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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 12, 1997
REGISTRATION NO. 333-27931
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM S-3/A
AMENDMENT NO. 2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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UNIPHASE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 94-2579683
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
163 BAYPOINTE PARKWAY
SAN JOSE, CALIFORNIA 95134
(408) 434-1800
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
KEVIN N. KALKHOVEN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
UNIPHASE CORPORATION
163 BAYPOINTE PARKWAY
SAN JOSE, CALIFORNIA 95134
(408) 434-1800
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
_______________
Copies to:
MICHAEL C. PHILLIPS, ESQ.
JUSTIN L. BASTIAN, ESQ.
MORRISON & FOERSTER LLP
755 PAGE MILL ROAD
PALO ALTO, CA 94304-1018
(415) 813-5600
_______________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this form are to be
offered pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [x]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ____________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] ____________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus supplement shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.
SUBJECT TO COMPLETION, DATED AUGUST 12, 1997
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SUBJECT TO COMPLETION
665,568 SHARES
UNIPHASE CORPORATION
COMMON STOCK
This Prospectus relates to the offer and sale from time to time by the
holder (the "Selling Stockholder") of up to 665,568 shares (the "Shares") of
Common Stock, par value $.001 per share (the "Common Stock") of Uniphase
Corporation (the "Company"). The Company is registering the Shares pursuant to
a Common Stock Purchase Agreement dated as of November 20, 1995 by and between
the Company and the Selling Stockholder, to provide the Selling Stockholder
with freely tradable securities. The registration of the Shares does not
necessarily mean that any of the Shares will be offered and sold by the holder
thereof. See "Use of Proceeds" and "Registration Rights."
The Common Stock is listed on the Nasdaq National Market ("Nasdaq")
under the symbol "UNPH." On August 11, 1997, the last reported sales price as
reported by Nasdaq was $64.625 per share. See "Price Range of Common Stock."
SEE "RISK FACTORS" COMMENCING ON PAGE 5 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK
OFFERED HEREBY.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
_______________
The Selling Stockholder from time to time may offer and sell the
Shares held by them directly or through agents or broker-dealers on terms to be
determined at the time of sale. To the extent required, the names of any agent
or broker-dealer and applicable commissions or discounts and any other required
information with respect to any particular offer will be set forth in an
accompanying Prospectus Supplement. See "Plan of Distribution." The Selling
Stockholder reserves the right to accept or reject, in whole or in part, any
proposed purchase of the Shares to be made directly or through agents.
The Company will not receive any of the proceeds from the sale of
Shares by the Selling Stockholder but has agreed to bear certain expenses of
registration of the Shares under Federal and state securities laws.
The Selling Stockholder and any agents or broker-dealers that
participate with the Selling Stockholder in the distribution of Shares may be
deemed to be "underwriters" within the meaning of the Securities Act of 1933,
as amended (the "Securities Act"), and any commissions received by them and any
profit on the resale of the Shares may be deemed to be underwriting commissions
or discounts under the Securities Act. See "Registration Rights" for
indemnification arrangements between the Company and the Selling Stockholder.
The date of this Prospectus is , 1997
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AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Exchange
Act, and in accordance therewith, files, annual and quarterly reports, proxy
and information statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and
other information can be inspected and copied at the public reference
facilities maintained by the Commission at its office at Room 1034, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
at Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and 7 World Trade Center, Suite 1300, New York, New York 10048.
Copies of such materials can be obtained from the public reference section of
the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Commission maintains a website (http://www.sec.gov) containing
reports, proxy statements and other information of registrants, including the
Company, that file electronically with the Commission. In addition, the
Company's Common Stock is quoted on the Nasdaq National Market and reports,
proxy statements and other information concerning the Company can be inspected
at the National Association of Securities Dealers, Inc., 9513 Key West Avenue,
Rockville, Maryland 20850.
This Prospectus constitutes a part of a Registration Statement on Form
S-3 (herein, together with all amendments, schedules and exhibits, referred to
as the "Registration Statement") filed by the Company with the Commission under
the Securities Act. This Prospectus does not contain all of the information set
forth in the Registration Statement and certain parts are omitted in accordance
with the rules and regulations of the Commission. For further information with
respect to the Company and the Common Stock offered hereby, reference is made to
such Registration Statement. Statements contained in this Prospectus as to the
contents of any contract or other document referred to are not necessarily
complete, and in each instance, reference is made to the copy of such contract
or other document filed as an exhibit or incorporated by reference to the
Registration Statement of which this Prospectus forms a part, each such
statement being qualified in all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the
Commission (File No. 0-22874) pursuant to the Exchange Act are incorporated
herein by reference:
(1) the Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1996;
(2) the description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A filed with the Commission on
November 15, 1993;
(3) the Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ended September 30 and December 31, 1996, and March 31, 1997; and
(4) the Company's Current Report on Form 8-K dated March 25, 1997.
(5) the Company's Current Report on Form 8-K/A Amendment 3 filed on
August 12, 1997; and
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(6) the Company's 10-Q/A for the fiscal quarter ended March 31, 1997
filed on June 10, 1997.
All reports and other documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date of this Prospectus and prior to the termination of the offering of the
Common Stock hereunder shall be deemed to be incorporated by reference herein
and to be a part hereof from the date of the filing of such reports and
documents. The Company hereby undertakes to provide without charge to each
person, including any beneficial owner, to whom a copy of this Prospectus is
delivered, upon written or oral request of such person a copy of any or all of
the foregoing documents incorporated herein by reference (exclusive of
exhibits, unless such exhibits are specifically incorporated by reference into
such documents). Requests for such documents should be submitted in writing to
the Corporate Secretary at the corporate headquarters of the Company at 163
Baypointe Parkway, San Jose, California 95134 or by telephone at (408)
434-1800.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document that also is or is deemed to be
incorporated by reference herein modified or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of the Registration Statement or this
Prospectus.
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The statements contained in this Prospectus that are not purely
historical are forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934, including statements regarding the Company's expectations, hopes, beliefs,
intentions or strategies regarding the future. Actual results could differ from
those projected in any forward- looking statements for the reasons detailed in
other sections of this "Risk Factors" portion of this Prospectus. The
forward-looking statements are made as of the date of this Prospectus and the
Company assumes no obligation to update the forward-looking statements, or to
update the reasons why actual results could differ from those projected in the
forward-looking statements.
THE COMPANY
Uniphase Corporation ("Uniphase" or the "Company") is an
optoelectronics company that designs, develops, manufactures and markets laser
subsystems, laser-based semiconductor wafer defect examination and analysis
equipment and fiber optic telecommunications equipment products. Optoelectronics
is a technology that extends the speed and capacity of conventional electronic
solutions by addressing many of the constraints of the electron with the
particle of light, the photon. A common source of the photon in optoelectronics
is the laser. By combining electronics, photonics and software, optoelectronics
has enabled new technologies such as CD-ROMs and fiber optic communication, and
has created new solutions for existing markets.
Since its founding, Uniphase has shipped over one million lasers in its
capacity as a supplier of laser subsystems for OEMs in a variety of markets,
including CATV, long haul telecommunications, semiconductor wafer inspection,
biotechnology, and graphics and printing markets. The Company focuses on selling
its laser subsystems to such customers at the design-in phase of a product,
creating the potential for recurring sales throughout a product's life.
The Company's predecessor was incorporated in California in 1979 under
the name "Uniphase Corporation." The Company was incorporated in California in
1984 under the name "Uniphase Holding, Corporation," and changed its name to
Uniphase Corporation in 1987 as part of a reorganization in which it succeeded
to the assets, liabilities and business operations of its predecessor. The
Company reincorporated in Delaware in October 1993. Unless the context otherwise
requires, the terms "Uniphase" and the "Company" refer to Uniphase Corporation,
a Delaware corporation, its California predecessors and its subsidiaries. The
Company's principal executive offices are located at 163 Baypointe Parkway, San
Jose, California 95134 and its telephone number is (408) 434-1800.
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RISK FACTORS
In evaluating the Company's business, prospective investors should
carefully consider the following factors in addition to the other information
presented in this Prospectus and in the documents incorporated by reference
herein.
MANAGEMENT OF GROWTH; UTP FIBREOPTICS AND ULE ACQUISITION
The Company has experienced recent growth through increased levels of
operations in its existing businesses, the acquisition of UTP in May 1995 and
the acquisition of ULE in March 1997. The Company is devoting significant
resources to develop new solid state lasers for OEM customers, to improve
products and increase market penetration of its Ultrapointe Systems and to
increase its penetration of the CATV and telecommunications industries. In
addition, the Company is now increasing its marketing, customer support and
administrative functions in order to support an increased level of operations
primarily from sales of its telecommunications equipment products. No assurance
can be given that the Company will be successful in creating this infrastructure
or that any increase in the level of such operations will justify the increased
expense levels associated with these businesses.
In May 1996, the Company acquired UTP Fibreoptics. As a result of
acquiring UTP Fibreoptics, the Company has entered the local telecommunications
and data communications market in which it had no previous experience, and has
expanded its employee base. The success of the UTP Fibreoptics acquisition will
be dependent on the Company's ability to integrate UTP Fibreoptics into its
existing operations as a division of UTP. UTP's ability to manage UTP
Fibreoptics will be complicated by the geographical distance between UTP's
facilities in Bloomfield, Connecticut and Chalfont, Pennsylvania and UTP
Fibreoptics's locations in the United Kingdom and in Batavia, Illinois. There
can be no assurance that the operations of UTP Fibreoptics can be successfully
integrated into UTP or that such integration will not strain the Company's
available management, manufacturing, financial and other resources.
In March 1997, the Company acquired ULE. As a result of acquiring ULE,
the Company has gained access to a proven semiconductor based laser application
for use in telecommunications. The success of the ULE acquisition will be
dependent upon the Company's ability to integrate ULE 980nm lasers and future
products used in erbium doped fiber amplifiers (EDFA) and to many major
telecommunication equipment manufacturers. There can be no assurance that the
ULE operations can be successfully integrated into UTP or that such integration
will not strain the Company's available management, manufacturing, financial and
other resources.
The Company also made capital expenditures in fiscal 1996 to acquire
certain properties in San Jose, California totaling 109,000 square feet, which
included land, buildings and improvements for an aggregate purchase price of
approximately $11.0 million and continues to invest in property, plant and
equipment needed for its business requirements, including adding to
manufacturing capacity throughout the Company. Any failure to utilize these
areas in an efficient manner could have a material adverse effect on the
Company.
The Company currently has no commitments with respect to any future
acquisitions. The Company, however, frequently evaluates the strategic
opportunities available to it and may in the future pursue acquisitions of
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additional complementary products, technologies or businesses. Such
acquisitions by the Company may result in the diversion of management's
attention from the day-to-day operations of the Company's business and may
include numerous other risks, including difficulties in the integration of the
operations and products, integration and retention of personnel of the acquired
companies and certain financial risks. Further acquisitions by the Company may
result in dilutive issuances of equity securities, the incurrence of additional
debt, reduction of existing cash balances, amortization expenses related to
goodwill and other intangible assets and other charges to operations that may
materially adversely affect the Company's business, financial condition or
operating results.
