no  law  or regulation of any governmental authority (including without limitation any federal, state or local law or regulation) has been violated by Seller in performance of its obligations under this Order. If the goods ordered herein are purchased for incorporation into products sold under United States Government contract or subcontract, the terms required or reasonably desired to be inserted by NeoPhotonics shall be deemed to apply to this Order. Seller shall comply with NeoPhotonics's corporate ethics and other relevant policies, copy(ies) of which are available from the office from which this Order was received

16. As per «FRAMEWORK OF STANDARDS TO SECURE AND FACILITATE GLOBAL TRADE », supplier should optimize the supply chain security continually to higher AEO lever.

 
SCHEDULE 8
LIST OF DOCUMENTATION FOR PRODUCTION PROCESS
	
				
	Document No.
	Product
	Type
	Document Description

	D000027509
	CFP2
	Specfication
	SPEC, PT-C24C3LDCL, CFP2 TVR, 100G CFP2 LR4 TRANSCEIVER, 
 TELECOM AND DATACOM, 10KM C-TEMP DUAL-RATE G2

	D000027510
	CFP2
	Specfication
	SPEC, PT-C24C3LECL, CFP2 TVR, 100G CFP2 LR4 TRANSCEIVER,  
TELECOM AND DATACOM, 10KM C-TEMP SINGLE-RATE G2

	D000028429
	CFP2
	Specfication
	RevA1.0_4x28G TOSA_OL3183M_171208

	D000031498
	CFP2
	Specfication
	4x28G Q-ROSA_PQR-C44C7PLCL SPEC_RevA1.1_181203

	D000031763
	CFP2
	QCFC
	Neo_Russia CFP2-LR4 G2 QCFC Rev A

	D000031764
	CFP2
	WI
	HOTBAR

	D000031765
	CFP2
	WI
	Visual inspection

	D000031766
	CFP2
	WI
	module assembly

	D000031767
	CFP2
	WI
	LC interface cleaning

	D000031768
	CFP2
	WI
	Testing

	D000031769
	CFP2
	WI
	Burn in

	D000031770
	CFP2
	WI
	temperature cycle

	D000031771
	CFP2
	WI
	eeprom check

	D000031772
	CFP2
	WI
	FQC check

	D000031773
	CFP2
	WI
	packing

	D000031774
	CFP2
	WI
	Rework WI

	D000031869
	CFP2
	TS
	TS_1000042365_V1.0

	D000031872
	CFP2
	TS
	TS_1000042366_V1.0

	D000027501
	CFP2
	EEPROM
	EEPROM MAP, PT-C24C3LDCL, CFP2 TVR, 100G CFP2,  
TELECOM AND DATACOM, 10KM C-TEMP DUAL-RATE G2

	D000027502
	CFP2
	EEPROM
	EEPROM MAP, PT-C24C3LECL, CFP2 TVR, 100G CFP2,  
TELECOM AND DATACOM, 10KM C-TEMP SINGLE-RATE G2

	D000027272_C
	CFP2
	PCB Outline Drawing
	PCB OUTLINE DRAWING, CFP2-LR4 G2

	D000028476
	CFP2
	FW
	Firmware History Affair Note--CFP2_LR4_G2 - Version D

	23-30430-01-J
	AWG
	Specfication
	SPECIFICATION, STANDARD PRODUCT,100GHZ WIDEBAND  
ATHERMAL AWG_

	D000031838
	AWG
	QCFC
	Rev.A Curve dice phaseII Athermal AWG (100G)QCFC

	D000031775
	AWG
	WI
	Fiber and connector Appearance Common Inspection  
Criteria doc Rev_A

	D000031828
	AWG
	WI
	SWS system calibration _Rev A

	D000031829
	AWG
	WI
	Athermal O-ring Packaging Assembly work instruction_Rev A

	D000031830
	AWG
	WI
	Return Loss Test Work Instruction _Rev A

	D000031831
	AWG
	WI
	Fiber_connector_endface_cleaning work instruction_Rev A

	D000031833
	AWG
	WI
	Athemal AWG Packaging Work Instruction _Rev A

	D000031834
	AWG
	WI
	Label Controlling and Printing Work Instruction _Rev A

	D000031835
	AWG
	WI
	PLC Product Final Visual Inspection _Rev A

	D000031836
	AWG
	WI
	Oven profile and operation _Rev A

	D000031837
	AWG
	WI
	Athermal Product Test Procedure _Rev A

	D000031839
	AWG
	WI
	A_AWG Inspection Criteria_A

	D000031918
	AWG
	WI
	Generate Datasheet Work Instruction Rev A

	D000031832
	AWG
	WI
	OP GDE,Operation Rule of Instrument Facility for  
ESZ-2CAESZ-3CAESZ-4CA High Low Temperature  
Chamber _Rev A

	D000031775
	General
	Quality control
	Fiber and connector Appearance Common  
Inspection Criteria doc Rev_A

	D000031791
	General
	Quality control
	PCBA inspection criteria A

	D000031834
	General
	Quality control
	Q-TOSA,Q-ROSA Final Inspection Criteria Rev A

	D000031840
	General
	Quality control
	Die-casting Parts incoming inspection criteria Rev A

	D000031841
	General
	Quality control
	Passive machine parts inspection criteria A

	D000031842
	AWG
	Quality control
	FA ASSY Cosmetic Inspection Criteria_Rev A

	D000031839
	AWG
	Quality control
	A_AWG Inspection Criteria_A

	D000031943
	CFP2
	Quality control
	CFP Module Inspection Criteria _Rev_A

 
SCHEDULE 9
SELLER’S PRODUCTION SPECIFICATION AND YIELD TARGETS
Production Yield for NeoPhotonics Module Products
As a deliverables item, personnel will:
		
	•
	Train NEO-RU current engineers in NeoChina plant for manufacturing technology transfers as required 

		
	•
	to produce AAWG modules products (using NeoPhotonics qualified athermal subassembly) and 

		
	•
	CFP2-LR4 module products (using NeoPhotonics qualified TOSA/ROSA subassemblies).

to NeoPhotonics production specifications with normalized yields.  AAWG modules and CFP2-LR4 modules are collectively the “Products”.  This Schedule defines normalized yields for the Products. 
The Products are specifically as follows:
	
