-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S/OuVouVbYVJEQ/fw+TrRlIynBER9E1bJZ1lL/BqLh+zsgw4k2P7COweGqCzoMxy iIW3g4TVs075G8m4pXCjdQ== 0000891618-98-003025.txt : 19980625 0000891618-98-003025.hdr.sgml : 19980625 ACCESSION NUMBER: 0000891618-98-003025 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19980529 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980624 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNIPHASE CORP /CA/ CENTRAL INDEX KEY: 0000912093 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 942579683 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-22874 FILM NUMBER: 98653032 BUSINESS ADDRESS: STREET 1: 163 BAYPOINTE PKWY CITY: SAN JOSE STATE: CA ZIP: 95134 BUSINESS PHONE: 4084341800 MAIL ADDRESS: STREET 1: 163 BAYPOINTE PARKWAY CITY: SAN JOSE STATE: CA ZIP: 95134 8-K 1 FORM 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): May 29, 1998 UNIPHASE CORPORATION ------------------------------------------------------ (Exact Name of Registrant as Specified in its Charter) DELAWARE ---------------------------------------------- (State or Other Jurisdiction of Incorporation) 0-22874 94-2579683 ------------------------ ------------------------------------ (Commission File Number) (I.R.S. Employer Identification No.) 163 Baypointe Parkway, San Jose, CA 95134 ----------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) (408) 434-1800 ----------------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) Not Applicable ---------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) 2 INFORMATION TO BE INCLUDED IN REPORT ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On June 9, 1998, pursuant to that certain Master Purchase Agreement dated as of May 29, 1998 (the "Master Agreement"), among Koninklijke Philips Electronics N.V., a Netherlands corporation ("Philips"), Uniphase Corporation, a Delaware corporation (the "Registrant"), and certain indirect wholly-owned subsidiaries of the Registrant, Registrant acquired, through such wholly-owned subsidiaries, Philips Optoelectronics B.V., a Netherlands corporation ("OPTO"). OPTO is in the business of, among other things, designing, developing, manufacturing, marketing and selling optoelectronic components, modules and subsystems in the global telecommunications, cable television, multimedia and printing industries. The acquisition was completed in two steps: (a) the sale to the Registrant of OPTO's foreign and U.S. intangible assets; followed by (b) the sale to the Registrant of all of OPTO's outstanding capital stock. The assets acquired by the Registrant pursuant to the transaction include all assets of OPTO, which consist of, among other things, OPTO's accounts receivable, inventory, fixed and tangible personal property (including, without limitation, all machinery, equipment, supplies, tools, furniture, fixtures, hardware, and spare parts), intangible personal property, contracts, and books and records. The assets acquired also include certain intellectual property used in OPTO's business. In addition to the personal property assets acquired in the transaction, the Registrant also acquired, through OPTO, a leasehold interest in and to certain real property in Eindhoven, The Netherlands, at which OPTO currently conducts its business. Philips has agreed that, during the term of the lease, it will provide OPTO with certain services necessary to the conduct of OPTO's business. It is currently anticipated that all of the assets acquired by the Registrant will continue to be used by the Registrant in conducting the business of OPTO as conducted when the same was acquired by the Registrant. The consideration paid by the Registrant to Philips in connection with such acquisition consisted of (1) 3.6 million newly issued restricted shares of the Registrant's common stock, and (2) 100,000 shares of newly issued restricted shares of the Registrant's Series A Preferred Stock, which shares of Series A Preferred Stock are convertible into shares of the Registrant's common stock based on, among other things, the achievement of certain product shipment milestones by OPTO during the four year period commencing April 1, 1998 and ending March 31, 2002. The consideration paid at the closing of the acquisition was determined through arms-length negotiations between the Company and Philips, which negotiations took into account OPTO's business, financial position, operating history, products, intellectual property and other factors relating to OPTO's business. The shares of the Registrant's common stock issued to Philips at the closing of the acquisition and the shares into which the shares of Series A Preferred Stock issued to Philips at the Closing are convertible are subject to certain registration rights. 3 There are no material relationships between Philips and the Registrant or any of its affiliates, any director or officer of the Registrant, or any associate of any such director or officer. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) Financial Statements of Businesses Acquired The audited financial statements of Optoelectronics B.V. are not yet completed. The required audited financial statements will be filed with the Securities and Exchange Commission within 60 days of the filing of this report on Form 8-K. (b) Pro Forma Financial Information The unaudited pro forma financial information of Uniphase Corporation and Optoelectronics B.V. are not yet completed. The required unaudited pro forma financial information will be filed with the Securities and Exchange Commission within 60 days of the filing of this report on Form 8-K. (c) Exhibits The Exhibit Index appearing on page 5 is incorporated herein by reference. 4 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. UNIPHASE CORPORATION By: /s/ ANTHONY R. MULLER ------------------------------------- Anthony R. Muller Senior Vice President, Chief Financial Officer, Secretary (Principal Accounting Officer) Dated: June 24, 1998 5 EXHIBIT INDEX
Exhibit Number Description - ------- ----------- 10.1 Master Purchase Agreement dated as of May 29, 1998, by and among Koninklijke Philips Electronics N.V., Uniphase Corporation, Uniphase Opto Holdings, Inc., and Uniphase International C.V. 10.2 Stockholder Agreement dated as of June 9, 1998, by and between Uniphase Corporation. and Koninklijke Philips Electronics N.V. 10.3 Certificate of Designation of the Series A Preferred Stock dated as of May 29, 1998, executed by Uniphase Corporation. 10.4 Series A Preferred Conversion and Redemption Agreement dated as of June 9, 1998, by and between Uniphase Corporation and Koninklijke Philips Electronics N.V.* 10.5 Asset Sale Agreement (U.S. Intangible Assets) dated as of June 9, 1998, by and between Uniphase Corporation and Koninklijke Philips Electronics N.V. 10.6 Asset Sale Agreement (Foreign Intangible Assets) dated as of June 9, 1998, by and between Uniphase Corporation and Koninklijke Philips Electronics N.V. 10.7 Lease dated as of June 9, 1998 between Uniphase Netherlands B.V. and Nederlandse Philips Bedrijven B.V. 10.8 Lease dated as of June 9, 1998 between Uniphase Netherlands B.V. and Nederlandse Philips Bedrijven B.V.
6 EXHIBIT INDEX
Exhibit Number Description - ------- ----------- 10.9 Site Services Agreement dated as of June 9, 1998 between Uniphase Netherlands B.V. and Nederlandse Philips Bedrijven B.V.
*Confidential treatment has been requested regarding a portion of this exhibit. The omitted information has been filed separately with the Securities and Exchange Commission. EX-10.1 2 MASTER PURCHASE AGREEMENT DATED MAY 29, 1998 1 EXHIBIT 10.1 MASTER PURCHASE AGREEMENT among KONINKLIJKE PHILIPS ELECTRONICS N.V., a company duly established under the laws of The Netherlands ("Philips"), and and UNIPHASE CORPORATION, a corporation duly organized under the laws of the State of Delaware ("Uniphase"), UNIPHASE OPTO HOLDINGS, Inc., a corporation duly organized under the laws of the State of Delaware ("OPTO Buyer"), and UNIPHASE INTERNATIONAL CV, a company duly established under the laws of The Netherlands ("Foreign Intangibles Buyer"). Dated May 29, 1998 2 i TABLE OF CONTENTS
Page SECTION 1. DEFINITIONS...........................................................1 SECTION 2. PURCHASE AND SALE OF OPTO SHARES; INTANGIBLE ASSET SALE...............8 2.1. Basic Transaction...................................................8 2.2. Consideration.......................................................9 SECTION 3. CLOSING DATE DELIVERIES AND PAYMENT...................................9 3.1. Closings............................................................9 3.2. Transactions and Deliveries at the Asset Sales Closing..............9 3.3. Transactions and Deliveries at the OPTO Closing....................10 3.4. Closing Costs......................................................12 SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE UNIPHASE PARTIES...............12 4.1. Organization of Buyer..............................................12 4.2. Authorization of Transaction.......................................13 4.3. Noncontravention...................................................13 4.4. Capitalization.....................................................14 4.5. SEC Filings; Financial Statements..................................15 4.6. Absence of Certain Changes or Events...............................16 4.7. No Vote Required...................................................16 4.8. Consents...........................................................16 4.9. Valid Issuance.....................................................17 4.10. No Brokers........................................................17 SECTION 5. REPRESENTATIONS AND WARRANTIES CONCERNING OPTO AND THE BUSINESS......17 5.1. Organization, Qualification and Corporate Power....................17 5.2. Capitalization.....................................................18 5.3. Noncontravention...................................................19 5.4. Consents...........................................................20 5.5. Closing Date Balance Sheet.........................................20 5.6. Assets.............................................................21 5.7. Liabilities........................................................22 5.8 Tax Matters.........................................................22 5.9. Real Property......................................................24
3 ii TABLE OF CONTENTS
Page 5.10. Intellectual Property.............................................26 5.11. Litigation and Claims.............................................27 5.12. Employees and Employee Benefit Plans..............................28 5.13. Permits...........................................................31 5.14. Environmental Conditions..........................................32 5.15. Brokers' Fees.....................................................33 5.16. Insurance.........................................................33 5.17. [Intentionally Omitted]...........................................33 5.18. Compliance with Laws..............................................33 5.19. Material Contracts................................................33 5.20. Grants............................................................34 5.21. Conduct of Activity...............................................35 5.22. Material Adverse Change...........................................37 5.23. Accounts Receivable and Accounts Payable..........................37 SECTION 6. PRE-CLOSING COVENANTS................................................37 6.1. General............................................................38 6.2 Consents and Notifications..........................................38 6.3. Trade Unions and Works Counsel.....................................39 6.4. Operation of the Activity..........................................39 6.5. Ownership of Assets................................................40 6.6. Owner's Equity and Liabilities.....................................40 6.7. Notice of Developments.............................................40 6.8. [Intentionally Omitted]............................................41 6.9. OPTO Patents.......................................................41 SECTION 7. CONDITIONS TO OBLIGATIONS TO CLOSE...................................41 7.1. Conditions to Obligation to Close of Uniphase Parties to be Satisfied at each Closing......................................41 7.2. Conditions to Obligation to Close of Philips.......................42 SECTION 8. OPTO EMPLOYEES.......................................................42 8.1. Retention of OPTO Employees........................................42 8.2. Pension Obligations................................................42 8.3. Collective Bargaining Agreement....................................43 8.4. Transfer Expenses..................................................43 SECTION 9. POST-CLOSING COVENANTS...............................................43 9.1. General............................................................43 9.2 Intellectual Property Rights and Obligations........................44 9.3. Non-Compete........................................................46
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Page 9.4. Closing Date Balance Sheet.........................................46 9.5. Cooperation and Access to Financial Books and Records..............47 9.6. Confidentiality....................................................47 9.7. Press Releases and Other Disclosures...............................48 9.8. Poaching...........................................................48 SECTION 10. INDEMNITIES.........................................................49 10.1. Indemnities by Philips............................................49 10.2. Indemnities by Uniphase...........................................49 10.3. Defense of Claims.................................................49 SECTION 11. TERMINATION.........................................................51 11.1. Termination.......................................................51 11.2. Limitations on Philips' Termination Rights........................51 11.3. Effect of Termination.............................................52 SECTION 12. REMEDIES FOR BREACHES OF THIS AGREEMENT.............................52 12.1. Survival..........................................................52 12.2. Liability of Philips..............................................53 12.3. Liability of Uniphase Parties.....................................54 12.4. Other Liability Provisions........................................54 SECTION 13. GENERAL MATTERS.....................................................54 13.1. Entire Agreement..................................................54 13.2. Succession and Assignment.........................................55 13.3. Notices...........................................................55 13.4. Amendments and Waivers............................................56 13.5. Severability......................................................56 13.6. Incorporation of Schedules and Exhibits...........................56 13.7. No Contribution...................................................56 13.8. Waiver to Terminate...............................................57 13.9. Attorneys' Fees...................................................57 13.10. Counterparts.....................................................57 This Agreement and the other Sale Agreements may be executed in one or more counterparts, each of which shall be deemed an original, but all of which, taken together, shall constitute one and the same document.....................57 SECTION 14. APPLICABLE LAW......................................................57
5 iv EXHIBITS Exhibit A Certificate of Designation Exhibit B Foreign Asset Sale Agreement Exhibit C Lease Exhibit D Series A Preferred Agreement Exhibit E Site Services Agreement Exhibit F Stockholder Agreement Exhibit G U.S. Asset Sale Agreement SCHEDULES Schedule 1.25 Fixed and Tangible Assets Schedule 1.27 Foreign Intangible Assets Schedule 1.69 U.S. Intangible Assets Schedule 2.2 Allocation of Consideration Schedule 3.3 Preclosing Transfers Schedule 5.3 Noncontravention Schedule 5.4 Consents Schedule 5.6 Exceptions to Title to Assets Schedule 5.9 Real Property Schedule 5.10(a) Intellectual Property Schedule 5.10(b) Cross-Licenses Schedule 5.12(a) Employees Schedule 5.12(b) Employee Benefit Plans Schedule 5.13 Permits Schedule 5.19 Material Contracts
6 MASTER PURCHASE AGREEMENT THIS MASTER PURCHASE AGREEMENT (This "Agreement") dated as of 29 May, 1998 is entered into by and among KONINKLIJKE PHILIPS ELECTRONICS N.V., a company duly established under the laws of The Netherlands ("Philips"), and UNIPHASE CORPORATION, a corporation duly organized under the laws of the State of Delaware ("Uniphase"), UNIPHASE OPTO HOLDINGS, INC., a corporation duly organized under the laws of the State of Delaware ("OPTO Buyer"), and UNIPHASE INTERNATIONAL CV, a company duly established under the laws of The Netherlands ("Foreign Intangibles Buyer"; and collectively with Uniphase and, OPTO Buyer, and Foreign Intangibles Buyer, collectively, the "Uniphase Parties"). RECITALS A. Philips Optoelectronics B.V., a company duly established under the laws of The Netherlands ("OPTO") is in the business of, among other things, designing, developing, manufacturing, marketing and selling optoelectronic components, modules and subsystems in the global telecommunications, cable television, multimedia and printing industries (such business of OPTO, the "Activity"). OPTO is a wholly-owned subsidiary of Philips. B. Philips desires to sell and the Buyers desire to acquire OPTO and the Activity from Philips, upon the terms and conditions set forth in this Agreement and the other Sale Agreements. NOW, THEREFORE, the parties agree as follows: SECTION 1 DEFINITIONS 1.1. "Activity" shall have the meaning set forth in Recital A to this Agreement. 1.2. "Affiliate" means any and all Persons (other than OPTO) now or hereafter controlled by another Person; control meaning: (i) directly or indirectly holding more than fifty percent (50%) of the nominal value of the issued share capital, 7 2 and/or (ii) directly or indirectly holding fifty percent (50%) or more of the voting power of the directors and/or (iii) otherwise having the power to direct the activities of such Person, but any such Person shall unless otherwise specifically provided be deemed an Affiliate only as long as such control or capacity to control exists. 1.3. "Agreement" means the present document and all of its Schedules and Exhibits. 1.4. "Assets" shall have the meaning set forth in Section 5.6. 1.5. "Asset Sale Agreements" means, collectively, the U.S. Asset Sale Agreement and the Foreign Asset Sale Agreement. 1.6. "Asset Sale Closing" means the meeting held on the Asset Sale Closing Date at which the sale and purchase of the Intangible Assets is consummated. 1.7. "Asset Sale Closing Date" shall mean the Business Day immediately preceding the OPTO Closing Date. 1.8. "Average Closing Market Price" means the average last reported sales price on the NASDAQ National Market (as published in the Wall Street Journal, Eastern Edition) of one (1) share of Uniphase Common Stock over the ten (10) trading days ending on the trading day that is two (2) trading days prior to the Asset Sale Closing Date. 1.9. "Business Day" shall mean any day other than a Saturday or Sunday or any other day on which the banks in California, New York or The Netherlands are closed. 1.10. "Buyers" means, collectively, OPTO Buyer, and Foreign Intangibles Buyer. 1.11. "Certificate of Designation" means a Certificate of Designation setting forth the rights, privileges and preferences of the Uniphase Preferred Stock, in the form attached hereto as Exhibit A. 1.12. "Claim" shall mean any loss, cost, claim, liability or expense (including, without limitation, attorneys and consultants fees and costs). 1.13. "Closing" means the Asset Sale Closing or the OPTO Closing. 1.14. "Closing Date" means the Asset Sale Closing Date or the OPTO Closing Date. 1.15. "Closing Date Balance Sheet" means the balance sheet prepared by Philips, in accordance with Philips Accounting Policies, with respect to OPTO and the Activity as at the last Philips reporting day of the month immediately preceding the OPTO Closing Date. 8 3 1.16. "Closing Liabilities" means all liabilities set forth on the Closing Date Balance Sheet. 1.17. "Consideration" means (i) the number of newly issued shares of Uniphase Common Stock determined by dividing NLG 349,800,000 (converted to $U.S. at the currency exchange rate as of the close of business in New York on the Business Day that is two (2) Business Days immediately preceding the Asset Sale Closing Date, as published in the Wall Street Journal, Eastern Edition) by the greater of (a) Average Closing Market Price, and (b) U.S.$43.00, (ii) 100,000 newly issued shares of Uniphase Preferred Stock, and (iii) NLG 200,000, payable in immediately available funds. 1.18. "Dutch Philips Pension Fund" means the Philips' pension fund pursuant to which some or all of the OPTO Employees are members. 1.19. "Employee Benefit Plan" shall mean any and all bonus, deferred compensation, incentive compensation, stock purchase, stock option, stock appreciation, phantom stock, savings, profit sharing, severance or termination pay, health or other medical, dental, life, disability or other insurance (whether insured or self-insured), supplementary unemployment or employment benefit, pension, retirement, registered retirement savings, supplementary retirement, change-in-control and any other employment benefit or compensation plan, program, agreement, arrangement, policy or practice (including any funding mechanism therefore which is now in effect which will be required in the future as a result of the transactions contemplated hereby), whether formal or informal, funded or unfunded, registered or unregistered, oral or written, which are maintained or contributed to or are required to be maintained, contributed to or provided by OPTO or Philips or any of Philips' Affiliates, under which any OPTO Employee, former employee or independent contractor (or any dependent of any such Persons) has any present or future right to benefits or compensation or under which OPTO has any present or future liability or obligation. 1.20. "Encumbrance" means all pledges, charges, liens, mortgages, security interests, pre-emption rights, options, restrictions, voting agreements and trusts, and any other encumbrances or third party rights or claims of any kind. 1.21. "Environment" means all or any of the following media, namely, the air, water and land; and the medium of air includes the air within buildings and the air within other natural or man-made structures above or below ground. 1.22. "Environmental Law" means all laws, common law, statutes, directives, regulations, notices, standards, codes of practice, guidance notes, judgments, decrees or orders whether of the European Community or any state or country relating to pollution, contamination or protection of the Environment or to the storage, labeling, handling, release, treatment, manufacture, processing, deposit, 9 4 transportation or disposal of substances regarded as hazardous thereunder or otherwise regulated thereby including without limitation occupational safety and health matters. 1.23. "Exchange Act" means the United States Securities Exchange Act of 1934, as amended. 1.24. [Intentionally Omitted.] 1.25. "Fixed and Tangible Asset List(s)" means those certain lists, copies of which are attached hereto as Schedule 1.25, dated as of April 26, 1998, setting forth the loose plant, fixtures, furnishings, equipment and vehicles and other tangible assets of the Activity (other than inventory). 1.26. "Foreign Asset Sale Agreement" means that certain Asset Sale Agreement (Foreign Intangibles), dated the Asset Sale Closing Date, in the form attached hereto as Exhibit B, to be executed by Philips and the Foreign Intangibles Buyer. 1.27. "Foreign Intangible Assets" means the intangible assets of OPTO described on Schedule 1.27 attached hereto. 1.28. "Foreign Intangibles Buyer" shall have the meaning set forth in the preamble to this Agreement. 1.29. "GAAP" means generally accepted accounting practices as applied in The Netherlands. 1.30. "HSR Act" means the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. 1.31. "Indebtedness" means in relation to any Person, at any time, any indebtedness of that Person in respect of moneys borrowed or raised including without limitation: (a) money borrowed or raised (whether or not for a cash consideration) and premiums (if any) and accrued interest in respect thereof; (b) any guarantee provided or assumed to pay, discharge or otherwise take responsibility for the Indebtedness of any other Person; (c) bills of exchange, or promissory notes drawn, accepted or endorsed under any bill discounting or note purchase facility; (d) rental or hire payments under or in respect of any lease or hire purchase agreement; 10 5 (e) the deferred purchase price of assets or services (other than credit obtained in the ordinary course of trading for a period not exceeding 90 days); (f) liabilities in respect of any derivative, foreign exchange, interest currency or commodity purchase or swap transactions or similar arrangements; or (g) any other transactions having the commercial effect of borrowing entered into by any Person to finance its operations or capital requirements. 1.32. "Intangible Assets" shall mean, collectively, the U.S. Intangible Assets and the Foreign Intangible Assets. 1.33. "Intellectual Property" means any patent, utility model, trademark, design right, database right, trade name, fictitious business name, service mark, copyright, maskwork, right in undisclosed or confidential information (including without limitation trade secret, know how and invention (whether or not patentable)), franchise, system, computer software, design, blueprint, proprietary product, technology, proprietary right or other intellectual property right or intangible asset (whether registered or not) and applications for such rights as exist anywhere in the world. 1.34. "Knowledge" means, in respect of a particular fact, event or other matter, that the specified Person is actually aware or should have been aware after reasonable inquiry and investigation of such fact, event or other matter. With respect to Philips or the Uniphase Parties, Philips or the Uniphase Parties, as applicable, shall be deemed to have "Knowledge" of a particular fact, event or other matter if any manager, director or officer of such Party has Knowledge of such fact, event or other matter. 1.35. "Lease" shall mean those certain Leases, dated as of the OPTO Closing Date, in the form attached hereto as Exhibit C, to be executed by Philips and OPTO. 1.36. "Material Contracts" shall have the meaning set forth in Section 5.19. 1.37. "NLG" means Dutch Guilders. 1.38. "OPTO" shall have the meaning set forth in the Recitals to this Agreement. 1.39. "OPTO Buyer" shall have the meaning set forth in the preamble to this Agreement. 1.40. "OPTO Closing" means the meeting held on the Closing Date at which the sale and purchase of the OPTO Shares is consummated. 1.41. "OPTO Closing Date" means two (2) business days after the date on which all of the conditions set forth in Section 7 of this Agreement have been satisfied in full or 11 6 waived in writing by the Party for whose benefit such conditions are provided. 1.42. "OPTO Employees" means all employees employed by OPTO and engaged in the Activity. 1.43. "OPTO Patents" shall mean all patents (including all pending invention disclosures) originated in the Activity as of the date hereof and as of the OPTO Closing Date. 1.44. "OPTO Shares" shall mean all of the issued and outstanding share capital of OPTO. 1.45. "Owner's Equity" shall mean the owner's equity reflected on the Closing Date Balance Sheet. 1.46. "Party" means any of the parties to this Agreement. 1.47. "Permit" is defined in Section 5.13. 1.48. "Person" means any individual, company, corporation, partnership, association, trust or other governmental entity, body, agency or authority. 1.49. "Philips" shall have the meaning set forth in the preamble to this Agreement. 1.50. "Philips Accounting Policies" means the accounting policies used by Philips for preparing its financial statements for the year 1997, as summarized in the 1997 Annual Report of Philips (pages 57 through 62) and as specified in further detail in the Philips Accounting Directives and Guidelines. The Philips Accounting Policies and the related Philips Accounting Directives have been prepared on a basis consistent with GAAP. 1.51. "Philips Collective Labour Agreement" means the collective labour agreement currently in effect, governing the collective bargaining rights of the OPTO Employees. 1.52. "Philips Director" means Willem Haverkamp or such other Person nominated by Philips and appointed and qualified, as set forth in the Stockholder Agreement. 1.53. "Philips Entities" shall mean Philips and any and all of Philips' Affiliates. 1.54. "Real Property" shall have the meaning set forth in Section 5.9. 1.55. "Sale Agreements" means, collectively, this Agreement, the Asset Sale Agreements, the Stockholder Agreement, the Lease, the Site Services Agreement, the Series A Preferred Agreement, the Certificate of Designation and all agreements, certificates and other documents executed or contemplated to be executed by any of the Parties in connection with the transactions contemplated 12 7 hereby. 1.56. "SEC" means the United States Securities and Exchange Commission. 1.57. "Securities Act" means the United States Securities Act of 1933, as amended. 1.58. "Series A Preferred Agreement" shall mean that certain Series A Preferred Stock Conversion and Redemption Agreement, dated as of the OPTO Closing Date, in the form attached hereto as Exhibit D, to be executed by Philips and Uniphase. 1.59. "Site Services Agreement" shall mean that certain Site Services Agreement, dated as of the OPTO Closing Date, in the form attached hereto as Exhibit E, to be executed by Philips and OPTO. 1.60. "Stockholder Agreement" shall mean that certain Stockholder Agreement, dated as of the OPTO Closing Date, in the form attached hereto as Exhibit F, to be executed by Philips and Uniphase. 1.61. "Tax" means all forms of taxation, assessment, withholdings, duties, imposts, levies, social security contributions and rates (including, without limitation, all income taxes, capital gains taxes, transfer taxes, sales taxes and value added taxes) imposed by any local, municipal, governmental, state, federal, or other body in any country and any interest, penalty, surcharge or fine in connection therewith. 1.62. "Uniphase" shall have the meaning set forth in the preamble to this Agreement. 1.63. "Uniphase Common Stock" means Uniphase common stock, $0.001 par value. 1.64. "Uniphase Options" shall have the meaning set forth in Section 4.4. 1.65. "Uniphase Parties" shall have the meaning set forth in the preamble to this Agreement. 1.66. "Uniphase Preferred Stock" means Uniphase Series A Preferred Stock, as more particularly described in the Certificate of Designation. 1.67. "Uniphase SEC Documents" shall have the meaning set forth in Section 4.5(i). 1.68. "U.S. Asset Sale Agreement" shall mean that certain Asset Sale Agreement (U.S. Intangibles), dated the Asset Sale Closing Date, in the form attached hereto as Exhibit G, to be executed by Philips and OPTO Buyer. 1.69. "U.S. Intangible Assets" means the intangible assets of OPTO described on Schedule 1.69 attached hereto. 13 8 1.70. "U.S. Intangibles Buyer" shall have the meaning set forth in the preamble to this Agreement. 1.71. "U.S.$" means United States dollars. Unless the context otherwise requires, terms defined in the singular shall have a comparable meaning when used in the plural, and vice versa. SECTION 2. PURCHASE AND SALE OF OPTO SHARES; INTANGIBLE ASSET SALE 2.1. Basic Transaction. Subject to and in accordance with the terms of this Agreement and the other Sale Agreements: (i) At the Asset Sale Closing, Philips shall sell (a) the U.S. Intangible Assets to OPTO Buyer, and (b) the Foreign Intangible Assets to the Foreign Intangibles Buyer, in each case, free from all Encumbrances (other than solely the rights of third parties pursuant to licenses and other Material Contracts included in the Intangible Assets and listed on Schedule 5.19), pursuant to the terms and conditions of this Agreement and the Asset Sale Agreements. Uniphase shall procure that the OPTO Buyer and the Foreign Intangibles Buyer, as applicable, shall (x) execute and deliver the Asset Sale Agreements, and (y) perform their respective obligations to purchase the Intangible Assets pursuant to the terms of this Agreement and the Asset Sale Agreements; and (ii) Following consummation of the transactions described in clause (i) above and at the OPTO Closing, Philips shall sell the OPTO Shares to OPTO Buyer, free from all Encumbrances and together with all rights now or hereafter attaching thereto. 2.2. Consideration. 14 9 In consideration of the sales described in Section 2.1 above, the Uniphase Parties shall cause the Consideration, free from all Encumbrances, to be paid to Philips or any specified Affiliate thereof in the amounts and in the manner allocated pursuant to Schedule 2.2 attached hereto. SECTION 3. CLOSING DATE DELIVERIES AND PAYMENT 3.1. Closings. Subject to the fulfillment (or waiver) of the conditions specified in Section 7, each Closing shall take place on the applicable Closing Date at the offices of Philips in Amsterdam, The Netherlands, or at such other place as Philips and Uniphase may mutually agree. 3.2. Transactions and Deliveries at the Asset Sales Closing. At the Asset Sale Closing: (i) Philips shall (a) execute and deliver the Asset Sale Agreements, (b) sell, assign and transfer the Intangible Assets to the applicable Buyer, free of all Encumbrances (other than solely the rights of third parties pursuant to licenses and other Material Contracts included in the Intangible Assets and listed on Schedule 5.19), in accordance with the terms hereof and the terms of the Asset Sale Agreements, and (c) execute any and all additional documents and take any and all actions reasonably requested by any of the Uniphase Parties in furtherance of the actions described in clause (a) and (b) above; and (ii) The applicable Uniphase Parties shall (and Uniphase shall procure that such Buyers shall) (a) execute and deliver the Asset Sale Agreements, and (b) pay to Philips the portion of the Consideration, as set forth on Schedule 2.2, payable by OPTO Buyer and the Foreign Intangibles Buyer in consideration of the transfer of the U.S. Intangible Assets and Foreign Intangible Assets, respectively, free from all Encumbrances, in the form of stock certificates evidencing such portion of the Consideration. 