CYCLICALITY OF SEMICONDUCTOR INDUSTRY
The Company's Ultrapointe Systems and a portion of its laser subsystems
businesses depend upon capital expenditures by manufacturers of semiconductor
devices, including manufacturers that are opening new or expanding existing
fabrication facilities, which, in turn, depend upon the current and anticipated
market demand for semiconductor devices and the products utilizing such devices.
The semiconductor industry is highly cyclical, and historically has experienced
periods of oversupply, resulting in significantly reduced demand for capital
equipment. Recently, the semiconductor industry has experienced a downturn which
has led certain of the Company's customers to delay or cancel purchase of the
Company's Ultrapointe Systems. Results of operations for the third quarter of
fiscal 1997 ended March 31, 1997 include sales of Ultrapointe product totaling
$2.7 million, down from $5 million in the first quarter of fiscal 1996. The
Company believes the short-term outlook for Ultrapointe products is improving as
evidenced by an increase in backlog to 12 systems at the end of the third fiscal
quarter of 1997 - most of which is deliverable during the fourth quarter. There
can be no assurance that the Company's operating results will not be materially
and adversely affected by these factors. Furthermore, there can be no assurance
that the semiconductor industry will not experience further downturns or
slowdowns in the future, which may materially and adversely affect the Company's
business and operating results.
GALLIUM ARSENIDE
Gallium Arsenide, referred to as GaAs, is a semiconductor material that
has an electron mobility that is up to five times faster than silicon. As a
result, it is possible to design GaAs circuits that operate at significantly
higher frequencies than silicon circuits. At similar frequencies, GaAs circuits
will produce higher signal strength (gain) and lower background interference
(noise) than silicon circuits, permitting the transmission and reception of
information over longer distances. GaAs circuits can also be designed to consume
less power and operate more efficiently at lower voltages than silicon circuits.
The fabrication of integrated circuits, particularly GaAs devices such
as those sold by ULE is a highly complex and precise process. Minute impurities,
difficulties in the fabrication process, defects in the masks used to print
circuits on a wafer, wafer breakage or other factors can cause a substantial
percentage of wafers to be rejected or numerous die on each wafer to be
nonfunctional. Management considers wafer yields in excess of 18% achieving
internal lot validation criteria to be acceptable. ULE has in the past and may
be in the future experience lower than expected production yields, which could
delay product shipments and adversely affect gross margins, and there can be
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no assurance that ULE will be able to maintain acceptable yields in the future.
Because the majority of ULE manufacturing costs are relatively fixed,
manufacturing yields are critical to the results of operations. To the extent
ULE does not achieve acceptable manufacturing yields or experiences product
shipment delays, its business, operating results and financial condition could
be materially and adversely affected.
RISKS FROM CUSTOMER CONCENTRATION
A relatively limited number of OEM customers historically have
accounted for a substantial portion of UTP's (including ULE) net sales. UTP's
sales to any single customer are also subject to significant variability from
quarter to quarter. Such fluctuations could have a material adverse effect on
both UTP and the Company's business, operating results or financial condition.
The Company expects that sales of UTP products to a limited number of customers
will continue to account for a high percentage of the net sales for the
foreseeable future. Moreover, there can be no assurance that UTP's current
customers will continue to place orders or that UTP will be able to obtain new
orders from new customers.
DECLINING MARKET FOR GAS LASERS; DEVELOPMENT AND OTHER RISKS RELATING TO SOLID
STATE LASER TECHNOLOGIES
Gas laser subsystems sales accounted for 74.6% and 47.7% of total
Company's sales for the fiscal years ended 1995 and 1996, respectively, and the
Company anticipates 33.0% of fiscal 1997 sales. The market for gas lasers is
mature and is expected to decline as customers transition from conventional
lasers, including gas, to solid state lasers, which are currently expected to be
the primary commercial laser technology in the future. In response to this
transition, the Company has devoted substantial resources to developing solid
state laser products. To date, sales of the Company's solid state laser products
have been limited and primarily for customer evaluation purposes. Due to the
acquisition of Laser Enterprises in March 1997, the Company's strategic focus
with respect to diode based applications has moved away from the manufacturing
and development of its existing pumped solid state laser products to the
manufacturing and development of diode lasers utilizing the 980nm pump chip
supplied by Laser Enterprise. Therefore, the Company has drastically curtailed a
significant portion of its existing diode pumped solid state laser technology.
The Company believes that a number of companies are further advanced than the
Company in their development efforts for solid state lasers and are competing
with evaluation units for many of the same design-in opportunities than the
Company is pursuing. It is anticipated that the average selling price of solid
state lasers may be significantly less in certain applications than the gas
laser products the Company is currently selling in these markets. The Company
further believes it will be necessary to continue to reduce the cost of
manufacturing and to broaden the wavelengths provided by its laser products.
There can be no assurance that the Company's solid state laser products will not
be rendered obsolete or uncompetitive by products of other companies.
VARIABILITY AND UNCERTAINTY OF QUARTERLY OPERATING RESULTS
The Company has experienced and expects to continue to experience
significant fluctuations in its quarterly results. The Company believes that
fluctuations in quarterly results may cause the market price of its Common Stock
to fluctuate, perhaps substantially. Factors which have had an influence on and
may continue to influence the Company's operating results in a
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particular quarter include the timing of the receipt of orders from major
customers, product mix, competitive pricing pressures, the relative proportions
of domestic and international sales, costs associated with the acquisition or
disposition of businesses, products or technologies, the Company's ability to
design, manufacture, and ship products on a cost effective and timely basis,
the delay between incurrence of expenses to further develop marketing and
service capabilities and realization of benefits from such improved
capabilities, the announcement and introduction of cost effective new products
by the Company and by its competitors, and expenses associated with any
intellectual property litigation. In addition, the Company's sales will often
reflect orders shipped in the same quarter that they are received. Moreover,
customers may cancel or reschedule shipments, and production difficulties could
delay shipments. The timing of sales of the Company's Ultrapointe Systems may
result in substantial fluctuations in quarterly operating results due to the
substantially higher per unit price of these products relative to the Company's
other products. In addition, the Company sells its telecommunications equipment
products to OEMs who typically order in large quantities and therefore the
timing of such sales may significantly affect the Company's quarterly results.
The timing of such OEM sales can be affected by factors beyond the Company's
control, including demand for the OEM's products and manufacturing issues
experienced by OEMs. In this regard, the Company has experienced a temporary
rescheduling of orders by OEM telecommunications customers. As a result of the
above factors, the Company's results of operations are subject to significant
variability from quarter to quarter.
There can be no assurance that other acquisitions or dispositions of
businesses, products or technologies by the Company in the future will not
result in substantial charges or other expenses that may cause fluctuations in
the Company's quarterly operating results.
The Company's operating results in a particular quarter may also be
affected by the acquisition or disposition of other businesses, products or
technologies by the Company. For example, in the fourth quarter of fiscal 1996,
the Company incurred charges totaling $7.5 million for acquired in-process
research and development related to the acquisition of UTP Fibreoptics and
compensation expense in connection with the cancellation of certain options of
UTP and granted replacement options to purchase Uniphase Common Stock to UTP
employees in order to operate UTP Fibreoptics as a division of UTP. In the
fourth quarter of fiscal 1995, the Company incurred charges totaling $5.4
million, primarily for acquired in-process research and development in
connection with the Company's acquisition of UTP, and to a lesser extent from
the loss on the sale of the Company's diode laser product line. Such charges
reduced net income per share for the fourth quarter of fiscal 1995 by $0.34 and
for fiscal 1995 by $0.33. There can be no assurance that acquisitions or
dispositions of businesses, products or technologies by the Company in the
future will not result in substantial charges or other expenses that may cause
fluctuations in the Company's quarterly operating results.
INTENSE INDUSTRY COMPETITION
The laser, semiconductor capital equipment, CATV and telecommunications
industries in which the Company sells its products are highly competitive. In
each of the markets it serves, the Company faces intense competition from
established competitors, many of which have substantially greater financial,
engineering, research and development, manufacturing, marketing, service and
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support resources. The Company is a recent entrant into the semiconductor
capital equipment, the CATV and telecommunications marketplaces and competes
with many companies in those markets that have substantially greater resources,
including greater name recognition, a larger installed base of products and
longer standing customer relationships. In order to remain competitive, the
Company must maintain a high level of investment in research and development,
marketing, and customer service and support. There can be no assurance that the
Company will be able to compete successfully in the laser, semiconductor
capital equipment, CATV or telecommunications industries in the future, that
the Company will have sufficient resources to continue to make such
investments, that the Company will be able to make the technological advances
necessary to maintain its competitive position or that its products will
receive market acceptance. The semiconductor capital equipment market is
frequently affected by new product introductions and new technologies that make
existing production and inspection equipment obsolete. There can be no
assurance that others will not introduce products which compete with the
Ultrapointe System or which render the Ultrapointe System obsolete or
uncompetitive based on existing or new technologies. In addition, there can be
no assurance that technological changes or development efforts by the Company's
competitors will not render the Company's products or technologies obsolete or
uncompetitive.
DEPENDENCE ON KEY OEM RELATIONSHIPS
In July 1997, the Company entered into an exclusive OEM Agreement
(Agreement) with KLA-Tencor pursuant to which KLA-Tencor will distribute
Ultrapointe Systems through its worldwide distribution channels. This Agreement
supersedes any and all prior OEM negotiations, correspondence, understandings
and agreements regarding the Companies' business relationship. The Company
currently expects that KLA-Tencor will account for a majority of Ultrapointe's
net sales for the foreseeable future for Laser Imaging Systems used to analyze
defects on semiconductor wafers and photomasks during the manufacturing process
as well as automatic defect classification software products. The Agreement
outlines minimum quantities in the year of inception, product specifications,
ongoing research and development efforts on the product line, pricing and
payment terms. The Agreement is effective through June 30, 2000 and may be
extended for up to three (3) additional one year renewal periods thereafter.
On April 30, 1997, Tencor and KLA Instruments merged and formed
KLA-Tencor Corporation. The Company believes that the timing of the receipt of
orders and the related product mix under the Agreement will not be consistent
with historical orders for Ultrapointe Systems given the size and complexities
associated with merging these organizations, consequently, interim revenue
levels and profit margins may be adversely affected.
In addition, one laser subsystems customer, the Applied Biosystems
Division of Perkin-Elmer Corporation, accounted for approximately 12% of the
Company's net sales for fiscal years, 1996, 1995, and 1994, respectively. The
loss of orders from these or other OEM relationships could have a materially
adverse effect on the Company's business and operating results.
ATTRACT AND RETAIN KEY PERSONNEL
The future success of the Company is dependent, in part, on its ability
to attract and retain certain key personnel. In particular, the Company's
research and development efforts are dependent on the Company being able to hire
and retain engineering staff with the requisite qualifications. Competition in
recruiting highly skilled engineering personnel is extremely
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intense, and the Company is currently experiencing substantial difficulty in
identifying and hiring certain qualified engineering personnel in many areas of
its business. No assurance can be given that the Company will be able to
successfully hire such personnel at compensation levels that are consistent
with the Company's existing compensation and salary structure. The Company's
future success will also depend to a large extent on the continued
contributions of its executive officers and other key management and technical
personnel, none of whom has an employment agreement with the Company and each
of whom would be difficult to replace. The Company does not maintain any key
person life insurance policy on any of such persons. The loss of the services
of one or more of the Company's executive officers or key personnel or the
inability to continue to attract qualified personnel could delay product
development cycles or otherwise have a material adverse effect on the Company's
business and operating results.