		
	Product
	PN

	AAWG
	1000042377

	CFP2 LR4 single rate
	1000042366

Yield refers to the percentage of non-defective items of all produced items, and is indicated by the ratio of the number of non-defective items against the number of manufactured items.
Yield variance is the difference between actual output and standard output of a production or manufacturing process, based on standard inputs of materials and labor. 
First pass yield (FPY) is defined as the number of units coming out of a process divided by the number of units going into that process over a specified period of time. Only good units with no rework or scrap are counted as coming out of an individual process.
The actual yield is the actual amount produced when the production process is carried out.  AAWG and CFP2-OR4 modules yield is specifically concerned with First pass yield, or FPY.   Over time, there is normal variation in the output of the set of production process that precede the First pass yield determination.  The measurement of First pass yield for each product is determined as noted in the applicable product assembly work instructions.
The maximum percentage yield for a product process is 100%; the average yield is calculated using sampling from a population.  The lowest percentage yield under normal operation is reflected in control limits that reflect three sigma variation on the normal process.  For example, average percentage yield of 85% with standard deviation to the sample of the population of 5% means that the upper control limit (UCL) would be 100% (85% + 3*5%) and the lower control limit (LCL) would be 70% (85% - 3*5%).  Normalized yield is defined as percentage yield that is within the range of the UCL and LCL.  Therefore Target Yield for tech transfer of CFP2-LR4 and for AAWG is defined as the LCL of First pass yield.
Target Yield is based on NeoPhotonics China production data from over the period February through September 2018 as follows:
	
			
	Product
	100G AAWG
	CFP2-LR4

	Average percentage yield FPY
	89.1%
	85.6%

	Standard deviation of sample in FPY measures
	2.3%
	4.5%

	UCL
	96.0%
	99.1%

	LCL
	82.1%
	72.1%

	Target Yield
	82%
	72%

Achievement of Target Yield on first pass as shown above is within the range of LCL to UCL based on NeoPhotonics China production data from over time.  

 

SCHEDULE 10
TECHNICAL SERVICES AGREEMENT

Dated December __, 2018

TECHNICAL SERVICES AGREEMENT

between

NEOPHOTONICS CORPORATION, LLC 
and

NEOPHOTONICS CORPORATION

 
This agreement is made the __ day of December, 2018

between

NEOPHOTONICS CORPORATION, LLC, a company registered in the Russian Federation, main state registration number 1127746681710, located at Volgogradsky Prospekt 42, building 5, Moscow 109548, Russia (the “Client”);

and

NEOPHOTONICS CORPORATION, a company incorporated under the laws of Delaware, the United States of America, located at 2911 Zanker Road, San Jose, CA 95134 United States of America (the “Consultant”).

WHEREAS:

		
	A.
	The Consultant agreed to sell 100% of the outstanding participation interests in the capital of the Client to JSC "RUSNANO" (the “Purchaser”) and its affiliate pursuant to the Framework Purchase Agreement dated December ___, 2018 (the “FPA”);

		
	B.
	The Purchaser wishes the Client to receive certain technical services from the Consultant after the completion of the Tech Transfer (as defined in the FPA);

		
	C.
	The Consultant has agreed to provide such services to the Client; and

		
	D.
	The Parties have agreed that the services will be undertaken on the basis of this Agreement (as defined below).

THE PARTIES AGREE AS FOLLOWS:
    
		
	1.
	DEFINITIONS AND INTERPRETATION

		
	1.1.
	The following words and phrases have the meaning set out next to them unless the context otherwise requires:

AAWG means Athermal Arrayed Waveguide Grating (100 GHz 40 channel module);
Affiliate or Affiliated means in relation to a person (a) a person directly or indirectly Controlled by, or under common Control with that person; or (b) a person owning or controlling fifty (50) per cent or more of the issued voting securities or beneficial interests of the first person; or (c) a director, partner or member of the immediate family of a director or partner, of the first person and in the case of a trust, any trustee or beneficiary (actual or potential) of that trust.
Agreement means this technical services agreement including any attachments or schedules;
Business Day means any day excluding a Saturday, Sunday or holiday on which banks are open for business both in the Russian Federation and in the United States of America;
CFP2-LR4 means CFP2-LR4 100 Gbps transceiver modules;
Commencement Date means the next business day after the date of completion of the Tech Transfer (as defined in the FPA);
Confidential Information means, subject to the exceptions in clause 11, any information of whatever kind whether communicated verbally, in writing or in any other form which is original information or a work product that has been derived or constructed from or using that original information; and relates to the disclosing Party's technology, know how, business, finances or customers or any such information relating to any associated company, Consultant or customer of the disclosing Party and is received as a result of the discussions leading up to this Agreement or during the period of this Agreement;
Control means, in relation to a company or other entity: (i) the legal power to secure directly or indirectly that the affairs of such entity are conducted in accordance with his or its wishes, including to direct or cause the direction of its general management and policies; (ii) the ability to appoint, directly or indirectly, the majority of its directors or executive officers; (iii) the ability to exercise, directly or indirectly, a majority of the votes exercisable at a general meeting; or (iv) the right to receive, directly or indirectly, a majority of the proceeds arising from: (a) any declaration of a dividend; or (b) a distribution arising in the course of winding up, whether solvent or insolvent, or any return of capital to shareholders or members; and the expressions Controlled and Controlling shall be construed accordingly.
Dispute has the meaning specified in clause 12.5.1;
Fee for Services has the meaning specified in clause 2.2;
Force Majeure Event has the meaning specified in clause 14.1;
Party shall mean either the Client or the Consultant and “Parties” shall mean both of them;
Products shall mean AAWG and CFP2-LR4;
Rules has the meaning specified in clause 12.5.1;
Services has the meaning specified in clause 2.1.
		
	1.2.
	References to statutory provisions will be construed as references to those provisions as amended or re-enacted or as their application is modified by other provisions from time to time and will include references to any provisions of which they are re-enactments (whether with or without modification).

		
	1.3.
	References to clauses and schedules are references to clauses of and schedules to this Agreement, references to sub clauses are, unless otherwise stated references to sub clauses of the clause in which the reference appears.

		
	1.4.
	Any reference to any agreement or document is a reference to such agreement or document as it may have been or may from time to time be amended, novated, supplemented or replaced by a document having similar effect.

		
	1.5.
	References to the plural include the singular and vice versa.

1.6.    References to any gender include a reference to all other genders.
		
	1.7.
	References to an individual will include his personal representatives.

		
	1.8.
	The words “including” and “in particular” are to be construed as being by way of illustration or emphasis only and are not to be construed as, nor will they take effect as, limiting the generality of any foregoing words.