15 10 3.3. Transactions and Deliveries at the OPTO Closing. At the OPTO Closing: (i) Philips shall take or cause to be taken all actions required to cause good, valid and marketable title to all of the OPTO Shares to vest in OPTO Buyer, free from all Encumbrances; (ii) Philips shall execute and deliver the Stockholder Agreement, the Lease, the Site Services Agreement and the Series A Preferred Agreement; (iii) Philips shall execute and deliver to Uniphase a certificate, executed by an officer of Philips, certifying (a) that all of the representations and warranties of Philips set forth herein are true, correct and complete in all material respects as of the OPTO Closing Date, as if made on such date, (b) that Philips has performed all covenants required to be performed by it pursuant to this Agreement prior to and as of the OPTO Closing Date, and (c) that, as of the date of the Closing Date Balance Sheet, the Owner's Equity is not less than NLG 34 million (without giving effect to any Tax consequences of the transactions described in Section 3.2 or on Schedule 3.3 attached hereto), and the Closing Liabilities consist only of (x) accounts payable (or accruals related thereto) incurred in the ordinary course of the Activity to Persons other than Philips or any of Philips' Affiliates, (y) accrued salaries and wages of the OPTO Employees not in excess of one pay period for any OPTO Employee, and (z) Indebtedness (contingent or otherwise) owed to Philips (or any of Philips' Affiliates) consisting solely of trade debt incurred in the ordinary course of business; (iv) Philips will cause all directors of OPTO to resign as directors and waive all rights to payment or compensation in connection with such resignations; (v) Philips shall execute and deliver any and all other documents and take all other actions reasonably required by the Uniphase Parties in furtherance of the transactions contemplated by this Agreement; 16 11 (vi) the Uniphase Parties shall pay to Philips the portion of the Consideration, free from all Encumbrances, as set forth on Schedule 2.2, payable by OPTO Buyer in consideration of the transfer of the OPTO Shares, in the form of immediately available funds, and, as applicable, stock certificates evidencing such portion of the Consideration; (vii) OPTO shall execute and deliver the Lease and the Site Services Agreement; (viii) Uniphase shall execute and deliver the Stockholder Agreement and the Series A Preferred Agreement; (ix) Uniphase shall cause the Certificate of Designation to be filed in the Office of the Secretary of State for the State of Delaware; (x) Uniphase shall execute and deliver to Philips a certificate, executed by an officer of Uniphase, certifying (a) that all of the representations and warranties of the Uniphase Parties set forth herein are true, correct and complete in all material respects as of the OPTO Closing Date, as if made on such date, (b) that the Uniphase Parties have performed all covenants required to be performed by them pursuant to this Agreement prior to and as of the OPTO Closing Date, and (c) that the Consideration has been duly and validly authorised and issued, is fully paid and nonassessable; (xi) Uniphase shall cause the Philips Director to be nominated and appointed as a non-executive member of the Uniphase board of directors, as provided in the Stockholder Agreement; (xii) The Uniphase Parties shall execute and deliver any and all other documents and take all other actions reasonably required by Philips in furtherance of the transactions contemplated by this Agreement; and (xiii) The Parties will provide written evidence or certificates that (a) all internal corporate actions have been taken that are required to enter into this Agreement and the other Sale Agreements and that all necessary actions were taken to consummate the transactions contemplated herein and therein, including the approval of same, and (b) that the Persons signing this 17 12 Agreement on behalf of the Parties are duly authorized to represent the respective Party and to enter into this Agreement and the other Sale Agreements on behalf of the respective Party. 3.4. Closing Costs. Except as otherwise specifically provided in this Agreement, each Party shall be responsible for and pay all other costs and expenses incurred by such Party with respect to the transactions contemplated hereby. SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE UNIPHASE PARTIES Each of the Uniphase Parties, jointly and severally, represents to Philips that the following statements are true and correct. 4.1. Organization of Buyer. (i) Each of the Uniphase Parties is a corporation or limited partnership duly organized and validly existing and in good standing, if applicable, under the laws of the jurisdiction of its formation. Uniphase has delivered to Philips a true, correct and complete copy of its Certificate of Incorporation and by-laws. Uniphase is not in default under any provision of such documents. (ii) None of the Uniphase Parties has filed (or has had filed against it) a petition in bankruptcy or insolvency, or is insolvent within the meaning of applicable laws, rules, regulations or similar requirements, and has not made any assignment in favor of its creditors or any class thereof, nor has any petition for a receivership or administration order been presented in respect of such Uniphase Party. None of the Uniphase Parties has initiated any proceedings with respect to a compromise or arrangement with its creditors or for the dissolution, liquidation or reorganization of such Uniphase Party, or the winding up or cessation of the business or affairs of such Uniphase Party. No receiver or administration receiver or liquidator has been appointed in respect of such Uniphase Party, or any of its assets and no execution or distress has 18 13 been levied upon any of its assets. 4.2. Authorization of Transaction. Each Uniphase Party has the requisite corporate or partnership power and authority to own and operate its properties and assets and to carry on its business as presently conducted and as presently proposed to be conducted. Each Uniphase Party has full power and authority and has taken all corporate or partnership action necessary in order to execute and deliver each Sale Agreement to which it is a party and to perform its obligations thereunder. Each Sale Agreement constitutes or will on execution constitute the valid and legally binding obligation of the applicable Uniphase Party, enforceable in accordance with its terms and conditions. 4.3. Noncontravention. Neither the execution and delivery of this Agreement or any other Sale Agreement to which any Uniphase Party is a party, nor the consummation or performance of any of the transactions contemplated hereby or thereby, will directly or indirectly (with or without notice or lapse of time): (i) contravene, conflict with or result in a violation of (x) any of the provisions of the certificates of incorporation, by laws, articles of association, partnership agreement or other organizational or governing documents of such Uniphase Party, or (y) any resolution adopted by the stockholders, managers, board of directors or partners of such Uniphase Party; (ii) contravene, conflict with or result in a violation of, or give any governmental authority, agency or body or other Person the right to challenge any of the transactions contemplated hereby or to exercise any remedy or obtain any relief under, any law to which such Uniphase Party or any of the assets of such Uniphase Party are subject; (iii) cause such Uniphase Party to become subject to, or to become liable for the payment of, any Tax, subject to any Tax required to be paid by any of the Uniphase Parties pursuant to the transactions described in Section 3.2 and on 19 14 Schedule 3.3; (iv) contravene, conflict with or result in a violation or termination of any license, permit or other governmental authorization held by such Uniphase Party permit; (v) contravene, conflict with or result in a violation or breach of, or result in a default under, any provision of any of the contract, agreement or understanding pursuant to which such Uniphase Party is a party or by which its assets are bound; (vi) give any Person the right to (x) declare a default or exercise any remedy under any agreement or understanding pursuant to which such Uniphase Party is a party or by which its assets are bound, (y) accelerate the maturity or performance of any agreement or understanding pursuant to which such Uniphase Party is a party or by which its assets are bound, or (z) cancel, terminate or modify any agreement or understanding pursuant to which such Uniphase Party is a party or by which its assets are bound; (vii) except as contemplated hereby, give any Person the right to any payment by such Uniphase Party or give rise to any acceleration or change in the award, grant, vesting or determination of options, warrants, rights, severance payments or other contingent obligations of any nature whatsoever of such Uniphase Party in favor of any Person or entity, in any such case as a result of the change in control of such Uniphase Party, or otherwise resulting from the transactions contemplated hereby; or (viii) result in the imposition or creation of any Encumbrance upon or with respect to any asset of such Uniphase Party. 4.4. Capitalization. As of April 30, 1998, the authorized capital stock of Uniphase consists of 50,000,000 shares of Uniphase Common Stock and 1,000,000 shares of preferred stock. As of April 30, 1998 (a) 34,902,938 shares of Uniphase Common Stock were validly issued and outstanding, and (b) no shares of preferred stock were 20 15 issued or outstanding. As of April 30, 1998: (x) 6,271,609 shares of Uniphase Common Stock are subject to issuance pursuant to outstanding options to purchase shares of Uniphase Common Stock; and (y) 121,539 shares of Uniphase Common Stock are reserved for future issuance pursuant to Uniphase's Employee Stock Purchase Plan. (Stock options granted by Uniphase pursuant to Uniphase's stock option plans are referred to in this Agreement as "Uniphase Options.") Except for the Uniphase Options and Uniphase's Employee Stock Purchase Plan (and rights related thereto), as of the date of this Agreement, there is no: (1) outstanding subscription, option, call, warrant or right (whether or not currently exercisable) to acquire any shares of capital stock or other securities of Uniphase; (2) outstanding security, instrument or obligation that is or may become convertible into or exchangeable for any shares of capital stock or other securities of Uniphase; (3) stockholder rights plan (or similar plan commonly referred to as a "Poison Pill") or contract under which Uniphase currently is or may become obligated to sell or otherwise issue any shares of its capital stock or any other securities. All outstanding shares of Uniphase Common Stock and all outstanding Uniphase Options have been, and all shares of Uniphase Common Stock and Uniphase Preferred Stock to be issued pursuant to this Agreement will be, issued and granted in compliance with all applicable securities laws and other applicable legal requirements. 4.5. SEC Filings; Financial Statements. (i) Uniphase has delivered to Philips accurate and complete copies of each report, registration statement and definitive proxy statement filed by Uniphase with the SEC since June 30, 1997 (the "Uniphase SEC Documents"). All statements, reports, schedules, forms and other documents required to have been filed with the SEC have been so filed. As of the time it was filed with the SEC (or, if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing): (x) each of the Uniphase SEC Documents complied in all material respects with the applicable requirements of the Securities Act or the Exchange Act (as the case may be); and (y) none of the Uniphase SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light 21 16 of the circumstances under which they were made, not misleading. (ii) The consolidated financial statements contained in the Uniphase SEC Documents: (x) complied as to form in all material respects with the published rules and regulations of the SEC applicable thereto; (y) were prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods covered (except as may be indicated in the notes to such financial statements and, in the case of unaudited statements, as permitted by Form 10-Q of the SEC, and except that unaudited financial statements may not contain footnotes and are subject to normal and recurring year-end audit adjustments which will not, individually or in the aggregate, be material in amount); and (z) fairly present the consolidated financial position of Uniphase and its subsidiaries as of the respective dates thereof and the consolidated results of operations of Uniphase and its subsidiaries for the periods covered thereby. 4.6. Absence of Certain Changes or Events. Since June 30, 1997: (i) to the Knowledge of the Uniphase Parties, there has not been any event that has had or may have a material adverse effect on the business, operations, finances or prospects of Uniphase; and (ii) Uniphase has not declared, accrued, set aside or paid any dividend or other distribution. 4.7. No Vote Required. No vote of the holders of Uniphase Common Stock is required to authorize the transactions contemplated hereby. 4.8. Consents. Except as may be required by the Securities Act, the Exchange Act, state securities or "blue sky" laws, the Delaware General Corporation Law, the Exon Florio Amendment and the HSR Act, none of the Uniphase Parties is nor will be required to make any filing with or give any notice to, or to obtain any consent, approval or authorization from, any Person in connection with the execution, delivery or performance of this Agreement and the other Sale Agreements or the consummation of the transactions contemplated herein and therein. 22 17 4.9. Valid Issuance. The Uniphase Common Stock and the Uniphase Preferred Stock to be issued hereunder will, when issued in accordance with the provisions of this Agreement, be duly authorized, validly issued, fully paid and nonassessable. 4.10. No Brokers. None of the Uniphase Parties has, nor will Philips acquire as a result of any act by any Uniphase Party, any liability to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement or the other Sale Agreements. SECTION 5. REPRESENTATIONS AND WARRANTIES CONCERNING OPTO AND THE BUSINESS Philips hereby represents to each of the Uniphase Parties that the following statements are true and correct. 5.1. Organization, Qualification and Corporate Power. (i) Each of Philips and OPTO is duly organized and validly existing under the laws of The Netherlands. (ii) Philips has delivered to Buyer a true, correct and complete copy of the articles of association and other organizational and governing documents of OPTO. OPTO is not in default under or in violation of any provision of any such documents. (iii) OPTO has the requisite corporate power and authority to own and operate its properties and assets (including, without limitation, the Activity) and to carry on its business as presently conducted and as presently proposed to be conducted. 23 18 (iv) Philips has full power and authority and has taken all corporate action necessary in order to execute and deliver each of the Sale Agreements and to perform its obligations thereunder. Each of the Sale Agreements constitutes or will when executed constitute the valid and legally binding obligations of Philips enforceable in accordance with its terms and conditions. (v) OPTO has not filed (or has had filed against it) a petition in bankruptcy or insolvency, or is insolvent within the meaning of applicable laws, rules, regulations or similar requirements, and has not made any assignment in favor of its creditors or any class thereof, nor has any petition for a receivership or administration order been presented in respect of OPTO. OPTO has not initiated any proceedings with respect to a compromise or arrangement with its creditors or for the dissolution, liquidation or reorganization of OPTO, or the winding up or cessation of the business or affairs of OPTO. No receiver or administration receiver or liquidator has been appointed in respect of OPTO, or any of its assets and no execution or distress has been levied upon any of its assets. (vi) OPTO has no subsidiaries and OPTO has never owned, beneficially or otherwise, any shares or other securities of, or any direct or indirect interest in, any Person. 5.2. Capitalization. (i) The OPTO Shares consist of 140 shares of the ordinary share capital of OPTO, NLG 1,000 par value per share. (ii) The OPTO Shares have been validly issued and placed, Philips has full title to the Shares, free of Encumbrances and no share certificates evidencing the OPTO Shares are in existence. (iii) The OPTO Shares constitute all of the issued and outstanding shares in the capital of OPTO. (iv) There are no options, warrants or other rights exercisable for or rights to subscribe for or acquire shares of or rights of participation in OPTO, through 24 19 conversion or otherwise; and there are in existence no agreements or instruments pursuant to which any other Person has any right to call for the transfer or issue of any shares in the capital of OPTO. (v) Neither Philips nor any of Philips' Affiliates has any obligation to transfer the OPTO Shares to a third party (with the exception of the obligations of Philips to OPTO Buyer arising out of this Agreement), or to create any Encumbrances in respect of the OPTO Shares. (vi) The Shares have not been seized or attached. (vii) At the OPTO Closing, Philips shall have transferred or caused to be transferred to OPTO Buyer, and OPTO Buyer shall have acquired all of the OPTO Shares. 5.3. Noncontravention. Except as set out in Schedule 5.3, neither the execution and delivery of this Agreement or any other Sale Agreement, nor the consummation or performance of any of the transactions contemplated hereby or thereby, will directly or indirectly (with or without notice or lapse of time): (i) contravene, conflict with or result in a violation of (x) any of the provisions of the articles of association or other organizational or governing documents of Philips or OPTO, or (y) any resolution adopted by the stockholders, managers or board of directors of Philips or OPTO; (ii) contravene, conflict with or result in a violation of, or give any governmental authority, agency or body or other Person the right to challenge any of the transactions contemplated hereby or to exercise any remedy or obtain any relief under, any law to which OPTO, the Activity or any of the Assets or the Intangible Assets are subject; (iii) cause OPTO to become subject to, or to become liable for the payment of, any Tax, subject to any Tax required to be paid by OPTO due to the transactions set forth in Section 3.2 or on Schedule 3.3; 25 20 (iv) contravene, conflict with or result in a violation or termination of any Permit; (v) contravene, conflict with or result in a violation or breach of, or result in a default under, any provision of any of the Material Contracts; (vi) give any Person the right to (x) declare a default or exercise any remedy under any Material Contract, (y) accelerate the maturity or performance of any Material Contract, or (z) cancel, terminate or modify any Material Contract; (vii) Except as contemplated hereby, give any Person the right to any payment by OPTO or give rise to any acceleration or change in the award, grant, vesting or determination of options, warrants, rights, severance payments or other contingent obligations of any nature whatsoever of OPTO in favor of any Person or entity, in any such case as a result of the change in control of OPTO, or otherwise resulting from the transactions contemplated hereby; or (viii) result in the imposition or creation of any Encumbrance upon or with respect to the Activity, any Asset or any Intangible Asset. 5.4. Consents. Except as set forth on Schedule 5.4, neither Philips nor any Philips Affiliate is required to make any filing with or give any notice to, or obtain any consent, approval or authorization from any Person in connection with the execution, delivery or performance of this Agreement and the other Sale Agreements are parties or the consummation or performance of any of the transactions contemplated hereby or thereby. 5.5. Closing Date Balance Sheet. The Closing Date Balance Sheet will have been prepared in accordance with Philips Accounting Policies and audited by KPMG Peat Marwick, Philips' auditors, and prepared on a basis consistent with past practices. The Closing Date Balance Sheet will be complete and accurate in all respects and show a true and fair view of the assets and liabilities of OPTO and the Activity as of the date thereof on a basis consistent with Philips' Accounting Policies and the Fixed and Tangible Asset List. 26 21 A copy of a summary of Philips Accounting Policies has been previously delivered to Uniphase. 5.6. Assets. (i) Except as shown on Schedule 5.6, OPTO owns, or on the OPTO Closing Date will own, and has good, valid and marketable title to, or on the OPTO Closing Date, will have good, valid and marketable title to, all loose plant, fixtures, furnishings, equipment, vehicles, inventory and other tangible assets that are to be reflected on the Closing Date Balance Sheet (the "Assets"), free and clear of all Encumbrances, subject to changes in the Assets in the ordinary course of the Activity's business, consistent with past practices. The Closing Date Balance Sheet will include all of the tangible assets listed on the Fixed Tangible Asset Lists, subject to changes in the normal and ordinary course of business. That certain Fixed and Tangible Asset List that sets forth the budget numbers for the loose plant, fixtures, furnishings, equipment and vehicles of the Activity reflects the same items of tangible property that is set forth in that certain Fixed and Tangible Asset List that designated such tangible property by "tag" number. After giving effect to the Lease and the Site Services Agreement, the Assets constitute all of the fixed and other tangible assets necessary for the operation of the Activity, as the same is presently conducted and as the same is anticipated to be conducted. At the OPTO Closing, all right, title and interest in and to the Assets shall remain in OPTO, free and clear of all Encumbrances. OPTO does not own and has never owned any Real Property. (ii) All raw materials, work in progress and valuated finished goods and inventory of OPTO existing now and at the OPTO Closing Date meet and will meet applicable specifications to enable them to be sold in the ordinary course of business to a purchaser in accordance with OPTO's ordinary course pricing practices (allowing for negotiations). All such materials, work in process and finished goods that comprise the inventory for purposes of the Closing Date Balance Sheet will be reflected therein in accordance with Philips Accounting Policies. 27 22 (iii) The Assets are capable of being used and have throughout their ownership by Philips and OPTO been maintained and serviced properly. 5.7. Liabilities. As of the OPTO Closing Date, except for any Tax payable by OPTO due to the transactions described in Section 3.2 or on Schedule 3.3, OPTO shall have no liabilities or Indebtedness required by Philips Accounting Policies to be set forth on the Closing Date Balance Sheet other than liabilities and Indebtedness reflected in the Closing Date Balance Sheet, as the same shall be prepared in accordance with Section 9.4, and trade accounts payable (or accruals related thereto) incurred in the ordinary course of OPTO's business in a manner consistent with past practices during any period after the date of the Closing Date Balance Sheet and on or before the OPTO Closing Date. 5.8 Tax Matters. (i) All returns, computations, notices and information made or provided or required to be made or provided by Philips, OPTO or any of Philips' Affiliates in relation to OPTO or the Activity for any Tax purpose have been made or given within the requisite periods and on a proper basis and when made were true and accurate in all material respects and none of the foregoing Persons is likely to be the subject of any dispute with any Tax authority. (ii) No material deficiencies for taxes have been claimed, proposed, or assessed and made known to Philips, OPTO or Philips' Affiliates regarding OPTO or the Activity by any taxing or other governmental authority. OPTO has paid all Tax which it has become liable to pay and whose due date for payment fell on or before the date hereof and OPTO nor any director or officer thereof (in his capacity as such) has paid or become liable to pay any fine, penalty, surcharge or interest in relation to Tax. (iii) OPTO has no nor will it have any claim or liability to Tax arising in respect of any income, profits or gains earned, accrued or received on or before the OPTO Closing Date or as a result of any event occurring on or before the OPTO Closing Date other than Tax paid or discharged on or before the date 28 23 of the Closing Date Balance Sheet, subject to any Tax payable by OPTO due to the transactions described in Section 3.2 or on Schedule 3.3, and subject to any Tax that accrues for periods prior to the OPTO Closing Date that is the result of actions taken by OPTO and/or Uniphase after the OPTO Closing Date; and for the purposes of this warranty reference to income, profits and gains earned, accrued or received on or before any Closing includes a reference to income, profits and gains which are deemed for any Tax purpose to have been earned, accrued or received on or before that Closing and reference to an event occurring on or before that Closing includes a reference to any act, transaction, omission, event or circumstance (whether or not Philips or any of Philips' Affiliates is a party thereto) occurring or existing, or deemed for any Tax purpose to have occurred or existed, on or before that Closing, including the entering into of this Agreement and that Closing. (iv) No act or transaction has been or will, on or before each Closing, be effected by Philips, OPTO or any of Philips' Affiliates or any other Person (including the sale of the OPTO Shares), in consequence of which OPTO or any Uniphase Party is or may be held liable for Tax primarily chargeable against some other Person and OPTO is not liable for Tax in respect of the income, profits or gains of any other Person. (v) Each Philips and OPTO in relation to the Activity has made all deductions and withholdings in respect, or on account, of any Tax from any payments made by it which it is obliged to make and has duly accounted in full to the appropriate authority for all amounts so deducted or withheld. (vi) Except as described on Schedule 3.3, OPTO has not entered into or been engaged in or been a party to any transaction or series of transactions or scheme or arrangement of which the main purpose or one of the main purposes was the avoidance, deferral or reduction in the amount, of any liability to Tax of OPTO, apart from having been a member of a larger fiscal unity or tax group in order to pool profits and losses arising in a particular tax jurisdiction. 29 24 (vii) OPTO is not and has not at any time been liable to Tax in any place outside its jurisdiction of formation. (viii)All documents to which Philips, OPTO or Philips' Affiliates in relation to the Activity is a party or which form part of OPTO's title to any asset or in the enforcement of which OPTO is or may be interested and which are subject to registration, documentary or other registration taxes or duties have been duly registered and all applicable taxes or duties paid. (ix) OPTO, to the extent OPTO is engaged in making taxable supplies, is registered for value added tax purposes has complied fully in all material respects with all of its obligations relating to value added tax, maintains and has at all times maintained complete, correct and up to date records for the purposes of value added tax and has preserved such records in such form and for such periods as are required for value added tax purposes. (x) Philips and OPTO, in relation to the Activity, have properly operated all payroll deduction, social security, and other employer's deduction and contribution obligations by making such deductions as are required by law from all payments made or deemed to be or treated as made by it or on its behalf and by duly accounting to the appropriate authority for all sums so deducted and for all other amounts for which it is required to account under the relevant contribution systems. (xi) Each of Philips and OPTO in relation to the Activity has complied in full in all material respects with all its reporting obligations to the relevant authorities in connection with benefits provided for any director or employee. 5.9. Real Property. (i) Schedule 5.9 is a complete and accurate list showing the location of all land, plants, warehouses, office buildings and other buildings and real property rented, leased or occupied by OPTO (the "Real Property"). (ii) OPTO leases all of the Real Property from Philips or Philips' Affiliates pursuant to oral lease agreements and there are no written understandings 30 25 relating to the same. OPTO is not in default under, and has promptly complied with its obligations under, the lease agreements regarding the Real Property, and, to Philips' Knowledge, no other party to such lease agreements is in default of such lease agreements. (iii) To the Knowledge of the Philips, there are no notices or claims made by governmental authorities of any violations of any applicable law, statute, ordinance, code, rule, regulation, zoning plan or standard relating to any of the Real Property. (iv) Except as stated in Schedule 5.9, OPTO is the only occupier and has exclusive rights of occupation of the Real Property and there are no leases, tenancies, licenses or other rights of occupation in favor of third parties (including Philips and Philips' Affiliates) affecting the same, apart from sharing arrangements, as contemplated by the Site Services Agreement. (v) True and accurate copies of all documents of or affecting the title of or to the Real Property occupied by OPTO has been delivered to Uniphase. (vi) To Philips' knowledge, the current use of the Real Property does not contravene any law, statute, ordinance, regulation or zoning plan relating to zoning, planning, health or safety. (vii) No construction, alteration, demolition, change of use or other action or omission has been carried out in relation to the Real Property which would require any consent under or by virtue of any law relating to zoning, use or real estate or planning without such consent having been properly obtained and any conditions or restrictions imposed thereon have been fully observed and performed. (viii) OPTO has not at any time assigned or otherwise disposed of any property, leasehold or otherwise, in respect of which any of them has a continuing liability (contingent or otherwise) for payment of rent and/or for any other liability. 31 26 (ix) OPTO is not the guarantor of or surety for any other Person's liability (contingent or otherwise) for any obligations under any lease or tenancy or under any agreement relating to the assignment of any lease or tenancy. 5.10. Intellectual Property. (i) Schedule 5.10(a) lists all of the OPTO Patents. (ii) The Philips Parties have taken reasonable measures and precautions to protect the confidentiality and value of the OPTO Patents and all other Intellectual Property used by OPTO or the Activity. (iii) All OPTO Employees and all former employees of OPTO or Philips (relating to the Activity) are bound by confidentiality and protection of proprietary information provisions, which provisions are included in the Philips Collective Labour Agreement. (iv) To the Knowledge of Philips and except as set forth on Schedule 5.10(a), OPTO and the Activity are and have at all times in the past been operated and conducted without infringement or claim of infringement of any Intellectual Property of any other Person, and no facts, events or circumstances have occurred which may give rise to any such claim of infringement. None of Philips or any of Philips' Affiliates has received any notice or other communication (in writing or otherwise) of any infringement by OPTO or the Activity of any Intellectual Property owned or used by any other Person. Philips is not aware that any other Person is infringing, and Philips is not aware that any Intellectual Property owned or used by any other Person infringes or conflicts with, any Intellectual Property owned by OPTO or incorporated into any of the products of the Activity. (v) To the Knowledge of Philips, except as set forth on Schedule 5.10(b), neither the execution, delivery nor the performance of this Agreement or the other Sale Agreements will cause OPTO and/or the Activity to lose any license rights to the Intellectual Property of any third party that are necessary in order to operate the Activity or conduct the business of OPTO as presently conducted, or as currently proposed to be conducted by Philips, without 32 27 infringement of such third party Intellectual Property. Notwithstanding the foregoing, no representation is made by Philips as to the effect of the consummation of the transactions contemplated hereby on the current written cross-licenses between Philips and third parties. (iv) Philips owns all of the OPTO Patents, and owns all of the other Intellectual Property sold or licensed by OPTO to third parties, in each case, free and clear of all Encumbrances (except solely as provided in the Material Contracts listed on Schedule 5.19). Philips is not aware that the Intellectual Property identified in Schedule 5.10(a), or otherwise required to be transferred pursuant to the Sale Agreements, does not constitute all of the Intellectual Property necessary to enable OPTO to conduct the Activity in the manner currently conducted and as the same is currently anticipated to be conducted by Philips. 