CONFLICTING PATENTS AND INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES;
POTENTIAL INFRINGEMENT CLAIMS
The laser, semiconductor capital equipment, CATV and telecommunications
industries in which the Company sells its products are characterized by frequent
litigation regarding patent and other intellectual property rights. Numerous
patents in these industries are held by others, including academic institutions
and competitors of the Company. Such patents could inhibit the Company's ability
to develop new products for such markets. The industry in which the Company
operates is characterized by periodic claims of patent infringement or other
intellectual property rights. While in the past licenses generally have been
available to the Company where third-party technology was necessary or useful
for the development or production of the Company's products, there can be no
assurance that licenses to third-party technology will be available on
commercially reasonable terms, if at all. Generally, a license, if granted,
would include payments by the Company of up-front fees, ongoing royalties or a
combination thereof. There can be no assurance that such royalty or other terms
would not have a significant adverse impact on the Company's operating results.
The Company is a licensee of a number of third party technologies and
intellectual property rights and is required to pay royalties to these third
party licensors on certain of its products, including its Ultrapointe Systems
and its solid state lasers. During fiscal 1996 and for the nine month period
ended March 31, 1997, the Company expensed approximately $1.3 million and $1.2
million respectively in license and royalty fees primarily in connection with
its gas laser subsystems. In addition, there can be no assurance that third
parties will not assert claims against the Company with the Company's existing
products or with respect to future products under development by the Company. In
the event of litigation to determine the validity of any third-party claims,
such litigation could result in significant expense to the Company and divert
the efforts of the Company's technical and management personnel, whether or not
such litigation is determined in favor of the Company. In the event of an
adverse result in any such litigation, the Company could be required to expend
significant resources to develop non-infringing technology or to obtain licenses
to the technology which is the subject of the litigation. There can be no
assurance that the Company would be successful in such development or that any
such licenses would be available to the Company. In the absence of such a
license, the Company could be enjoined from future sales of the infringing
product or products. In fiscal years 1992 and 1993, the Company incurred
substantial legal expenses in connection with a patent infringement action
relating to the Company's current gas laser subsystems brought by
Spectra-Physics Lasers, Inc. ("Spectra-Physics"). While the Spectra-Physics case
has since been settled, no
10
<PAGE> 12
assurance can be given that, in the future, the Company will be able to avoid
similar actions by competitors or others or that the Company will not be forced
to initiate its own actions to protect its proprietary position.
LIMITED PROTECTION OF INTELLECTUAL PROPERTY
The Company's future success depends in part upon its intellectual
property, including trade secrets, know-how and continuing technological
innovation. There can be no assurance that the steps taken by the Company to
protect its intellectual property will be adequate to prevent misappropriation
or that others will not develop competitive technologies or products. The
Company currently holds 30 U.S. patents on products or processes and certain
corresponding foreign patents and has applications for certain patents currently
pending. While three patents have been issued with respect to the Company's
Ultrapointe Systems, no assurance can be given that competitors will not
successfully challenge the validity of these patents or design products that
avoid infringement of the Company's proprietary rights with respect to its
Ultrapointe Systems. There can be no assurance that other companies are not
investigating or developing other technologies that are similar to the
Company's, that any patents will issue from any application pending or filed by
the Company or that, if patents do issue, the claims allowed will be
sufficiently broad to deter or prohibit others from marketing similar products.
In addition, there can be no assurance that any patents issued to the Company
will not be challenged, invalidated or circumvented, or that the rights
thereunder will provide a competitive advantage to the Company. Further, the
laws of certain territories in which the Company's products are or may be
developed, manufactured or sold, including Asia, Europe or Latin America, may
not protect the Company's products and intellectual property rights to the same
extent as the laws of the United States.
DEPENDENCE ON SOLE AND LIMITED SOURCE SUPPLIERS
Various components included in the manufacture of the Company's
products are currently obtained from single or limited source suppliers. A
disruption or loss of supplies from these companies or an increase in price of
these components would have a material adverse effect on the Company's results
of operations, product quality and customer relationships. For example, the
Company obtains all the robotics, workstations and many optical components used
in its Ultrapointe Systems from Equipe Technologies, Silicon Graphics, Inc., and
Olympus Corporation, respectively. The Company currently utilizes a sole source
for the crystal semiconductor chip sets incorporated in the Company's solid
state microlaser products and acquires its pump diodes for use in its solid
state laser products from SDL, Inc., Opto Power Corporation and GEC. The Company
also obtains lithium niobate wafers, galium arsenide wafers, specialized fiber
components and certain lasers used in its UTP and ULE products primarily from
Crystal Technology, Inc., Fujikura, Ltd., Philips Key Modules, and Sumitomo,
respectively. The Company does not have a long-term or volume purchase
agreements with any of these suppliers, and no assurance can be given that these
components will be available in the quantities required by the Company, if at
all. Further, UTP depends on relatively specialized components and it cannot be
assured that its respective suppliers will be able to continue to meet UTP's
requirements. DIFFICULTIES IN MANUFACTURE OF THE COMPANY'S PRODUCTS
The manufacture of the Company's products involves highly complex and
precise processes, requiring production in highly controlled and clean
11
<PAGE> 13
environments. Changes in the Company's or its suppliers' manufacturing process
or the inadvertent use of defective or contaminated materials by the Company or
its suppliers could adversely affect the Company's ability to achieve
acceptable manufacturing yields and product reliability. In addition, UTP has
previously experienced certain manufacturing yield problems that have
materially and adversely affected both UTP's ability to deliver products in a
timely manner to its customers and its operating results. During the fourth
quarter of fiscal 1997, the Company anticipates launching an additional
production facility at UTP's Bloomfield, Connecticut facility. No assurance can
be given that the Company will be successful in manufacturing UTP products in
the future at performance or cost levels necessary to meet its customer needs,
if at all. In addition, UTP established a transmitter production facility in
Chalfont, Pennsylvania in March 1996 and consolidated the transmitter
production line previously located in Bloomfield, Connecticut into this
facility in April 1996. The Company has no assurance that this facility will be
able to deliver the planned production qualities of transmitters to customers
specifications at the cost and yield levels required. To the extent the Company
or UTP does not achieve and maintain yields or product reliability, the
Company's operating results and customer relationships will be adversely
affected.
FUTURE CAPITAL REQUIREMENTS
The Company is devoting substantial resources for new facilities and
equipment for Uniphase Laser Enterprise and to the development of new products
for the solid state laser, semiconductor capital equipment, CATV and
telecommunications markets. Although the Company believes existing cash
balances, cash flow from operations and available lines of credit, will be
sufficient to meet its capital requirements at least through the end of calendar
year 1997, the Company may be required to seek additional equity or debt
financing to compete effectively in these markets. The timing and amount of such
capital requirements cannot be precisely determined at this time and will depend
on several factors, including the Company's acquisitions and the demand for the
Company's products and products under development. There can be no assurance
that such additional financing will be available when needed, or, if available,
will be on terms satisfactory to the Company.
POTENTIAL VOLATILITY OF COMMON STOCK PRICE
The market price of the Company's Common Stock has recently been and is
likely to continue to be highly volatile and significantly affected by factors
such as fluctuations in the Company's operating results, announcements of
technological innovations or new products by the Company or its competitors,
governmental regulatory action, developments with respect to patents or
proprietary rights, general market conditions and other factors. Further, the
Company's net revenues or operating results in future quarters may be below the
expectations of public market securities analysts and investors. In such event,
the price of the Company's Common Stock would likely decline, perhaps
substantially. In addition, the stock market has from time to time experienced
significant price and volume fluctuations that are unrelated to the operating
performance of particular companies.
RISKS ASSOCIATED WITH INTERNATIONAL SALES
International sales accounted for approximately 28.9%, 30.3%, 24.3% and
33.1% of the Company's net revenues in fiscal years 1994, 1995, 1996 and
12
<PAGE> 14
nine-months ended March 31, 1997 respectively, and the Company expects that
international sales will continue to account for a significant portion of the
Company's net revenues. The Company may continue to expand its operations
outside of the United States and to enter additional international markets,
both of which will require significant management attention and financial
resources. International sales are subject to inherent risks, including
unexpected changes in regulatory requirements, tariffs and other trade
barriers, political and economic instability in foreign markets, difficulties
in staffing and management and integration of foreign operations, longer
payment cycles, greater difficulty in accounts receivable collection, currency
fluctuations and potentially adverse tax consequences. Since substantially all
of the Company's foreign sales are denominated in U.S. dollars, the Company's
products may also become less price competitive in countries in which local
currencies decline in value relative to the U.S. dollar. The Company's business
and operating results may also be materially and adversely affected by lower
sales levels which typically occur during the summer months in Europe and
certain other overseas markets. Furthermore, the sales of many of the Company's
OEM customers are dependent on international sales and, consequently, this
further exposes the Company to the risks associated with such international
sales.
ISSUANCE OF PREFERRED STOCK; POTENTIAL ANTI-TAKEOVER EFFECTS OF DELAWARE LAW
The Board of Directors has the authority to issue up to 1,000,000
shares of undesignated Preferred Stock and to determine the powers, preferences
and rights and the qualifications, limitations or restrictions granted to or
imposed upon any wholly unissued shares of undesignated Preferred Stock and to
fix the number of shares constituting any series and the designation of such
series, without any further vote or action by the Company's shareholders. The
Preferred Stock could be issued with voting, liquidation, dividend and other
rights superior to those of the holders of Common Stock. The issuance of
Preferred Stock under certain circumstances could have the effect of delaying,
deferring or preventing a change in control of the Company.
The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law prohibiting publicly-held Delaware corporations from
engaging in business combinations with certain stockholders for a specified
period of time without the approval of substantially all of its outstanding
voting stock. Such provisions could delay or impede the removal of incumbent
directors and could make more difficult a merger, tender offer or proxy contest
involving the Company, even if such events could be beneficial, in the short
term, to the interests of the stockholders. In addition, such provisions could
limit the price that certain investors might be willing to pay in the future for
shares of the Company's Common Stock. The Company's Certificate of Incorporation
and Bylaws contain provisions relating to the limitations of liability and
indemnification of its directors and officers, dividing its Board of Directors
into three classes of directors serving three- year terms and providing that its
stockholders can take action only at a duly called annual or special meeting of
stockholders. These provisions also may have the effect of deterring hostile
takeovers or delaying changes in control or management of the Company.