		
	1.9.
	The words “other” or “otherwise” are not to be construed as being within the same class or grouping as any foregoing words where a wider construction is appropriate in the context.

		
	1.10.
	The headings and sub headings and any contents page are inserted for convenience only and will not affect the construction of this Agreement.

		
	2.
	AGREEMENT

		
	2.1
	After the Commencement Date, if and when requested by the Client, the Consultant shall provide the following services (the “Services”) to the Client:

		
	•
	Technical support and assistance at Client’s Moscow, Russia facility premises as requested by Client to fix any Moscow facility equipment operation malfunctioning and to ensure reliable manufacturing AAWG and CFP2-LR4 according to the manufacturing capacities of the equipment;

		
	•
	Reasonable remote technical support and assistance as requested by Client to fix any Moscow facility equipment operation malfunctioning and to ensure reliable manufacturing AAWG and CFP2-LR4 according to the manufacturing capacities of the equipment.

		
	2.2
	For the provision of the Services, the Client shall pay the Consultant a fee of either (i) $9,000.00 United States Dollars (USD) per week for an engineer working to assist Client remotely or (ii) $15,000.00 USD per week for an engineer if travel is required or (iii) as otherwise agreed between the parties (the “Fee for Services”).

		
	3.
	PERIOD FOR PROVIDING SERVICES

The Consultant shall provide the Services under this Agreement if and when requested by the Client, subject to the termination provisions of this Agreement, for the period from the Commencement Date until 30 September 2019.  Any Services provided by the Consultant after such date shall be subject to a separate agreement between the Parties.  
		
	4.
	CONSULTANT UNDERTAKINGS

The Consultant shall ensure that the Services are performed by qualified and trained personnel of the Consultant with reasonable skill, care and diligence to the standards to be expected of a professional Consultant and commensurate with the standards of Consultant’s overall business.  
		
	5.
	TERMINATION DUE TO INSOLVENCY

Either Party may, at any time by notice in writing to the other Party, terminate this Agreement as from the date of service of such notice if the other Party:
		
	5.1
	suspends or ceases to carry on (or threatens to suspend or cease to carry on) all or a material part of its business; 

		
	5.2
	stops or suspends payment of any of its debts or is unable to, or admits its inability to, pay its debts as they fall due;

		
	5.3
	has a moratorium declared in respect of any of its indebtedness;

		
	5.4
	has any action, proceedings, procedure or step taken in relation to the suspension of payments, a moratorium of any indebtedness, winding up, dissolution, administration or reorganisation (using a voluntary arrangement, scheme of arrangement or otherwise); 

		
	5.5
	suffers the appointment of a liquidator, receiver, administrative receiver, administrator, compulsory manager or other similar officer in respect of itself, or

		
	5.6
	has any event occur in relation to it that is analogous to those set out above in any jurisdiction.

		
	6.
	TERMINATION FOR CONVENIENCE

The Client may, upon a 1-month written notice, and the Consultant may, upon a 2-month written notice (which notice cannot be sent before the Commencement Date), request the termination of this Agreement for convenience. 
		
	7.
	TERMINATION OR SUSPENSION ON BREACH OF CONTRACT

		
	6.1
	Either Party may at any time, by notice in writing to the other Party, terminate this Agreement immediately where the other Party commits a material breach of its obligations under this Agreement which is incapable of remedy. 

		
	6.2
	Either Party may, at any time by notice in writing to the other Party, terminate this Agreement where the other Party commits a material breach of any of its obligations in this Agreement and such breach is not remedied within the period agreed between the Parties at the time, but which in any event shall not be greater than 30 days after receipt of the notice.

		
	6.3
	The Consultant may suspend the provision of Services hereunder by notice in writing to the Client if the Client fails to pay any portion of the Fee for Services which has become due and payable and such failure continues for 30 days or more after the issuance of the relevant invoice (including in the case of the failure of the Parties to execute an act of acceptance with respect to the services for any reason).

		
	8.
	PAYMENT ON TERMINATION

If this Agreement is terminated for any reason, the Client shall pay to the Consultant the Fee for Services or a pro-rata portion thereof which reflects the Services performed for the Client up to the date of such termination.
		
	9.
	PAYMENT TERMS

		
	9.1
	The Consultant will issue invoices to the Client on a monthly basis for the Fee for Services. 

		
	9.2
	The Client shall pay the relevant invoice within fifteen (15) Business Days from the day the invoice is received by the Client.  The Client shall not deduct or withhold any amounts in respect of tax from the payment amount of any invoice unless required by applicable law, in which case the Client shall increase the amount payable under the invoice so that the net amount actually received by the Consultant equals the amount it would have received but for such deduction or withholding.

		
	9.3
	The Client and the Consultant shall execute a respective act of acceptance with regard to the services performed by the Consultant, in form and substance satisfactory to the Client. Notwithstanding the foregoing, failure to execute such act of acceptance shall not relieve the Client of the obligation to pay the relevant invoice as set out in Clause 9.2.

		
	10.
	LIABILITIES

		
	10.1
	The Consultant’s total liability under this Agreement, howsoever caused, arising out of or in connection with any Services provided under this Agreement shall not exceed the aggregate Fee for Services actually paid by the Client to the Consultant under this Agreement at the time of determination.

		
	10.2
	Except as set out above, the Consultant shall not be liable for indirect loss howsoever caused.

		
	11.
	CONFIDENTIALITY

		
	11.1
	Both Parties shall, at all times during the period of this Agreement and after termination:

		
	11.1.1
	keep all Confidential Information confidential and not to disclose any Confidential Information to any other person; and

		
	11.1.2
	not use any Confidential Information for any purpose other than the performance of its obligations under this Agreement.

		
	11.2
	Any Confidential Information may be disclosed by the receiving Party to:

		
	11.2.1
	any governmental or other authority or regulatory body; or

		
	11.2.2
	any employees, and (when permitted) any agents or sub-contractors of it;

but only to such extent as is necessary for the purposes contemplated by this Agreement or as required by law and subject in each case to the relevant Party ensuring that the person in question keeps the same confidential and does not use the same except for the purposes for which the disclosure was made.
		