5.11. Litigation and Claims. (i) There are no outstanding suits, arbitrations, mediations or other proceedings (whether judicial, administrative, regulatory, extra-judicial or otherwise) by any Person against OPTO, the Activity or the assets of OPTO. OPTO is not engaged in or a party to any civil, criminal or administrative litigation or dispute (including, without limitation, arbitration and mediation proceedings), none is pending or threatened in writing and to Philips' Knowledge no facts are known which make such litigation or dispute to be expected. (ii) Without limiting Section 5.11(i) above, no Claim has been made by any Person as a result of any defect or deficiency or claimed defect or deficiency in any product manufactured, assembled or sold by OPTO, or Philips or any of Philips' Affiliates (with respect to the Activity), including any such matter arising or incurred based on any theory of product liability, however expressed. 5.12. Employees and Employee Benefit Plans. (i) A complete and accurate listing of the OPTO Employees, together with their salaries, bonus schedules, entitlements, and benefits, is attached as 33 28 Schedule 5.12(a). (ii) No material salary or bonus increases have been committed to the OPTO Employees since the date of the Financial Statements. (iii) There are no disputes with any of the OPTO Employees or any trade union or other organization; nor has, to the Knowledge of Philips, such a dispute been threatened or notified. (iv) No OPTO Employee has any right or expectation to be paid any early retirement or severance payment or benefit granted or the cost of which is funded or met by OPTO. (v) Apart from Messrs. Griede, Irijanan, Brans and Van de Heuvel, OPTO does not employ or have the benefit of any secondment arrangement in relation to an employee of another Philips' Affiliate under which either the employee has a right to return to the other Philips' Affiliate or the employee has expatriate salary or other benefits. (vi) Apart from the Philips Collective Labour Agreement, a copy of which has previously been provided to Uniphase, OPTO is not a party to or subject to any collective bargaining agreements with any trade union or collective bargaining agent representing any of the OPTO Employees or any other Persons. (vii) To Philips' Knowledge, no OPTO Employee is in violation of any term of any employment contract, proprietary information agreement or any other agreement relating to the right of any such individual to be employed by, or to contract with, OPTO, and to Philips' Knowledge the continued employment by OPTO of the OPTO Employees, will not result in any such violation. Philips has not received any notice alleging that any such violation has occurred. Philips has no Knowledge that any manager, director or key employee, or that any group of key employees, intends to terminate his, her or their employment with OPTO, nor, except as otherwise specifically provided herein, does OPTO have a present intention to terminate the employment of any officer, key employee or group of key employees. 34 29 (viii)Schedule 5.12(b) attached hereto contains a true and complete list of all Employee Benefit Plans. Philips has provided to the Purchaser current, accurate and complete copies of each written Employee Benefit Plan or, where oral, a written description of the terms thereof, as amended to date, together with the most current funding agreements and summary plan descriptions relating to each such Employee Benefit Plan including, without limitation, the most current copies of booklets or manuals prepared for or circulated to employees with respect to any of the Employee Benefit Plans. (ix) Each Employee Benefit Plan is now and will be fully funded for all periods prior to the OPTO Closing Date. Without limiting the foregoing, all contributions to each of the Employee Benefit Plans in respect of periods of service or benefits accrued prior to the Closing Date have been or will have been made on an accrual basis up to the OPTO Closing Date, notwithstanding that such contributions may not be due and owing until after the OPTO Closing Date. (x) No promises or commitments have been made by OPTO or Philips, or any of their employees, consultants or former employees or consultants to amend any Employee Benefit Plan or to provide increased benefits thereunder. (xi) Each Employee Benefit Plan is, and has been, administered in all material respects in accordance with the terms thereof, any collective agreements and applicable laws. All obligations under the Employee Benefit Plans have been satisfied, to the extent required by the terms thereof or applicable laws. (xii) Each Employee Benefit Plan is in good standing under and in compliance with all applicable laws and there are no outstanding material defaults or violations by the Philips or OPTO in connection with any Employee Benefit Plan, and no order has been made or notice given requiring (or proposing to require) the OPTO or any others to take or refrain from taking any action in respect of any Employee Benefit Plan. All material returns, filings, reports and disclosures relating to the Employee Benefit Plans required pursuant to the terms thereof or applicable laws have been made, filed or distributed in accordance with all such requirements and all filing fees and levies imposed on the Employee Benefit Plans by any regulatory authorities or applicable 35 30 laws have been made or remitted on a timely basis. (xiii) No actions, suits, claims (other than routine claims for payment of benefits in the ordinary course), commands, investigations, arbitrations or other proceedings have been commenced or threatened in respect of any of the Employee Benefit Plans or its assets. (xiv) None of the Employee Benefit Plans provides benefits to employees following their retirement. No Employee Benefit Plan exists that could result in the payment to any employee of any money, benefits or other property or accelerate or increase the funding requirements for any Employee Benefit Plan, in each case as a result of the transactions contemplated hereby. (xv) There are no employment policies or plans, including policies or plans regarding incentive compensation, stock options, severance pay or other terms or conditions of employment or terms or conditions upon which Employees may be terminated, which are binding upon OPTO. (xvi) OPTO has been and is being operated in full compliance with all legal requirements relating to employees, including employment standards, occupational health and safety, pay equity and employment equity. There have been no complaints under such laws against Philips or OPTO. (xvii) There are no complaints nor are there any threatened complaints, against OPTO or Philips, before any employment standards branch or tribunal or human rights tribunal. To Philips' Knowledge, nothing has occurred which might lead to a complaint against Philips or OPTO, under any human rights legislation or employment standards legislation. There are no outstanding decisions or settlements or pending settlements under the employment standards legislation which place any obligation upon OPTO, to do or refrain from doing any act. (xviii) There is no strike or lock out occurring or threatened affecting OPTO or the Activity. 36 31 (xix) OPTO has no unresolved employee grievances or pending arbitration cases outstanding. OPTO has no serious labour problems that might materially affect the value of OPTO or lead to an interruption of its operations at any location. (xx) Except as set forth on Schedule 5.12(a), OPTO employs no independent contractors or consultants, and there are no Persons (other than the OPTO Employees) necessary to conduct the Activity, as the same is presently conducted and anticipated to be conducted in the future. 5.13. Permits. (i) To Philips' Knowledge, all permits, permissions, easements, wayleaves, concessions, authorizations, licenses, consents and exemptions (collectively "Permits") required to operate OPTO and the Activity as presently conducted, all of which are listed on Schedule 5.13 attached hereto, have been obtained and are in full force and effect and the operation of the Activity does not contravene and has not contravened the conditions of any Permits, and to the Knowledge of the Philips Parties none of the Permits held directly by OPTO will be withdrawn, revoked or cease to apply as a result of the transactions contemplated by this Agreement, save as set out in Schedule 5.13. (ii) Philips has no Knowledge why the Uniphase Parties should not be able to obtain or renew any of the Permits referred to in clause (i) above upon proper submission by the applicable Uniphase Parties of applications therefor to the appropriate governmental or other body; however, Philips does not warrant such grant by the applicable governmental body. Philips has no Knowledge of any circumstances relating to the Uniphase Parties' proposed ownership or use of the Activity in the same manner as currently used by OPTO which would require the Buyers to obtain any Permit in addition to those referred to in Schedule 5.13. 5.14. Environmental Conditions (i) To Philips' Knowledge, Philips and OPTO have at all times conducted the Activity in compliance with, and have not committed any act or failed to act 37 32 in any way which gave or will give rise to any liability or obligation under, Environmental Laws, including permits, concessions, regulations and zoning plans. (ii) There is no lawsuit, proceeding or investigation, nor has there been issued any order or measure from any competent authorities relating to Environmental Laws or liabilities in respect thereof commenced or, to Philips' Knowledge, pending against Philips or OPTO in relation to the Activity or threatened against or affecting same. (iii) To Philips' Knowledge, at the locations where OPTO or Philips conducts or has conducted the Activity or will conduct the Activity: (a) there is and will be at the OPTO Closing Date no contamination of the soil (including the subsoil and groundwater); (b) nor is there nor have there ever been any air emissions, noise levels or water discharges in excess of permit limits or except as otherwise allowed by applicable law or regulation; (c) nor is there or has there ever been any storage, processing or disposal of any waste or waste water in contravention or in excess of permit limits or except as otherwise allowed by applicable law or regulation; and (d) nor is there or has there ever been any storage, processing or disposal of substances, including dangerous substances, chemicals, such as arsenics, in contravention or in excess of permit limits or limits based on Environmental Laws, nor has Philips ever infringed any obligation based on Environmental Laws with respect to the storage, processing or disposal of substances. The present use of arsenics at the Activity does not require an external safety report. (iv) To Philips' Knowledge, OPTO has no liability, contingent or actual, with regard to the condition of or presence of any waste or other contaminant in, under or on any property which is not currently occupied by it nor with regard 38 33 to any waste or other by-product disposed of by it. 5.15. Brokers' Fees. None of OPTO, Philips or any of Philips' Affiliates has, nor will OPTO or any Uniphase Party acquire as a result of any act by any Philips' Affiliate, any liability to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement or the other Sale Agreements. 5.16. Insurance. OPTO has insurance coverage which, given the size and nature of its business, is consistent with Philips' policy regarding such matters. All policies of insurance providing coverage to OPTO are in full force and effect but such coverage shall be terminated at the OPTO Closing Date. 5.17. [Intentionally Omitted] 5.18. Compliance with Laws. To Philips' Knowledge, each of Philips and OPTO has conducted the Activity in all material respects in accordance with all applicable laws, regulations and other requirements of each governmental body having authority over same, including without limitation all applicable competition and anti-trust laws and rules, and has not acted nor failed to act in any way which has given or will give rise to any violation of or liability under any of such laws, regulations or requirements. There are no contracts or obligations, agreements, arrangements or concerted practices to which OPTO is a party, and there are no practices in which OPTO is engaged, which are void, illegal, unenforceable, registrable or notifiable under or which contravene any anti-trust or similar legislation anywhere in the world. 5.19. Material Contracts. (i) Schedule 5.19 attached hereto lists all Material Contracts. For the purpose hereof, the term "Material Contracts" means all of the following: (i) all outstanding licenses or other agreements between OPTO and its customers (including, without limitation, all such licenses and agreements relating to the 39 34 sale or license of OPTO's products), (ii) all other licenses or other agreements pursuant to which OPTO licenses or has otherwise agreed to transfer, license or assign any right, title or interest in or to Intellectual Property owned or used by OPTO or the Activity, (iii) all other licenses or other agreements pursuant to which OPTO licenses or otherwise receives from another Person or entity any Intellectual Property of such other Person or entity, (iv) all employment or consultant contracts between OPTO and its employees and consultants, (v) all collective bargaining agreements and other labor agreements affecting OPTO or any of the OPTO Employees, (vi) all other agreements or understandings between OPTO and Philips or any of Philips' Affiliates, all of which, at Uniphase's election shall be terminated, with no further liability to OPTO, prior to the OPTO Closing Date, (vii) all instruments and other agreements evidencing, securing or otherwise relating to any debt of OPTO, if any, (viii) all real property leases pursuant to which OPTO is a party, (ix) all insurance policies held by OPTO, and (x) all other contracts, agreements, instruments, documents, and understandings which (1) involve future payments, performance of services or delivery of goods or materials to or by OPTO of an aggregate amount or value in excess of NLG 100,000, or (2) are material to OPTO or the Activity. Philips has previously delivered to Uniphase copies of all of the Material Contracts. (ii) To Philips' Knowledge, each Material Contract is valid and in full force and effect, and is enforceable by OPTO in accordance with its terms. (iii) OPTO is not in material default under any Material Contract and, to Philips' Knowledge, no other Person or entity has defaulted under any Material Contract. 5.20. Grants. No act or transaction has been effected by Philips, OPTO or any of Philips' Affiliates including the sale of the OPTO Shares in consequence of which: (i) OPTO is or could (under the terms of the grant or equivalent) be liable to: 40 35 (a) refund the whole or part of any investment grant from any government or quasi-governmental body or other grant received by virtue of any law; (b) repay in whole or in part any central or local governmental authority loan; (c) lose the benefit of any financial concession accorded to OPTO by any authority; or (ii) to the Knowledge of Philips, any grant for which application has been made on behalf of OPTO will or may not be paid or will or may be reduced pursuant to the present practice of the appropriate authority; and accurate details of all such grants and loans are contained on Schedule 5.20 attached hereto. 5.21. Conduct of Activity. Since the incorporation of OPTO: (i) there has been no interruption or alteration in the nature, scope or manner in the Activity, and the Activity has been carried on in the ordinary and usual course of business so as to maintain the same as a going concern; (ii) no material customer or supplier has: (a) indicated that it is likely to cease trading with or supply to OPTO; (b) indicated that it is likely to reduce materially its trading with or supplies to OPTO; (c) indicated that it is likely to change materially the terms upon which it is prepared to trade with or supply OPTO (other than normal price and incidental changes); 41 36 (iii) OPTO has continued to pay its creditors in the ordinary course of business; (iv) save for financing extended by Philips or its Affiliates to OPTO, all of which financing is disclosed on Schedule 5.19, OPTO has not repaid any loan capital in whole or in part nor has any become bound or liable to be called upon to repay prematurely any loan capital or borrowed monies; (v) OPTO has not, except in the ordinary course of business, acquired, sold, transferred or otherwise disposed of any assets of whatsoever nature, other than as set forth on Schedule 3.3; (vi) OPTO has not cancelled, waived, released or discontinued any rights, debts or claims other than in the ordinary course of business; (vii) save as set forth in the purchase orders listed on Schedule 5.19 and as described on Schedule 3.3, OPTO has not incurred any capital expenditure or made any capital commitment of an amount in excess of NLG 500,000 or disposed of any fixed assets having a value of more than NLG 500,000 in aggregate; (viii) OPTO has not hired or dismissed any employee earning an annual rate of remuneration, including fringe benefits, in excess of NLG 200,000; (ix) no dividends, bonuses or other distributions have been declared, paid or made in respect of any of the OPTO Shares; (x) OPTO has not undergone any capital reorganization or change in its capital structure; (xi) OPTO has not made any purchase or sale or introduced any method of management or operation in respect of the Activity, undertaking or assets except in a manner consistent with proper prior practice; and (xii) neither Philips nor any of its Affiliates has agreed to take any of the actions described in clauses (iii) through (xi) above. 42 37 5.22. Material Adverse Change. To Philips' Knowledge, since the date of incorporation of OPTO, there has not been any material adverse effect on the business, operations, finances or prospects of OPTO or the Activity. 5.23. Accounts Receivable and Accounts Payable. (i) All accounts receivable of OPTO represent valid and binding obligations of OPTO's customers entered into in the ordinary course of business. All such accounts receivable will be collected in full (without any counterclaim or setoff) in the ordinary course of business, subject solely to the reserve for doubtful accounts as set forth in the Closing Date Balance Sheet. Notwithstanding anything to the contrary set forth in this Agreement, the aggregate liability of Philips due to the failure of all or any portion of such accounts receivable to be so collected and the failure of Philips representations regarding inventory at Section 5.6(ii) hereof shall be reduced by the aggregate amount of all payments received by OPTO from the applicable customers in reduction of such doubtful accounts (net of all costs and expenses incurred by OPTO to collect the same). (ii) All accounts payable of OPTO were incurred in the ordinary course of business and represent arms-length obligations of OPTO. SECTION 6. PRE-CLOSING COVENANTS The Parties agree as follows with respect to the period between the signing of this Agreement and each Closing. 6.1. General. Each Party will use its best efforts to take all actions and to do all things necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement (including satisfying the respective closing conditions set forth in Section 7 below). 43 38 6.2 Consents and Notifications. (i) Promptly after execution hereof, Philips and OPTO will file (and Philips will cause OPTO to file) any notification and report forms and related material that Philips and/or OPTO may be required to file with any governmental authority (including, without limitation, all filings and notifications under the HSR Act), will use its best efforts to obtain (and Philips will cause OPTO to use its best efforts to obtain) the expiration or early termination of the applicable waiting period (or any extension thereof) for any required pre-acquisition or pre-merger notice to such authority, and will make (and Philips will cause OPTO to make) any further filings, including the submission of any additional information or documentary material, pursuant thereto that may be necessary in relation to such pre-acquisition or pre-merger notices and filings. (ii) Prior to each Closing, Philips will (a) notify any and all Persons required to be notified by Philips in connection with the transactions to be consummated at such Closing, and (b) obtain any and all consents identified on Schedule 5.4 as required to be obtained by Philips prior to such Closing. From and after the OPTO Closing, Philips shall continue diligently to use its reasonable efforts to obtain all other consents identified on Schedule 5.4. (iii) Promptly after execution hereof, Uniphase and the Buyers will file (and Uniphase will cause the Buyers to file) any notification and report forms and related material that Uniphase and/or the Buyers may be required to file with any governmental authority (including, without limitation, all filings and notifications under the HSR Act), will use its best efforts to obtain (and Uniphase will cause the Buyers to use their best efforts to obtain) the expiration or early termination of the applicable waiting period (or any extension thereof) for any required pre-acquisition or pre-merger notice to such authority, and will make (and Uniphase will cause the Buyers to make) any further filings, including the submission of any additional information or documentary material, pursuant thereto that may be necessary. 44 39 (iv) Prior to each Closing, the Uniphase Parties will (a) notify any and all Persons required to be notified by the Uniphase Parties in connection with the transactions to be consummated at such Closing, and (b) obtain any and all consents required to be obtained by the Uniphase Parties in connection with the transactions to be consummated at such Closing. 6.3. Trade Unions and Works Counsel. Without limiting any of the obligations of Philips pursuant to Section 6.2, prior to the Asset Sale Closing, Philips shall have (i) complied with all laws, rules and regulations of the Dutch Works Council Act applicable to the transactions contemplated by this Agreement and the other Sale Agreements, and (ii) obtained any and all approvals and consents required to be obtained therefrom and from any and all trade unions representing any of the OPTO Employees. 6.4. Operation of the Activity. OPTO will not and Philips will not cause or permit OPTO to engage in any practice, take any action, embark on any course of inaction, or enter into any transaction outside the ordinary course of the Activity (except as described on Schedule 3.3), as the same is currently conducted or to do anything which would cause a material breach of the representations and warranties contained in Section 5.21, as if such representations and warranties were made at the time of such action or inaction. Philips shall cause OPTO to keep OPTO, the Activity and the Assets intact, including OPTO's physical facilities, working conditions and relationships with lessors, licensors, suppliers, customers and the OPTO Employees. Without limiting the generality of the foregoing, and except as approved in writing by Uniphase in advance, prior to the OPTO Closing, Philips will procure that OPTO: (a) will not enter nor allow to be entered into any agreements or commitments relating to the Activity (except as described on Schedule 3.3), except on commercially reasonable terms and in the ordinary course of business; (b) without limiting clause (a), will not enter into any license or otherwise grant any rights with respect to any of the Assets or the Intangible Assets other than in the connection with sales of products of the Activity in the ordinary course (except as described on Schedule 3.3); and (c) will not declare, make or pay nor allow to declared or paid any dividend or other distribution with respect to any 45 40 of the OPTO Shares or other payment to Philips (other than for trade payables incurred in the ordinary course of OPTO's business consistent with past practice). 6.5. Ownership of Assets. Philips shall ensure that (i) at each Closing, OPTO owns the Assets, and (ii) with respect to the Intangible Assets (including without limitation, all of the OPTO Patents), good, valid and marketable title to all of the Intangible Assets are transferred to the applicable Buyer at the Asset Sale Closing. 6.6. Owner's Equity and Liabilities. Philips shall ensure that at each Closing, (i) the Owner's Equity is not less than NLG 34 million (without giving effect to any Tax consequences of the transactions described in Section 3.2 or on Schedule 3.3), and (ii) Closing Liabilities shall consist only of (a) accounts payable incurred in the ordinary course consistent with past practice to Persons other than Philips or any of Philips' Affiliates, (b) accrued salaries and wages of the OPTO Employees, at the same rates and levels as in effect as of the date hereof, not in excess of one pay period for any OPTO Employee, and (c) trade Indebtedness owed to Philips or its Affiliates, incurred in the ordinary course consistent with past practice. 6.7. Notice of Developments. Each Party will give prompt written notice to the other of any material development affecting the financial or other condition of such Party or, with respect to Philips' obligations under this Section 6.7, the Activity. 6.8. [Intentionally Omitted]. 6.9. OPTO Patents. Prior to the Asset Sale Closing Date, at Uniphase's election, Uniphase may notify Philips in writing of a patent attorney/agent to whom the relevant files for the OPTO Patents shall be transferred at such Closing, in which event, Philips shall cause such transfers to occur at the Asset Sale Closing. Any and all costs incurred 46 41 in connection with (x) the transfer and the change of registration of the OPTO Patents by Philips as herein provided, and (y) the maintenance of the OPTO Patents after the Asset Sale Closing Date (including, without limitation, procedural/prosecution fees, patent attorney/agent fees and patent maintenance fees), shall be borne by the Uniphase Parties. SECTION 7. CONDITIONS TO OBLIGATIONS TO CLOSE 7.1. Conditions to Obligation to Close of Uniphase Parties to be Satisfied at each Closing. The obligation of the Uniphase Parties to consummate the transactions to be performed by them in connection with the Closings is subject to satisfaction (or waiver in writing in Uniphase's sole and absolute discretion) of the following conditions: (i) the representations and warranties set forth in Section 5 shall be true and correct in all material respects at and as of each Closing Date, as if made on such dates; (ii) Philips shall have performed and complied with all of its covenants to be performed prior to each Closing; and (iii) Philips shall have received all of the authorizations, consents and approvals of governments and governmental agencies identified on Schedule 5.4 as required to be obtained by Philips prior to each Closing; and (iv) Philips shall have obtained in form and substance reasonably satisfactory to Uniphase all Permits the obtaining of which is material to the continuation of the Activity as presently conducted and which are identified in Schedule 5.13 as being material by designation with an asterisk. 7.2. Conditions to Obligation to Close of Philips. 47 42 The obligations of Philips to consummate the transactions to be performed by it in connection with the Closings is subject to satisfaction (or waiver in writing in Philips' sole and absolute discretion) of the following conditions: (i) the representations and warranties set forth in Section 4 above shall be true and correct in all material respects at and as of each Closing Date, as if made on such dates; (ii) the Uniphase Parties shall each have performed and complied with all of their respective covenants to be performed prior to each Closing; and (iii) the Uniphase Parties shall have received the authorizations, consents and approvals of governments and governmental agencies required to be obtained by such Persons in connection with the transactions contemplated hereby. SECTION 8. OPTO EMPLOYEES 8.1. Retention of OPTO Employees. The Parties acknowledge that all OPTO Employees identified on Schedule 5.12(a) will transfer by operation of law at the OPTO Closing. Notwithstanding the foregoing, Philips shall pay and be responsible for all salaries, wages and other compensation, and all severance, sick leave or other benefits (including, without limitation, all benefits provided for in the Employee Benefit Plans) owed by OPTO and accrued with respect to periods prior to the OPTO Closing Date. 8.2. Pension Obligations. Philips shall ensure that, on the OPTO Closing Date, all obligations of the Philips Parties to the OPTO Employees pursuant to the Employee Benefit Plans are fully-funded and otherwise in full compliance with applicable law. Without limiting the foregoing, Philips shall ensure that, on the OPTO Closing Date, each OPTO Employee shall have a fully-paid up pension policy (entitling such OPTO Employee to a deferred pension) pursuant to the Dutch Philips Pension Fund covering the period during which such OPTO Employee was a member of the Dutch Philips Pension Fund, all in accordance with the terms and conditions of the 48 43 Dutch Philips Pension Fund. Philips has provided Uniphase with a true, correct and complete copy of the Dutch Philips Pension Fund organizational and governing documents. 8.3. Collective Bargaining Agreement. The Parties acknowledge that, effective on the OPTO Closing Date, the OPTO Employees will not be covered by the Philips Collective Labour Agreement. The Philips Parties shall cooperate with the Uniphase Parties in good faith to procure a collective labour agreement, satisfactory to the Uniphase Parties, with respect to the OPTO Employees after the OPTO Closing Date. 8.4. Transfer Expenses. All costs and expenses relating to the agreements of the Parties under this Section 8 shall be borne by the Uniphase Parties, other than Philips' obligations pursuant to Section 8.2, which shall be borne by Philips. SECTION 9. POST-CLOSING COVENANTS The Parties agree as follows with respect to matters arising following each Closing. 9.1. General. In case at any time after any Closing any further action is necessary to (i) perfect the transfer of ownership of the Consideration, the Intangible Assets or the OPTO Shares or the implementation in full of any of the Sale Agreements, or (ii) obtain any authorization, approval or consent of any Person required to consummate the transactions contemplated hereby (and which consent, authorization or approval was not required to be obtained prior to such Closing pursuant to the terms hereof), each Party will take such further action (including the execution and delivery of such further instruments and documents) as any other Party reasonably may request, all at the sole cost and expense of the requesting Party (unless the requesting Party is entitled to indemnification therefor under Section 10 below), except with respect to the obtaining of consents described in clause (ii) above, the 49 44 cost of which shall be borne by the Party required to obtain such consent. In particular, but without limiting the generality of the foregoing, if it becomes apparent that any tangible or intangible asset used by OPTO or the Activity or required for use in the Activity is owned by Philips or any of Philips' Affiliates, Philips will or will procure that Philips' Affiliate will either transfer ownership of such asset to the relevant Buyer without charge or allow the relevant Buyer use of such asset indefinitely free of charge for the purposes of such Buyer's business; provided that the foregoing shall not apply to any of the assets on properties to be leased or otherwise made available to OPTO and/or Uniphase pursuant to the Lease or the Site Services Agreement. 9.2 Intellectual Property Rights and Obligations. (i) After the OPTO Closing, subject to Section 9.3, Philips and, subject to the next sentence, Philips' Affiliates, shall have the nonexclusive, worldwide, royalty-free right to use the OPTO Patents, and the transfer of the OPTO Patents shall be further subject to Philips' commitments with respect to the same (which commitments consist solely of certain cross-licenses and Philips' obligations under the European R&D projects disclosed on Schedule 5.3) accruing prior to the date hereof. Notwithstanding the foregoing, if at any time any Philips Affiliate ceases to be a Philips Affiliate, the license rights provided in this Section 9.2(i) with respect to such Person shall immediately terminate and be of no further force or effect. Without Uniphase's prior written consent (which consent shall not be unreasonably withheld in the case of a sale by Philips of a product line or business division to Persons not competitive with Uniphase or its Affiliates), such license rights shall not be assignable, sublicensable or otherwise transferable, in whole or in part (by operation of law or otherwise). (ii) Philips shall use reasonable endeavors, in cooperation with Uniphase, to ensure that, from and after the OPTO Closing Date, OPTO may continue to use all software used in the Activity. OPTO shall assume and be responsible for all costs in connection with license renewals for such software from and after the OPTO Closing Date as well as the maintenance costs of such 50 45 licenses from and after the OPTO Closing Date. (iii) After the OPTO Closing Date, OPTO shall no longer be entitled to use the "Philips" trademark (whether the "Philips" shield emblem or the word mark "Philips"), nor shall OPTO be entitled to use the trade name "Philips" (or "Phil" or "Phili" or any derivative thereof). Notwithstanding the foregoing, OPTO shall, for a period of one (1) year from and after the OPTO Closing Date, be entitled to use the "Philips" trade name or shield emblem, in a manner reasonably pre-approved by Philips, on remaining product manuals and packaging materials manufactured by or for OPTO prior to the OPTO Closing Date. Prior to the OPTO Closing Date, Philips shall procure that the trade name of OPTO be modified in such a manner that it no longer includes the name "Philips" (or any name including the elements "Phil" or "Phili") and shall effect such name change as requested by Uniphase in the relevant trade register. (iv) Subject to Section 9.2(iii), neither Philips nor any of Philips' Affiliates shall, at any time from and after the OPTO Closing, assert against any of the Uniphase Parties, or any of their subsidiaries or Affiliates (and/or their respective customers), any patents owned or used by Philips or any of Philips' Affiliates, to the extent that such patents are used or incorporated in the design, manufacture, marketing, sale or use of any products (including all improvements or enhancements made to such products after the OPTO Closing Date, to the extent that such improvements or enhancements do not make use of any additional Intellectual Property owned or used by Philips and not used by the non-improved or non-enhanced product) produced by OPTO or the Activity or under development prior to the OPTO Closing Date. In addition and without limitation of the foregoing, to the extent OPTO shall be using Intellectual Property of Philips' or Philips' Affiliates, as of the OPTO Closing Date that is not subject to a patent and that is otherwise not being transferred to the Uniphase Parties pursuant to the Sale Agreements, the non-assertion obligations of Philips set forth in this Section 9.2(iv) shall extend to and include any such non-patented Intellectual Property, other than Philips' proprietary software, with respect to which such non-assertion obligation shall apply only to OPTO, provided that to the extent OPTO is required by the terms of the Site Services Agreement or the Lease to pay for the use of 51 46 any Philips proprietory software, the non-assertion with respect solely to such software shall terminate upon a default by OPTO (beyond any applicable cure period) with respect to any such payment. 