LEGAL PROCEEDINGS
On May 19, 1997, Tacan Corporation ("Tacan") filed a lawsuit in the
U.S. District Court for the Southern District of California (the "Southern
California Action") against Uniphase Telecommunications Products Inc. ("UTP") a
subsidiary of the Company. The Complaint alleges claims of breach of contract,
breach of implied and express warranties, negligent misrepresentation,
conversion and negligent interference with perspective economic advantage. The
claims arise out of sales to Tacan of products made by UTP that Tacan claims
were defective and did not meet contract specifications, and as a result caused
Tacan to suffer damages in the form of lost earnings and damage to its
reputation and goodwill. The damages claimed are unspecified, but Tacan alleges
that they are expected to exceed $1.6 million. Tacan also seeks punitive damages
for UTP's alleged conversion of equipment ordered and built for Tacan but which
UTP allegedly has refused to ship to Tacan. UTP has filed a motion, scheduled
for hearing on November 3, 1997, to dismiss, or in the alternative, stay the
Southern California action on the ground that there is a prior action pending
between the parties regarding the same dispute. That prior action was filed by
UTP on November 6, 1996 in the U.S. District Court for the District of
Connecticut (the "Connecticut Action"). In the Connecticut Action, UTP alleges
claims against Tacan for breach of contract, breach of the covenant of good
faith and fair dealing, statutory theft, unjust enrichment and unfair
competition. UTP seeks to recover in excess of $695,000 for amounts that Tacan
refused to pay for equipment ordered and/or received by Tacan from UTP. UTP now
seeks punitive damages and treble damages pursuant to Connecticut law. Tacan has
made a motion to dismiss the Connecticut Action for lack of personal
jurisdiction over Tacan and for improper venue. That motion is under submission
and a decision could by rendered at any time. No discovery has been taken in the
Southern California action and no trial date has been set. Preliminary written
discovery has been taken by UTP in the Connecticut action but no trial has been
set. The Company believes the Southern California Action will not have a
material negative impact on the Company's financial condition or results of
operations. However, given the inherent uncertainty of litigation and the early
stage of discovery, there can be no assurance that the ultimate outcome in the
Southern California Action will be in the Company's favor, or that the diversion
of management's attention, and any costs associated with the lawsuit, will not
have a material adverse effect on the Company's financial condition or results
of operations.
13
<PAGE> 15
SECURITIES TO BE OFFERED
This prospectus relates to the offer and sale from time to time by the
holder (the "Selling Stockholder") of up to 665,568 shares (the "Shares") of
Common Stock of the Company. The Shares were purchased by the Selling
Stockholder for cash pursuant to a Common Stock Purchase Agreement (the "Stock
Purchase Agreement") dated November 20, 1995 by and between the Company and the
Selling Stockholder, and were acquired for investment purposes. Concurrent with
the sale of the Shares, the Company and the Selling Stockholder entered into an
OEM Agreement and a License Agreement. The Company is registering the Shares
pursuant to certain registration rights contained in the Stock Purchase
Agreement to provide the Selling Stockholder with freely tradable securities.
The registration of the Shares does not necessarily mean that any of the Shares
will be offered and sold by the holder thereof.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Stockholder but has agreed to bear certain expenses of
registration of the Shares under Federal and state securities laws.
DESCRIPTION OF THE COMPANY'S CAPITAL STOCK
The authorized capital stock of the Registrant consists of 20,000,000
shares of Common Stock, $.001 par value per share, and 1,000,000 shares of
Preferred Stock, $.001 par value per share. As of April 30, 1997, there were
16,678,086 shares of Common Stock issued and outstanding and no shares of
Preferred Stock issued and outstanding.
COMMON STOCK
The holders of Common Stock are entitled to one vote for each share
held of record on all matters submitted to a vote of the stockholders. Holders
of Common Stock do not have cumulative voting rights in the election of
directors. Subject to preferences that may be granted to any then outstanding
Preferred Stock, holders of Common Stock are entitled to receive ratably such
dividends as may be declared by the Board of Directors out of funds legally
available therefor as well as any distributions to the stockholders. In the
event of a liquidation, dissolution or winding up of the Company, holders of
Common Stock are entitled to share ratably in all assets of the Company
remaining after payment of liabilities and the liquidation preference of any
then outstanding Preferred Stock. Holders of Common Stock have no preemptive or
other subscription or conversion rights. There are no redemption or sinking fund
provisions applicable to the Common Stock. All outstanding shares of Common
Stock are, and all shares of Common Stock to be outstanding upon completion of
the offering will be, validly issued, fully paid and nonassessable.
PREFERRED STOCK
The Company's Board of Directors has the authority, without further
action by the stockholders, to issue up to 1,000,000 shares of Preferred Stock
in one or more series and to fix the rights, preferences, privileges and
restrictions thereof, including dividend rights, conversion rights, voting
rights, terms of redemption, liquidation preferences, sinking fund terms and the
number of shares constituting any series or the designation of such series,
without any further vote or action by the stockholders. The issuance of
Preferred Stock
14
<PAGE> 16
could adversely affect the voting power of holders of Common Stock and the
likelihood that such holders will receive dividend payments and payments upon
liquidation and could have the effect of delaying, deterring or preventing a
change in control of the Company. The Company has no present plan to issue any
shares of Preferred Stock.
DELAWARE ANTI-TAKEOVER LAW AND CERTAIN CHARTER PROVISIONS
Anti-Takeover Law
The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law. In general, Section 203 prohibits a publicly-held
Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner or unless the interested
stockholder acquired at least 85% of the corporation's voting stock (excluding
shares held by certain designated stockholders) in the transaction in which it
became an interested stockholder. For purposes of Section 203, a "business
combination" includes a merger, asset sale or other transaction resulting in a
financial benefit to the interested stockholder. Subject to certain expenses, an
"interested stockholder" is a person who, together with affiliates and
associates, owns, or within the previous three years did own, 15% or more of the
corporation's voting stock.
Limitation of Director and Officer Liability
The Company's Certificate of Incorporation and Bylaws contain certain
provisions relating to the limitation of liability and indemnification of
directors and officers. The Company's Certificate of Incorporation provides that
directors of the Company may not be held personally liable to the Company or its
stockholders for monetary damages for a breach of fiduciary duty, except for
liability (i) for any breach of the director's duty of loyalty to the Company or
its stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the Delaware General Corporation Law, relating to prohibited dividends,
distributions and repurchases or redemptions of stock, or (iv) for any
transaction from which the director derives an improper benefit. However, such
limitation does not limit the availability of non-monetary relief in any action
or proceeding against a director. In addition, the Company's Certificate of
Incorporation and Bylaws provide that the Company shall indemnify its directors
and officers to the fullest extent authorized by Delaware law.
Classified Board of Directors
The Company's Certificate of Incorporation provides that, so long as
the Board of Directors consists of more than two directors, the Board of
Directors will be divided into three classes of directors serving staggered
three-year terms. As a result, approximately one-third of the Company's Board of
Directors will be elected each year.
No Stockholder Action by Written Consent; Special Meetings
The Company's Certificate of Incorporation provides that stockholders
can take action only at a duty called annual or special meeting of stockholders.
Stockholders of the Company are not permitted to take action by written
15
<PAGE> 17
consent in lieu of a meeting. In addition, the Certificate of Incorporation
provides that, subject to the rights of the holders of any stock having a
preference over the Common Stock as to dividends or liquidation, special
meetings of the stockholders can be called only by the Board of Directors, the
Chairman of the Board or the Chief Executive Officer of the Company.
Stockholders are not permitted to call a special meeting or to require the
Board of Directors to call a special meeting of stockholders. These provisions
may have the effect of deterring hostile takeovers or delaying changes in
control or management of the Company.
TRANSFER AGENT AND REGISTRANT
The transfer agent and registrar for the Company's Common Stock is American
Stock Transfer & Trust Company, New York, New York.
16
<PAGE> 18
SHARES AVAILABLE FOR FUTURE SALE
As of April 30, 1997, there were 16,678,086 shares of Common Stock
issued and outstanding and no shares of Preferred Stock issued and outstanding.
As of April 30, 1997, the Company had reserved for issuance under the Company's
Amended and Restated 1993 Flexible Stock Incentive Plan and under the Company's
1996 Non-Qualified Stock Option Plan (collectively, the "Plans") 2,125,000
shares and 780,000 shares of Common Stock, respectively.
In certain circumstances, the holder of Shares may elect to sell its
Shares in accordance with the exemptions provided by Rule 144 under the
Securities Act rather than pursuant to this Prospectus. In general, under Rule
144, a person (or persons whose shares are aggregated in accordance with the
Rule) who has beneficially owned his or her shares for at least one year,
including any such persons who may be deemed "affiliates" of the Company (as
defined in the Securities Act), would be entitled to sell within any three-month
period a number of shares that does not exceed the greater of 1% of the then
outstanding number of shares or the average weekly trading volume of the shares
during the four calendar weeks preceding each such sale. After shares are held
for two years, a person who is not deemed an "affiliate" of the Company is
entitled to sell such shares under Rule 144 without regard to the volume
limitations described above. Sales of shares by affiliates will continue to be
subject to the volume limitations. As defined in Rule 144, an "affiliate" of an
issuer is a person that directly or indirectly, through the use of one or more
intermediaries, controls, is controlled by, or is under common control with,
such issuer.
As of April 30, 1997, pursuant to the Plans, options to purchase an
aggregate of 2,114,660 shares of Common Stock have been granted or authorized to
be granted to the Company's directors, officers and employees.
No prediction can be made as to the effect, if any, that future sales
of shares or the availability of shares for future sale will have on the market
price prevailing from time to time. Sales of substantial amounts of shares
(including shares issued upon the exercise of options), or the perception that
such sales could occur, could adversely affect the prevailing market price of
the shares.
SELLING STOCKHOLDER
The following table sets forth certain information known to the Company
with respect to the beneficial ownership of the Selling Stockholder as of April
30, 1997, as to (i) the number of shares of Common Stock and percentage of
outstanding shares of Common Stock beneficially held by the Selling Stockholder,
(ii) the maximum number of Shares that may be offered pursuant to the
Prospectus, (iii) the number of shares of Common Stock and percentage of
outstanding shares of Common Stock that will be held by the Selling Stockholder
after the sale of the Shares assuming all shares are sold by the Selling
Stockholder. The registration of the Shares does not necessarily mean that any
of the Shares will be offered and sold by the holder thereof.
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER OF SHARES
BENEFICIALLY OWNED BENEFICIALLY OWNED
PRIOR TO OFFERING NUMBER OF AFTER OFFERING
-------------------------------- SHARES -------------------------------
SELLING STOCKHOLDER NUMBER PERCENTAGE TO BE SOLD NUMBER PERCENTAGE
- ------------------- ------------ ------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Tencor Instruments(1) 665,568 4.0% 665,568 0 *
</TABLE>
17
<PAGE> 19
____________
*less than 1%
(1) Tencor Instruments is a wholly-owned subsidiary of KLA-Tencor
Corporation. Tencor Instruments' address is 333 Octavius Street, Santa
Clara, CA 95054.
<PAGE> 20
LEGAL MATTERS
The validity of the Shares offered hereby will be passed upon for the
Company by Morrison & Foerster LLP, Palo Alto, California.
EXPERTS
The consolidated financial statements of Uniphase incorporated by
reference in Uniphase's Annual Report on Form 10-K for the fiscal year ended
June 30, 1996, have been audited by Ernst & Young LLP, independent auditors, as
set forth in their report thereon incorporated by references therein and
incorporated by reference herein. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
The financial statements of Laser Enterprise, a Division of
International Business Machines, New York, appearing in Uniphases's Amendment
No. 2 to the Current Report on Form 8-K/A dated June 10, 1997 and Amendment No.
3 to the Current Report on Form 8-K/A dated August 11, 1997, have been audited
by ATAG Ernest & Young AG, independent auditors, as set forth in their report
thereon included therein and incorporated by reference herein. Such financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
Asset Purchase of Uniphase Laser Enterprises AG
On March 10, 1997, the Company acquired the net assets of ULE, formerly
the laser operations of IBM's Zurich Research Laboratory in Switzerland. ULE
develops, manufactures and markets semiconductor chips for use in laser
telecommunication applications. The acquisition has been accounted for under
the purchase method of accounting, and accordingly, the accompanying financial
statements include the operations of ULE subsequent to the date of acquisition.