	11.3
	Confidential Information shall not include any information that:

		
	11.3.1
	is, or has at the relevant time come to be, in the public domain other than as a result of disclosure by the receiving Party (or any of its employees, agents or sub-contractors); or

		
	11.3.2
	is already in, or at any relevant time comes into, the receiving Party's possession free from any obligation of confidentiality as demonstrated by written evidence.

		
	11.4
	The Parties will keep confidential the contents of this Agreement and the negotiations leading to it and any documents, files and information made available pursuant to it, except insofar as such matters are required to be disclosed by law. 

		
	12.
	AMENDMENTS

Any amendments or additions to this Agreement must be evidenced in writing and signed by the authorised representatives of both Parties.
		
	13.
	ASSIGNMENT

		
	13.1
	The Client may assign this Agreement to any third party upon consent of the Consultant; such consent not to be unreasonably withheld or delayed. The Client may assign and/or transfer this Agreement and all rights and obligations of the Client hereunder without the consent of the Consultant to (i) an Affiliate of the Buyer, or (ii) a person or entity acquiring all or substantial all of the assets of the Buyer, whether by sale, acquisition, merger, operation of law or otherwise, provided that in either case such person is not a competitor of the Consultant or its Affiliates (it being understood and agreed that a "competitor" means an entity deemed by the Consultant or its Affiliates to be a threat to its core business (principally outside of the Russian Federation) due to technology, products or related competitive actions or strategies). For the avoidance of doubt, consent of the Consultant shall not be required for such assignment and/or transfer. For the avoidance of doubt, change of Control over the Client shall not affect the rights and obligations of the Parties hereunder provided that the person acquiring Control over the Client is not a competitor of the Consultant or its Affiliates.

		
	13.2
	Neither Party shall subcontract this Agreement or its obligations under it without the prior written consent of the other Party. 

		
	14.
	FORCE MAJEURE

		
	14.1
	Neither Party will be liable for any delay in performing or failure to perform any of its obligations under this Agreement caused by events beyond its reasonable control (“Force Majeure Event”). 

		
	14.2
	The Party claiming the Force Majeure Event will promptly notify the other Party in writing of the reasons for the delay or stoppage (and the likely duration) and will take all reasonable steps to overcome the delay or stoppage.

		
	14.3
	If the Party claiming the Force Majeure Event has complied with clause 14.2 its performance under this Agreement will be suspended for the period that the Force Majeure Event continues, and the Party will have an extension of time for performance which is reasonable. As regards such delay or stoppage:

		
	14.3.1
	either Party may, if the delay or stoppage continues for more than 30 continuous days, terminate this Agreement with immediate effect on giving written notice to the other Party, and neither Party will be liable to the other for such termination; and

		
	14.3.2
	the Party claiming the Force Majeure Event will take all necessary steps to bring that event to a close or to find a solution by which this Agreement may be performed despite the Force Majeure Event.

		
	15.
	NOTICES

		
	15.1
	Any notice or communication given or in connection with this Agreement will be sent by email and given or sent in writing to:

	
		
	In the case of Client:
	In the case of the Consultant:

	NEOPHOTONICS CORPORATION, LLC
Address:_____________________
____________________________
	NEOPHOTONICS CORPORATION
2911 Zanker Road
San Jose, CA 95134 
United States of America

	 
	 

	Email:   ______________________
	Email: Legal@neophotonics.com

	Attention: __________________
	Attention: General Counsel

		
	15.2
	Any such notice or other communication will be conclusively deemed to have been given upon the earlier of (a) the time of delivery or (b) if by email, then upon an acknowledgement of receipt of such email.

		
	15.3
	Any such notice or communication given after 5.00 pm on a Business Day or on a day other than a Business Day will conclusively be deemed to have been received at the start of the next Business Day.

		
	15.4
	A Party may change its address and other particulars listed in this clause 15 for the purpose of addressing notices to it by providing the other Party with notice of such change not less than 5 Business Days before such change is to become effective.  

		
	16.
	GENERAL

		
	16.1
	It is hereby acknowledged and agreed that nothing in this Agreement will be constituted as giving rise to any relationship of agency or partnership between the Parties. In fulfilling its obligations hereunder, each Party will be acting entirely for its own account.

		
	16.2
	The exercise or failure to exercise any right under this Agreement will not, unless otherwise provided, constitute a waiver of that or any other right.

		
	16.3
	If any provision of this Agreement is found by any court or administrative body of competent jurisdiction to be invalid or unenforceable, the invalidity or unenforceability of such provision shall not affect the other provisions of this Agreement, and all the other provisions of this Agreement shall remain in full force and effect.  The Parties agree to negotiate in good faith to substitute for any invalid or unenforceable provision a valid or enforceable provision which achieves to the greatest extent possible the economic legal and commercial objectives of the invalid or unenforceable provision.

		
	17.
	COSTS

Each Party will pay its own costs relating to the negotiation, preparation, execution and implementation by it of this Agreement and of each document referred to in it.
		
	18.
	COUNTERPARTS

This Agreement may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Agreement.
		
	19.
	 GOVERNING LAW INTERPRETATION

		
	19.1
	This Agreement shall be governed by the law of the state of Delaware, USA.

		
	19.2
	This Agreement and any disputes or claims arising out of or in connection with its subject matter or formation (including any contractual or non-contractual obligation, dispute, controversy or claim arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination on-contractual disputes or claims), including any question regarding its existence, validity or termination will be referred to and finally resolved by Arbitration Institute of the Stockholm Chamber of Commerce under Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce (the "Rules").  The place of arbitration shall be Stockholm.  The arbitration shall be in English.  There shall be 3 arbitrators appointed in accordance with the Rules.

IN WITNESS WHEREOF the duly authorised officers of the Parties have signed this Agreement on the day and year first written above.

NEOPHOTONICS CORPORATION, LLC

Signature:_________________________
Name:  ___________________________
Title:  General Director

NEOPHOTONICS CORPORATION

Signature:_________________________
Name: ___________________________
Title: ____________________________
 
SCHEDULE 11
LIST AND VALUATION OF EQUIPMENT CONSTITUTING EQUIPMENT CONTRIBUTION

	
							
	No п/п
	Описание
	Модель
	Дата производ-ства
	Рыночная стоимость без НДС
	Кол. шт.
	Общая сумма

	1
	Оптический коммутатор среднего размера
	86061C
	Apr-06
	162 467р.
	1
	162 467р.