9.3. Non-Compete. For a period of five (5) years following the OPTO Closing Date, Philips and Philips' Affiliates shall not engage in the business of designing, developing, manufacturing or selling III-V semiconductor lasers or III-V monitor photodiodes. For the avoidance of doubt, the preceding sentence shall in no manner restrict Philips in conducting and continuing at any location the activities of other businesses, including, without limitation, the activities of the following entities: Philips Broadband Networks, Inc. in Manlius, New York, U.S.A.; Philips Optics / Electro-optical Components, part of Philips Components B.V. in Eindhoven, The Netherlands; Lumiled Lighting B.V. in Best, The Netherlands; Philips' microwave activities, part of Philips Semiconductors in Limeilles, France as well as in Caen, France; Philips Optical Storage Group in Eindhoven, The Netherlands; and the activities relating to communication systems for health care of Philips Medical Systems. In no event, however, shall the foregoing be deemed to permit Philips to effect commercial sales of any products being sold by or under development within the Activity as of the OPTO Closing Date. 9.4. Closing Date Balance Sheet. Philips shall prepare and deliver the Closing Date Balance Sheet to Uniphase no later than the date that is forty-five (45) days after the OPTO Closing Date. The Closing Date Balance Sheet shall (i) be audited by KPMG Peat Marwick, Philips' auditors, and shall be prepared in a manner consistent with past practice, and (ii) conform to Philips' obligations pursuant to Section 6.6. The Closing Balance Sheet shall be certified by such auditors to Uniphase and Philips as complete and accurate in all respects and as showing the true and fair view of the state of affairs of OPTO and the Activity as at the OPTO Closing Date. 9.5. Cooperation and Access to Financial Books and Records. 52 47 (i) If required by Philips for the purpose of the preparation of tax filings and/or financial reporting (and responding to any Tax audits), Uniphase will provide all reasonable cooperation to Philips, at Philips' cost, in regard thereto. Such cooperation in any event includes that Uniphase, if so requested by Philips for this purpose, shall give access to all relevant books, relevant individuals and financial records relating to the Activity and OPTO and shall allow Philips to make copies thereof. Uniphase shall keep all of its books and records for all periods required by applicable law. (ii) If required by Uniphase for the purpose of the preparation of tax filings and/or SEC and financial reporting (and responding to any Tax audits), Philips will provide all reasonable cooperation to Uniphase, at Uniphase's cost, in regard thereto. Such cooperation in any event includes that Philips, if so requested by Uniphase for this purpose, shall give access to all relevant books and financial records relating to the Activity and OPTO and shall allow Buyer to make copies thereof. 9.6. Confidentiality. (i) Philips will hold and cause its Affiliates to hold all information received under Section 9.5, and all other information that remains in the possession of Philips or Philips' Affiliates from any period prior to the OPTO Closing Date and that relates to the Activity, or the suppliers, Intellectual Property, technical know-how, customers, products and processes of OPTO, which are not in the public domain, in confidence and to use such information only for the purposes for which it was obtained, except that this Section 9.6 shall not restrict the use of information which is in the possession of Philips or Philips' Affiliates in their capacity as manufacturers, purchasers or suppliers conducting businesses other than the Activity as conducted by them prior to the date hereof. (ii) Each Party agrees to forever hold and to cause its Affiliates to hold all information received from any other Party, and which is not in the public domain, in strict confidence, except to the extent disclosure of such information is required by applicable law. 53 48 9.7. Press Releases and Other Disclosures. No Party or such Party's Affiliates, without the prior written consent of the other Party, will issue any press release or any similar public announcement concerning the transactions contemplated by this Agreement, such consent not to be unreasonably delayed or withheld. However, if such disclosure is required by law or regulations of a stock exchange or other regulatory body, no such consent shall be required, and the Parties will cooperate in preparing a press release or releases. 9.8. Poaching. During the two (2) year period following the OPTO Closing, Philips will and will procure that each of Philips' Affiliates will not solicit any of the OPTO Employees for employment. For the purposes of this Section 'solicit' shall include any act intended or calculated to result in an OPTO Employee leaving the employment of OPTO or Uniphase or its subsidiaries but shall exclude any of the following activities by Philips or its Affiliates: (i) advertising for employment in any bulletin board (including electronic bulletin boards), newspaper, trade journal or other publication available to the general public; (ii) participating in any hiring fair or similar event open to the public and not targeted at employees of any Uniphase or its subsidiaries; (iii) use of recruiting or employee search firms that have been instructed and agreed in writing not to solicit any OPTO Employee; and (iv) negotiating with and/or offering employment to any OPTO Employee who initially contacts Philips or an Affiliate solely as a result of any of the activities included in clauses (i) to (iii) above. 54 49 Philips agrees that it and Philips' Affiliates may only employ an OPTO Employee if neither it nor any Philips' Affiliate has solicited such OPTO Employee in contravention of clauses (i) to (iii) above. SECTION 10. INDEMNITIES 10.1. Indemnities by Philips. Philips undertakes with the Uniphase Parties to indemnify and hold each of the Uniphase Parties harmless against all Claims arising out of or incurred as a result of any breach by Philips of (i) any representation or warranty of Philips contained in this Agreement or any of the other Sale Agreements, or (ii) any covenant, agreement or obligation of Philips under this Agreement or any of the other Sale Agreements. 10.2. Indemnities by Uniphase. Uniphase undertakes with Philips to indemnify and hold Philips harmless against all Claims arising out of or incurred as a result of any breach by any of the Uniphase Parties of (i) any representation or warranty of any of the Uniphase Parties contained in this Agreement or any of the other Sale Agreements, or (ii) any covenant, agreement or obligation of any of the Uniphase Parties under this Agreement or any of the other Sale Agreements. 10.3. Defense of Claims. (i) In the event of the assertion of any Claim by any third-party with respect to which a Party (the "Indemnified Party") is entitled to be indemnified pursuant to Section 10.1 or 10.2 above, the Party required to indemnify the Indemnified Party (the "Indemnifying Party") shall reasonably promptly, following the Indemnified Party's actual knowledge thereof, notify the Indemnifying Party of such Claim. The Indemnifying Party shall have the right to assume the defense of such Claim at the sole expense of the Indemnifying Party. If the Indemnifying Party so elects to assume the defense of any such Claim: 55 50 (a) the Indemnifying Party shall proceed to defend such Claim in a diligent manner with counsel reasonably satisfactory to the Indemnified Party; (b) the Indemnifying Party shall keep the Indemnified Party promptly informed of all material developments and events relating to such Claim; (c) the Indemnified Party shall have the right to participate in the defense of such Claim at their own sole expense, which shall not be reimbursed by the Indemnifying Party; and (d) the Indemnifying Party shall not settle, adjust or compromise such Claim without the prior written consent of the Indemnified Party, which consent shall not be unreasonably withheld or delayed. (ii) If the Indemnified Party so proceeds with the defense of any Claim, (a) all expenses incurred and relating to the defense of such Claim (whether or not incurred by the Indemnified Party) shall be borne and paid exclusively by the Indemnifying Party; (b) The Indemnifying Party shall make available to the Indemnified Party any documents and materials in the possession or control of the Indemnifying Party that may be necessary to the defense of such Claim; (c) the Indemnified Party shall keep the Indemnifying Party informed of all material developments and events relating to such Claim; and (d) the Indemnified Party shall have the right to settle, adjust or compromise such Claim, with the consent of the Indemnifying Party, provided, that the Indemnifying Party shall not unreasonably withhold or delay such consent. SECTION 11. TERMINATION 56 51 11.1. Termination. This Agreement may terminated at any time prior to the OPTO Closing Date: (i) by mutual written consent of the Parties; (ii) by the Uniphase Parties, in the event of a material breach by Philips of any provision of this Agreement, including, all covenants, representations and warranties, which is not remedied within 30 days following a written notice demanding such remedy; (iii) by Philips, in the event of a material breach by any of the Uniphase Parties of any provision of this Agreement, including, all covenants, representations and warranties, which is not remedied within 30 days following written notice demanding such remedy; (iv) by Philips if the Average Closing Market Price is less than U.S.$39.00; (v) subject to Section 11.2, by Philips if the Average Closing Market Price is greater than U.S.$60.00; and (vi) by any of the Parties, upon three (3) days prior written notice, in the event that the OPTO Closing shall not have occurred by June 30, 1998, provided that the failure of the OPTO Closing to occur is not due to the breach by the terminating Party of any provision of this Agreement. 11.2. Limitations on Philips' Termination Rights. Notwithstanding anything to the contrary set forth in Section 11.1(v) above, Philips may not terminate this Agreement if, at the election of the Uniphase Parties, and notwithstanding anything to the contrary contained in this Agreement, the Consideration payable at the OPTO Closing is adjusted as follows: (a) the non-cash portion of the Consideration paid at the OPTO Closing shall be calculated based on a price per Uniphase Common Share of U.S.$60.00, or (b) in lieu of the foregoing, in addition to the Consideration (calculated without regard to clause (a) above), Uniphase shall pay to Philips at the OPTO Closing, an amount, in 57 52 immediately available NLG funds (based on the exchange rate used to calculate the Consideration), equal to the sum of (x) the product of (1) the Average Closing Market Price minus U.S.$60.00, multiplied by (2) the number of Uniphase Common Shares included in the Consideration, plus (y) an amount such that, on an after tax basis, Philips receives the same value of consideration pursuant to clause (b) as it would have received under clause (a). 11.3. Effect of Termination. Except for Sections 9.6, 9.7 and 10, which Sections shall survive any termination of this Agreement, in the event of any termination of this Agreement pursuant to Section 11.1, this Agreement shall immediately terminate and be of no further force or effect, and the Parties shall be released from any and all obligations hereunder, provided that, nothing herein shall relieve any Party from liability for the breach of any representation, warranty, covenant or agreement of such Party set forth in this Agreement, or such Party's indemnity obligations with respect to such breach. SECTION 12. REMEDIES FOR BREACHES OF THIS AGREEMENT 12.1. Survival. All representations and warranties of the Parties contained in this Agreement shall survive each Closing and continue in effect for the following periods: (i) Except as otherwise provided in this Section 12.1, the representations and warranties in Sections 4 and 5 shall expire eighteen (18) months after the OPTO Closing Date; (ii) The representations and warranties of the Uniphase Parties and Philips, respectively, under Section 4.9 and Section 5.2, respectively, shall survive forever; (iii) the representations and warranties of Philips Sections 5.8 and 5.12 shall expire at the end of the applicable statute of limitations; 58 53 (iv) the representations and warranties of Philips under Section 5.14 shall expire ten (10) years after the OPTO Closing Date; and each Party must assert any Claim involving a representation and warranty against the other Party by providing notice in accordance with Section 13.3, specifying the factual basis in reasonable detail, before expiration of any applicable survival period. Notwithstanding any contrary provision, as long as the Claim is asserted on a timely basis, the Claim will continue to be valid and assertible even though the survival period may subsequently expire before the Claim is resolved. 12.2. Liability of Philips. Subject to the next sentence, (a) in the absence of fraud, Philips' aggregate liability to the Uniphase Parties, pursuant to this Agreement and the other Sale Agreements (other than the Lease and the Site Services Agreement), shall not exceed NLG 50 million, and (b) Philips shall have no liability under such Sale Agreements unless the aggregate amount of all of the Uniphase Parties' Claims exceeds NLG 1 million, in which event, Philips shall be liable for all Claims, which exceed NLG 50,000 (provided that claims of a similar nature or involving a single Person (and its Affiliates) shall be aggregated for the purpose of determining such NLG 50,000 amount). Notwithstanding the foregoing, (x) the maximum aggregate liability of Philips for any breach of Section 9.3 shall be NLG 50 million, independent of any limit prescribed in the preceding sentence (provided that the amount of any indemnification claims for breach of Section 9.3 shall be counted against the NLG 50 million limit on liability set forth in the preceding sentence), and (y) the maximum aggregate liability of the Philips Parties for any breach by them of their representations and warranties under Sections 5.2, 5.6, 5.10(i) and 5.10(v) shall be NLG 462 million, independent of any limit prescribed in the preceding sentence. 12.3. Liability of Uniphase Parties. In the absence of fraud, the Uniphase Parties' aggregate liability to Philips, pursuant to this Agreement and the other Sale Agreements (other than the Lease and the Site Services Agreement), shall not exceed NLG 50 million. In addition, the Uniphase Parties shall have no liability under such Sale Agreements unless the 59 54 aggregate amount of all of the Philips Parties' Claims exceeds NLG 1 million, in which event, subject to the next sentence, the Uniphase Parties shall be liable for all Claims which exceed NLG 50,000 (provided that claims of a similar nature or involving a single Person (and its Affiliates) shall be aggregated for the purpose of determining such NLG 50,000 amount). Notwithstanding the foregoing, the maximum aggregate liability of Uniphase for any breach of its obligations pursuant to the Series A Preferred Agreement (and the corresponding provisions in the Certificate of Designation) shall be NLG 200 million, without prejudice to Uniphase's obligation to pay the Earn-Out (as defined therein), but subject to a credit for any such damage amount against the maximum amounts payable for such Earn-Out, if applicable. 12.4. Other Liability Provisions. The foregoing liability provisions are in lieu of any statutory or common law remedy a Party may have for breach of any representation, warranty or covenant of this Agreement or the other Sale Agreement (other than the Lease and the Site Services Agreement). SECTION 13. GENERAL MATTERS 13.1. Entire Agreement. This Agreement (including the documents referred to in it) constitutes the entire agreement between the Parties and supersedes any prior understandings, agreements, or representations by or between the Parties, written or oral, that relate to the subject matter. 13.2. Succession and Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. No Party may assign either this Agreement or any of its rights, interests, or obligations hereunder to any Person (other than an Affiliate of the transferring Party) without the prior written approval 60 55 of the other Party. Notwithstanding any assignment, the assigning Party shall remain liable and responsible for the performance of all of its obligations under this Agreement). 13.3. Notices. All notices and other communications under this Agreement shall be in writing and shall be deemed given (i) when delivered by hand, (ii) when transmitted by telecopier, with confirmation of receipt; provided that a copy is sent on the same date by registered or certified mail, return receipt requested, or (iii) five (5) Business Days after being sent by Federal Express, DHL or another reasonably reliable international courier service, to the addressee at the following addresses or telecopier numbers (or to such other address or telecopier number as a party may specify from time to time by notice hereunder): If to the Philips Parties: Koninklijke Philips Electronics N.V. Attention: Mr. E.C. Coutinho Corporate Legal Department Telephone: 31-20-5977235 Facsimile: 31-20-5977230 If to the Uniphase Parties: Uniphase Corporation 163 Baypointe Parkway San Jose, California 95134 Attention: Kevin Kalkhoven Telephone: (408) 434-1800 Facsimile: (408) 954-0760 13.4. Amendments and Waivers. No amendment of any provision of this Agreement shall be valid unless the same is in writing and signed by Uniphase and Philips. No waiver by any Party of any 61 56 default, misrepresentation, or breach of warranty or covenant under this Agreement, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant under this Agreement or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. 13.5. Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions of this Agreement or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. 13.6. Incorporation of Schedules and Exhibits. The Schedules and Exhibits identified in this Agreement are incorporated by reference and made a part of this Agreement. 13.7. No Contribution. Philips hereby waives, and acknowledges and agrees that it shall not have and shall not exercise or assert or attempt to exercise or assert, any right of contribution or right of indemnity or any other right or remedy against OPTO in connection with any indemnification obligation or any other liability to which Philips may become subject under this Agreement or any of the other Sale Agreements or otherwise in connection with any of the transactions contemplated hereby or thereby. Philips further acknowledges that the waivers, acknowledgments and agreements of Philips contained in this Section 13.7 are an essential inducement to the Uniphase Parties in entering into this Agreement and agreeing to consummate the transactions contemplated hereby. 13.8. Waiver to Terminate. Except as otherwise permitted herein, each of the parties hereto, as from the Closing Date, waives its right to dissolve and/or annul and/or rescind this Agreement. 62 57 13.9. Attorneys' Fees. In the event that any dispute among the parties to this Agreement or any other Sale Agreement should result in litigation, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Agreement or such other Sale Agreement, including without limitation such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals. 13.10.Counterparts. This Agreement and the other Sale Agreements may be executed in one or more counterparts, each of which shall be deemed an original, but all of which, taken together, shall constitute one and the same document. SECTION 14. APPLICABLE LAW This Agreement and all of the other Sale Agreements (other than the Shareholder Agreement and the Certificate of Designation) shall be governed by the laws of The Netherlands. The Stockholder Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to such State's principles of conflicts of laws. The Certificate of Designation shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to such State's principles of conflicts of laws. 63 58 Thus signed and agreed upon on May 29, 1998. PHILIPS: KONINKLIJKE PHILIPS ELECTRONICS N.V. By: /s/ WILLEM HAVERKAMP ------------------------------------------ Name: Willem Haverkamp ---------------------------------------- Its: ----------------------------------------- UNIPHASE PARTIES: UNIPHASE CORPORATION By: /s/ DAN PETTIT ------------------------------------------ Dan Pettit, Vice President, Finance UNIPHASE OPTO HOLDINGS, INC. By: /s/ DAN PETTIT ------------------------------------------ Dan Pettit, President 64 59 UNIPHASE INTERNATIONAL, CV By: Uniphase CV GP1, Inc. General Partner By: /s/ DAVID MACKENCIE -------------------------------------- David MacKencie, Vice-President By: Uniphase CV GP2, Inc. General Partner By: /s/ DAVID MACKENCIE -------------------------------------- David MacKencie, Vice-President 65 GENERAL DISCLOSURE GENERAL Any disclosure made hereunder, or under any of the Schedules attached hereto, will be deemed to have been made also in relation to any other Section of this Agreement to which it may be relevant. As of the date hereof, the Uniphase Parties are not aware of any facts, events or circumstances which would cause any of the representations and warranties as provided by Philips hereunder to be untrue in any material respect. As of the date hereof, Philips is not aware of any facts, events or circumstances which would cause any of the representations and warranties as provided by any of the Uniphase Parties hereunder to be untrue in any material respect. INTELLECTUAL PROPERTY RIGHTS Reference is made to the fact that Rockwell Corporation has in the past notified Philips in relation to a possible infringement by Philips of certain Rockwell patents. Philips has also been notified of the possible infringement by Philips of a patent owned by the Massachusetts Institute of Technology (M.I.T.). In general, OPTO will, from Closing, no longer be covered under any of the current Philips cross licence agreements entered into with third parties in respect of intellectual property rights (notably patents). By contrast, the change of control of Philips Optoelectronics B.V. will not affect the rights of Philips' cross licensing partners under the relevant cross licensing agreements, even after the transfer of the OPTO Patents. ENVIRONMENTAL MATTERS Reference is made to the fact that currently, for the disposal of carbon filters, containing arsine, no arrangement is in place with Mirec B.V. or any other third party having a licence to accept such materials for disposal. However, the contract with Mirec B.V. (disclosed under Schedule 5.13) does provide for the disposal of other waste. INSURANCE From Closing, Philips Optoelectronics will no longer be covered under any of Philips insurance policies. 1 66 VAT REGISTRATION From Closing, Philips Optoelectronics will have to apply for separate VAT registration, in its own name, as a result of the fact that it will no longer form part of the fiscal unity of Nederlandse Philips Bedrijven B.V. CORPORATE PURCHASING ARRANGEMENTS From Closing, Philips Optoelectronics will no longer participate under any corporate purchasing arrangements (including IT licence agreements) of Philips. 2 67 SCHEDULE 1.25 FIXED AND TANGIBLE ASSETS Pursuant to Item 601(b)(2) of Regulation S-K, this Schedule to the Master Purchase Agreement has been omitted. The Schedule will be submitted to the Securities and Exchange Commission upon request. 3 68 SCHEDULE 1.27 FOREIGN INTANGIBLE ASSETS The exclusive right to make or reproduce, have made or reproduced, sell or otherwise transfer, distribute or have distributed, to customers located outside the United States, products or property deriving from the Intellectual Property of OPTO or the Activity, or otherwise dispose, display, perform and use all such Intellectual Property and all customer lists, contracts and relationships. Included in such right are the following patents attached hereto as Schedule 1.27. Pursuant to Item 601(b)(2) of Regulation S-K, this Schedule to the Master Purchase Agreement has been omitted. The Schedule will be submitted to the Securities and Exchange Commission upon request. 4 69 SCHEDULE 1.69 U.S. INTANGIBLE ASSETS The exclusive right to make or reproduce, have made or reproduced, sell or otherwise transfer, distribute or have distributed, to customers located in the United States, products or property deriving from the Intellectual Property of OPTO or the Activity, or otherwise dispose, display, perform and use all such Intellectual Property and all customer lists, contracts and relationships. Included in such right are the following patents attached hereto as Schedule 1.69. Pursuant to Item 601(b)(2) of Regulation S-K, this Schedule to the Master Purchase Agreement has been omitted. The Schedule will be submitted to the Securities and Exchange Commission upon request. 5 70 SCHEDULE 2.2 CONSIDERATION CONSIDERATION PAID FOR OWNER'S EQUITY OF OPTO: Dutch Guilders paid by Uniphase Opto Holdings, Inc NLG 200,000 Dutch guilder value of the shares of Uniphase common stock exchanged NLG 45,066,666 by Uniphase Opto Holdings, Inc (convert to shares) CONSIDERATION PAID FOR U.S. INTANGIBLE ASSETS: Dutch Guilder value of the shares of Uniphase common stock exchanged NLG 243,786,667 by Uniphase Opto Holdings, Inc (convert to shares) Number of shares of Uniphase Preferred Stock exchanged by Uniphase 80,000 Opto Holdings, Inc. CONSIDERATION PAID FOR FOREIGN INTANGIBLE ASSETS: Dutch Guilder value of the shares of Uniphase common stock exchanged NLG 60,946,667 By Uniphase International CV (convert to shares) Number of shares of Uniphase Preferred Stock exchanged by Uniphase 20,000 International CV
The foregoing amounts reflect the allocation of the Consideration at its stated value as set forth in the Agreement and do not take into account actual value based on appropriate discounts from such stated value. 6 71 SCHEDULE 3.3 PRECLOSING TRANSFERS Prior to the Asset Sale Closing Date, Philips shall cause OPTO to transfer to Philips the Foreign Intangible Assets and the U.S. Intangible Assets, for consideration equal in value to the portion of the Consideration allocated to the Foreign Intangible Assets and the U.S. Intangible Assets, respectively, on Schedule 2.2. Immediately after such sale, Philips shall (a) cause OPTO and all relevant intervening subsidiaries of Philips to distribute as a dividend to Philips the account receivable held by OPTO resulting from such sale, and (b) cause OPTO to simultaneously charge the amount of such account receivable to OPTO's premium reserve. Uniphase shall be solely responsible for and indemnify and hold Philips harmless from any income tax, capital gains tax (or similar tax) liability of OPTO or Philips due to the transactions described in the previous paragraph and the transfer of the Foreign Intangible Assets and the U.S. Intangible Assets at the Asset Sale Closing. Notwithstanding the foregoing, this indemnity obligation shall not extend to the income tax treatment, valuation or income tax liability in any respect relating to the receipt by Philips or any Philips Party of the Consideration or any amounts paid or distributed to Philips or the Philips Parties with respect to the Uniphase Preferred Stock to be issued to Philips or any Philips Party. 7 72 SCHEDULE 5.3 NONCONTRAVENTION CHANGE OF CONTROL PROVISIONS IN CONTRACTS Uniphase Corporation is hereby notified of the fact that the software licence agreements and the software services agreements under which Philips Optoelctronics participates may contain so-called change of control provisions pursuant to which the other party has the right to terminate the agreement in event of a change of control in Philips Optoelectronics B.V. Reference is made to the list of Material Contracts, disclosed under Schedule 5.19; certain of these Material Contracts contain such change of control provisions. All such change in control provisions as contained in any of these Material Contracts are identified as required consents on Schedule 5.4. EXPORT LICENCE Philips Optoelectronics B.V. will, as result of the change of control, no longer be covered under the general export licence of Nederlandse Philips Bedrijven B.V. in respect of so-called strategic goods. This general export licence has been granted by the Centrale Dienst voor In- en Uitvoer in Groningen, The Netherlands (copy of licence disclosed under section 3.3 of the initial due diligence binders). As a result, Philips Optoelectronics B.V. will have to apply with said authority for an export licence in respect of strategic goods in its own name. EUROPEAN R & D PROJECTS Philips Optoelectronics currently participates under a number of European R&D projects, which are sponsored by the European Community. This participation is formally in the name of Nederlandse Philips Bedrijven B.V., as the contracting legal entity. The other partners under these projects, as well as the European Commission have to be notified of the fact that Philips Optoelctronics is now established as a separate legal entity as well as of the imminent change of control in Philips Optoelectronics B.V. In principle, as result of such change of control of Philips Optoelectronics B.V., the participation of Philips Optoelectronics under these projects will be discontinued. In the event that Philips Optoelectronics would wish to continue its participation under said projects, it would need to obtain the approval from the relevant partners under these projects as well as the confirmation from the European Commission. 8 73 In the event of discontinuation of the participation of Philips Optoelectronics under any of these R & D projects, such discontinuation will also imply that Philips Optoelectronics will no longer have necessary background information of Philips as contributed under these projects, will be continued. Reference is made to the document setting out the rules and procedures regarding Philips' participation under European R & D projects, notably to Annex II of the General Conditions of the so-called Esprit Programme, copy of which has been provided to Uniphase in the course of the interview with Mr. E. Ideler on May 13, 1998, as part of the confirmatory due diligence survey by Uniphase. INTELLECTUAL PROPERTY RIGHTS As stated in the general disclosure letter, as a result of the change of control in Philips Optoelectronics B.V., Philips Optoelectronics B.V. will no longer be covered under the so-called cross licence agreements with third parties (in respect of patents (and other intellectual property rights, as the case may be) as entered into by Philips. By contrast, the rights of Philips' cross-licensing partners under the relevant cross-licensing agreements will not be affected by the change of control in Philips Optoelectronics B.V. or by the transfer of the OPTO Patents to Uniphase. 9 74 SCHEDULE 5.4 CONSENTS A. Required: 1. Hart-Scott-Rodino filing Philips is required to submit a so-called Hart-Scott-Rodino filing in respect of the contemplated transaction under the so-called Hart-Scott-Rodino Antitrust Improvements Act of 1976. Such filing has been made. 2. Works council/Unions The change of control in Philips Optoelectronics B.V. is subject to the provisions of the Dutch Works Councils Act (Wet op de Ondernemingsraden). Pursuant to Article 25 of said Act, the relevant works council needs to give a positive advice in respect of the contemplated transaction and the related consultation procedure with the relevant works council is to be initiated as soon as there is a legitimate expectation between the prospective partners that agreement regarding the intended transaction can be reached. At the time of the signing of the Letter of Intent regarding the contemplated transaction however, no separate works council was yet in place for Philips Optoelectronics, as a result of the fact that Philips Optoelectronics had only been incorporated as a separate legal entity in February 1998. Given the fact that no separate works council was yet in place for Philips Optoelectronics B.V. at the time of the signing of the letter, and in order to comply with the spirit of the Works Councils Act, Philips has requested the advice regarding the contemplated transaction from an ad hoc committee, comprising representatives for Philips Optoelectronics and members from the works council of the Philips Research Laboratories, of which Philips Optoelectronics was part prior to its incorporation as a separate legal entity. In addition, negotiations with the relevant unions were initiated regarding the labour conditions as would apply after the transition, including possible transition measures. The negotiations with the unions have been concluded satisfactorily and positive advice regarding the contemplated transaction has been obtained from the ad hoc committee and the works council of Philips Optoelectronics per letter dated 26th May, 1998, copy of which is attached hereto. 