The $45.9 million purchase price consisted of $45 million cash and
acquisition expenses of approximately $900,000.
The preliminary allocation of ULE's purchase price based on the fair
value of net assets acquired is as follows:
March 31,
(In thousands) 1997
- -------------- ---------
Current assets acquired $ 7,578
Prepaid lease and service agreement 1,500
Property, plant and equipment 3,503
Intangibles, primarily developed technology 4,768
Current liabilities assumed (3,087)
Retirement benefits assumed (1,676)
Acquired in-process research and development costs 33,314
---------
Total purchase price $45,900
To determine the value of the acquired in-process research and
development, the Company considered, among other factors, the stage of
development of each project, the time and resources needed to complete each
project, expected income, target markets and associated risks. Associated risks
included inherent difficulties and uncertainties in completing the project and
thereby achieving technical feasibility, and risks related to the viability of
and potential changes in future target markets. The Company applied a discount
rate of 20% in the valuation of in-process technology. This analysis resulted
in a valuation of $33.3 million for acquired in-process research and
development that had not reached technological feasibility and did not have
alternative future uses. Therefore, in accordance with generally accepted
accounting principles, the $33.3 million was expensed. The Company estimates
that a total investment of $9.4 million in research and development over the
next three years will be required to complete the in-process research and
development.
The purchased intangibles are being amortized over an average
estimated useful life of five years. The prepaid lease and service agreement is
being amortized over the term of the agreement of two years. The purchase price
allocation is preliminary and is dependent upon the Company's final analysis.
================================================================================
No dealer, sales representative, or any other person has been
authorized to give any information or to make any representations in connection
with this offering other than those contained in this Prospectus, and, if given
or made, such information or representations must not be relied upon as having
been authorized by the Company or the Underwriters. This Prospectus does not
constitute an offer to sell or a solicitation of any offer to buy any securities
other than the shares of Common Stock to which it relates or an offer to, or a
solicitation of, any person in any jurisdiction where such an offer or
solicitation would be unlawful. Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any circumstances create an implication that
there has been no change in the affairs of the Company or that information
contained herein is correct as of any time subsequent to the date hereof.
_____________
TABLE OF CONTENTS
PAGE
Available Information ....................................... 2
Incorporation of Certain Documents
by Reference................................................. 2
The Company.................................................. 4
Risk Factors................................................. 5
Securities To Be Offered..................................... 14
Use of Proceeds.............................................. 14
Description of the Company's
Capital Stock................................................ 14
Shares Available for Future Sale............................. 17
Selling Stockholder.......................................... 17
Legal Matters................................................ 18
Experts...................................................... 18
_____________
665,568 SHARES
UNIPHASE CORPORATION
COMMON STOCK
_____________
PROSPECTUS
_____________
, 1997
================================================================================
<PAGE> 21
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the Company in connection
with the sale of Common Stock being registered. All amounts are estimates except
the SEC registration fee, NASD filing fee and Nasdaq listing fee.
<TABLE>
<CAPTION>
AMOUNT TO BE PAID
-----------------
<S> <C>
SEC registration fee .................................................. $ 9,341
Nasdaq listing fee .................................................... 13,312
Legal fees and expenses ............................................... 15,000
Accounting fees and expenses .......................................... 30,000
Printing Fees ......................................................... 4,500
Miscellaneous expenses ................................................ 1,847
---------
Total ....................................................... $74,000
=========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The indemnification and liability of the Company's directors and
officers are governed by Delaware law.
Under Section 145 of the General Corporation Law of the State of
Delaware, the Company has broad powers to indemnify its directors and officers
against liabilities that may incur in such capacities, including liabilities
under the Securities Act of 1933, as amended (the "Securities Act"). The
Company's Bylaws also provide for mandatory indemnification of its directors and
executive officers, and permissive indemnification of its employees and agents,
to the fullest extent permissible under Delaware law.
The Company's Certificate of Incorporation provides that the liability
of its directors for monetary damages shall be eliminated to the fullest extent
permissible under Delaware law. Pursuant to Delaware law, this includes
elimination of liability for monetary damages for breach of the directors'
fiduciary duty of care to the Company and its stockholders. These provisions do
not eliminate the directors' duty of care and, in appropriate circumstances,
equitable remedies such as injunctive or other forms of non-monetary relief will
remain available under Delaware law. In addition, each director will continue to
be subject to liability for breach of the director's duty of loyalty to the
Company, for acts of omissions not in good faith or involving intentional
misconduct, for knowing violations of law, for any transaction from which the
director derived an improper personal benefit, and
II-1
<PAGE> 22
for payment of dividends or approval of stock repurchases or redemptions that
are unlawful under Delaware law. The provision also does not affect a
director's responsibilities under any other laws, such as the federal
securities laws or state or federal environmental laws.
The Company has entered into agreements with its directors and certain
of its executive officers that require the Company to indemnify such persons
against expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred (including expenses of a derivative action) in connection
with any proceeding, whether actual or threatened, to which any such person may
be made a party by reason of the fact that such person is or was a director or
officer of the Company or any of its affiliated enterprises, provided such
person acted in good faith and in a manner such person reasonably believed to be
in or not opposed to the best interests of the Company and, with respect to any
criminal proceeding, had no reasonable cause to believe his or her conduct was
unlawful. The indemnification agreement also sets forth certain procedures that
will apply in the event of a claim for indemnification thereunder.
The Company has obtained a policy of directors' and officers' liability
insurance that insures the Company's directors and officers against the cost of
defense, settlement or payment of a judgment under certain circumstances.
The Underwriting Agreement provides for cross-indemnification of the
Underwriters and the Company and its officers and directors for certain
liabilities arising under the Securities Act or otherwise.
ITEM 16. EXHIBITS
(a) Exhibits
NO. DESCRIPTION
--- -----------
5.1* Opinion of Morrison & Foerster LLP
10.1 OEM Agreement dated July 24, 1997 by and between the Registrant and
KLA-Tencor Corporation (confidential treatment requested as to
certain portions of this Exhibit).
23.1 Consent of Ernst & Young LLP, independent auditors
23.2* Consent of Counsel
23.3 Consent of ATAG Ernst & Young AG, independent auditors
24.1* Power of Attorney
*Previously filed.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Company pursuant to the foregoing provisions, or otherwise, the Company has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act, and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
II-2
<PAGE> 23
The undersigned Company hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Company pursuant to Rule 424(b)(1) or (4), or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of Prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) For the purpose of determining liability under the Securities Act,
each filing of the Company's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 24
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Amendment No. 2 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of San Jose, State of
California, on the 12th day of August, 1997.
UNIPHASE CORPORATION
By: /s/ Kevin Kalkhoven
Kevin N. Kalkhoven
President, Chief Executive Officer
and Chairman of the Board of Directors
II-4
<PAGE> 25
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBITS
------ --------
<S> <C>
5.1* Opinion of Morrison & Foerster LLP
10.1 OEM Agreement dated July 24, 1997 by and between the Registrant and
KLA-Tencor Corporation (confidential treatment requested as to
certain portions of this Exhibit).
23.1 Consent of Ernst & Young LLP, independent auditors
23.2* Consent of Counsel
23.3 Consent of ATAG Ernst & Young AG, independent auditors
24.1* Power of Attorney
</TABLE>
*Previously filed
<PAGE> 1
EXHIBIT 10.1
Confidential treatment has been requested with respect to
the provisions indicated by (*). The omitted information
has been filed separately with the Securities and
Exchange Commission.
OEM AGREEMENT
THIS OEM AGREEMENT ("Agreement") is made and entered into as of July 24,
1997 (the "Effective Date") by and between Uniphase Corporation, a Delaware
corporation ("Uniphase"), and KLA-Tencor Corporation, a Delaware corporation
("KLA-Tencor").
R E C I T A L
WHEREAS, Uniphase and KLA-Tencor desire to enter into an exclusive OEM
agreement relating to Uniphase's Systems and ADC Software (as defined below);
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties agree as follows:
1. DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
meanings set forth below:
1.1. ADC Software. "ADC Software" means (i) Uniphase's proprietary
automatic semiconductor wafer, mask and flat panel display defect review and
classification software identified on Exhibit A hereto, (ii) any other software
for the automatic review and classification of semiconductor wafer, mask and
flat panel display defects commercially released by Uniphase during the term of
this Agreement, and (iii) any upgrades, new versions or improvements to any of
the foregoing commercially released by Uniphase during the term of this
Agreement. ADC Software will be provided by Uniphase to KLA-Tencor in object
code form only and solely as an element of Systems.
1.2. Affiliate. "Affiliate" means an entity controlling, controlled by
or under common control with the named company, where "control" refers to the
ability, direct or indirect, to elect a majority of the Board of Directors or
other governing body of the controlled entity. An entity shall be deemed an
Affiliate of the named company only so long as the foregoing control
relationship exists.
1.3. Change in Control. "Change in Control" shall have the meaning given
in Section 12.4.
1.4. Competitive System. "Competitive System" means any optical defect
review microscope or similar tool for semiconductor wafer, mask or flat panel
display defect review or classification whose architecture is based primarily on
reflected light images and which is capable of operating on a standalone basis
(i.e., does not have to be incorporated into an inspection system).
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1.5. Demonstration System. "Demonstration System" means a Uniphase
Product that is used for demonstration purposes, as designated by KLA-Tencor;
provided, however, that no more than three (3) Uniphase Products may be
designated as Demonstration Systems by KLA-Tencor during any year (commencing
with the year July 1, 1997-June 30, 1998) of this Agreement. Purchases of
Demonstration Systems by KLA-Tencor and its Affiliates shall not be counted in
calculating whether KLA-Tencor has met its minimum purchase obligations
hereunder as described in Section 2.2 or 12.2 below.
1.6. Exclusive Period. "Exclusive Period" means the period during the
term of this Agreement during which the restrictions on Uniphase set forth in
Section 2.7 are in effect, as such term may be extended pursuant to Section 12.
1.7. Gross Margin. "Gross Margin" shall mean, with respect to any sale
or other disposition of ADC Software or Systems (excluding sales of Spare Parts
(as defined below) and non-warranty customer support), the Net Sales Price
thereof minus the sum of (i) the sales price of any KLA-Tencor Options sold or
otherwise disposed of in connection with such sale or other disposition, to the
extent the sales price of such KLA-Tencor Options is included in the Net Sales
Price of such ADC Software or Systems, plus (ii) the Uniphase COGS for such ADC
Software or Systems, as applicable, plus (iii) the KLA-Tencor COGS incurred by
KLA-Tencor in connection with such sale or other disposition. "Spare Parts"
means parts that (i) are acquired by a user of a Uniphase Product, or by
KLA-Tencor on behalf of such a user, to replace the same or substantially the
same parts on such Uniphase Product that are consumed or worn out in the
operation thereof, and (ii) do not provide additional functionality to such
Uniphase Product.
1.8. Initial Term. "Initial Term" means the period commencing on the
Effective Date and ending on June 30, 2000.