	2
	Климатическая камера
	ESZ-2CA
	Apr-06
	474 324р.
	1
	474 324р.

	3
	Шасси оптического инструментального ресивера сканирующей системы SWS с модулями
	OWB10002
	Apr-06
	127 852р.
	3
	383 556р.

	4
	Калибратор оборудования
	SRM2519
	Jun-00
	275 469р.
	1
	275 469р.

	5
	Плата AT-DIO-32F
	AT-DIO-32F
	Jun-00
	10 541р.
	1
	10 541р.

	6
	Плата PCI-GPIB
	NI PCI-GPIB NI-488.2
	Jun-00
	8 899р.
	8
	71 192р.

	7
	Перестраиваемый источник лазерного излучения
	SWS15101
	Jun-00
	652 096р.
	1
	652 096р.

	8
	Оптический модуль
	SWS15102
	Sep-07
	182 177р.
	1
	182 177р.

	9
	Четырехпозиционный контроллер поляризации
	SWS15104
	Nov-00
	211 647р.
	1
	211 647р.

	10
	Патчкорд оптический
	FC/APC-FC/UPC,SM,Φ3mm, 3M, 2М, 30М
	Jan-18
	3 690р.
	1
	3 690р.

	11
	Адаптер
	PA-342-001C-000
	Nov-07
	1 209р.
	2
	2 418р.

	12
	Обдувочный пневмопистолет
	DC-10
	Nov-07
	126р.
	2
	252р.

	13
	Настольный видеомикроскоп
	FV-210P
	Aug-08
	11 362р.
	6
	68 172р.

	14
	Измеритель вносимого затухания и возвратных потерь с инструментами для настройки
	BR5
	May-08
	302 662р.
	1
	302 662р.

	15
	Электрическая отвертка
	S-3
	Jan-15
	1 609р.
	1
	1 609р.

	16
	Тестер оптический
	BD-281
	Aug-09
	12 783р.
	1
	12 783р.

	17
	Стереомикроскоп
	SZ6745-ST1
	Aug-08
	16 062р.
	4
	64 248р.

	18
	Ионный вентилятор
	HX-DC011
	Aug-00
	1 699р.
	5
	8 495р.

	19
	Индукционная паяльная станция
	Quick203
	Jul-16
	7 002р.
	2
	14 004р.

	20
	Нагревательный столик для пайки
	HP-200T
	Sep-16
	6 377р.
	13
	82 901р.

	21
	Установка пульсовой сварки
	TM-100P-0215
	Jul-16
	307 243р.
	1
	307 243р.

	22
	Ионный вентилятор
	AP.DC2458
	Jul-16
	5 268р.
	2
	10 536р.

	23
	Дозатор паяльной пасты с приспособлением для крепления
	7016249
	Aug-08
	42 065р.
	1
	42 065р.

	24
	Динамометрическая отвертка
	RTD 15CN
	Jul-16
	7 154р.
	2
	14 308р.

	25
	Устройство для резки с прессом
	Neo-018
	Aug-08
	1 336р.
	1
	1 336р.

	26
	Осциллограф со встроенными модулями
	86100D
	Jul-10
	2 142 795р.
	3
	6 428 385р.

	27
	Анализатор оптического спектра
	AQ6370D
	Mar-08
	1 359 420р.
	3
	4 078 260р.

	28
	Измеритель мощности
	PM-1623
	Dec-07
	67 157р.
	2
	134 314р.

	29
	Устройство восстановления данных и тактового сигнала оптических и электрических данных (OE-CDR) с низким  джиттером
	100G-LR4-OE-CDR-EVB
	Mar-17
	228 802р.
	3
	686 406р.

	30
	Пельтье-термоэлектрический пластинчатый охладитель
	CP-200HTTT
	Sep-16
	32 866р.
	7
	230 062р.

	31
	Мультиметр для оптических измерений cо встроенным модулем
	8163B
	Jun-00
	285 073р.
	1
	285 073р.

	32
	Мультиметр для оптических измерений cо встроенным модулем
	AQ2211
	Sep-11
	117 982р.
	4
	471 928р.

	33
	Волокно Катушка 10 км
	SMF-28e(10KM) G652.D
	Dec-07
	65 018р.
	3
	195 054р.

	34
	Регулируемый оптический аттенюатор
	VOA-S-1310-45-FU-FU-M-1
	Aug-16
	82 875р.
	1
	82 875р.

	35
	Полупроводниковый оптический усилитель
	HY-SOA-06-FC/APC
	Jun-00
	22 253р.
	1
	22 253р.

	36
	Устройство очистки оптических коннекторов
	FCL-B1000
	Jul-00
	64 306р.
	1
	64 306р.

	37
	Термометр контактный
	Fluke 52 II
	Mar-17
	20 929р.
	1
	20 929р.

	38
	Термометр для измерения температуры жала паяльника или температуры припоя.
	191A
	Mar-17
	700р.
	1
	700р.

	39
	Измеритель оптической мощности
	FPM-302
	May-10
	20 021р.
	1
	20 021р.

	40
	Клеевой пистолет
	AB-608-60W
	Mar-17
	473р.
	1
	473р.

	 
	 
	 
	 
	7 343 789р.
	 
	16 081 230р.

 
 SCHEDULE 12
SELLER'S PROTECTION
This Schedule 12 applies to all claims by the Purchasers against the Seller under this Agreement, other than claims excluded from operation of clause 2.6 as indicated therein. 
		
	1
	Limits on Claims

The Seller shall not be liable for any claim unless and until Completion has occurred. 
		
	2
	Amounts

		
	(a)
	The aggregate liability of the Seller for all and any claims under this Agreement is set out in Clause 2.6.

		
	(b)
	The liability of the Seller in respect of any claim (or several claims in aggregate)for breach of warranties indicated in Schedule 13 shall not arise unless and until the amount of such claim (or several claims in aggregate) exceeds USD 25,000 or its equivalent in any other currency. For the avoidance of doubt, the Seller shall be liable even in the event a single claim does not exceed USD 25,000, but several claims in aggregate exceed such amount. For further avoidance of doubt, if any claim or several claims in aggregate exceed USD 25,000, the Seller shall be liable for the whole amount of claim (claims) and not merely the excess.

		
	(c)
	For the avoidance of doubt, the Seller shall be liable for all reasonable legal and other professional fees and expenses payable by the Purchaser or the Company in respect of any breach of any warranty indicated in Schedule 13, including to enforce and preserve the rights of the Purchasers in connection with such breach so long as such fees and expenses are within the aggregate limit of liability of the Seller.