3. Change of control provisions in Material Contracts Philips Optoelectronics has written to the third parties specified above to solicit their consent in connection with the relevant transfer, on May 27, 1998. Attached hereto are copies of the responses received from these third parties. Pursuant to Item 601(b)(2) of Regulation S-K, this portion of this Schedule to the Master Purchase Agreement has been omitted. The omitted portion of the Schedule will be submitted to the Securities and Exchange Commission upon request. 10 75 B. Other: 1. European R & D projects Reference is made to Schedule 5.3. As set out herein, the consent from the relevant partners under the European R&D projects is required for the continued participation of Philips Optoelectronics B.V. under the relevant European R&D projects; similar consent/confirmation is required from the European Commission. In connection with the incorporation of Philips Optoelectronics B.V. as a separate legal entity, the relevant contract partners of Philips Optoelectronics need to consent to the transition, i.e. the incorporation of Philips Optoelectronics B.V. as a separate legal entity (formally contracting through Nederlandse Philips Bedrijven B.V). The relevant contract partners (suppliers as well as customers) have been notified in writing of said incorporation; no adverse reaction has been received and no indication has been received that any adverse reaction is to be expected. However, the Philips refrains from any representation or warranty as to such consents from the relevant contract partners. 11 76 SCHEDULE 5.6 ASSETS Philips Optoelectronics B.V. does not own all assets used in the operation of its activities. Attached hereto is a listing of equipment currently leased from Philips Research (Nat Lab), part of Nederlandse Philips Bedrijven B.V. Pursuant to Item 601(b)(2) of Regulation S-K, this portion of the Schedule has been omitted. The omitted information will be submitted to the Securities and Exchange Commission upon request. A listing of real property/buildings leased by Philips Optoelectronics B.V. is attached to Schedule 5.9. In respect of Section 5.6 (ii), it should be noted that not all raw materials, work in progress and finished goods existing at the OPTO Closing Date necessarily comply with the applicable specifications so as to enable them to be sold in the ordinary course of business. However, a portion of such raw materials, work in progress and finished goods, although not complying with the applicable specifications, has been valued on the balance sheet on the basis of the expectation that they can still be sold in the ordinary course of business. Conversely, any raw materials, work in progress and/or finished goods which do not comply with the applicable specifications and which can which are not included in the sales forecasts, are not included on the balance sheet of Philips Optoelectronics. 12 77 SCHEDULE 5.9 REAL PROPERTY A list of buildings and real property rented, leased or occupied by Philips Optoelectronics is attached hereto. In relation to the soil on which the buildings of Philips Optoelectronics are located, a third party (DHV) has been commissioned to carry out a soil investigation. A report on the findings by DHV is expected in the week commencing June 8, 1998. Attached is a copy of an internal memo from Mr. Van Lierop of the Philips Corporate Environmental and Energy office dated 1998-05-28 referring to this report. Pursuant to Item 601(b)(2) of Regulation S-K, this Schedule to the Master Purchase Agreement has been omitted. The Schedule will be submitted to the Securities and Exchange Commission upon request. 13 78 SCHEDULE 5.10(a) INTELLECTUAL PROPERTY A list of OPTO Patents, including pending invention disclosures is attached hereto. Also attached is a non-exhaustive overview of patent rights, which will not be transferred by Philips, but under which patent rights Philips will provide a non-assert. Pursuant to Item 601(b)(2) of Regulation S-K, this Schedule to the Master Purchase Agreement has been omitted. The Schedule will be submitted to the Securities and Exchange Commission upon request. 14 79 SCHEDULE 5.10(b) LOSS OF ANY INTELLECTUAL PROPERTY RIGHTS Reference is made to the general disclosure letter. As a result of the change of control in Philips Optoelectronics B.V., Philips Optoelectronics B.V. will no longer be covered under the so-called cross licence agreements with third parties in respect of patents (and other international property rights, as the case may be) as entered into by Philips. 15 80 SCHEDULE 5.12(a) AND 5.12(b) EMPLOYEES AND EMPLOYEE BENEFIT PLANS 5.12(a) A list of OPTO Employees is attached hereto. Approximately 60 of the OPTO Employees are temporary staff, contracted by Philips Optoelectronics. These individuals are not members of the Philips pension Fund and are not covered by the Philips Collective Labour Agreement. In relation to the list of OPTO Employees, Mr. Jan Mink will transfer to another Philips entity on May 31, 1998. Mr. Arjen Noordermeer and Mr. Paul Damink have indicated their desire to leave the Activity. Further, Mr. Harry Griede, Mr. Romaldus Irijanan, Mr. Frans Brans, and Mr. Wil van de Heuvel are not OPTO Employees but have been working for Philips Optoelectronics on a secondment basis. 5.12(b) The employee benefit plans are as set out in the collective labour agreement of Philips (CAO A and CAO B), copies of which have been provided to Uniphase in the course of the due diligence survey by Uniphase and are attached hereto. Only Mr. Wim Nijman has an individual contract with Philips, a copy of which has similarly been disclosed to Uniphase in the course of the due diligence survey and is attached hereto. With regard to item (xxi) of Section 5.12, reference is made to the consultancy agreements entered into with Burgers Management Consutancy, I.S.G. and Rhode & Partners, respectively, copies of which are attached hereto. Pursuant to Item 601(b)(2) of Regulation S-K, this Schedule to the Master Purchase Agreement has been omitted. The Schedule will be submitted to the Securities and Exchange Commission upon request. 16 81 SCHEDULE 5.13 PERMITS Attached hereto are copies of the following permits: Vergunning ingevolge de Hinderwet. This permit applies to the facilities of Philips Research (Nat Lab) at the so-called Complex W, located at the Prof. Holstlaan in Eindhoven (which include the facilities and operations of Philips Optoelectronics. Also attached is a copy of the contract entered into with Mirec B.V. in respect of waste disposal. Attached hereto is a letter from the municipal environmental authority (Milieudienst Regio Eindhoven) addressed to Philips Optoelectronics B.V. dated 28 May 1998, confirming the discussions during a meeting between representatives of the Milieudienst Regio Eindhoven, Philips, and Uniphase on May 13, 1998. This letter states that the current environmental permits under which Philips Optoelectronics operate are adequate and further, that the current environmental permit will cover the construction of the new wafer fab for Philips Optoelectronics. This letter also confirms that the contemplated change of control of Philips Optoelectronics will not affect the application of the current environmental permit in relation to the operations of Philips Optoelectronics on the current premises. Also attached is a letter from Mr. Van den Ende to Mrs. Hovenier dated 1998-05-18 in relation to the waste water disposal permit of Philips Optoelectronics, with attached copy of the relevant permit. Also attached is a copy of the contract entered into with Mirec B.V. in respect of waste disposal. Also attached is a copy of a letter from Mr. L. Ebben of the Philips radiation protection unit (Philips Stralingsbeschermingsdient) to the Centraal Kantoor Arbeidinspectie in relation to a permit under the Dutch Nuclear Energy Act. This letter states that Philips Optoelectronics (to be renamed) will have to apply for a separate permit in its own name following the transfer from Philips to Uniphase. Pursuant to Item 601(b)(2) of Regulation S-K, this Schedule to the Master Purchase Agreement has been omitted. The Schedule will be submitted to the Securities and Exchange Commission upon request. 17 82 SCHEDULE 5.19 MATERIAL CONTRACTS A list of Material Contracts is attached hereto. Reference is also made to the (European) R & D projects, disclosed in the course of the due diligence survey, an overview of which is attached hereto (memo from Mr. Bart Verbeek to Mr. Wim Nijman, dated March 9, 1998, notably section 4 thereof). As regards the so-called Rainbow project, the participation under this project will be continued by Philips Research (Nederlandse Philips Bedrijven B.V.), not by Philips Optoelectronics. It should be noted that, in respect of sales to customers, with the exception of those relations for which separate contracts are in place, sales usually occur on the basis of the General Conditions of Sale of Philips Optoelectronics, copy of which is attached hereto. The same applies, mutatis mutandis, to purchase relations (copies of General Conditions of Purchase). As regards the lease arrangements for real estate property and buildings / equipment, new lease agreements will be entered into upon Closing. Accordingly, the lease and rental arrangements as were in place prior to Closing are automatically discontinued. Pursuant to Item 601(b)(2) of Regulation S-K, this Schedule to the Master Purchase Agreement has been omitted. The Schedule will be submitted to the Securities and Exchange Commission upon request. 18 EX-10.2 3 STOCKHOLDER AGREEMENT DATED JUNE 9, 1998 1 EXHIBIT 10.2 STOCKHOLDER AGREEMENT THIS STOCKHOLDER AGREEMENT (the "Agreement") is entered into as of the ____ day of June 1998, by and among UNIPHASE CORPORATION, a Delaware corporation ("Uniphase"), KONINKLIJKE PHILIPS ELECTRONICS N.V., a company duly established under the laws of The Netherlands and having its registered office in Eindhoven, The Netherlands ("Philips" and individually or collectively with any person to whom Philips transfers its rights under this Agreement pursuant to Section 2.10 below, "Holder"). RECITALS WHEREAS, Uniphase, Philips, Philips Optoelectronics B.V. ("OPTO") and certain subsidiary corporations and other business entities controlled by Uniphase are parties to that certain Master Purchase Agreement, dated as of May 29, 1998 (the "Purchase Agreement") and the other Sale Agreements (as defined in the Purchase Agreement), which provide for the acquisition of OPTO and the Activity (as defined in the Purchase Agreement) by the Uniphase Parties (as defined in the Purchase Agreement) in exchange for certain shares of Uniphase Common Stock (as defined in the Purchase Agreement) issued to Philips on or prior to the date hereof (the "Closing Common Stock"). WHEREAS, pursuant to the Purchase Agreement, a total of 100,000 shares of Uniphase Preferred Stock (as defined in the Purchase Agreement) were issued to Philips, and such shares of Uniphase Preferred Stock are convertible into additional shares of Uniphase Common Stock (the "Earn-Out Common Stock" and collectively with the Closing Common Stock as the "Common Stock") in accordance with that Series A Preferred Agreement (as defined in the Purchase Agreement). WHEREAS, the parties wish to provide herein for certain registration rights with respect to the Common Stock at the election of a Philips representative to the Uniphase Board of Directors and certain restrictions that shall apply to Philips Entities (as defined in the Purchase Agreement) during any period in which the Philips Entities shall own or be deemed to own 5% or more of the outstanding shares of Uniphase Common Stock. NOW THEREFORE, in consideration of the mutual promises, representations, warranties, covenants and conditions set forth in this Agreement and in the Purchase Agreement, the parties mutually agree as follows: 2 2 1. GENERAL 1.1. Definitions in Purchase Agreement. Accept as herein specifically provided, any terms defined in the Purchase Agreement shall have the same meaning for the purpose of this Agreement. 1.2. Other Definitions. As used in this Agreement the following terms shall have the following respective meanings: "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from time to time. "HOLDER" means any person owning of record Registrable Securities that have not been sold to the public or any assignee of record of such Registrable Securities in accordance with Section 2.10 hereof. "MARKET VALUE" means, at any date set forth herein, the product of: (i) the average last reported sale price on the NASDAQ National Market (or any other national securities exchange upon which the Uniphase Common Stock shall be registered) of one share of Uniphase Common Stock over the ten (10) trading days ending immediately prior to such date; and (ii) the number of shares of Uniphase Common Stock held by a Holder or Holders to be registered on behalf of such Holder or Holders, as the case may be. "REGISTER," "REGISTERED," and "REGISTRATION" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of effectiveness of such registration statement or document. "REGISTRABLE SECURITIES" means (i) any shares of Closing Common Stock (ii) any shares of Earn-Out Common Stock issued or issuable upon conversion of the Uniphase Preferred Stock, and (iii) any Uniphase Common Stock issued as a dividend or other distribution with respect to, or in exchange for, or in replacement of Uniphase Common Stock. Notwithstanding the foregoing, Registrable Securities shall not include any securities sold by a person to the public either pursuant to a registration statement or Rule 144 promulgated under the Securities Act or sold in a private transaction in which the transferor's rights under Section 2 of this Agreement are not assigned. "REGISTRABLE SECURITIES THEN OUTSTANDING" shall be the number of Registrable Securities as are issued and outstanding as of a specified date. "REGISTRATION EXPENSES" shall mean all expenses (other than Selling Expenses) incurred by Uniphase in complying with Sections 2.2, 2.3 and 2.4 hereof, including, without limitation, all registration, filing fees and qualifications, printing expenses, fees and disbursements of counsel for Uniphase, reasonable fees and disbursements of a single special counsel for the Holders, blue sky fees and expenses and the expense of any special audits 3 3 incident to or required by any such registration (but excluding the compensation of regular employees of Uniphase which shall be paid in any event by Uniphase). "SECURITIES ACT" shall mean the Securities Act of 1933, as amended from time to time. "SELLING EXPENSES" shall mean all underwriting discounts and selling commissions applicable to the sale. "FORM S-3" means Form S-3 under the Securities Act as in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC which permits inclusion or incorporation of substantial information by reference to other documents filed by Uniphase with the SEC. "SEC" or "COMMISSION" means the Securities and Exchange Commission. 2. REGISTRATION; RESTRICTIONS ON TRANSFER 2.1. Restrictions on Transfer of Voting Stock 2.1.1. Philips shall not, directly or indirectly, sell, assign, pledge, hypothecate or otherwise transfer any shares of the Closing Common Stock (or any right, title or interest therein) for a period of one year following the date hereof. 2.1.2. Any purported transfer in violation of this Section 2.1 shall be void. 2.1.3. Each certificate representing Registrable Securities shall (unless otherwise permitted by the provisions of the Agreement) be stamped or otherwise imprinted with a legend substantially similar to the following (in addition to any legend required under applicable state securities laws, Uniphase's bylaws, or as provided elsewhere in this Agreement): THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR UNLESS UNIPHASE HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO UNIPHASE AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED. 4 4 2.1.4. Uniphase shall be obligated to reissue promptly unlegended certificates at the request of any holder thereof if the holder shall have obtained an opinion of counsel (which counsel may be counsel to Uniphase) reasonably acceptable to Uniphase to the effect that the securities proposed to be disposed of may lawfully be disposed of without registration, qualification or legend. 2.2. Demand Registrations 2.2.1. Right to Demand Registration. Subject to the conditions of this Section 2.2, if Uniphase shall receive a written request from the Holders of Registrable Securities (the "Initiating Holders") that Uniphase file a registration statement under the Securities Act covering the registration of Registrable Securities then outstanding having a Market Value of not less than $10,000,000, then Uniphase shall, within thirty (30) days of the receipt of such request, give written notice of such request to all Holders, and subject to the limitations of this Section 2.2, effect, as soon as practicable, the registration under the Securities Act of all Registrable Securities that the Holders request to be registered. 2.2.2. Underwriting. If the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of a firm commitment underwritten offering, they shall so advise Uniphase as part of their request made pursuant to this Section 2.2, and Uniphase shall include such information in the written notice referred to in Section 2.2.1. The Initiating Holders shall designate any underwriter or underwriters to be retained in connection with any registration pursuant to this Section 2.2, which underwriter or underwriters shall be reasonably acceptable to Uniphase. In such event, the right of any Holder to include its Registrable Securities in such registration shall be conditioned upon such Holder's participation in such underwritten offering and the inclusion of such Holder's Registrable Securities in the underwriting (unless otherwise mutually agreed by a majority in interest of the Initiating Holders and such Holder) to the extent provided herein. All Holders proposing to distribute their securities through such underwriting and Uniphase, shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting. Notwithstanding any other provision of this Section 2.2, if the underwriter in good faith advises Uniphase that marketing factors require a limitation of the number of securities to be underwritten (including Registrable Securities) then any securities to be sold on behalf of Uniphase or any stockholder of Uniphase (other than Holders) shall be excluded from such registration to the extent required by such limitation. If a limitation on the number of shares to be included in such registration shall still be required after giving effect to the limitation in the preceding sentence, Uniphase shall so advise all Holders of Registrable Securities which would otherwise be underwritten pursuant hereto, and the number of shares that may be included in the underwriting shall be allocated to the Holders of such Registrable Securities on a pro rata basis based on the number of Registrable Securities held by all such Holders (including the Initiating Holders). Any Registrable Securities excluded or withdrawn from such underwriting shall be withdrawn from the registration. In the event that the reduction in Registrable Securities to be included in such registration reduces the number of Registrable Securities to be so registered to less than fifty percent (50%) of the Registrable Securities requested to be so registered pursuant to this Section 2.2, Uniphase shall be obligated to proceed with the registration and such 5 5 registration shall not be counted for the purpose of clause (2) or (3) of Section 2.2.3 below. If any Holder disapproves of the terms of the underwritten offering, it may elect to withdraw therefrom by prompt written notice to Uniphase, the underwriter and the Initiating Holders. The Registrable Securities so withdrawn shall also be withdrawn from registration. Subject to the foregoing limitations and Section 2.2.4, Uniphase shall have the right to include securities to be sold on its behalf in any offering registered pursuant to this Section 2.2. 2.2.3. Uniphase shall not be required to effect a registration pursuant to this Section 2.2: 1. prior to one (1) year from the date of this Agreement, provided that a holder may give notice and require that the Company take steps necessary to ensure that such registration is effective upon the first anniversary of this Agreement; or' 2. after any holder has demanded three (3) registrations pursuant to this Section 2.2, and such registrations have been declared or ordered effective; or 3. after any Holder has demanded one (1) registration pursuant to this Section 2.2 during the preceding twelve (12) month period, and such registration has been declared or ordered effective. 2.2.4. Exclusivity. If the Initiating Holders do not advise Uniphase of their intent to distribute the Registrable Securities covered by their request by means of a firm commitment underwritten offering, they shall have the right to require that Uniphase not register any additional shares or allow any other registration statement to become effective, whether on that registration statement or otherwise (other than a registration on Form S-8, Form S-4 or any successor to such forms), for a period not to exceed 30 days after effectiveness of the registration statement on which the Initiating Holders' shares are being registered. Such right to demand exclusivity shall preclude any other person from exercising piggy-back registration rights similar to Section 2.3. 2.3. Piggyback Registrations. Uniphase shall notify all Holders of Registrable Securities in writing promptly but in any event at least twenty (20) days prior to the initial filing of any registration statement under the Securities Act to register any of its securities either for its own account or the account of any holder or holders of Uniphase equity securities, but excluding registration statements relating to employee benefit plans or with respect to corporate mergers, combinations, acquisitions, reorganizations or other transactions under Rule 145 of the Securities Act) and will afford each such Holder an opportunity to include in such registration statement (and any related qualification under blue sky laws or other compliance), and in any underwritten offering therein all or part of such Registrable Securities held by such Holder. Each Holder desiring to include in any such registration statement all or any part of the Registrable Securities held by it shall, within fifteen (15) days after the above-described notice from Uniphase, so notify Uniphase in writing. Such notice shall state the intended method of disposition of the Registrable Securities by such Holder. If a Holder decides not to include all of its Registrable Securities in any registration statement thereafter filed by Uniphase, such Holder shall 6 6 nevertheless continue to have the right to include any Registrable Securities in any subsequent such registration statement or registration statements pursuant to this Section 2.3. 2.3.1. Underwriting. If the registration statement under which Uniphase gives written notice under this Section 2.3 is for an underwritten offering, Uniphase shall so advise the Holders of Registrable Securities in such written notice. In such event, the right of any such Holder to be included in a registration pursuant to this Section 2.3 shall be conditioned upon such Holder's participation in such underwritten offering and the inclusion of such Holder's Registrable Securities in the underwritten offering to the extent provided herein. All Holders proposing to distribute their Registrable Securities through such underwritten offering and Uniphase shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by Uniphase. Notwithstanding any other provision of the Agreement, if the underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the securities of Uniphase (other than Registrable Securities) held by officers or directors and by other shareholders (other than shareholders holding Pari Passu Registration Rights (as hereinafter defined) (the "Pari Passu Holders"), shall be excluded from such registration to the extent so required by such limitation, and if a limitation of the number of shares is still required, then the underwriter may limit the number of Registrable Securities and securities held by Pari Passu Holders to be included in the registration, such limitation to be allocated pro rata among the Holders and the Pari Passu Holders based on the number of Registrable Securities and securities held by Pari Passu Holders otherwise requested to be included in such registration. No such reduction shall reduce the securities being offered by Uniphase for its own account to be included in the registration and underwriting. If any Holder disapproves of the terms of the underwritten offering, it may elect to withdraw therefrom by prompt written notice to Uniphase and the underwriter. The Registrable Securities so withdrawn shall also be withdrawn from registration. 2.3.2. Right to Terminate Registration. Uniphase shall have the right to terminate or withdraw any registration initiated by it under this Section 2.3 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration. The Registration Expenses of such withdrawn registration shall be borne by Uniphase in accordance with Section 2.5 hereof. 2.4. Form S-3 Registration. In case Uniphase shall receive from any Holder or Holders of Registrable Securities then outstanding, having a Market Value of not less than $5,000,000, a written request or requests that Uniphase effect a registration on Form S-3 or any similar short-form registration statement and any related qualification or compliance with respect to Registrable Securities, Uniphase will: 2.4.1. promptly give written notice of the proposed registration, and any related qualification or compliance, to all other Holders of Registrable Securities; and 2.4.2. as soon as practicable, use its best efforts to effect such registration and all such qualifications and compliances as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Holder's or Holders' Registrable 7 7 Securities as are specified in such request, together with all or such portion of the Registrable Securities of any other Holder or Holders joining in such request as are specified in a written request given within fifteen (15) days after receipt of such written notice from Uniphase, provided, however, that Uniphase shall be obligated to file a registration statement no later than one hundred twenty (120) days after receipt of a request under this Section 2.4. 2.4.3. Notwithstanding anything herein to the contrary, Uniphase shall not be obligated to effect any such registration, qualification or compliance pursuant to this Section 2.4: 1. To the extent Form S-3 (or any successor or similar form) is not available for such offering by the Holders; or 2. if the Holders propose to sell Registrable Securities and such other securities (if any) with a Market Value of less than $2,500,000; or 3. if Uniphase has, within the twelve (12) month period preceding the date of such request, already effected one (1) registration on Form S-3 for the Holders pursuant to this Section 2.4. 2.4.4. Underwriting. If the Holders intend to distribute the Registrable Securities covered by their request by means of a firm commitment underwriting, they shall so advise Uniphase as a part of their request made pursuant to this Section 2.4, and Uniphase shall include such information in the written notice referred to in Section 2.4.1. The Holders shall designate any underwriter or underwriters to be retained in connection with any registration pursuant to this Section 2.4, which underwriter or underwriters shall be reasonably acceptable to Uniphase. In such event, the right of any Holder to include its Registrable Securities in such registration shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting (unless otherwise mutually agreed by a majority in interest of the Initiating Holders and such Holder) to the extent provided herein. Uniphase and all Holders proposing to distribute their securities through such underwriting shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting. 2.4.5. Subject to the foregoing, Uniphase shall file a Form S-3 registration statement covering the Registrable Securities and no other securities as soon as practicable after receipt of the request or requests of the Holders, but in no event later than 120 days from the receipt of such request. 2.5. Expenses of Registration. Except as specifically provided herein, all Registration Expenses incurred in connection with any registration, qualification or compliance pursuant to Section 2.2, Section 2.3 or Section 2.4 herein shall be borne by Uniphase. All Selling Expenses incurred in connection with any registrations hereunder, shall be borne by the holders of the securities so registered pro rata on the basis of the number of shares so registered. Uniphase shall not, however, be required to pay for expenses of any registration proceeding 8 8 begun pursuant to Section 2.2, the request of which has been subsequently withdrawn by the Initiating Holders unless the withdrawal is pursuant to Section 2.7. If the Holders are required to pay the Registration Expenses, such expenses shall be borne by the holders of securities (including Registrable Securities) requesting such registration in proportion to the number of shares for which registration was requested and such Holders shall not forfeit their rights pursuant to Section 2.2 to demand registration. If Uniphase is required to pay the Registration Expenses of a withdrawn offering (other than pursuant to Section 2.7), then the Holders shall forfeit their rights pursuant to Section 2.2 to one demand registration. 2.6. Obligations of Uniphase. Whenever required to effect the registration of any Registrable Securities, Uniphase shall, at its expense, as expeditiously as reasonably possible: 2.6.1. Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use all reasonable efforts to cause such registration statement to become effective, and keep such registration statement effective for up to one hundred and twenty (120) days (or two (2) years, if such registration is pursuant to Section 2.4 hereof) days or, if earlier, until the Holder or Holders have completed the distribution related thereto. 2.6.2. Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement. 2.6.3. Furnish to the Holders such number of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them. 2.6.4. Use all reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders. 2.6.5. In the event of any underwritten public offering, enter into and perform its obligations (including reasonable indemnification) under an underwriting agreement, in usual and customary form, with the managing underwriter(s) of such offering. Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement. 2.6.6. Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make 9 9 the statements therein not misleading in the light of the circumstances then existing. 2.6.7. Furnish, at the request of a majority in interest of the Holders participating in the registration, on the date that such Registrable Securities are delivered to the underwriters for sale, if such securities are being sold through underwriters, or, if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective, (i) an opinion, dated as of such date, of the counsel representing Uniphase for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering and reasonably satisfactory to a majority in interest of the Holders requesting registration, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities, and (ii) a letter dated as of such date, from the independent certified public accountants of Uniphase, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering and reasonably satisfactory to a majority in interest of the Holders requesting registration, addressed to the underwriters, if any, and if permitted by applicable standards governing such accountants, to the Holders requesting registration of Registrable Securities. 2.7. Delay in Registration. Uniphase shall have the right to delay the filing or effectiveness of any registration statement contemplated by Section 2.2, 2.3 or 2.4 for one or more periods, aggregating not more than sixty (60) days in any twelve month period, in the event that (i) Uniphase would, in accordance with the written advice of its legal counsel, be required to disclose in the prospectus information not otherwise then required by law to be publicly disclosed and (ii) in the reasonable judgment of the Uniphase's Board of Directors, there is a reasonable likelihood that such disclosure would materially and adversely affect any existing or prospective material business situation, transaction or negotiation or otherwise materially and adversely affect Uniphase. 2.8. Termination of Registration Rights. A Holder's registration rights shall expire at such time as all Registrable Securities held by such Holder can reasonably be expected to be able to be sold under Rule 144 under the Securities Act during any ninety (90) day period. 2.9. Delay of Registration; Furnishing Information 2.9.1. No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2. 2.9.2. It shall be a condition precedent to the obligations of Uniphase to take any action pursuant to Section 2.2, 2.3 or 2.4 that the selling Holders shall furnish to Uniphase such information regarding themselves, the Registrable Securities held by them and the intended method of disposition of such securities as shall be required to effect the registration of their Registrable Securities. 