1.9. Intellectual Property Rights. "Intellectual Property Rights" means
any and all United States and foreign Patents and published or unpublished
patent applications (including without limitation any and all additions,
divisions, continuations, continuations-in-part, substitutions, extensions,
renewals, utility models and certificates of invention or reissues thereof or
therefor), copyrights, mask work rights, trademarks, trade names, trade secrets
and other forms of legal protection for inventions, works of authorship,
know-how, data, processes and the like.
1.10. KLA-Tencor COGS. "KLA-Tencor COGS" means all of KLA-Tencor's costs
of sales, installation, warranty and applications support (i.e., customer
training and system commissioning, including System integration and testing),
license fees and royalties incurred in connection with sales or other
dispositions of Uniphase Products, measured in each case in accordance with
generally accepted accounting principles consistently applied ("GAAP"), but
excluding any such costs, fees and royalties incurred in connection with sales
or other dispositions of KLA-Tencor Options.
1.11. KLA-Tencor Options. "KLA-Tencor Options" means those KLA-Tencor
products which may be sold or otherwise disposed of in connection with sales or
other disposition of ADC Software or Systems but which are not covered by any
Uniphase Intellectual
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<PAGE> 3
Property Rights or otherwise embody any Uniphase technology. Notwithstanding the
foregoing, it is understood and agreed that (*) described in Section 11.3
below, is a KLA-Tencor Option.
1.12. Net Sales Price. "Net Sales Price" means the total amount invoiced
by KLA-Tencor upon the sale or other disposition of ADC Software or Systems,
less the following deductions: (i) sales, use or similar taxes; (ii) freight,
insurance and other transportation charges; (iii) trade, cash and quantity
discounts; and (iv) amounts repaid or credited by reason of returns or because
of retroactive price reductions, or due to government laws or regulations
requiring rebates; provided that if ADC Software or a System is sold together or
in connection with other products on the same purchase order or under the same
purchase agreement, and the Net Sales Price of the ADC Software or System is
discounted from its published list price, then the discount from published list
price on all of the products so sold on the same purchase order or under the
same purchase agreement, including the System and the ADC Software, shall be
allocated evenly across the Net Sales Price of all of the products so sold on
the same purchase order or under the same purchase agreement, including the
System and the ADC Software, for purposes of calculating Gross Margin.
1.13. Patent. "Patent" shall mean a patent, reissue or reexamination
patent, patent of importation, revalidation patent, utility model, certificate
of invention or registration of patent.
1.14. Specifications. "Specifications" shall have the meaning set forth
in Exhibit C.
1.15. Systems. "Systems" means (i) Uniphase's proprietary laser confocal
microscope semiconductor wafer, mask and flat panel display defect review and
classification systems identified on Exhibit B hereto, (ii) any other laser
confocal microscope systems for the review and classification of semiconductor
wafer, mask and flat panel display defects commercially released by Uniphase
during the term of this Agreement, and (iii) any options, upgrades, new versions
or improvements to any of the foregoing commercially released by Uniphase during
the term of this Agreement.
1.16. System Software. "System Software" means all software provided by
Uniphase to KLA-Tencor with and for the operation of Systems, provided that
System Software does not include ADC Software. System Software will be provided
by Uniphase to KLA-Tencor in object code form only and solely as an element of
Systems; provided, however, that subject to the terms and conditions set forth
herein, Uniphase shall provide KLA-Tencor the source code for such elements of
the System Software as necessary to carry out the research and development
effort contemplated by Section 11.3 below; provided further, however, that the
parties intend that Uniphase shall not provide KLA-Tencor any source code for
System Software licensed by Uniphase from ISOA, Inc.
1.17. Uniphase COGS. "Uniphase COGS" means all of Uniphase's direct and
indirect costs of manufacturing Uniphase Products, including (without
limitation) costs of materials, labor, allocated overhead and services,
including variances, license fees, royalties and similar amounts payable to
third parties, warranty expense, costs of hardware necessary to
3
<PAGE> 4
incorporate ADC Software into Systems, costs of testing and integration at
Uniphase's facility and depreciation, measured in each case in accordance with
GAAP.
1.18. Uniphase Products. "Uniphase Products" means (a) Systems, and (b)
ADC Software.
2. SUPPLY; SPECIFICATIONS; EXCLUSIVITY; COMPETING PRODUCTS.
2.1. Subject to the terms and conditions of this Agreement, Uniphase
hereby appoints KLA-Tencor and its Affiliates as Uniphase's exclusive original
equipment manufacturer for the Uniphase Products. Uniphase shall supply to
KLA-Tencor and its Affiliates all Uniphase Products ordered during the term of
this Agreement. As new Uniphase Products are introduced, Uniphase may wish to
discontinue older Uniphase Products. KLA-Tencor and Uniphase shall negotiate in
good faith a reasonable phase-out for discontinued Uniphase Products that takes
into account both KLA-Tencor's business needs and Uniphase's manufacturing
situation. Uniphase shall also supply to KLA-Tencor and its Affiliates up to
three (3) Demonstration Systems per year, as provided in Section 1.5.
2.2. KLA-Tencor and its Affiliates shall place firm orders with Uniphase
for at least 45 Systems and shall take delivery of at least 45 Systems, in each
case during the period commencing on June 30, 1997 and ending on June 30, 1998,
provided that for purposes of the foregoing minimum purchase commitment: (i)
"Systems" shall mean laser confocal microscope Systems and not merely options or
upgrades thereto; and (ii) the 45 Systems as to which KLA-Tencor and its
Affiliates will place firm orders with Uniphase during the foregoing period need
not be the same 45 Systems as to which KLA-Tencor and its Affiliates will take
delivery from Uniphase during the foregoing period. KLA-Tencor and Uniphase
shall negotiate in good faith minimum purchase quantities for each subsequent
year of the Initial Term (commencing with the year July 1, 1998 - June 30, 1999)
at least thirty (30) days prior to the start of each such year, taking into
account general industry economic forecasts, segment specific growth statistics
and the previous year's actual sales volume, as more fully described in Section
12.2 below.
2.3. The specifications for the Systems listed on Exhibit B hereto and
for Uniphase's Identifier 2.0 product (the "Specifications") are attached to
this Agreement as Exhibit C. Within thirty (30) days after the Effective Date,
Uniphase and KLA-Tencor shall mutually agree upon specifications for the ADC
Software. In the event that a KLA-Tencor customer requests modifications to the
Specifications, including ADC Software specifications, in connection with any
sale or other disposition of a Uniphase Product, such modifications shall not be
binding upon Uniphase unless agreed to by Uniphase. Specifications for new
Uniphase Products to be sold hereunder shall be mutually agreed upon. Subject to
Section 2.4 below, specifications shall not be changed without the parties'
mutual consent.
2.4. Uniphase may implement changes in the design of a Product from time
to time as required to satisfy safety, environmental or governmental standards
as reasonably determined by Uniphase, in consultation with KLA-Tencor and
providing KLA-Tencor with advance notice thereof to the greatest extent
reasonably practical. Uniphase shall use
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<PAGE> 5
commercially reasonable efforts to avoid changing the Specifications for any
Product in connection with its implementation of any of the foregoing changes.
Uniphase shall promptly notify KLA-Tencor when Uniphase becomes aware of the
possible need for any such change, and shall keep KLA-Tencor informed on a
continuing basis as to the implementation of any such change. Uniphase may
further implement changes in the design of a Product that do not result in a
change in the Specifications for such Product with KLA-Tencor's prior written
consent, not to be unreasonably withheld.
2.5. Except as expressly provided in Section 11.3, KLA-Tencor shall not
(i) modify or prepare derivative works of any of the Uniphase Products, (ii)
disassemble, decompile, reverse engineer or otherwise attempt to derive the
source code for the ADC Software or System Software, (iii) incorporate any of
the Uniphase Products in any other products, or (iv) use any of the Uniphase
Products to develop or provide other products or services.
2.6. Notwithstanding any other term of this Agreement, it is understood
and agreed that KLA-Tencor is not acquiring title to the ADC Software or System
Software (or any part thereof). Except as expressly provided in Section 11.3, in
using the ADC Software or System Software internally, KLA-Tencor shall comply
with the terms and conditions of the license agreement attached hereto as
Exhibit D. In connection with KLA-Tencor's sale and distribution of Uniphase
Products to its customers, it is understood and agreed that (i) Uniphase will
include with or in such Uniphase Products a license agreement in the form of
Exhibit D attached hereto covering the ADC Software and System Software included
therein, (ii) KLA-Tencor shall not remove such license agreement from such
Uniphase Products, and (iii) KLA-Tencor shall not grant or purport to grant to
its customers any rights in respect of the ADC Software or System Software that
are broader than the rights granted in such license agreement; provided,
however, that such licenses may be transferable by such customer solely in
connection with the subsequent resale by such customer of the Uniphase Products
as to which such license was originally granted.
2.7. Subject to Section 12, during the Exclusive Period Uniphase agrees
not to sell or license Uniphase Products to any manufacturer of semiconductor
inspection equipment or any other person or entity, other than KLA-Tencor and
its Affiliates. Notwithstanding the foregoing:
(i) Uniphase may continue to sell upgrades and options, either
directly or through its sales channels, to its current customers listed in
Exhibit E attached hereto and continue to provide service and support to such
customers, unless and until such customers elect to receive support from
KLA-Tencor;
(ii) Except as set forth in Section 2.7(i), within ninety (90) days
after the Effective Date, Uniphase shall terminate all rights of Innotech
Corporation to purchase and sell Uniphase Products; and
(iii) Uniphase may contract directly with third parties for the
development and delivery of prototype or beta systems or to conduct funded
research and development, provided that (x) Uniphase notifies KLA-Tencor of any
such contract, (y) except
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<PAGE> 6
for contracts that Uniphase has formally quoted or entered into as of the
Effective Date, all of which are set forth in Exhibit F attached hereto,
Uniphase shall not enter into any such contract with (*) and (z) any resulting
products that are commercially released by Uniphase as a result of such activity
and that fall within the definition of ADC Software or Systems in Section 1
above shall be deemed Uniphase Products hereunder upon such commercial release.
2.8. During the Exclusive Period, neither KLA-Tencor nor any of its
Affiliates, acting by itself or with any other person or entity, will develop,
manufacture, market, sell, distribute, display or otherwise promote any
Competitive System. The foregoing shall not be deemed to prohibit KLA-Tencor or
its Affiliates from selling, distributing or otherwise promoting products other
than Competitive Systems, including without limitation (*). In addition, during
the Exclusive Period, neither KLA-Tencor nor any of its Affiliates, acting by
itself or with any other person or entity, will develop, sell, license,
distribute or otherwise promote any automatic semiconductor wafer, mask or flat
panel display defect review or classification software for use in connection
with any Competitive Systems. Notwithstanding the foregoing, KLA-Tencor or any
of its Affiliates, acting by itself or with any other person or entity, may
develop, manufacture, market, sell, distribute, display or otherwise promote any
optical defect review system for the review and classification of mask (but not
semiconductor wafer or flat panel display) defects. In such event, Uniphase
shall have the option to either (i) convert KLA-Tencor's rights hereunder with
respect to any Uniphase Product(s) that perform the same or substantially the
same functions from exclusive to non-exclusive, or (ii) terminate such rights in
their entirety. In either case as provided in the preceding sentence, the
restrictions set forth in Section 2.7 shall no longer apply with respect to the
Uniphase Product(s) referred to in the preceding sentence.