		
	3
	Time

The Seller shall not be liable unless a Purchaser gives a notice in writing specifying full particulars of a claim (including the amount) within 24 months after the Completion Date, provided that any such claim shall (if not previously satisfied, settled or withdrawn) be deemed to have been withdrawn unless legal proceedings in respect of it have been commenced within twelve (12) months of such written notice being given to the Seller.
		
	4
	Other Exclusions 

The Seller shall not be liable:
		
	(a)
	if a claim would not have arisen but for any changes made after Completion in the accounting bases, policies, practices or treatment of the Company after the Completion;

		
	(b)
	to the extent that the claim arises or increases because of:

		
	(i).
	any change in, any law coming into effect after the date of this Agreement (which is not prospectively in force at the date of this Agreement); or

		
	(ii).
	any increase in the rates of any Taxation, or the imposition of any new Taxation coming into effect after the date of this Agreement (which is not prospectively in force at the date of this Agreement);

		
	(c)
	which is contingent only, unless and until the contingent liability to which the claim  relates becomes an actual liability and is due and payable (but without prejudice to the right of the Purchaser to give a notice of claim related to such liability);

		
	(d)
	to the extent that the losses in respect of a claim are actually recovered under any policy of insurance, or the matter giving rise to such claim has been compensated without loss to the Purchasers or the Company.

		
	5
	Mitigation 

Nothing in this Schedule 13 restricts or limits the general obligation of the Purchasers to mitigate any loss or damage which it may incur in consequence of a matter giving rise to a claim under the Seller's Warranties. 

 
SCHEDULE 13 
 
SELLER’S WARRANTIES
		
	1
	Warranties related to the Seller 

		
	(a)
	The Seller is solvent or able to pay its debts within the meaning of applicable insolvency laws, and has not stopped paying its debts as they fall due and (to the Seller’s knowledge) there is no threatened action, suit, investigation or similar proceeding for the dissolution, liquidation, or insolvency of the Seller. The Seller is entering into the Transactions for its own benefit. 

		
	(b)
	There is no statutory basis for the Seller to be obliged to make a decision on its liquidation or bankruptcy or for third parties to apply to a court for the liquidation or bankruptcy of the Seller. 

		
	(c)
	The Seller does not have any Liability to pay any compensation to any broker, finder, or agent with respect to the Transactions for which the Purchaser or the Company could become directly or indirectly liable.

		
	(d)
	No stamp duty or similar Tax is payable in the jurisdiction of the Seller in connection with the Transactions.

		
	2
	The Company

		
	(a)
	The Company is an entity duly created, formed or organised, validly existing, and in good standing under the laws of the Russian Federation. The particulars of the Company and the Participatory Interest set out in Schedule 1 are complete, true and correct. 

		
	(b)
	The Company is duly authorised and has the requisite power and authority necessary to conduct its business and is in good standing under the laws of each jurisdiction where such qualification is required. 

		
	(c)
	The Company has no Subsidiaries, branches or representative offices; and does not control, directly or indirectly, or has any direct or indirect Equity Securities in any person.

		
	(d)
	The copies of the Company's Constitutive Documents that were provided to the Purchasers are accurate and complete and reflect all amendments made through the date hereof. The Company's records made available to the Purchasers for review were correct and complete as of the date of such review, no further entries have been made through the date of this Agreement.

		
	(e)
	The Register of the participants of the Company is true and accurate.

		
	(f)
	The Company is solvent and able to pay its debts within the meaning of applicable insolvency laws, and has not stopped paying its debts as they fall due and there is no threatened action, suit, investigation or similar proceeding for the dissolution, liquidation, or insolvency of the Company. 

		
	3
	Effect of the Transaction

The execution and the delivery of this Agreement and the performance and consummation of the Transactions by the Seller will not:
		
	(a)
	breach any Applicable Law or Order to the Company is subject or any provision of its Constitutive Documents;

		
	(b)
	breach any Consent by which the Company is bound or to which any of the Company's assets is subject;

		
	(c)
	require any Consent to be obtained by or on behalf of the Company; or 

		
	(d)
	trigger any rights of first refusal, preferential purchase or similar rights with respect to the  Company.

		
	4
	The Participatory Interest

		
	(a)
	All of the issued and outstanding participatory interests in the Company (a) have been duly authorised and are validly issued, fully paid, and non-assessable, (b) were issued in compliance with all Applicable Laws, (c) were not issued in breach of any commitments, and (d) are held of record and owned beneficially solely by the Seller. The Company does not have any Commitments outstanding nor has any obligation to issue any Commitments. There are no Contracts with respect to the voting or transfer of the Company's Equity Securities. There are no resolutions on contribution to the assets of the Company that have not been fulfilled (it being understood that the Equipment Contribution and/or the Intellectual Property Contribution might not be completed as of the date of the Agreement but will be completed not later than the Completion Date).

		
	(b)
	Other than the Participatory Interest, the Company has not issued any Equity Securities. 

		
	(c)
	The Seller is the sole legal and beneficial owner of the Participatory Interest free and clear of any Encumbrances, and is entitled to sell, transfer, convey, assign and deliver to Purchaser 1 the full legal and beneficial ownership of Participatory Interest 1, and to Purchaser 2 the full legal and beneficial ownership of Participatory Interest 2, in each case free of any Encumbrances and third party rights. 

		
	(d)
	Neither the Seller nor the Company has received nor is it aware of any claims from any person with respect to the legal title, other rights including right to demand title to or benefit from, or an Encumbrance over, any or all of the Participatory Interest (whether exercisable now or in the future and whether contingent or not), and to the Seller's knowledge no facts or circumstances exist that may give rise to any of the foregoing.  

		
	5
	Management Accounts

		
	(a)
	The management accounts of the Company dated as at 30 September 2018 (the “Accounts Date”), a copy of which is attached to the Agreement as Schedule 14 (the “Management Accounts”), have been prepared in accordance with applicable accounting standards and fairly present the assets, liabilities (including all reserves, allowances, provisions, liabilities and commitments contingent or otherwise) and the financial position of the Company as of the Accounts Date, and, so far as the Seller is aware, there has been no Material Adverse Effect on the assets, liabilities and financial position (including off-balance sheet transactions) of the Company since the Accounts Date.