10 10 2.10. Indemnification. In the event any Registrable Securities are included in a registration statement under Sections 2.2, 2.3 or 2.4: 2.10.1. To the extent permitted by law, Uniphase will indemnify and hold harmless each Holder, the partners, members, officers, directors and legal counsel of each Holder, any underwriter (as defined in the Securities Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a "Violation") by Uniphase: (i) any untrue statement or alleged untrue statement of a material fact contained in any registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by Uniphase of the Securities Act, the Exchange Act, any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law and related to any action or inaction required of Uniphase in connection with the offering covered by such registration statement; and Uniphase will reimburse each such Holder, partner, member, officer or director, underwriter or controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided however, that the indemnity agreement contained in this Section 2.10.1 shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of Uniphase, which consent shall not be unreasonably withheld, nor shall Uniphase be liable in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by such Holder, partner, member, officer, director, underwriter or controlling person of such Holder. 2.10.2. To the extent permitted by law, each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration qualifications or compliance is being effected, indemnify and hold harmless Uniphase, each of its directors, its officers, and legal counsel and each person, if any, who controls Uniphase within the meaning of the Securities Act, any underwriter, any person who controls such underwriter, and any other Holder selling securities under such registration statement or any of such other Holder's partners, members, directors or officers or any person who controls such other Holder, against any losses, claims, damages or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other federal or state law and related to any action or inaction of required of the Holders, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs by reason of reliance upon and in conformity with written information furnished by such Holder under an instrument duly executed by such Holder and stated to be specifically for use in connection with such registration; and 11 11 each such Holder will reimburse any legal or other expenses reasonably incurred by Uniphase or any such director, officer, controlling person, underwriter or other Holder, or partner, member, officer, director or controlling person of such other Holder in connection with investigating or defending any such loss, claim, damage, liability or action if it is judicially determined that there was such a Violation; provided, however, that the indemnity agreement contained in this Section 2.10.2 shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of such Holder, which consent shall not be unreasonably withheld; provided further, that in no event shall any indemnity under this Section 2.10 exceed the net proceeds from the offering received by such Holder. 2.10.3. Promptly after receipt by an indemnified party under this Section 2.10 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.10, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party shall have the right to retain its own counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if materially prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 2.10, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 2.10. 2.10.4. If the indemnification provided for in this Section 2.10 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any losses, claims, damages or liabilities referred to herein, the indemnifying party, in lieu of indemnifying such indemnified party thereunder, shall, to the extent permitted by applicable law contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the Violation(s) that resulted in such loss, claim, damage or liability, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by a court of law by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; provided, that in no event shall any contribution by a Holder hereunder 12 12 exceed the proceeds from the offering received by such Holder. 2.10.5. The obligations of Uniphase and the Holders under this Section 2.10 shall survive completion of any offering of Registrable Securities in a registration statement and the termination of this Agreement. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. In the event any offering of Registrable Securities is underwritten, and the underwriting agreement provides for indemnification and/or contribution by Uniphase in favor of the Holders offering securities thereunder or of such Holders in favor of Uniphase, the indemnification and/or contribution obligations of Uniphase and the Holders hereunder shall in no event exceed the respective obligations of the parties set forth in such underwriting agreement. 2.11. Assignment of Registration Rights. The rights to cause Uniphase to register Registrable Securities pursuant to this Section 2 may be assigned by Philips to a transferee or assignee of Registrable Securities that (i) is another Philips Entity, or (iii) acquires Registrable Securities having a Market Value at the time of assignment of $5,000,000 or more; provided, however, (A) the transferor shall, within a reasonable time after such transfer, furnish to Uniphase written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being assigned and (B) such transferee shall agree to be subject to all restrictions set forth in this Agreement. 2.12. Amendment of Registration Rights. Any provision of this Section 2 may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of Uniphase and the Holders of more than fifty percent (50%) of the Registrable Securities. Any amendment or waiver effected in accordance with this Section 2.12 shall be binding upon each Holder and Uniphase. By acceptance of any benefits under this Section 2, Holders of Registrable Securities hereby agree to be bound by the provisions hereunder. 2.13. Limitation on Subsequent Registration Rights. After the date of this Agreement, Uniphase shall not, without the prior written consent of the Holders of more than sixty-six and two-thirds percent (66%) of the then outstanding Registrable Securities, enter into any agreement with any holder or prospective holder of any securities of Uniphase that would grant such holder registration rights senior to or on a parity with those granted to the Holders hereunder, provided that Uniphase may grant subordinate (including without limitation as to cutback) registration rights to future equity investors in Uniphase without such consent, provided further that Uniphase may grant pari passu registration rights ("Pari Passu Registration Rights") to holders or prospective holders of the Uniphase's securities that are effective after the Holders shall cease to hold more than five percent (5%) of Uniphase Common Stock (prior to the Issue Date, giving effect to the hypothetical issuance of Uniphase Common Stock at the Penalty Conversion Ratio (as defined in the Certificate of Designation), and provided further, that nothing contained herein shall limit the ability of Uniphase to register (without participation by 13 13 the Holders) any shares of Uniphase Common Stock issuable on conversion or exchange of any convertible note or other derivative security originally issued by Uniphase after the date hereof, subject to the foregoing. Any right given by Uniphase to any holder or prospective holder of Uniphase securities in connection with the registration of securities shall be conditioned such that it shall be consistent with the provisions hereof and with the rights of the Holders provided herein. 2.14. "Market Stand-Off" Agreement. If requested by Uniphase as the representative of the underwriters of Uniphase Common Stock (or other securities), neither Uniphase nor any Holder shall sell, assign, pledge, hypothecate or otherwise transfer or dispose of any shares of Uniphase Common Stock (or other securities of Uniphase) held by Uniphase or such Holder (other than those included in an effective registration statement filed prior to such request), or any right, title or interest therein, for a period specified by the representative of the underwriters not to exceed one hundred twenty (120) days following the effective date of a registration statement of Uniphase filed under the Securities Act, provided that all Holders shall receive the benefit of any period less than 120 days if such shorter period is offered by the managing underwriters or underwriter for such offer, to any person required by such underwriter to be subject to such restriction. The obligations described in this Section 2.14 shall not apply to a registration relating solely to employee benefit plans on Form S-1 or Form S-8 or similar forms that may be promulgated in the future, or a registration relating solely to a Commission Rule 145 transaction on Form S-4 or similar forms that may be promulgated in the future. Uniphase may impose stop-transfer instructions with respect to the shares of Common Stock (or other securities) subject to the foregoing restriction until the end of said one hundred twenty (120) day period. 2.15. Rule 144 Reporting. With a view to making available to the Holders the benefits of certain rules and regulations of the SEC which may permit the sale of the Registrable Securities to the public without registration, Uniphase agrees to use its best efforts to: A. Make and keep public information available, as those terms are understood and defined in SEC Rule 144 or any similar or analogous rule promulgated under the Securities Act, at all times; B. Take such action as is necessary to enable the Holders to utilize Form S-3 for the sale of Registrable Securities; C. File with the SEC, in a timely manner, all reports and other documents required of Uniphase under the Exchange Act and the Securities Act; and D. So long as a Holder owns any Registrable Securities, furnish to such Holder forthwith upon request: (i) a written statement by Uniphase as to its compliance with the reporting requirements of said Rule 144 of the Securities Act, and of the Exchange Act; (ii) a copy of each annual and quarterly report of Uniphase; and (iii) such other reports and documents 14 14 as a Holder may reasonably request in availing itself of any rule or regulation of the SEC allowing it to sell any such securities without registration. 2.16. Covenant Not to Impair. Uniphase shall not take any action or fail to take any action which could reasonably impair the ability of Uniphase to perform its obligations pursuant to this Section 2. 2.17. No Outstanding Registration Rights. Uniphase hereby represents and warrants to Philips that, other than the rights granted to Philips hereunder, no Person has any right to require Uniphase to register any shares of Uniphase's capital stock held by such Person. 3. COVENANTS OF PHILIPS 3.1. Standstill Provisions. For the Standstill Period (as defined in Section 3.7 below), Philips shall not (and shall not permit any Philips Affiliate to), directly or indirectly, acquire from other holders of Uniphase Common Stock, or other securities convertible into or exchangeable or exercisable for Uniphase Common Stock, beneficial ownership of any Uniphase Common Stock, any options, warrants or other securities exercisable for, convertible into or exchangeable for Uniphase Common Stock, or any other right to acquire Uniphase Common Stock (except, in any case, by way of stock dividends or other distributions or offerings made available to holders of any Uniphase Common Stock or Uniphase Preferred Stock generally), or authorize or make a tender, exchange or other offer which would result in such an acquisition, without the written consent of Uniphase; provided that: 3.1.1. Philips (either directly or through a Philips Affiliate) shall have the right at any time to effect open market purchases of Uniphase Common Stock to the extent the aggregate number of shares of Uniphase Common Stock then held by Philips Entities is below five percent (5%) of the then total number of outstanding shares of Uniphase Common Stock; and 3.1.2. This Section 3.1 shall not apply to the acquisition by Philips (or a Philips Affiliate) of the Earn-Out Common Stock. 3.2. Notice of Purchases. Philips shall promptly advise management of Uniphase as to Philips' (or a Philips Affiliate's) acquisitions of additional shares of Uniphase Common Stock, or rights thereto, within a reasonable time period not to exceed thirty (30) days after such acquisition. All open market purchases of Uniphase Common Stock by Philips (or Philips Affiliates) shall be made in compliance with applicable laws and regulations. 3.3. No Voting Arrangements. Without Uniphase's prior written consent, Philips (or Philips Affiliates) shall not deposit any shares of Uniphase Common Stock in a voting trust or subject any Uniphase Common Stock to any arrangement or agreement with respect to the voting of such Uniphase Common Stock. 15 15 3.4. No Proxies. Without Uniphase's prior written consent, Philips (or Philips Affiliates) shall not solicit proxies with respect to any Uniphase Common Stock, nor shall Philips (or Philips Affiliates) become a "participant" in any "election contest" (as such terms are used in Rule 14a-11 promulgated under the Exchange Act) relating to the election of directors of Uniphase; provided however, that Philips (or Philips Affiliates) shall not be deemed to be a "participant" by reason of the membership of Philips' designees on Uniphase's Board of Directors as provided in Section 4.1 below. 3.5. No Partnerships. Philips (or Philips' Affiliates) shall not join any partnership, limited partnership, syndicate or other group, or otherwise act in concert with any third person for the purpose of acquiring, holding, voting or disposing of Uniphase Common Stock. 3.6. Voting of Shares Owned by Phillips. During the Standstill Period and subject to Section 4 hereof, Philips (directly or through Philips Affiliates) agrees to vote any shares of Uniphase Common Stock held by Philips (directly or through Philips Affiliates) for management's nominees to Uniphase's Board of Directors, and, unless Uniphase otherwise consents in writing, on all other matters to be voted on by the stockholders in the same manner and in the same proportion as the votes cast by holders of the majority of the outstanding shares of Uniphase Common Stock voting with respect to the applicable matter, except that Philips may vote its Uniphase Common Stock as it determines as to any proposed amendment to the certificate of incorporation of Uniphase or any other proposal that Philips determines in good faith materially and adversely affects the rights, preferences and privileges of the Uniphase Preferred Stock held by the Philips Entities. 3.7. Standstill Period, Termination of Philips' Covenants. The covenants set forth in Sections 3.1 through 3.6, inclusive, shall remain in full force and effect until the first to occur of the expiration of five (5) years from the date hereof or any of the following events (the "Standstill Period"): (i) Uniphase shall be in material breach of its obligations under the Sale Agreements (other than the Lease or the Site Services Agreement), and such breach shall not have been cured following five (5) Business Days' written notice from Philips; (ii) a third party shall acquire "control" of Uniphase ("control" being defined as the ability presently or prospectively to direct the management and policies of Uniphase, directly or indirectly, whether through ownership of voting securities, by contract or otherwise, and being presumed any time any such third party shall have greater than 30% of the voting power to elect directors of Uniphase or the power to elect or designate directors who fill 20% of the board seats of Uniphase); or (iii) Uniphase shall in any way facilitate the acquisition by a third party of "control" of Uniphase (whether by entering into an agreement for the acquisition of control, recommendation by the Board of Directors of Uniphase of, or failure to reject, a tender offer by a third party, issuance of common stock, or otherwise, whether or not "control" is 16 16 actually acquired by a third party. 3.8. Confidential Information. Uniphase from time to time may disclose to the Philips certain technical and nontechnical business information which Uniphase advises Philips to be confidential. Notwithstanding any other provision of this Agreement, Philips shall not disclose such information to third parties (other than information developed or received independently by Philips) until the earliest of (i) the date upon which such information becomes public knowledge through no fault of the Philips, (ii) the date upon which Uniphase discloses such information to a third party on an unrestricted basis, (iii) the date such information is required to be disclosed by law or by a court of competent jurisdiction or a regulatory agency, or (iv) the fifth anniversary of the date of disclosure. In the event that Philips or any of its representatives is requested or required to disclose confidential information by law or by a court or regulatory agency, Philips will provide Uniphase with prompt notice of such request or requirement so that Uniphase may seek a protective order. Philips further acknowledges and understands that any information so obtained which may be considered "inside" non-public information will not be utilized by the Philips in connection with purchases and/or sales of Uniphase's securities except in compliance with applicable state and federal securities laws. 4. PHILIPS BOARD REPRESENTATION From and after the date hereof and until the later of the date on which no shares of Uniphase Preferred Stock remain outstanding or the date on which Philips ceases to hold more than five (5%) of the outstanding Uniphase Common Stock, Philips shall be entitled to nominate a non-executive director on the Board of Directors of Uniphase, and Uniphase shall use its reasonable best efforts (including, without limitation, the solicitation of proxies) to cause such Philips' nominee to be elected as a member of the Board of Directors (including creation of a vacancy and filling it with such nominee at the Closing). Such director shall have equal rights in relation to the other directors and Uniphase shall use its best effort to have such director participate as a member of all committees of the Board of Directors other than the compensation committee. 5. MISCELLANEOUS 5.1. Governing Law. This Agreement shall be governed by and construed under the laws of the State of New York as applied to agreements among New York residents entered into and to be performed entirely within New York. 5.2. Survival. The representations, warranties, covenants, and agreements made herein shall survive any investigation made by any Holder and the closing of the transactions contemplated hereby. All statements as to factual matters contained in any certificate or other instrument delivered by or on behalf of Uniphase pursuant hereto in connection with the transactions contemplated hereby shall be deemed to be representations and 17 17 warranties by Uniphase hereunder solely as of the date of such certificate or instrument unless otherwise expressly stated herein. 5.3. Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors, and administrators of the parties hereto and shall inure to the benefit of and be enforceable by, and to the extent permitted by law be binding upon, each person who shall be a holder of Registrable Securities from time to time; provided, however, that prior to the receipt by Uniphase of adequate written notice of the transfer of any Registrable Securities specifying the full name and address of the transferee, Uniphase may deem and treat the person listed as the holder of such shares in its records as the absolute owner and holder of such shares for all purposes, including the payment of dividends or any redemption price. 5.4. Entire Agreement. This Agreement, the Exhibits and Schedules hereto, and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and no party shall be liable or bound to any other in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein and therein. 5.5. Amendment and Waiver 5.5.1. Except as otherwise expressly provided, this Agreement may be amended or modified only upon the written consent of Uniphase and the holders of more than fifty percent (50%) of the Registrable Securities. 5.5.2. Except as otherwise expressly provided, the obligations of Uniphase and the rights of the Holders under this Agreement may be waived only with the written consent of the holders of more than fifty percent (50%) of the Registrable Securities. 5.6. Delays or Omissions. It is agreed that no delay or omission to exercise any right, power, or remedy accruing to any Holder, upon any breach, default, or noncompliance of Uniphase under this Agreement shall impair any such right, power, or remedy, nor shall it be construed to be a waiver of any such breach, default, or noncompliance, or any acquiescence therein, or of any similar breach, default, or noncompliance thereafter occurring. It is further agreed that any waiver, permit, consent, or approval of any kind or character on any Holder's part of any breach, default, or noncompliance under the Agreement or any waiver on such Holder's part of any provisions or conditions of this Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, by law, or otherwise afforded to Holders, shall be cumulative and not alternative. 5.7. Incorporation by Reference. Sections 13.3, 13.5, 13.9 and 13.10 of the Purchase Agreement are hereby incorporated by this reference. 18 18 5.8. Titles and Subtitles. The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Stockholder Agreement as of the date set forth in the first paragraph hereof. UNIPHASE: PHILIPS: UNIPHASE CORPORATION KONINKLIJKE PHILIPS ELECTRONICS N.V. By: /s/ DAN E. PETTIT By: /s/ WILLEM HAVERKAMP ------------------------------------ --------------------------------- Dan E. Pettit, Senior Vice President Title: ------------------------------ EX-10.3 4 CERTIFICATE OF DESIGNATION DATED MAY 29, 1998 1 EXHIBIT 10.3 UNIPHASE CORPORATION CERTIFICATE OF DESIGNATION OF THE SERIES A PREFERRED STOCK --------------------------------------- Pursuant to Section 151 of the General Corporation Law of the State of Delaware --------------------------------------- The undersigned officers of Uniphase Corporation, a corporation organized and existing under the General Corporation Law of the State of Delaware (the "Corporation"), in accordance with the provisions of Section 103 thereof, DO HEREBY CERTIFY: That, pursuant to the authority conferred upon the Board of Directors of the Corporation by its Restated Certificate of Incorporation (the "Certificate"), the said Board of Directors, at a duly called meeting held on April 8, 1998, at which a quorum was present and acted throughout, adopted the following resolutions, which resolutions remain in full force and effect on the date hereof creating a series of 100,000 shares of Preferred Stock having a par value of $.001 per share, designated as Series A Preferred Stock (the "Series A Preferred Stock") out of the class of 1,000,000 shares of preferred stock, par value of $.001 per share (the "Preferred Stock") of the Corporation: RESOLVED, that pursuant to the authority vested in the Board of Directors in accordance with the provisions of the Certificate, the Board of Directors does hereby create, authorize and provide for 100,000 shares of its authorized Preferred Stock to be designated and issued as the Series A Preferred Stock; RESOLVED, that pursuant to the authority of Section 151(a) of the Delaware General Corporate Law, certain matters related to the voting powers, designations, preferences, rights and qualifications, limitations or restrictions of the Series A Preferred Stock are dependent upon facts ascertainable outside the Certificate or these resolutions (the "External Facts"); RESOLVED, that all External Facts shall be determined and ascertained only in reference to and in accordance with the terms of that certain Series A Preferred Stock Conversion and Redemption Agreement, dated as of May 18, 1998, exclusive of any amendments or modifications thereafter (the "Series A Preferred Stock Agreement"), between the Corporation and Koninklijke Philips Electronics N.V., a company established under the law of the Netherlands ("Philips"), a copy of which is available, upon request, to any holder of the Series A Preferred Stock at the Corporation's principal offices; 2 2 RESOLVED, that all capitalized terms used, but not otherwise defined, in these resolutions shall have the respective meaning ascribed to such terms in the Series A Preferred Stock Agreement; RESOLVED, that the Series A Preferred Stock shall have the following voting powers, designations, relative, participating, optional and other special rights, preferences and qualifications, limitations and restrictions: 1. Dividends and Distributions. The Series A Preferred Stock shall have no right to dividends or other distributions. 2. Conversion. The Series A Preferred Stock have conversion rights as follows (the "Conversion Rights"): (a) Automatic Conversion. On the Issue Date, each share of Series A Preferred Stock which has not been redeemed pursuant to Section 4 below or converted pursuant to Section 2(b) below shall automatically be converted into that number of shares of Common Stock equal to the Per Share Earn-Out Amount divided by the average last reported sale price on the NASDAQ National Market (as published in the Wall Street Journal, Eastern Edition) of one share of Common Stock (as then constituted) over the twenty (20) trading days ending immediately prior to the Issue Date. (b) Right to Convert on Occurrence of Redemption Event. All shares of Series A Preferred Stock which has not been redeemed pursuant to Section 4 below, shall be convertible, at the request of the holders of at least a majority of the then outstanding shares of Series A Preferred Stock, into shares of Common Stock in accordance with this Section 2(b) in the event a Redemption Event (as defined in the Series A Preferred Stock Agreement) occurs on or before June 30, 2002. Such Conversion Rights shall be exercisable by a majority of the holders of Series A Preferred Stock on written notice to the Corporation for a period of ninety (90) days following the date Philips (as defined in Section 7 below) determines that a Redemption Event has occurred (the "First Election Period") or, if such Conversion Right is not exercised during the First Election Period, for a period of thirty (30) days preceding July 1, 2002 (the "Second Election Period"). The number of shares of Common Stock issuable upon conversion of a share of Series A Preferred Stock pursuant to this Section 2(b) shall be equal to the Redemption Price divided by the average last reported sale price on the NASDAQ National Market (as published in the Wall Street 3 3 Journal, Eastern Edition) of one share of Common Stock (as then constituted) over the twenty (20) trading days ending immediately prior to commencement of the First Election Period (if such Conversion Rights are exercised pursuant to this Section 2(b) during the First Election Period) or the Issue Date (if such Conversion Rights are exercised pursuant to this Section 2(b) during the Second Election Period). (c) Mechanics of Conversion. In the event of an automatic conversion of the Series A Preferred Stock pursuant to Section 2(a) hereof or an election by the holders of at least a majority of the then outstanding shares of Series A Preferred Stock to convert all of the Series A Preferred Stock pursuant to Section 2(b) above, the outstanding shares of Series A Preferred Stock shall then be converted automatically without any further action by the holders of such shares into shares of Common Stock and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent; provided that the Corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon such automatic conversion unless and until the certificates evidencing such shares of Series A Preferred Stock are either delivered to the Corporation or its transfer agent as provided above, or the holder notifies the Corporation or its transfer agent that such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection with such certificates. The Corporation shall, as soon as practicable after such delivery, or after such agreement and indemnification, issue and deliver to such holder of Series A Preferred Stock, a certificate or certificates for the number of shares of Common Stock to which he or she shall be entitled as aforesaid. Such conversion shall be deemed to have been made immediately prior to the occurrence of the event leading to such automatic conversion or the election of the holders, as the case may be, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such dates. (d) Reclassifications; Mergers or Consolidations. In the case of any capital reorganization or any reclassification of the stock of the Corporation (other than as a result of a stock dividend or subdivision, split-up or combination of shares) or the consolidation or merger of the Corporation with or into another person or of the sale or other disposition of all or substantially all the properties and assets of the 4 4 Corporation at any time after the date thereof, the shares of the Series A Preferred Stock shall, after such reorganization, reclassification, consolidation, merger, sale or other disposition, be convertible into the kind and number of shares of stock, other securities, cash or other property to which such holder would have been entitled if immediately prior to such reorganization, reclassification, consolidation, merger, sale or other disposition such holders had converted such shares of the Series A Preferred Stock into Common Stock. The provisions of this Section 2(d) shall (i) similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales or other dispositions, and (ii) be subject to the rights of the holders of the Series A Preferred Stock pursuant to Section 2(b) above and Section 4 below following the occurrence of a Redemption Event. (e) Fractional Shares. In lieu of any fractional shares to which the holder of Series A Preferred Stock would otherwise be entitled upon conversion, the Corporation shall pay cash equal to such fraction multiplied by the value of one share of Common Stock as determined in accordance with Section 2(a) or Section 2(b) hereof as applicable. The number of whole shares issuable to each holder upon such conversion shall be determined on the basis of the number of shares of Common Stock issuable upon conversion of the total number of shares of Series A Preferred Stock held by such holder at the time of conversion pursuant to Section 2 hereof. (f) No Impairment. The Corporation will not through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance of performance of any of the terms to be observed or performed hereunder by the Corporation, but will at all times in good faith assist in the carrying out of all the provisions of this Section 2 and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of Series A Preferred Stock against impairment. (g) Reservation of Stock Issuable Upon Conversion. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of Series A Preferred Stock, such number of shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Series A Preferred Stock. If at any time the number of authorized but unissued shares of Common 5 5 Stock shall not be sufficient to effect the conversion of all then-outstanding shares of Series A Preferred Stock, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose. 3. Voting Rights. The Series A Preferred Stock shall have no voting rights except as required by law and except that approval of Philips, as long as Philips is a holder of shares of Series A Preferred Stock, or more than fifty percent (50%) of the outstanding shares of Series A Preferred Stock, in the event that Philips is no longer such a holder, shall be required as to any amendment to the Certificate or this Certificate of Designation that: (i) changes or alters the rights of the Series A Preferred Stock so as to adversely affect the rights and privileges of the holders of the Series A Preferred Stock, or (ii) increases the number of authorized shares of Series A Preferred Stock. 4. Redemption. (a) Redemption of Series A Preferred Stock. In the event a Redemption Event shall occur on or before June 30, 2002, the Corporation shall, at the request of the holders of at least a majority of the then outstanding shares of Series A Preferred Stock, redeem all outstanding shares of Series A Preferred Stock at the Redemption Price; provided, that, if the Redemption Event is a Company Sale, such Redemption Event shall not give rise to a redemption of the Series A Preferred Stock pursuant to this Section 4. Holders of Series A Preferred Stock requesting redemption hereunder shall promptly notify the Corporation. Such notice (the "Redemption Notice") shall specify the date of the requested redemption (the "Redemption Date") and shall be given, if at all, during either the First Election Period or the Second Election Period, as the case may be. The Corporation shall reply to the Redemption Notice within fifteen (15) days by notifying the holder or holders of Series A Preferred Stock requesting redemption hereunder of the number of shares which the Corporation may lawfully redeem consistent with the requirements of Section 160 of the Delaware General Corporation Law on the date specified for redemption. (b) Redemption Payments. For each share of Series A Preferred Stock which is to be redeemed hereunder, the Corporation shall be obligated on the Redemption Date to pay to the holder thereof (upon surrender by such holder at the Corporation's principal office of the certificate representing such share) an amount in immediately 6 6 available funds equal to the Redemption Price. If the funds of the Corporation legally available for redemption of shares of Series A Preferred Stock on the Redemption Date consistent with the requirements of Section 160 of the Delaware General Corporation Law are insufficient to redeem the total number of shares of Series A Preferred Stock to be redeemed on such date, those funds which are legally available under Section 160 of the Delaware General Corporation Law shall be used to redeem the maximum possible number of shares of Preferred Stock pro rata among the holders of Series A Preferred Stock to be redeemed based upon the aggregate number of shares of Series A Preferred Stock held by each such holder in accordance with subsection (c) below. At any time thereafter when additional funds of the Corporation are legally available under Section 160 of the Delaware General Corporation Law for the redemption of shares of Series A Preferred Stock, such funds shall immediately be used to redeem the balance of the shares of Series A Preferred Stock which the Corporation has become obligated to redeem on the Redemption Date but which it has not so redeemed. (c) Determination of the Number of Each Holder's Shares to be Redeemed. The number of shares of Series A Preferred Stock to be redeemed from each holder thereof in redemptions of fewer than all of the outstanding shares of Series A Preferred Stock hereunder shall be the number of shares determined by multiplying the total number of Series A Preferred Stock, to be redeemed by a fraction, the numerator of which shall be the total number of shares of Series A Preferred Stock then held by such holder and the denominator of which shall be the total number of shares of Series A Preferred Stock then outstanding. In case fewer than the total number of shares represented by any certificate are redeemed, a new certificate representing the number of unredeemed shares shall be issued to the holder thereof without cost to such holder within five business days after surrender of the certificate representing the redeemed shares. 