2.9. KLA-Tencor and its Affiliates shall have the right, subject to
Section 2.6 above, to grant sublicenses to their end-user customers who have
paid the required fees in respect of the ADC Software and the System Software
installed in Systems purchased by KLA-Tencor and its Affiliates hereunder for
the sole purpose of permitting such end-user customers to use the ADC Software
and the System Software for their own internal business purposes in connection
with their use of such Uniphase Products, provided that such sublicenses shall
not grant or purport to grant any rights in respect of the ADC Software or
System Software that are broader than the rights granted in the license
agreement attached hereto as Exhibit D. KLA-Tencor and its Affiliates shall have
the further right to provide to their end-user customers any updates, upgrades
and/or bug fixes to the ADC Software and the System Software provided by
Uniphase to KLA-Tencor hereunder, such updates, upgrades and/or bug fixes to be
used solely in connection with such use of Uniphase Products. KLA-Tencor shall
have the right, subject to Section 2.6 above, to use and make copies of the ADC
Software and System Software, in object code form only, for the sole purpose of,
and only to the extent necessary for, selling, maintaining and supporting the
Uniphase Products purchased by KLA-Tencor and its Affiliates hereunder. No other
rights to grant sublicenses with respect to, provide updates, upgrades and/or
bug fixes for or use or copy the ADC Software or System Software are granted
hereby, except as expressly set forth herein.
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<PAGE> 7
3. PRICES.
3.1. Uniphase will sell and transfer Systems and ADC Software to
KLA-Tencor and its Affiliates hereunder at prices (the "Transfer Prices") to be
negotiated in accordance with Section 3.2. The parties intend that the Transfer
Prices will approximate the sum of (i) the Uniphase COGS with respect to such
Uniphase Products, and (ii) (*) of such Uniphase Products by KLA-Tencor and its
Affiliates. Notwithstanding the foregoing: (i) the amounts that would otherwise
be paid to Uniphase shall be reduced by (*) for each of the first twenty (20)
Systems sold to KLA-Tencor or its Affiliates or to customers of KLA-Tencor or
its Affiliates after June 1, 1998; and (ii) the prices to be paid by KLA-Tencor
and its Affiliates for Spare Parts shall be determined as provided in Section
11.5.
3.2. The initial Transfer Prices for Systems and ADC Software will be
agreed to by Uniphase and KLA-Tencor as soon as possible following the Effective
Date and in any event by August 1, 1997. The Transfer Prices are applicable only
to new Uniphase Products and do not apply to (i) Uniphase Products that Uniphase
has used as demonstration systems, or (ii) Uniphase Products that are designated
by KLA-Tencor as Demonstration Systems (the prices for which are set forth in
Section 7.1 below). The parties shall meet and agree upon any necessary or
appropriate prospective changes to the Transfer Prices prior to October 1, 1997
and January 1, 1998 and on each July 1 thereafter. In the event the parties are
unable to agree upon the initial Transfer Prices or any changes to such prices,
the matter shall be resolved by arbitration as provided in Section 17.1 below.
3.3. The parties currently estimate that:
(i) as of the Effective Date, the Uniphase COGS for its LIS 1010
System is (*) and the Uniphase COGS for its LIS Mask system is (*); and
(ii) the KLA-Tencor COGS for Uniphase Product sales will be (*) of
the sales price to the customer, plus (*) per ADC Software product for
applications support.
3.4. KLA-Tencor and Uniphase will use commercially reasonably efforts to
reduce the KLA-Tencor COGS and Uniphase COGS, respectively. The parties intend
to share equally the benefits of any such cost savings. It is understood and
agreed that failure to achieve such cost savings will not constitute a breach of
the Agreement.
3.5. In order to accelerate the research and development effort to be
undertaken by Uniphase pursuant to Section 11.2 below, on August 1, 1997,
KLA-Tencor will pay Uniphase a non-refundable fee of (*) for non-recurring
engineering costs associated with that effort.
4. NEW RELEASES. Uniphase shall give KLA-Tencor at least six months
prior written notice of new Product releases.
5. ORDER PROCESS. KLA-Tencor will submit orders to Uniphase at least
ninety (90) days prior to shipment. Orders will be submitted on KLA-Tencor's
standard
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purchase order form. Any terms of any order form or order acceptance form which
are inconsistent with or add to the terms of this Agreement shall be of no force
or effect, even if such form is acknowledged by the recipient. The orders shall
contain all relevant information for packing, shipping (forwarding methods) and
other elements to be agreed upon by the parties hereto. Uniphase will use
commercially reasonable efforts to meet the shipment dates requested by
KLA-Tencor. KLA-Tencor shall have the right, at least four (4) weeks prior to
shipment, to delay delivery of Uniphase Products up to four (4) weeks from the
scheduled delivery date. If any Uniphase Products are delivered late to
KLA-Tencor, then during the period of any deficiency Uniphase will devote at
least fifty percent (50%) of its production capacity for Uniphase Products to
the production of Uniphase Products for KLA-Tencor and shall make available at
least fifty percent (50%) of its production output of Uniphase Products to
KLA-Tencor, until such deficiency has been eliminated.
6. DELIVERY; INSPECTION.
6.1. Uniphase Products shall be delivered FOB Uniphase's factory in San
Jose, California.
6.2. All Uniphase Products must meet the Specifications, including the
ADC Software specifications and any modifications to the Specifications
requested by KLA-Tencor or its customers and agreed to by Uniphase, prior to
Source Acceptance (as defined below), if any, shipment and invoicing therefor.
Subject to Uniphase's and KLA-Tencor's development of mutually agreed-to
procedures for this purpose, KLA-Tencor and its Affiliates and the customers of
KLA-Tencor and its Affiliates shall have the right to inspect Uniphase Products
produced for KLA-Tencor and its Affiliates or the customers of KLA-Tencor and
its Affiliates prior to shipment ("Source Acceptance") and shall have the right
to witness all tests of the Uniphase Products produced for KLA-Tencor and its
Affiliates or the customers of KLA-Tencor and its Affiliates which are conducted
by Uniphase.
7. CURRENCY; INVOICING AND PAYMENT TERMS.
7.1. Uniphase shall submit invoices for all Uniphase Products to
KLA-Tencor in U.S. Dollars at the address specified in Section 18.4. Invoices
shall be submitted no earlier than the date of shipment to KLA-Tencor or its
Affiliate or, if Uniphase is requested by KLA-Tencor or its Affiliate to ship
the Uniphase Products directly to the customer of KLA-Tencor or its Affiliate,
the date of shipment to such customer. KLA-Tencor and its Affiliates shall pay
Uniphase eighty percent (80%) of the amount due on each invoice within thirty
(30) days from the date of invoice. KLA-Tencor and its Affiliate shall pay
Uniphase the remaining twenty percent (20%) of the amount due on each invoice
within sixty (60) days from the date of invoice. Notwithstanding the foregoing,
with respect to Uniphase Products that are purchased as Demonstration Systems,
KLA-Tencor shall pay Uniphase the Uniphase COGS with respect to such Uniphase
Products within thirty (30) days from the date of invoice and (*) with respect
to such Uniphase Products within thirty (30) days from KLA-Tencor's receipt of
payment of the sales price therefor from the customer. In all cases KLA-Tencor
or its Affiliate, as applicable,
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shall pay Uniphase the amounts owed hereunder within thirty (30) days of
receiving the associated payment from the end-user customer.
7.2. Any tax, customs duty, or other charges with respect to the sale
hereunder, resale by KLA-Tencor, use or delivery of Uniphase Products shall be
the responsibility of KLA-Tencor. KLA-Tencor shall promptly pay all such amounts
when due. In the event Uniphase is required to pay any amounts for which
KLA-Tencor is responsible pursuant to this Section 7.2, KLA-Tencor shall
promptly reimburse Uniphase upon receipt of an invoice therefor.
7.3. Each party shall have the right, at its own expense, during normal
working hours and not more than once per year, to have its independent auditors
review the other party's books and records to confirm the Uniphase COGS,
KLA-Tencor COGS and Gross Margin incurred and/or achieved by KLA-Tencor or
Uniphase, as applicable. Such auditor shall only disclose to the auditing party
such information as is necessary for such confirmation.
8. FORECASTS. On or before the 15th day of each calendar quarter,
KLA-Tencor shall provide Uniphase with a six-month rolling forecast, of which
the first three months shall be firm orders.
9. TITLE; RISK OF LOSS. Good and marketable title and risk of loss shall
pass to KLA-Tencor or its Affiliate after Source Acceptance, if any, and when
Uniphase Products are delivered to the carrier, FOB Uniphase's factory in San
Jose, California.
10. KLA-TENCOR OBLIGATIONS; TRAINING; EXHIBITIONS.
10.1. KLA-Tencor shall be responsible for promoting, selling,
installing, supporting and servicing the Uniphase Products purchased under this
Agreement.
10.2. Uniphase will provide telephone support to KLA-Tencor regarding
the Uniphase Products during Uniphase's normal business hours (Monday through
Friday, 9:00 AM to 5:00 PM) free of charge to KLA-Tencor. If KLA-Tencor's
customers who have purchased Uniphase Products contact Uniphase with support
questions, Uniphase will refer such customers to KLA-Tencor. KLA-Tencor shall
assume as much of the telephone support burden as its expertise permits.
10.3. Uniphase will train up to five (5) KLA-Tencor engineers, who shall
act as trainers for the KLA-Tencor sales and support organizations. Training
will be conducted in English. Travel, meals and lodging expenses of KLA-Tencor's
and Uniphase's engineers will be borne by KLA-Tencor.
10.4. Uniphase will provide mutually agreed upon customer support in
case of a problem that cannot be solved by KLA-Tencor for the first twenty (20)
Uniphase Products sold by KLA-Tencor to KLA-Tencor's customers, for a period not
to exceed six (6) months following acceptance, free of charge. KLA-Tencor will
bear the reasonable travel, meals and lodging expenses of Uniphase's service
personnel. Thereafter, Uniphase will provide service to
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KLA-Tencor's customers at Uniphase's local service charge rate, with travel,
meals and lodging expenses of service personnel borne by KLA-Tencor.
10.5. In the event that KLA-Tencor shall experience within a single
thirty (30) day period, failure of at least six (6) of the same Uniphase
Products while under warranty to meet the same element of the mutually agreed
Uniphase specifications (a "Continuing Fault"), KLA-Tencor's purchase
commitments under Section 2 for the annual period(s) during which such
Continuing Fault has occurred shall be suspended during such period of
Continuing Fault and shall be reduced in proportion to the portion of the period
covered by such purchase commitment during which the Continuing Fault remains
unresolved. In such event, Uniphase and KLA-Tencor shall work together to
resolve such problem as quickly as possible. Field support for Uniphase Products
with Continuing Faults shall be provided by Uniphase at Uniphase's expense.
10.6. During the term of this Agreement, KLA-Tencor agrees to market and
promote sales of the Uniphase Products, other than Uniphase Products for the
review and classification of mask (but not semiconductor wafer or flat panel
display) defects, with the same level of effort as KLA-Tencor uses to market and
promote sales of KLA-Tencor's wafer inspection and yield management products.