		
	(b)
	The Management Accounts make proper provision or reserve for or, in the case of actual liabilities, properly disclose, note or take into account as at the Accounts Date:

		
	(i)
	All known liabilities whether actual contingent or disputed;

		
	(ii)
	all known capital commitments whether actual or contingent;

		
	(iii)
	all known bad and doubtful debts; and

		
	(iv)
	all known taxation,

in each case to the extent required by generally accepted accounting practice.
		
	5.
	Books and Records

So far as the Seller is aware, the information set out in the corporate books of account and all other records of the Company (including without limitation the Management Accounts) is current, complete and accurate in all material respects, without any omission of any material fact, and no material entry has been destroyed or tampered with in such records; all material corporate measures have been duly and formally authorized by appropriate corporate action.
		
	6.
	Tax Matters

So far as the Seller is aware, the Company 
		
	(a)
	has complied with all material requirements in respect of Tax imposed by Applicable Law;

		
	(b)
	has duly made within any required time period all necessary declarations and reports to the relevant fiscal body for Taxation, and  

		
	(c)
	has properly and punctually paid all Tax which it has become liable to pay.  

		
	7.
	Ownership of Assets

		
	(a)
	The Intellectual Property Contribution will be duly completed not later than the Completion Date. So far as the Seller is aware, no Taxes are payable or will be payable by the Company in connection with the Intellectual Property Contribution.

		
	(b)
	The Company has good and marketable title to and legal and beneficial ownership of all its respective property, free and clear of all liens and encumbrances. The Company has not permitted or created any Encumbrance of any kind over any of the assets.

		
	(c)
	So far as the Seller is aware, after its entry into the Manufacturing License Agreement, the Company will have valid contractual or legal rights to all objects, facilities, services, properties, assets and intellectual property, free and clear from any Encumbrance except as set out in the Manufacturing License Agreement, necessary for the carrying on of the business of the Company in the manner in which it is presently carried on and for the future production of CFP2– LR4 and AAWG (100 GHz). The Seller has sufficient right, title and authority to grant the rights and/or licenses under the Manufacturing License Agreement to the Company.  So far as the Seller is aware, entering into and performing the Manufacturing License Agreement and the provision of respective license to the Company thereunder will not infringe or violate any third party rights, including any third party intellectual property rights.

		
	(d)
	Not later than the Completion Date, the Company will become the sole valid legal owner of the equipment listed in Schedule 11 to the Agreement pursuant to the Equipment Contribution, free and clear from any Encumbrance.

		
	8.
	Litigation 

		
	(a)
	The Company is not engaged, whether as claimant, defendant or otherwise, in any legal action, proceeding or litigation which is either in progress or, so far as the Seller is aware, is threatened.

		
	(b)
	No Governmental Authority is conducting an official investigation or inquiry concerning the Company, or, so far as the Seller is aware, has threatened to do so.

		
	9.
	Compliance with Laws

So far as the Seller is aware, 
		
	(a)
	The Company is and has been acting in compliance with all material obligations, duties, requirements imposed by Applicable Law and with every order, decree, or resolution by any relevant Governmental Authority which are currently in force and binding upon the Company except for any non-compliance which would not have a Material Adverse Effect with respect to the Company. 

		
	(b)
	The Company has obtained and is currently in possession of all material Consents, permits, licenses and any similar authorizations required under Applicable Law necessary for the operation of its business.  Except for any default which would not have a Material Adverse Effect with respect to the Company, the Company is not and has not been in default under any of such Consents, permits, licenses or other similar authority.

		
	10.
	Employment Matters

		
	(a)
	The Company is in compliance with all Applicable Laws concerning labour, health and safety laws, regulations regarding employment and employment practices, terms and conditions of employment, wages and hours, and laws and regulations concerning health and safety in the workplace except for any non-compliance which would not have a Material Adverse Effect on the Company. 

		
	(b)
	So far as the Seller is aware, no employment-related complaint or grievance exists.

		
	(c)
	There are no agreements or other arrangements (binding or otherwise) outstanding or anticipated claims or disputes between the Company and any trade union or other body representing all or any of the employees of the Company. 

		
	(d)
	There are no contracts or arrangements between the Company and any of its employees that contain any unusual or non-market payment conditions or termination provisions other than retention and termination bonuses, the existence of which has been disclosed to the Purchaser. The Company has not issued any options to acquire participatory interest in the Company to its employees.  

		
	(e)
	So far as the Seller is aware, the Company has always timely paid wages and does not owe any debts to its employees in connection with their employment or otherwise except normal accrual through the current date, plus items noted in paragraph 10(d).

		
	11.
	Insurance Matters

The Company does not have any insurance policies other than insurance policies required by Applicable Law with respect to employees of the Company.
		
	12.
	 Environmental Matters

So far as the Seller is aware, the Company has operated in material compliance with all Applicable Laws concerning the protection of the environment and has not received written notice of any violation of such laws.
 
 SCHEDULE 14 
 
MANAGEMENT ACCOUNTS

	
				
	
	NEOPHOTONICS RUSSIA
SEP-18  USD

	GLOBAL BS DTL
	 
	 
	 

	ACCOUNT DESCRIPTION
	 
	 

	 
	 
	 
	NEO RUSSIA

	 
	 
	 
	SEP-18

	ASSETS
	 
	 
	 

	Cash and Cash Equivalents
	 
	 
	 

	Cash Bank Russia - RUB
	 
	 
	117.27

	Cash Bank - RUB (Budgeted)
	 
	 
	119,561.70

	Cash Bank - USD
	 
	 
	11,386.53

	 
	 
	 
	--------------

	     Total Cash and Cash Equivalents
	 
	 
	131,065.50

	 
	 
	 
	--------------

	 
	 
	 
	--------------

	Inter-Company Receivables
	 
	 
	 

	InterCo Other Receivable
	 
	 
	114,139.36

	InterCo Other Receivable
	 
	 
	15,102.84

	 
	 
	 
	--------------

	     Total Inter-Company Receivables
	 
	 
	129,242.20

	 
	 
	 
	--------------

	Inventories,Net
	 
	 
	 

	Inventories - Receiving Inventory Account
	 
	 
	2,647.13

	Inventories - Raw Materials
	 
	 
	559,812.93

	Inventories - Raw Materials - Org Default
	 
	 
	(130.200)

	Inventories - WIP
	 
	 
	(53.720)