5. Ranking. The shares of Series A Preferred Stock shall rank junior to all other series of the Preferred Stock and to any other class of Preferred Stock that hereafter may be issued by the Corporation as to the payment of dividends and the distribution of assets upon liquidation, unless the terms of any such series or class shall provide otherwise. 6. Reacquired Shares. Any shares of Series A Preferred Stock redeemed, converted or otherwise acquired by the Corporation in any manner whatsoever shall be retired and 7 7 cancelled promptly after the acquisition thereof. All such shares shall, upon their cancellation, become authorized but unissued shares (or fractions of shares) of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein. 7. Common Stock Definition. As used in this resolution, the term "Common Stock" shall mean the class of stock designated as the common stock, par value $.001 per share, of the Corporation at the date hereof or any other class of stock resulting from successive changes or reclassification of the common stock. IN WITNESS WHEREOF, Uniphase Corporation has caused this Certificate to be signed by its President and its Assistant Secretary this 29th day of May, 1998. UNIPHASE CORPORATION By: /s/ KEVIN KALKHOVEN ------------------------------------- Kevin Kalkhoven President By: /s/ MICHAEL C. PHILLIPS ------------------------------------- Michael C. Phillips Assistant Secretary EX-10.4 5 SERIES A PREFERRED CONVERSION & REDEMPTION AGMT. 1 CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE PORTIONS OF THIS AGREEMENT INDICATED WITH ****. A COMPLETE COPY OF THIS AGREEMENT, INCLUDING THE REDACTED TERMS, HAS BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. SERIES A PREFERRED STOCK CONVERSION AND REDEMPTION AGREEMENT This Series A Preferred Stock Conversion and Redemption Agreement (the "Agreement") is entered into as of this 18th day of May, 1998 by and among Uniphase Corporation, a Delaware corporation ("Uniphase"), Koninklijke Philips Electronics N.V., a company established under the laws of The Netherlands and having its registered office in Eindhoven, The Netherlands ("Philips") and each other holder of the Series A Preferred Stock, par value $0.001 per share of Uniphase (each a "Preferred Holder" and collectively the "Preferred Holders"). R E C I T A L S 1. Philips, Uniphase, Philips Optoelectronics B.V., a company established under the laws of the Netherlands ("Opto"), and certain other corporations and other business entities that are direct or indirect subsidiaries of Philips or Uniphase intend to become parties to that certain Master Purchase Agreement (the "Purchase Agreement") pursuant to which Uniphase will purchase from Philips the Activity (as defined in the Purchase Agreement). As partial consideration for the Activity, Uniphase shall issue to Philips 100,000 shares of Uniphase Preferred Stock (as defined in the Purchase Agreement), which shall have those rights and privileges set forth in the Certificate of Designation (as defined in the Purchase Agreement). The shares of Uniphase Preferred Stock to be issued to Philips will be convertible into shares of Uniphase Common Stock based on the level of shipments of WDM Lasers (as defined below) from the Activity during the four-year period that is to commence on July 1, 1998 upon the terms provided herein and in the Certificate of Designation. 2. Upon the occurrence of a Redemption Event (as defined below), the Uniphase Preferred Stock issued to Philips is, at Philip's option, convertible into Uniphase Common Stock in accordance with the Certificate of Designation and the terms and conditions contained 2 2 herein, or, in certain instances, redeemable by Uniphase at the option of Philips for the Redemption Price (as defined below). 3. NOW, THEREFORE, in consideration of the foregoing and the mutual promises herein contained, the parties agree as follows: SECTION 1. DEFINITIONS 1.1. Except as otherwise provided herein, defined terms set forth in the Purchase Agreement shall have the same meanings for the purpose of this Agreement. 1.2. For the purpose of this Agreement and the Certificate of Designation, the following definitions shall apply: "Accrued Contingent Payment" for each Earn-Out Period Year that is completed shall mean that amount determined in accordance with Section 3.2 below. "Actual Unit Shipments" for any Earn-Out Period Year or for the Earn-Out Period, as the case may be, shall mean the aggregate number of WDM Lasers shipped by Opto (either directly or through other Uniphase Entities) to customers exclusive of warranty replacement units (in which case the first shipment of the WDM Lasers shall only count towards actual unit shipments) and a reasonable number of evaluation or demonstration units consistent with past practices for which no charge (other than transport and handling charges) is made to the customer during the relevant period. "Company Sale" shall mean (i) a sale of all or substantially all of the assets of Uniphase; (ii) a merger in which Uniphase shall not be the surviving corporation and in which the holders of Uniphase Common Stock immediately prior to such transaction shall beneficially own less than fifty percent (50%) of the surviving corporation immediately after consummation of such transaction; or (iii) a third party shall acquire by merger or otherwise "control" of Uniphase ("control" being defined as the ability presently or prospectively to direct the management and policies of Uniphase, directly or indirectly, whether through ownership of voting securities, by contract or otherwise, and being presumed any time any such third party shall own beneficially securities of Uniphase having greater than thirty percent (30%) of the voting power in election of directors of Uniphase or the power to elect or designate directors who fill twenty percent (20%) of the board seats of Uniphase). 3 3 "Earn-Out" shall mean the performance of the Activity for purpose of determining the number of shares of Uniphase Common Stock, if any, issuable upon conversion of the Uniphase Preferred Stock or, alternatively, in the event of the occurrence of a Redemption Event and the election by the Holders to redeem the Uniphase Preferred Stock. "Earn-Out Period" shall mean the four (4) successive twelve (12) month periods commencing July 1 and ending June 30 of the next calendar year, of which the first twelve (12) month period is to commence July 1, 1998. "Earn-Out Period Year" shall mean any twelve (12) month period that commenced or is commencing on July 1 during the Earn-Out Period. "Issue Date" shall mean (i) for purposes of a conversion of the Uniphase Preferred Stock pursuant to Section 2(a) of the Certificate of Designation, July 1, 2002; and (ii) for purposes of a conversion of the Uniphase Preferred Stock pursuant to Section 2(b) of the Certificate of Designation, the date on which the Holders give notice of conversion to Uniphase pursuant to Section 2(c) of the Certificate of Designation. "Majority of the Preferred Holders" shall mean those Preferred Holders that then hold more than fifty percent (50%) of the outstanding shares of Uniphase Preferred Stock. "Per Share Earn-Out Amount" shall mean that amount determined in accordance with Section 3.2 below. "Percentage Performance" for any Earn-Out Period Year or the Earn-Out Period, as the case may be, shall mean the percentage amount determined by dividing the number of Target Unit Shipments by the number of Actual Unit Shipments for that same period; provided, that, in the event that the Percentage Performance for any Earn-Out Period Year is less than forty-five percent (45%), the Percentage Performance for the subsequent Earn-Out Period Year shall be reduced by the percentage amount by which the Percentage Performance for such prior Earn-Out Period Year was less than forty-five percent (45%) as determined on the basis of Actual Unit Shipments for that year and after giving effect in that year to the foregoing adjustment on the basis of Percentage Performance for the prior Earn-Out Period Year; provided, that to the extent such percentage amount is applied to reduce Percentage Performance for a subsequent Earn-Out Year that is excess of one hundred percent (100%), that portion of such percentage amount that is applied against Percentage Performance is excess of one hundred percent (100%) shall be divided by 1.82. For purposes of example, Percentage Performance shall be calculated in a manner 4 4 consistent with the calculation set forth in Annex A hereto. "Performance Factor" for any Earn-Out Period Year shall mean: (i) for any Earn-Out Period Year in which the Percentage Performance was less than forty-five percent (45%), an amount equal to zero (0); (ii) for any Earn-Out Period Year in which the Percentage Performance was equal to or greater than forty-five percent (45%) but not in excess of one hundred percent (100%), an amount equal to the quotient obtained by dividing (A) the Percentage Performance for the Earn-Out Period Year less forty-five percent (45%) by (B) fifty-five percent (55%); and (iii) for any Earn-Out Period year in which the Percentage Performance is in excess of one hundred percent (100%), an amount equal to the quotient obtained by dividing the Percentage Performance for that Earn-Out Plan Year by one hundred percent (100%). "Redemption Date" means the date specified for redemption by the holders of the Uniphase Preferred Stock pursuant to Section 4(a) of the Certificate of Designation. "Redemption Event" shall mean and be limited to: (i) a termination or discontinuance of the Activity by Uniphase which is not the result of a material adverse change in the market for WDM Lasers and/or electro-absorption modulators or general economic conditions; (ii) a sale or transfer of Opto or the Activity or all or substantially all of the assets of the Activity in a single transaction or series of transactions, without Philips' prior written consent; (iii) a Company Sale; or (iv) a material breach by Uniphase of its obligations pursuant to Section 5.2 hereof, provided that (A) such breach shall contribute materially to the Activity not achieving the Target Unit Shipments; and (B) Philips shall have given notice to Uniphase of such breach and Uniphase shall not have cured such breach in all material respects within thirty (30) days following such notice. "Redemption Price" shall have the meaning set forth in Section 4.2 below. "Target Unit Shipments" shall mean those projected unit quantities of WDM Lasers to be shipped during each Earn-Out Period Year and the Earn-Out Period as set forth in Section 3.1 below. For purposes of determining the aggregate number of Target Unit Shipments for any period, a WDM Laser that includes an integrated electro-absorption modulator element shall be counted as two (2) shipments. "WDM Laser" shall mean a fiber-pigtailed semiconductor laser with single frequency emission on a grid, anchor at 193.1 THZ, and with spacing of nx50 GhZ (n = 1, 2 ...) spanning the extended EDFA (Erbium Doped Fiber Amplifier) window. WDM Lasers can 5 5 be either stand-alone or included in modules and either operated as CW (continuous wave), directly modulated or be a DFB laser chip with-on the same substrate - an integrated EA (electro absorption) modulator element. SECTION 2. No Transfer of Uniphase Preferred Stock During the term of this Agreement, Philips shall not be permitted or authorized to transfer, sell or assign any shares of Uniphase Preferred Stock except to Philips Affiliates. To the extent a Philips Affiliate shall become a Preferred Holder and thereafter cease to be a Philips Affiliate prior to the termination of this Agreement, Philips agrees to cause any such Preferred Holder to transfer all shares of Uniphase Preferred Stock held by it to Philips or another Philips' Affiliate prior to the date such entity ceases to be a Philips Affiliate. SECTION 3. Calculation of Per Share Earn-Out Amount 3.1. Uniphase and Philips agree that the following amounts of shipments of WDM Lasers shall constitute the Target Unit Shipments for each of the four (4) Earn-Out Period Years and for the Earn-Out Period: YEAR 1 YEAR 2 YEAR 3 YEAR 4 TOTAL ------ ------ ------ ------ ----- Target Unit Shipments ........ **** **** **** **** **** The foregoing amounts in the first four columns constitute the Target Shipment Units for each Earn-Out Period Year and are not cumulative between such years. 3.2. For each Earn-Out Period Year that is completed, the Accrued Contingent Payment for that Earn-Out Period Year shall be an amount equal to (i) the product of: (A) NLG 50 million; and (B) the Performance Factor; plus (ii) interest on such amount at the rate of 15.2% from July 1, 1998 until the Issue Date, compounded annually. Upon completion of the Earn-Out Period and in any event not later than June 30, 2002 and subject to Section 3.3 below, the Per Share Earn-Out Amount shall be determined in an amount equal to the quotient obtained by dividing the sum of the Accrued Contingent Payments for each of the four (4) Earn-Out Period Years that have been completed by 100,000 (as appropriately adjusted for any stock splits or combinations that shall occur after the date hereof and prior to the Issue Date with respect to the Uniphase Preferred Stock). The Per Share Earn-Out Amount shall 6 6 apply to determine the number of shares of Uniphase Common Stock, if any, into which a share of Uniphase Preferred Stock shall be convertible in accordance with Section 2(a) of the Certificate of Designation. 3.3. Notwithstanding any term or condition of this Agreement, the Per Share Earn-Out Amount shall: (i) be zero (0) if the Percentage Performance for the Earn-Out Period is less than fifty-four point five percent (54.5%); and (ii) in no event exceed NLG 4,579.13. In the event that the Aggregate Contingent Payment as of the Issue Date is zero (0) or alternatively the Percentage Performance for the Earn-Out Period is less than fifty-four point five percent (54.5%), the Uniphase Preferred Stock shall be deemed cancelled and retired as of July 31, 2002 without issuance of any Uniphase Common Stock or payment of further consideration by Uniphase. SECTION 4. Occurrence of Redemption Event 4.1. In the event a Redemption Event shall occur on or before June 30, 2002, the Preferred Holders shall, subject to and in accordance with the terms of the Certificate of Designation, have the right to elect to redeem all (but only all) of the Uniphase Preferred Stock at the Redemption Price or to convert all (but only all) of the Uniphase Preferred Stock at the Redemption Price; provided, that, if the Redemption Event is a Company Sale, such Redemption Event shall only give rise to a right on the part of the Preferred Holders to convert their shares of Uniphase Preferred Stock at the Redemption Price as provided in Section 2(b) of the Certificate of Designation. 4.2. The per share redemption price (the "Redemption Price") as of any Redemption Date shall be equal to the quotient obtained by dividing: (i) the sum of: (A) for any Earn-Out Period Year that is then completed, the Accrued Contingent Payment for that year; and (B) for each Earn-Out Period that is not then completed, the greater of: (1) the Accrued Contingent Payment that would accrue for that year based on Percentage Performance of one hundred percent (100%); or (2) the Accrued Contingent Payment that would accrue for that year based on the average Percentage Performance for each Earn-Out Period Year that is then completed; plus (C) interest on the sum of clause (A) and (B) at the rate of 15.2% from July 1, 1998 to the Redemption Date (or for purposes of Section 2(b) of the Certificate of Designation, the Issue Date); by (ii) 100,000 (as appropriately adjusted for any stock splits or combinations that occur after the date hereof and prior to the Issue Date with respect to Uniphase Preferred Stock). 7 7 SECTION 5. Earn-Out Matters 5.1. Uniphase acknowledges that the value of the consideration to be received by Philips for the Activity is in significant part dependent on operation of the Activity after the date hereof. Accordingly, Uniphase agrees that it shall operate and maintain the Activity in the ordinary course consistent with Uniphase's operation of its other businesses, subject to Uniphase's primary goal of maximizing value of Uniphase Common Stock for the benefit of its stockholders, operate the Activity with reasonable regard to Philips' interest to earn the maximum Earn-Out (as set out in Clause 3.3 (ii)). Without in any way limiting the obligations imposed on Uniphase by the immediately preceding sentence, for the period from the date hereof through the Issue Date, Uniphase shall, and shall cause the Uniphase Parties to, (i) maintain its corporate existence in good standing and qualify and remain qualified to do business in each jurisdiction in which it does business at the date hereof, (ii) in the absence of any material adverse change in the market for WDM Lasers or general economic conditions, continue the business of shipment of WDM Lasers, (iii) use its reasonable commercial efforts to preserve, renew and keep in full force and effect all its franchises and licenses necessary or desirable in the normal conduct of its business, (iv) use its reasonable commercial efforts to comply with all applicable laws, orders, rules and regulations of all governmental authorities required for the continued conduct of its business as conducted at the date hereof, (v) keep proper books of record and account, in accordance with Uniphase's accounting practices, for the purpose of verifying the shipment of WDM Lasers with respect to the Earn-Out during the Earn-Out Period; (vi) use reasonable commercial efforts to maintain and preserve its business organization, retain the services of its present officers and employees and maintain its relationships with its suppliers and customers and (vii) subject to Philips' obligation to comply with relevant insider trading rules under applicable U.S. Securities laws, notify Philips promptly of any adverse change or prospective adverse change in its consolidated business, properties, financial condition or operations, present or prospective. Uniphase shall not, and shall cause any Uniphase Affiliate not to, cause or suffer to occur any other event or condition that may affect Uniphase's ability to satisfy its obligations set forth in the immediately preceding sentence. Breach of the matters set forth in this Section 5.1, to the extent such breach causes the amount of the Earn-Out to be materially and adversely affected, shall give Philips the right to monetary damages in addition to the rights of Philips upon the occurrence of a Redemption Event. 5.2. In the absence of any material adverse change in the market for WDM Lasers or in general 8 8 economic conditions and any material deviations in the Actual Unit Shipments from the Target Unit Shipments in during any portion of the Earn-Out Period, Uniphase shall provide working capital and capital expenditure funding to the Activity (or otherwise maintain within the Activity cash flow from the operations of the Activity) in such amounts as Uniphase, in the good faith exercise of its business judgement, determines is reasonably sufficient to achieve the Target Unit Shipments. Such funding shall be provided or otherwise made available to the Activity at such times as Uniphase shall determine in exercising such business judgment and, in the case of capital expenditure, may be provided in the form of purchase, lease or any form of leveraged financing as Uniphase shall determine. In the event Philips determines that Uniphase is not providing or otherwise making available sufficient working capital and capital expenditure funding to the Activity at any time during the Earn-Out Period, Philips shall give Uniphase notice of such failure, and Philips and Uniphase agree to negotiate in good faith as to the appropriate level of funding for the Activity for a period of not less than thirty (30) days following the notification from Philips. In the event that Uniphase fails in any material respect to provide the needed funding that is agreed by Philips and Uniphase through such negotiations, Uniphase shall be deemed in breach of its obligations pursuant to this Section 5.2. In all other cases, Uniphase shall only be deemed to be in breach of this Section 5.2 if it is determined that Uniphase has not acted in good faith in determining the level of funding for the Activity or in its negotiations with Philips as provided in this Section 5.2 as to the funding levels. 5.3. Within fifteen (15) days after the end of each of Uniphase's first three fiscal quarters during an Earn-Out Period Year and within forty-five (45) days after the end of each Earn-Out Period Year, Uniphase shall deliver to Philips a statement setting forth the number of WDM Lasers shipped in such quarter and for the Earn-Out Period Year to date, together with a reasonably detailed summary of shipments by product type, customer and shipment date (the "Quarterly Statement"). Philips shall be entitled to take such steps as it deems reasonably necessary to verify the contents of each Quarterly Statement (including without limitation the right to contact Uniphase customers) and Uniphase shall cooperate, and shall cause its auditors to cooperate, in enabling Philips to do so. Uniphase shall cause to be delivered certificates of Uniphase's chief financial officer, certifying to the accuracy of the information set forth in each of the four Quarterly Statements together with the Quarterly Statement for the fourth fiscal quarter of each Earn-Out Period Year, which shall include Actual Unit Shipments for the entire preceding Earn-Out Period Year and be certified by Uniphase's independent auditors. 9 9 SECTION 6. Agreement Binding on All Preferred Holders 6.1. Subject to Section 2, Philips and each Preferred Holder agrees, as a condition precedent to the assignment, sale or transfer of any shares of Uniphase Preferred Stock prior to the Issue Date to require the proposed assignee, purchaser or transferee other than the Company or another Preferred Holder to become bound by this Agreement. 6.2. Prior to the Issue Date, each certificate for shares of Preferred Stock issued to or held by Preferred Holders shall bear the following legend: "THE RATE AT WHICH THE SHARES OF SERIES A PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE ARE CONVERTIBLE INTO COMMON STOCK IS SUBJECT TO AN AGREEMENT BETWEEN THE CORPORATION AND THE HOLDERS OF SERIES A PREFERRED STOCK, A COPY OF WHICH AGREEMENT IS AVAILABLE UPON REQUEST AT THE PRINCIPAL OFFICES OF THE CORPORATION." SECTION 7. Miscellaneous 7.1. This Agreement shall remain in full force and effect until the Issue Date and shall terminate after the conversion and/or redemption of all Uniphase Preferred Stock. 7.2. A Majority of the Preferred Holders is hereby authorized to take any action which they deem appropriate or necessary to carry out the provisions of this Agreement. Each Preferred Holder hereby agrees to be bound by the actions of a Majority of the Preferred Holders for the purposes of this Agreement, and each Preferred Holder further agrees to cooperate with the Majority of the Preferred Holders with respect to such actions. 7.3. Within sixty (60) days of receipt of the certificates of Uniphase's chief financial officer and auditors in each Earn-Out Period Year, Philips shall be entitled to give notice to Uniphase of its objections to any of the Quarterly Statements delivered to Philips in that Earn-Out Period Year, and, at Philips' option, at the end of the Earn-Out Period, Philips shall be entitled to give notice to Uniphase of its objections to any of the Quarterly Statements delivered to Philips in that Earn-Out Period. If Philips gives any such notice of objection, then the issues in dispute will be promptly submitted to Price Waterhouse or such other certified public accountants as may be agreed (the "Accountants"), for resolution. If issues 10 10 in dispute are submitted to the Accountants for resolution, (i) each party shall furnish to the Accountants such work papers and other documents and information relating to the disputed issues as the Accountants may request, and will be afforded the opportunity to present to the Accountants any material relating to the determination and to discuss the determination with the Accountants; (ii) the determination by the Accountants, as set forth in a notice delivered to both parties by the Accountants, will be binding and conclusive on the parties; and (iii) Philips and Uniphase shall each bear fifty percent (50%) of the fees of the Accountants for such determination. Within five (5) business days following final determination of the issues in dispute, Philips and Uniphase shall take such action as is necessary to ensure that the rate at which the Uniphase Preferred Stock held by Philips or Philips Affiliates is convertible (or the number of shares of common stock held by Philips) reflects the resolution of the issues in dispute (including without limitation adjustment of the conversion rate retroactively to the Issue Date, the issuance to Philips of additional shares of Uniphase Common Stock and the return by Philips of shares of Uniphase Common Stock). 7.4. Sections 13.2, 13.3, 13.4, 13.5, 13.9 and 13.10 of the Purchase Agreement are hereby incorporated by this reference. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year hereinabove first written. UNIPHASE: PHILIPS: UNIPHASE CORPORATION KONINKLIJKE PHILIPS ELECTRONICS N.V. By: /s/ Ian Jenks By: /s/ Willem Haverkamp ---------------------- ---------------------- Title: authorized signatory Title: director 11 ANNEX A Year 1 Year 2 Year 3 Year 4 Actual shipments/target shipments .... 35.0% 40.0% 200.0% 90.0% Adjustment prior year ................ 0.0% -10.0% -8.2% 0.0% Percentage performance ............... 35.0% 30.0% 191.8% 90.0% Performance factor ................... 0 0 1.918 0.82 EX-10.5 6 ASSET SALE AGREEMENT (U.S.) DATED JUNE 9, 1998 1 EXHIBIT 10.5 DATED JUNE 9, 1998 ------------------ (1) KONINKLIJKE PHILIPS ELECTRONICS N.V. (2) UNIPHASE OPTO HOLDINGS, INC. ------------------------------------------------- ASSET SALE AGREEMENT (U.S. INTANGIBLES) ------------------------------------------------- 2 ASSET SALE AGREEMENT (U.S. INTANGIBLES) THIS ASSET SALE AGREEMENT (this "Agreement") dated as of June 9, 1998 is entered into by and between KONINKLIJKE PHILIPS ELECTRONICS N.V., a company duly established under the laws of The Netherlands ("Philips"), and Uniphase OPTO Holdings, Inc., a Delaware corporation ("Buyer"). RECITALS A. This Agreement is made pursuant to and in connection with a Master Purchase Agreement made on May 29, 1998 (the "Master Purchase Agreement"), between Philips and Buyer and the other Uniphase Parties (as defined in the Master Purchase Agreement). B. Pursuant to the Master Purchase Agreement, among other things, (a) Philips agreed to sell, transfer and assign to Buyer, and Buyer agreed to purchase, the U.S. Intangible Assets (as defined in the Master Purchase Agreement), and (b) Philips and Buyer agreed to enter into and perform their respective obligations under this Agreement. NOW, THEREFORE, the parties hereto agree as follows: SECTION 1. DEFINITIONS 1.1 All capitalized terms used herein, but not defined, shall have the meanings set forth in the Master Purchase Agreement. SECTION 2. PURCHASE AND SALE OF ASSETS 2.1 PURCHASE AND SALE OF ASSETS. Subject to and in accordance with the terms of this Agreement and the Master Purchase Agreement, effective the date hereof, in consideration of the portion of the Consideration set forth in the Master Purchase Agreement, Philips hereby sells, assigns and transfers, and Buyer hereby purchases and assumes, free from all Encumbrances, the U.S. Intangible Assets. SECTION 3. GENERAL MATTERS 3.1 BILL OF SALE. This Agreement shall constitute a bill of sale with respect to the transfer by Philips to Buyer of the U.S. Intangible Assets. 3 3.2 ENTIRE AGREEMENT. This Agreement, together with the other Sales Agreements, constitutes the entire agreement between the parties hereto and supersedes any prior understandings, agreements, or representations by or between the parties hereto, written or oral, that relate to the subject matter. 3.3 NOTICES. All notices and other communications under this Agreement shall be in writing and shall be delivered in the manner and to the addresses set forth in the Master Purchase Agreement. 3.4 AMENDMENTS AND WAIVERS. No amendment of any provision of this Agreement shall be valid unless the same is in writing and signed by each of the parties hereto. No waiver by any party hereto of any default, misrepresentation, or breach of warranty or covenant under this Agreement, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant under this Agreement or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. 3.5 SEVERABILITY. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions of this Agreement or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. 3.6 PRIORITY. This Agreement is being entered into pursuant to and in connection with the Master Purchase Agreement. In the event of any conflict between any of the provisions of this Agreement and any provisions of the Master Purchase Agreement, the provisions of the Master Purchaser Agreement shall prevail. 3.7 APPLICABLE LAW. This Agreement is governed by the laws of The Netherlands. 2 4 Thus signed and agreed upon on June 9, 1998. PHILIPS: KONINKLIJKE PHILIPS ELECTRONICS N.V. By: /s/ WILLEM HAVERKAMP ------------------------------------- Name: Willem Haverkamp ----------------------------------- Its: ------------------------------------ BUYER: UNIPHASE OPTO HOLDINGS, INC. By: /s/ DAN E. PETTIT ------------------------------------- Dan E. Pettit, President 3 EX-10.6 7 ASSET SALE AGREEMENT(FOREIGN) DATED JUNE 9, 1998 1 EXHIBIT 10.6 DATED JUNE 9, 1998 ------------------ (1) KONINKLIJKE PHILIPS ELECTRONICS N.V. (2) UNIPHASE INTERNATIONAL C.V. ------------------------------------------------- ASSET SALE AGREEMENT (FOREIGN INTANGIBLES) ------------------------------------------------- 2 ASSET SALE AGREEMENT (FOREIGN INTANGIBLES) THIS ASSET SALE AGREEMENT (this "Agreement") dated as of June 9, 1998 is entered into by and between KONINKLIJKE PHILIPS ELECTRONICS N.V., a company duly established under the laws of The Netherlands ("Philips"), and Uniphase International C.V., a company duly established under the laws of The Netherlands ("Buyer"). RECITALS A. This Agreement is made pursuant to and in connection with a Master Purchase Agreement made on May 29, 1998 (the "Master Purchase Agreement") between Philips and Buyer and the other Uniphase Parties (as defined in the Master Purchase Agreement). B. Pursuant to the Master Purchase Agreement, among other things, (a) Philips agreed to sell, transfer and assign to Buyer, and Buyer agreed to purchase, the Foreign Intangible Assets (as defined in the Master Purchase Agreement), and (b) Philips and Buyer agreed to enter into and perform their respective obligations under this Agreement. NOW, THEREFORE, the parties hereto agree as follows: SECTION 1. DEFINITIONS 1.1 All capitalized terms used herein, but not defined, shall have the meanings set forth in the Master Purchase Agreement. SECTION 2. PURCHASE AND SALE OF ASSETS 2.1 PURCHASE AND SALE OF ASSETS. Subject to and in accordance with the terms of this Agreement and the Master Purchase Agreement, effective the date hereof, in consideration of the portion of the Consideration set forth in the Master Purchase Agreement, Philips hereby sells, assigns and transfers, and Buyer hereby purchases and assumes, free from all Encumbrances, the Foreign Intangible Assets. SECTION 3. GENERAL MATTERS 3.1 BILL OF SALE. This Agreement shall constitute a bill of sale with respect to the transfer by Philips to Buyer of the Foreign Intangible Assets. 3 3.2 ENTIRE AGREEMENT. This Agreement, together with the other Sales Agreements, constitutes the entire agreement between the parties hereto and supersedes any prior understandings, agreements, or representations by or between the parties hereto, written or oral, that relate to the subject matter. 3.3 NOTICES. All notices and other communications under this Agreement shall be in writing and shall be delivered in the manner and to the addresses set forth in the Master Purchase Agreement. 3.4 AMENDMENTS AND WAIVERS. No amendment of any provision of this Agreement shall be valid unless the same is in writing and signed by each of the parties hereto. No waiver by any party hereto of any default, misrepresentation, or breach of warranty or covenant under this Agreement, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant under this Agreement or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. 3.5 SEVERABILITY. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions of this Agreement or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. 3.6 PRIORITY. This Agreement is being entered into pursuant to and in connection with the Master Purchase Agreement. In the event of any conflict between any of the provisions of this Agreement and any provisions of the Master Purchase Agreement, the provisions of the Master Purchaser Agreement shall prevail. 3.7 APPLICABLE LAW. This Agreement is governed by the laws of The Netherlands. 2 4 Thus signed and agreed upon on June 9, 1998. PHILIPS: KONINKLIJKE PHILIPS ELECTRONICS N.V. By: /s/ WILLEM HAVERKAMP ------------------------------------------ Name: Willem Haverkamp ---------------------------------------- Title: --------------------------------------- BUYER: UNIPHASE INTERNATIONAL C.V. By: Uniphase CV GP1, Inc., a Delaware corporation General Partner By: /s/ DAVID MACKENCIE -------------------------------------- David Mackencie, Secretary By: Uniphase CV GP2, Inc., a Delaware corporation General Partner By: /s/ DAVID MACKENCIE -------------------------------------- David Mackencie, Secretary 3 5 Thus signed and agreed upon on June 9, 1998. 4 EX-10.7 8 LEASE DATED AS OF JUNE 9, 1998 1 EXHIBIT 10.7 LEASE AGREEMENT FOR OFFICE ACCOMMODATION AND OTHER BUSINESS ACCOMMODATION NOT GOVERNED BY ARTICLE 7A: 1624 OF THE DUTCH CIVIL CODE - ---------------------------- based on the model adopted by the Real Property Council in February 1996. - ---------------------------- The undersigned: NEDERLANDSE PHILIPS BEDRIJVEN B.V., established in Eindhoven, lawfully represented by Mr. Dijkema in his capacity as director hereafter referred to as the "Lessor"; and UNIPHASE NETHERLANDS B.V., established in Eindhoven, the Netherlands, lawfully represented by Mr. Ian Jenks in his capacity as director of Uniphase Netherlands B.V., hereafter referred to as the "Lessee", HAVE AGREED AS FOLLOWS ARTICLE 1 - THE LEASED PROPERTY, DESIGNATION, USE 1.1. This agreement relates to the business accommodation (hereafter referred to as the "leased premises") consisting of the following accommodation:
gross m(2) net m(2) annual rent in NLG WAD 2,070 1,007 263,834 WAM 2,070 90 23,580 WBC/WBD 8,400 6,000 2,900,000 TOTAL 12,540 7,097 3,187,414
2 The rent relates to the calendar year 1998 and with respect to the buildings WAM and WAD includes the maintenance costs and service costs. 1.2. The leased premises are located at the Natlab site, Professor Holstlaan at Eindhoven, including 130 parking places at the Natlab site. Staff can use additional parking places, provided they are available. 1.3. A drawing showing the location of the leased premises is attached in annex 1a. A detailed list of the rooms and spaces leased in WAD and WAM is attached in annex 1b. The buildings WBC/WBD are described in the building plan certified by the parties and attached to this agreement as annex 2. This plan shall form an integral part of this agreement. 1.4. The lessee shall have the right to change the building plan of buildings WBC/WBD from the date of signing this agreement. In the event such changes in the building plan increase or decrease the building costs, the rent with respect to these buildings will be adjusted accordingly on the assumption that the rent will amount to 10% of the investment costs, exclusive of VAT. According to the building plan the investment costs amount to NLG 29,000,000 exclusive of VAT. 1.5. The leased premises may be used as office space, for assembling purposes, storage or production. Lessee shall have the right to access for 24 hours a day. The installations, equipment and facilities present in the leased premises at the moment of entry into force of this agreement are part of the leased premises, unless they are listed in schedule 1.25 of the Master Purchase Agreement of same date, containing the schedule of the installations, equipment and facilities owned or leased by the lessee. 3 1.6. Without the Lessor's prior permission, the Lessee may not assign to the leased property a designation different from the one specified in Article 1.2. However, the lessee is entitled to change at its own account, the designation of part of the premises into another designation as described in Article 1.2, subject to that determined in Article 6.1. 1.7. The maximum permissible load which may be placed on the floors of the leased property shall be 600kg/m(2) for manufacturing space and 300kg/m(2) for office space. ARTICLE 2 - CONDITIONS 2.1. This agreement shall include the general conditions pertaining to the leasing of office accommodation and other business accommodation not governed by Article 7A: 1624, Dutch Civil Code of February 1996 (hereafter referred to as the "general conditions"). The general conditions are part of the lease and attached in annex 3. ARTICLE 3 - TERM, RENEWAL, TERMINATION 3.1. This agreement has been concluded for a term of 5 (five) years with respect to the buildings WAM and WAD, commencing on 1 June 1998 and expiring on 31 May 2003. 3.2. The lease term with respect to buildings WBC and WBD shall be 20 (twenty) years, commencing on the date of delivery of these buildings and terminating 20 years thereafter. 4 3.3. After expiry of the term specified in Article 3.1 with respect to the buildings WAD and WAM, this agreement shall be renewed for a consecutive term of five (5) years, thus until 31 May 2008. At Philips' option, such lease will either be extended on similar conditions (adjusted so as to take into account market rate developments for such leases) for another 5 year period, or Uniphase may be offered similar accommodation in the vicinity of the facilities. 3.4. The agreement may be terminated by either party with respect to each building or functional part thereof, if mutually agreed, with due observance of a minimum notice period of 12 (twelve) months. 3.5. Notice must be given by writ or registered letter. 3.6. Premature termination of this agreement shall be allowed in the situations specified in Article 7 of the general conditions. ARTICLE 4 - PAYMENT OBLIGATION, PAYMENT PERIOD 4.1. The lessee's payment obligation shall comprise of: - the rent, which is with respect to the buildings WAM and WAD inclusive of the maintenance costs and the service costs; - the value-added tax due on the rent, or an equivalent amount in accordance with Article 5. 4.2. The rent with respect to the buildings WAD and WAM amounts to NLG 262 per square meter and includes the services specified in annex 4. 4.3. The rent of the buildings WBC and WBD shall amount to 10% of the investment costs. The anticipated rent amounts to NLG 2,900,000 per year, based on the capital price of the building, which according to the current building plan, amounts to NLG 29,000,000. 5 4.4. The payment obligation with respect to the buildings WBC and WBD starts on the date the buildings are available for occupation. 4.5. The rent shall be adjusted in accordance with Articles 4.1 - 4.4 of the general conditions for the first time on 1 January 2000. The parties agree that the rent will not be adjusted to the market. 4.6. The Lessor shall supply the services marked in annex 4 with respect to the building WAD and WAM. Should the Lessee wish to hire other services listed in annex 4, Lessor shall supply these services at the rates mentioned therein. 4.7. If required to do so by the Lessee, the Lessor will with respect to the buildings WBC and WBD supply the services specified in annex 4 to the Lessee as well as site services referred to in the site service agreement attached in annex 5, on comparable terms and conditions of that agreement. 4.8. For every payment period shall be 1 (one) calendar month. Payments are due on the first day of the month. ARTICLE 5 - VALUE-ADDED (VAT) 5.1. All sums specified in this agreement shall be exclusive of VAT. 5.2. The parties agree that the Lessor shall charge the Lessee VAT on the rent. 5.3. The Lessee herewith grants the Lessor and its legal successor(s) an irrevocable power of attorney to file a joint application under Article 11(1)(b)(5) of the Sales Tax Act 1968 (application for taxed lease). The Lessee shall on request co-sign the application and return it to the Lessor within 14 days of receiving it from the Lessor. 6 5.4. Lessee declares that it is using the leased premises for purposes which allow it to recover at least 90% of the VAT calculated on the rent installments. In the event this is no longer so, Lessee will report this in writing to the Lessor. 5.5. In the event that the tax authorities, notwithstanding a properly filed option request, do not allow a VAT taxed rent, or in the event approval of taxed rent be withdrawn, Lessee shall compensate Lessor for its damage as a result of the fact that part of the VAT that the Lessor deducted when constructing the leased premises shall be reimbursed to the tax authorities. The compensation to be paid by Lessee will occur by way of increase of the rent, this being at most the amount of VAT that should have been due if taxed rent was allowed. 5.6 Notwithstanding the foregoing, the Lessor is entitled to an additional increase of the rent in accordance with the damage resulting from the fact that it cannot recover its VAT on maintenance costs. This only refers to the buildings WAD and WAM. 5.7 The Lessor shall supply all information and documents to the Lessee, which reasonably can be required, with respect to its damage referred to in this article. The Lessee shall have right to an audit with respect to the damage claimed. The Lessor shall cooperate with such audit and make available all books and documents reasonably required by Lessee to it and to its accounts. ARTICLE 6 - MISCELLANEOUS 6.1 The Lessee is, after having acquired written consent from the Lessor, entitled to make structural and other adjustments to the leased premises. The Lessor may give its consent conditionally, but may not withhold its consent on unreasonable grounds. All adjustments will remain the Lessee's property and Lessee will be entitled to remove these adjustments unless the parties agree otherwise. They may agree the following: (1) the adjustments may not be taken away at the end of the lease; the 7 Lessee is or is not entitled to compensation by Lessor of part of the investments; or (2) the Lessee shall remove the adjustments at its own costs. 6.2 The soil investigation report dated 14 November 1997 with respect to the buildings WBC and WBD and the soil investigation report dated 28 May 1998 with respect to the buildings WAM/WAW and WAD provides a zero situation with respect to any soil pollution possibly caused by Lessee as referred to in Article 2.6.1 of the general conditions. These reports are attached in annex 6. 6.3 Lessor shall promptly after signing this agreement conduct at its own account a soil investigation with respect to the buildings WAD and WAM, which will serve as zero situation referred to in Article 6.2. 6.4 In deviation to that determined in Articles 2.5.1 and 2.5.2 of the general conditions, the Lessee shall comply with all the terms and conditions of the Environmental Control Act Permit issued to Lessor and relating to the activities performed by Lessee in the leased premises. The Lessee has received copy of this permit. The Lessor guarantees that the competent authorities approve of the Lessee performing its business subject to Lessor's Environmental Control Act Permit. 6.5 The Lessor undertakes to assist the Lessee with further developing the Internal Environmental report and to assist the Lessee with filing the request for an Environmental Control Act Permit, should this be necessary, without being entitled to recover the costs thereof from the Lessee. 6.6 If the parties agree on the terms and conditions of the building plan and provided that the Lessor obtains all required permits, consents etc. in relation to the building plan. NPB will construct at Uniphase's request an Assembly building adjacent to the buildings WBC/WBD. Uniphase shall file the request at such time, that construction of the building is effected within 60 months from the date of this agreement. In the event NPB sells 8 the leased premises on the condition that each new owner of the premises shall be obliged to construct the Assembly building on the terms set forth above. The Lessee shall lease this building on the same terms and conditions of this lease. The rent shall amount to 10% of the investment costs and the lease period shall be coterminous with the lease term of the buildings WBC/WBD. 6.7 The Lessor shall take out insurance (opstal- en brandverzekering) with respect to the leased premises at its own account. 6.8 In addition to that determined in Articles 2.8 and 2.10.2 under b of the general conditions, the Lessee shall be entitled to advertise its name and product at the entrance of and elsewhere at the Natlab site, provided that such advertisements can be deemed to be reasonable acceptable to the Lessor. 6.9 In deviation of that determined in Article 9 of the general conditions both daily maintenance and structural maintenance of the buildings WBC and WBD are at Lessee's expense. The Lessee shall conduct the maintenance in accordance with a maintenance plan approved of by the Lessor. 6.10 In deviation to that determined Article 17.2 and 17.3 of the general conditions the Lessee is entitled to damages for late delivery of the buildings WBC and WBD if and to the extent that the Lessor is entitled recover these damages under the building contract. ARTICLE 7 - GUARANTEE 7.1 In deviation of the determined in Article 8.1 of the general conditions, the Lessee shall not be obliged to issue a bank guarantee, provided that Uniphase Corporation being Lessee's parent company guarantees the fulfillment by Lessee of its obligations resulting from this agreement. 9 ARTICLE 8 - MANAGER 8.1 Subject to any statement to the contrary, the Lessor's manager shall be The Facility Management of the Nat.lab. ARTICLE 9 - ADDENDA 9.1 This agreement shall comprise the following addenda: - annex 1a: drawings of the leased premises - annex 1b: rooms and spaces leased - annex 2: building plan WBC/WBD - annex 3: general conditions - annex 4: schedule of rent - annex 5: site service agreement - annex 6: soil investigation reports. Drawn up and signed in triplicate originals, /s/ M. DIJKEMA /s/ IAN JENKS - --------------,----------- -----------------,------------ Lessor:Nederlandse Philips Bedrijven B.V. Lessee: Uniphase Netherlands B.V. /s/ DAN E. PETTIT - ------------------------- Uniphase Corporation, as guarantor 10 ADDENDA Pursuant to Item 601(b)(2) of Regulation S-K, the Addenda to the Lease Agreement have been omitted. The Addenda will be submitted to the Securities and Exchange Commission upon request. EX-10.8 9 LEASE DATED AS OF JUNE 9, 1998 1 EXHIBIT 10.8 LEASE AGREEMENT FOR OFFICE ACCOMMODATION AND OTHER BUSINESS ACCOMMODATION NOT GOVERNED BY ARTICLE 7A: 1624 OF THE DUTCH CIVIL CODE - ---------------------------- based on the model adopted by the Real Property Council in February 1996. - ---------------------------- The undersigned: NEDERLANDSE PHILIPS BEDRIJVEN B.V., established in Eindhoven, lawfully represented by Mr Dijkema in his capacity as director hereafter referred to as the "Lessor"; and UNIPHASE NETHERLANDS B.V., established in Eindhoven, lawfully represented by Mr Ian Jenks in his capacity as director, hereafter referred to as the "Lessee", HAVE AGREED AS FOLLOWS ARTICLE 1 - THE LEASED PROPERTY, DESIGNATION, USE 1.1. This agreement relates to the business accommodation (hereafter referred to as the "leased premises") consisting of the following accommodation:
gross m(2) net m(2) annual rent in NLG WA 17,705 98 19,017 WY 24,630 1,994(56) 1,182,553 WZ 16,875 3,547 1,855,269 TOTAL 59,200 5,639 3,057,639
2 2 The rent relates to the calendar year 1998 and includes the maintenance costs and service costs as listed in annex 2, and excludes VAT. 1.2. The leased premises are located at the Natlab site, Professor Holstlaan at Eindhoven, including parking places at the Natlab site. 1.3. A drawing showing the location of the leased premises is attached in annex 1 a. A detailed list of the rooms and spaces leased is attached in annex 1 b. The parties do not need further specification of the leased premises. 1.4. The leased premises may be used as office space, for assembling purposes, storage or production. Lessee shall have the right to access for 24 hours a day. The installations, equipment and facilities present in the leased premises at the moment of entry into force of this agreement are part of the leased premises, unless they are listed in schedule 1.25 Master Purchase Agreement of same date, containing the schedule of the installations, equipment and facilities owned by the lessee. 1.5. Without the Lessor's prior permission, the Lessee may not assign to the leased property a designation different from the one specified in Article 1.2. However, the lessee is entitled to change at its own account, the designation of part of the premises into another designation as described in Article 1.2. 1.6. The maximum permissible load which may be placed on the floors of the leased property shall be 600 kg/m2 for manufacturing space and 300 kg/m2 for office space. ARTICLE 2 - CONDITIONS 2.1. This agreement shall include the general conditions pertaining to the leasing of office accommodation and other business accommodation not governed by Article 7A: 1624, Dutch Civil Code of February 1996 (hereafter referred to as the "general conditions"). The general conditions are part of the lease and attached in annex 2. 3 3 ARTICLE 3 - TERM, RENEWAL, TERMINATION 3.1. This agreement has been concluded for a term of 5 (five) years commencing on 1 June 1998 and expiring on 31 May 2003, subject to the Lessee being entitled to terminate the lease with respect to each building separately of the space leased prematurely subject to a period of notice of 3 (three) months. 3.2. After expiry of the term specified in Article 3.1, this agreement shall be renewed for a consecutive term of 5 (five) years, thus until 31 May 2008, unless the Lessee has given notice. With respect to this extension period, the Lessee is also entitled to terminate the lease prematurely subject to a notice period of 3 (three) months. Regarding articles 3.1 and 3.2 Lessor is entitled to earlier termination of the lease if Lessee does not make use of the MOVPE reactors in buildings WY anymore for production. Termination of part of the space leased by the Lessee is possible after mutual agreement between the Lessee and the Lessor. 3.3. The period of notice for the Lessor is six months. 3.4. Notice must be given by writ or registered letter. 3.5. Premature termination of this agreement shall be allowed in the situations specified in Article 7 of the general conditions. ARTICLE 4 - PAYMENT OBLIGATION, PAYMENT PERIOD 4.1. The lessee's payment obligation shall comprise of: - the rent, which is inclusive of the maintenance costs and the service costs; as specified in annex 2. - the value-added tax due on the rent, or an equivalent amount in accordance with Article 5. 4 4 4.2. The rent shall be based on the actual use of square meters, being for 1998 the amounts listed in the schedule in Article 1.1 and specified in the schedule in annex 1 b. 4.3. The rent shall be adjusted in accordance with Articles 4.1 - 4.4 of the general conditions for the first time on 1 January 2000. The parties agree that the rent will not be adjusted to the market. 4.4. The lessor shall supply the services as stated in annex 2. The costs of these services are included in the rent. Thus, Article 12 of the general conditions does not apply. ARTICLE 5 - VALUE-ADDED (VAT) 5.1. All sums specified in this agreement shall be exclusive of VAT. 5.2. The parties agree that the Lessor shall charge the Lessee VAT on the rent. 5.3. The Lessee herewith grants the Lessor and its legal successor(s) an irrevocable power of attorney to file a joint application under Article 11(1)(b)(5) of the Sales Tax Act 1968 (application for taxed lease). The Lessee shall on request co-sign the application and return it to the Lessor within 14 days of receiving it from the Lessor. 5.4. Lessee declares that it is using the leased premises for purposes which allow it to recover at least 90% of the VAT calculated on the rent instalments. In the event this is no longer so, Lessee will report this in writing to the Lessor. 5.5. In the event that the tax authorities, notwithstanding a properly filed option request, do not allow a VAT taxed rent, or in the event approval of taxed rent be withdrawn, Lessee shall compensate Lessor for its damage as a result of the fact that part of the VAT that the Lessor deducted when constructing the leased premises shall be reimbursed to the tax authorities. The compensation to be 5 paid by Lessee will occur by way of increase of the rent, this being at most the amount of VAT that should have been due if taxed rent was allowed. 5.6 Notwithstanding the foregoing, the Lessor is entitled to an additional increase of the rent in accordance with the damage resulting from the fact that it cannot recover its VAT on maintenance costs. 5.7 The Lessor shall supply all information and documents to the Lessee, which reasonably can be required, with respect to its damage referred to in this article. The Lessee shall have right to an audit with respect to the damage claimed. The Lessor shall cooperate with such audit and make available all books and documents reasonably required by Lessee to it and to its accounts. ARTICLE 6 - MISCELLANEOUS 6.1. The Lessee is, after having acquired written consent from the Lessor, entitled to make structural and other adjustments to the leased premises. The Lessor may give its consent conditionally, but may not withhold its consent on unreasonable grounds. All adjustments will remain the Lessee's property and Lessee will be entitled to remove these adjustments unless the parties agree otherwise. They may agree the following: (1) the adjustments may not be taken away at the end of the lease; the Lessee is or is not entitled to compensation by Lessor of part of the investments; or (2) the Lessee shall remove the adjustments at its own costs. 6.2. Lessor shall promptly after signing this agreement conduct at its own account a soil investigation with respect to the leased premises, which will serve as zero situation referred to in Article 2.6.1 of the general conditions. 6.3. In deviation to that determined in Articles 2.5.1 and 2.5.2 of the general conditions, the Lessee shall comply with all the terms and conditions of the Environmental Control Act Permit issued to Lessor and relating to the activities performed by Lessee in the leased premises. The Lessee has received copy of this permit. The Lessor guarantees that the competent authorities 6 6 approve of the Lessee performing its business subject to Lessor's Environmental Control Act Permit. 6.4. The Lessor undertakes to assist the Lessee with further developing the Internal Environmental report and to assist the Lessee with filing the request for an Environmental Control Act Permit, should this be necessary, without being entitled to recover the costs thereof from the Lessee. 6.5. The Lessor shall take out insurance (opstal- en brandverzekering) with respect to the leased premises at its own account. 6.6. In addition to that determined in Articles 2.8 and 2.10.2 under b of the general conditions, the Lessee shall be entitled to advertise its name and product at the entrance of and elsewhere at the Natlab site, provided that such advertisements can be deemed to be reasonably acceptable to the Lessor. 6.7. In deviation of that determined in Article 9 of the general conditions both daily maintenance and structural maintenance of the leased premises is Lessor's responsibility and shall take place at Lessor's expense. ARTICLE 7 - GUARANTEE 7.1 In deviation of the determined in Article 8.1 of the general conditions, the Lessee shall not be obliged to issue a bank guarantee, provided that Uniphase Corporation being Lessee's parent company guarantees the fulfilment by Lessee of its obligations resulting from this agreement. ARTICLE 8 - MANAGER 8.1 Subject to any statement to the contrary, the Lessor's manager shall be The Facility Management of the Nat.lab. 7 7 ARTICLE 9 - ADDENDA 9.1 This agreement shall comprise the following addenda: - annex 1 a: drawings of the leased premises - annex 1 b: rooms and spaces leased - annex 2: maintenance and service costs included in the rent - annex 3: general conditions Drawn up and signed in triplicate originals, /s/ M. DIJKEMA /s/ IAN JENKS - --------------,----------- -----------------,------------ Lessor: Nederlandse Philips Bedrijven B.V. Lessee: Uniphase Netherlands B.V. /s/ DAN E. PETTIT - ------------------------- Uniphase Corporation, as guarantor 8 8 ADDENDA Pursuant to Item 601(b)(2) of Regulation S-K, the Addenda to the Lease Agreement have been omitted. The Addenda will be submitted to the Securities and Exchange Commission upon request. EX-10.9 10 SITE SERVICES AGREEMENT DATED JUNE 9, 1998 1 EXHIBIT 10.9 SITE SERVICES AGREEMENT The undersigned: UNIPHASE NETHERLANDS B.V. with its registered office at Eindhoven, and principal place of business at Professor Holstlaan 4, Eindhoven, duly represented by its director Mr Ian Jenks, hereinafter referred to as UNIPHASE and NEDERLANDSE PHILIPS BEDRIJVEN B.V., with its registered office and its principal place of business at Boschdijk 525, Eindhoven, legally represented by its director Mr Gerrit Koel, hereinafter referred to as NPB HAVE AGREED AS FOLLOWS: ARTICLE 1 SUPPLY OF SERVICES 1.1 NPB shall supply to Uniphase the services listed in Appendices A,B and C hereto. These services shall hereinafter be referred to as "THE SERVICES A, THE SERVICES B AND THE SERVICES C". The services A relate to the term of the leases with respect to the buildings WA, WY, WZ, WAD, WAM, all of them located at the Natlab site at Prof. Holstlaan in Eindhoven, entered into between the parties of even date. The services B and C relate to the activities performed in these buildings. 1.2 After entry into force of the lease agreement between Uniphase and NPB with respect to the building WBC/WBD, NPB is obliged to supply the services A, services B and services C to Uniphase for this building comparable to the terms and conditions of this agreement, should Uniphase request it to supply these services. 1.3 In addition to the services listed in the Appendices, Uniphase will be entitled to discharge all its waste water into the sewage system of NPB. The costs of this service will be calculated based on and equal to the levies charged by the competent authorities. Uniphase guarantees that it will comply with applicable legislation and the conditions of NPB's waste water permit dated 20 June 1985, of which the applicable provisions are attached to this agreement in Appendix D. 2 2 Uniphase shall inform NPB of any intention to increase the amount disposed of promptly. NPB guarantees that its own water disposal is in accordance with applicable legislation and the waste water permit 20 June 1985. NPB shall inform the water authorities of this agreement and undertakes to request a new waste water permit if required by law or by the water authorities. ARTICLE 2 DURATION AND TERMINATION 2.1 This agreement enters into effect on the day of transfer of the shares in Uniphase from Philips Business Electronics B.V. to Uniphase Corporation. This agreement is entered into for an indefinite period of time, subject to the following. Services A 2.2 With respect to the services A, this agreement shall terminate in any case in the event that both the lease agreements between NPB and Uniphase and to which the services relate terminate, without any notice being required. Otherwise, NPB is not entitled to terminate the supply of these services. Uniphase can terminate all or any part of the services A at any time after 1 January 1999, subject to a period of notice of six months. Services B 2.3 With respect to the services B, this agreement shall terminate in any case in the event that both the lease agreements referred to under services A terminate. Uniphase can terminate the services B at any time after 1, January 1999 subject to a six months period of notice. If at any time one party wishes earlier termination the other party will negotiate in good faith. NPB shall be entitled only to terminate the supply of a service B, in the event of serious default by Uniphase, which default is not cured within forty five (45) days after receipt of written notice thereof from NPB or in the event that NPB no longer supplies the service to the Nat.lab site, subject to a six months notice. In the event NPB is in default with the supply of a service and Uniphase has summoned NPB to cure its default within 14 days and thereafter the default has not been cured, Uniphase can terminate the supply of that service with immediate effect. 3 3 Services C 2.4 These services terminate in the event both the leases terminate. Uniphase can terminate taking account of a six month notice period. NPB can terminate these services, subject to a period of 24 months notice, however with respect to the chemical centrale, NPB can only terminate that service if it is generally withdrawn from the site. If the service with respect to the Ion implanter is terminated, Uniphase has the option to buy the Ion Implanter at current market value. Only in the event that NPB terminates services for IT and communications, NPB will, subject to Uniphase negotiating in good faith with third parties, be responsible for excess costs over and above standing NPB charges for these services to a maximum amount of six months charges for those services terminated. With respect to all services C if at any time one party wishes earlier termination the other party will negotiate in good faith. NPB shall be entitled only to terminate the supply of a service C, in the event of serious default by Uniphase, which default is not cured within forty five (45) days after receipt of written notice thereof from NPB or in the event that NPB no longer supplies the service to the Nat.lab site, subject to a six months notice. In the event NPB is in default with the supply of a service and Uniphase has summoned NPB to cure its default within 14 days and thereafter the default has not been cured, Uniphase can terminate the supply of that service with immediate effect. ARTICLE 3 PRICE 3.1 Prices are set forth in the annexes to this Agreement and include costs of maintenance. NPB is permitted to adjust prices annually according to costs of living index increases in The Netherlands for NPB originated services; whilst costs for services supplied by third parties can be adjusted to reflect changes in third party tariffs. All prices in the annexes are exclusive of VAT. 3.2 Payment will take place within thirty (30) days after invoice. NPB shall invoice Uniphase monthly; 3.3 In addition to the payment referred to in 2 of this Article and during any period in which NPB shall be providing services to Uniphase hereunder, Uniphase shall pay to NPB an annual administration fee in arrears of NLG 154,000 exclusive of VAT, subject to an annual index based on the consumer price index. 3.4 Upon a termination of any of the services pursuant to this agreement, the price for services payable pursuant to article 3 shall be reduced to reflect the reduced service. 4 4 ARTICLE 4 SUPPLY OF THE SERVICES 4.1 NPB guarantees the continuous supply of the services at the level, which generally is provided to the Nat.lab site. This shall in no event be less than the quality level of the services in the pre-closing period 4.2 In the event of disturbance, breakdown or interruptions in the supply of the services, NPB shall promptly repair or do whatever is necessary to continue the supply of the services in question, without being entitled to charge Uniphase for the costs of repair, or other measures. Uniphase shall inform NPB in writing as soon as possible of any breakdown, disturbance or interruption. NPB is obliged to take corrective action as soon as reasonably can be provided. 4.3 NPB will maintain the equipment, installation or facility used in the process of rendering a service and will repair or replace any faulty equipment at its own expense. 4.4 NPB guarantees that the supply of services takes place in conformity with applicable legislation and contractual obligations. NPB holds Uniphase harmless and indemnifies Uniphase against any claim from third parties, including orders or claims from public authorities with respect to any claims of any nature arising as a result of the supply of services by NPB. ARTICLE 5 LIABILITY AND DAMAGE 5.1 Parties are liable to each other for losses and damages caused due to negligence or improper use of installations and facilities. ARTICLE 6 MISCELLANEOUS 6.1 NPB will provide Uniphase access to the Philips/NPB material assessment techniques (SIMS, Auger, TEM, chemical analyses, etc.,) without charging Uniphase separately for this service. 6.2 Uniphase will not be entitled to transfer the rights resulting from this agreement in whole or in part to a third party, unless NPB has given its consent. 6.3 Should any part of this agreement be nullified, this shall not affect the remaining parts of the agreement. Instead of the nullified part, the agreements which are closest to that which the parties would have agreed upon had they known of the nullity or avoidance shall be considered to be agreed. 6.4 As from the commencement date of this agreement, all communications from Uniphase to NPB relating to the fulfilment of this agreement, shall be addressed to: for Uniphase Mr Wim Nijman Uniphase Netherlands B.V. Building WY-7 5 5 for NPB NPB Natuurkundig Laboratorium Buildings WB5 6.5 This agreement shall be governed by the laws of the Netherlands. Should any dispute arise with respect to the fulfilment of the obligations resulting from this agreement, these disputes should be brought before the District Court of Utrecht. 6.6 In the event that any dispute among the parties to this agreement should result in litigation, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this agreement, including without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals. /s/ IAN JENKS /s/ GERRIT KOEL - ----------------------------- ----------------------------------- Uniphase Netherlands B.V. Nederlandse Philips Bedrijven B.V., -----END PRIVACY-ENHANCED MESSAGE-----