	Inventories - WIP - Pull Materials
	 
	 
	25.28

	Inventories - Finished Goods
	 
	 
	242,411.43

	Inventories Intercompany - Intransit
	 
	 
	26,540.00

	Inventories Reserves - RM
	 
	 
	(588,841.420)

	Inventories Reserves - FG
	 
	 
	(242,411.430)

	 
	 
	 
	--------------

	     Total Inventories, Net
	 
	 
	0.00

	 
	 
	 
	--------------

	Prepaid and Other Current Assets
	 
	 
	 

	Other Receivables – Misc Non AR
	 
	 
	21,356.01

	 
	 
	 
	--------------

	     Total Prepaid and Other Current Assets
	 
	 
	21,356.01

	 
	 
	 
	--------------

	Assets Held for Sale
	 
	 
	 

	Assets-Held-for-Sale
	 
	 
	555,463.30

	Assets Held For Sale - PP&E - Cost
	 
	 
	5,856,803.81

	Assets Held For Sale - PP&E - Accum Depr
	 
	 
	(3,483,383.230)

	 
	 
	 
	--------------

	     Total Assets Held for Sale
	 
	 
	2,928,883.88

	 
	 
	 
	--------------

	     TOTAL CURRENT ASSETS
	 
	 
	3,210,547.59

	 
	 
	 
	--------------

	Property, Plant & Equipment
	 
	 
	 

	Machinery & Equipment - Manufacturing
	 
	 
	208,403.04

	 
	 
	 
	--------------

	     Total Property, Plant & Equipment
	 
	 
	208,403.04

	 
	 
	 
	--------------

	Accumulated Depreciation & Amortization
	 
	 
	 

	Accum Depr - Machinery & Equipment - Manufacturing
	 
	 
	(76,414.450)

	 
	 
	 
	--------------

	     Total Accumulated Depreciation & Amortization
	 
	 
	(76,414.450)

	 
	 
	 
	--------------

	     Net Property, Plant & Equipment
	 
	 
	131,988.59

	 
	 
	 
	--------------

	 
	 
	 
	--------------

	     TOTAL ASSETS
	 
	 
	3,342,536.18

	 
	 
	 
	--------------

	LIABILITIES AND STOCKHOLDER'S EQUITY
	 
	 
	 

	Accounts Payable
	 
	 
	 

	Trade Accounts Payable - Expense
	 
	 
	(1,048.660)

	Trade Accounts Payable - Expense (Adj)
	 
	 
	(150.370)

	Accrued Payable  – Inventory and Expense (Adj)
	 
	 
	(19,922.720)

	 
	 
	 
	--------------

	     Total Accounts Payable
	 
	 
	(21,121.750)

	 
	 
	 
	--------------

	I/C Accounts Payables
	 
	 
	 

	InterCo Payables
	 
	 
	(18,188.400)

	 
	 
	 
	--------------

	     Total I/C Accounts Payables
	 
	 
	(18,188.400)

	 
	 
	 
	--------------

	Accrued and Other Current Liabilities
	 
	 
	 

	Payroll Payable - Accrued salaries and wages
	 
	 
	(1,432.540)

	Payroll - Accrued Vacation
	 
	 
	(22,000.270)

	Accrued Audit and Accounting
	 
	 
	(668.400)

	Accrued Restructure
	 
	 
	(156,883.430)

	Accrued Miscellaneous
	 
	 
	(24,389.970)

	 
	 
	 
	--------------

	     Total Accrued and Other Current Liabilities
	 
	 
	(205,374.610)

	 
	 
	 
	--------------

	     TOTAL CURRENT LIABILITIES
	 
	 
	(244,684.760)

	 
	 
	 
	--------------

	 
	 
	 
	--------------

	     TOTAL LIABILITIES
	 
	 
	(244,684.760)

	 
	 
	 
	--------------

	Stockholder's Equity
	 
	 
	 

	Common Stock
	 
	 
	 

	Common Stock - NeoPhotonics Corporation Limited
	 
	 
	(21,833.960)

	 
	 
	 
	--------------

	     Total Common Stock
	 
	 
	(21,833.960)

	 
	 
	 
	--------------

	Additional Paid-In Capital
	 
	 
	 

	Additional paid-in capital
	 
	 
	(13,079,318.210)

	Additional paid-in-capital non US GAAP (Memo)
	 
	 
	(7,565,388.890)

	Additional paid-in-capital non US GAAP (Memo-Conta)
	 
	 
	7,565,388.89

	Additional paid-in capital - Options
	 
	 
	(90,621.510)

	 
	 
	 
	--------------

	     Total Additional Paid-In Capital
	 
	 
	(13,169,939.720)

	 
	 
	 
	--------------

	Accumulated Profit/(Deficit)
	 
	 
	 

	Retained earnings - Prior years
	 
	 
	7,880,343.35

	Current Year Earnings
	 
	 
	2,047,732.32

	 
	 
	 
	--------------

	     Total Retained Earnings + Current Year Earning
	 
	 
	9,928,075.67

	 
	 
	 
	--------------

	Accumulated Other Comprehensive Income/Loss
	 
	 
	 

	Unrealized Loss From Foreign Currency Translation
	 
	 
	 

	Foreign currency translation adjustments
	 
	 
	165,846.59

	 
	 
	 
	--------------

	     Total Accumulated Other Comprehensive Income/Loss
	 
	165,846.59

	 
	 
	 
	--------------

	     Total stockholders’ Profit/(Deficit)
	 
	 
	(3,097,851.420)

	 
	 
	 
	--------------

	     TOTAL LIABILITIES & STOCKHOLDER'S EQUITY
	 
	 
	(3,342,536.180)

	 
	 
	 
	--------------

SIGNATURES TO FRAMEWORK PURCHASE AGREEMENT

JOINT STOCK COMPANY "RUSNANO"

Signature: /s/ Yuri Udaltsov
Name: Yuri Udaltsov
Title: Deputy Chairman of the Management Board of Management Company RUSNANO LLC acting on the basis of a power of attorney

LIMITED LIABILITY COMPANY "RNI"

Signature: /s/ Marianna Peretyanko
Name: Marianna Peretyatko
Title: General Director

NEOPHOTONICS CORPORATION

Signature:  /s/ Timothy S. Jenks 
Name: Timothy S. Jenks
Title:   CEO

NeoPhotonics Confidential

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