10.7. During the term of this Agreement, KLA-Tencor agrees to exhibit
prominently the Uniphase Products at industry-wide trade shows where KLA-Tencor
has an exhibit in a manner that KLA-Tencor deems appropriate. This will include
all major industry shows in the second half of calendar 1997 and beyond during
the term of this Agreement.
11. UNIPHASE OBLIGATIONS.
11.1. Uniphase shall manufacture Uniphase Products in accordance with
the Specifications, including any modifications to such Specifications agreed to
by Uniphase. Uniphase shall comply with any reasonable request of KLA-Tencor as
to Specifications regarding color, label, logo, brand name, and model number. In
the event that KLA-Tencor determines to have Uniphase manufacture Uniphase
Products exhibiting any of Uniphase's trademarks, trade names, logos or similar
subject matter, any use of the foregoing by KLA-Tencor in marketing,
distributing or otherwise promoting the Uniphase Products shall be subject to
Uniphase's prior written approval, not to be unreasonably withheld or delayed.
KLA-Tencor agrees to reproduce the Uniphase copyright notices that appear on the
originals.
11.2. Uniphase will use commercially reasonable efforts to develop (*).
The resulting product will be deemed a Uniphase Product hereunder. KLA-Tencor
and Uniphase shall jointly develop the product development schedule for this
project.
11.3. Uniphase will assist KLA-Tencor in implementing (*):
11.3.1. KLA-Tencor and Uniphase shall jointly develop the product
specifications and development schedule for this project. In the event that
(*) is not available for shipment by the thirtieth (30th) day following the
availability date set forth on such
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schedule, then notwithstanding Section 3 above, Uniphase shall only be entitled
to (*) on sales and other dispositions of (*) during the sixty (60) day period
following such thirtieth (30th) day. In the event that (*) is not available for
shipment by the ninetieth (90th) day following the availability date set forth
on such schedule, then notwithstanding Section 3 above, Uniphase shall not be
entitled to any portion of the Gross Margin on sales and other dispositions of
(*) during the ninety (90) day period following such ninetieth (90th) day. In
the event that (*) is not available for shipment by the 180th day following
the availability date set forth on such schedule, then notwithstanding Section 3
above, Uniphase shall only be entitled to (*) on sales and other dispositions
of (*); provided, however, that (x) such period of reduced Gross Margin sharing
shall not exceed 180 days following such 180th day, (y) following such period of
reduced Gross Margin sharing, the provisions of Section 3 above shall govern the
sharing of Gross Margin on sales of (*) hereunder, and (z) Uniphase shall not be
required to supply (*) to KLA-Tencor after the completion of the 180 day
period following such 180th day.
11.3.2. Subject to the terms and conditions of this Agreement, Uniphase
hereby grants to KLA-Tencor, under Uniphase's applicable Intellectual Property
Rights, a world-wide, non-transferable, non-sublicensable (except as expressly
provided below) license to use, modify and duplicate the source code for the
System Software provided to KLA-Tencor by Uniphase hereunder for the sole
purpose of, and only to the extent necessary for, enabling (*) to operate on
and in conjunction with Systems, including for the support and maintenance of
(*). Subject to the terms and conditions of this Agreement, Uniphase hereby
further grants to KLA-Tencor, under Uniphase's applicable Intellectual Property
Rights, a world-wide, non-transferable, non-sublicensable license to compile
the foregoing modified source code for the System Software into object code and
(i) incorporate such object code into such (*) for the sole purpose of, and
only to the extent necessary for, enabling such (*) to operate on and in
conjunction with Systems, and (ii) make copies of and, subject to Section 2.6
above, grant sublicenses to end-user customers of KLA-Tencor and its Affiliates
in respect of such object code for the sole purpose of permitting such end-user
customers to use such object code for their own internal business purposes in
connection with their use of (*). No other rights or licenses in respect of
the source code for the System Software are granted hereby, by implication,
estoppel or otherwise. Any copies of the source code or object code for the
System Software made by or for KLA-Tencor shall bear the same copyright and
other proprietary notices and legends as appear on the original.
Notwithstanding the foregoing, if Uniphase reasonably believes that it cannot
provide a portion of the source code for the System Software to KLA-Tencor
without thereby providing source code licensed by Uniphase from ISOA, Inc.,
then (x) Uniphase shall not be obligated to provide such portion of the source
code for the System Software to KLA Tencor, and (y) no licenses shall be
granted hereunder with respect to such portion.
11.3.3. Subject to Section 16, Uniphase will provide to KLA-Tencor,
Uniphase's standard reliability test specifications and protocols for the
Systems to which KLA-Tencor intends to port (*). Modifications of such Systems
by KLA-Tencor shall not void the warranty provided in Section 14, provided that
(i) KLA-Tencor has notified Uniphase of such modifications at least thirty (30)
days in advance, (ii) KLA-Tencor provides Uniphase with access to reliability
test data which meets Uniphase's standard reliability specifications in
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accordance with Uniphase's standard reliability test protocols for relevant
subsystems; and (iii) Uniphase has reasonably agreed that such modifications
will not void the warranty. If KLA-Tencor cannot provide reliability test data
which meets Uniphase's standard reliability specifications in accordance with
Uniphase's standard reliability test protocols for relevant subsystems,
KLA-Tencor may elect that (a) Uniphase will not cover the warranty for the
modified subsystem; or (b) KLA-Tencor will provide Uniphase access to the
modified subsystems, in which case Uniphase will have its reliability engineers
inspect the equipment to determine whether the warranty should apply. If
KLA-Tencor provides such access, KLA-Tencor will bear the costs of travel,
meals, lodging and engineering time of Uniphase's reliability engineers. The
warranty provided in Section 14 shall not apply to modules of the Uniphase
Products which have been modified by KLA-Tencor if (x) KLA-Tencor has not
notified Uniphase of such modification at least thirty (30) days in advance, or
(y) Uniphase, in its reasonable discretion, has not approved of the modification
(provided that in such case, Uniphase shall provide KLA-Tencor with a reasonable
explanation of why the modification was not approved), and the deviation of any
such modules from the Specifications therefor shall not be deemed a Continuing
Fault. All modules of the Uniphase Product which are not modified by KLA-Tencor
or defects not caused by KLA-Tencor's modifications shall remain covered by the
warranty in Section 14. In the event that (I) Uniphase approves of a
modification as provided above, and (II) based on field experience with such
modified System, it appears that such modification is resulting in more frequent
or more serious System defects or failures, then Uniphase shall not be required
to honor the warranty provided in Section 14 for such modified Systems. No other
rights to modify Uniphase Products are granted hereby, by implication, estoppel
or otherwise.
11.4. During the Exclusive Period, but in no event for a period
exceeding the Initial Term, Uniphase agrees to invest annually at least (*) of
the amounts received by Uniphase for sales of Uniphase Products hereunder
(excluding the amounts received pursuant to Section 3.5 above) in each twelve
month period following the Effective Date (commencing with the period July 1,
1997-June 30, 1998) in research and development activities relating to further
development of Uniphase Products. Characterization of activities as involving
research and development efforts shall be in accordance with GAAP. After the
Initial Term, so long as the Exclusive Period is in effect, the parties shall
negotiate the level of Uniphase's investment in research and development for
subsequent terms of the Agreement.
11.5. It is understood and agreed that most parts for the Uniphase
Products are obtained by Uniphase from third-party vendors. During the term and
following termination of this Agreement, Uniphase will assist KLA-Tencor, at
KLA-Tencor's expense, in procuring Spare Parts from such vendors. With respect
to Uniphase Products Spare Parts manufactured by Uniphase, Uniphase shall make
such parts available to KLA-Tencor for a period of five (5) years following
manufacture of the applicable Uniphase Products. The prices to be paid by
KLA-Tencor for such Spare Parts shall be the greater of (i) Uniphase COGS plus
twenty percent (20%) and (ii) fifty percent (50%) of KLA-Tencor's then-current
published U.S. list price.
11.6. Uniphase shall provide KLA-Tencor with copies of and hereby grants
KLA-Tencor the right to use, reproduce and reformat (to the extent required to
conform to other
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KLA-Tencor documentation) all necessary Uniphase technical and other
documentation such as operation and maintenance manuals and system descriptions,
including the right to receive and reproduce electronic versions of these
documents and their regular updates. All written materials shall be provided in
English. All electronic versions shall be provided on a diskette in Windows
format. KLA-Tencor may make modifications to the foregoing materials; provided
that KLA-Tencor shall reproduce on any copies thereof all Uniphase copyright and
other proprietary notices and legends as appear on the versions thereof provided
to KLA-Tencor by Uniphase. KLA-Tencor shall only use, reproduce and distribute
the foregoing Uniphase materials in connection with KLA-Tencor's sale and
promotion of the Uniphase Products.
12. TERM AND TERMINATION,
12.1. The initial term of this Agreement shall be the Initial Term.
Following the Initial Term, KLA-Tencor may extend the term of this Agreement for
up to three (3) additional one-year periods by giving written notice to Uniphase
at least two (2) months before the end of the then-current term; provided,
however, that no such extension shall be effective unless it is determined,
within thirty (30) days after the end of the then-current term, that KLA-Tencor
met the minimum purchase obligation provided for in Section 2.2 above or Section
12.2 below, as applicable, for the year immediately preceding the proposed
extension year. In the event that it is determined that KLA-Tencor has not met
the foregoing minimum purchase obligation, then Uniphase shall provide written
notice to that effect to KLA-Tencor and this Agreement shall terminate thirty
(30) days after such notice is given. Upon termination of this Agreement under
any subsection of this Section 12, (a) the rights and license granted to
KLA-Tencor pursuant to this Agreement shall automatically terminate except as
necessary to continue support and maintenance of the Uniphase Products for
KLA-Tencor's customers and to sell any Uniphase Products in KLA-Tencor's
inventory or covered by firm purchase orders placed by KLA-Tencor prior to such
termination or within thirty (30) days thereafter and calling for delivery
within six (6) months thereafter, (b) Uniphase and KLA-Tencor will each, upon
the other party's request, ship to such other party all tangible items in the
shipping party's possession which are proprietary to such other party, and (c)
KLA-Tencor will have no obligation to purchase any Uniphase Products after the
date of termination, whether or not such products have been forecasted for
purchase, unless such Uniphase Products are covered by a KLA-Tencor purchase
order.
12.2. For each year of this Agreement following the initial year
(commencing with the year July 1, 1998-June 30, 1999), the parties shall
negotiate in good faith to reach agreement on the minimum number of Systems to
be purchased hereunder by KLA-Tencor during such year, including any extension
year pursuant to Section 12.1 above, at least thirty (30) days prior to the
start of such year. In addition to the factors referenced in Section 2.2 above,
the parties shall use VLSI Research Inc.'s sales growth projections for optical
review tools, if available, or if not available for process diagnostics
equipment as a guideline for their negotiations. In the event that the parties,
after making such good faith efforts, do not reach agreement on a minimum number
of Systems for such year, then such minimum number shall be determined by
arbitration as provided in Section 17.1 below. The Exclusive Period shall
continue during the period of any such negotiation and/or arbitration.
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12.3. In the event of a material breach or default under this Agreement,
this Agreement may be terminated by the non-breaching party upon ninety (90)
days written notice unless such breach or default is cured to the reasonable
satisfaction of the non-breaching party during said 90-day period.
12.4. This Agreement may be terminated by a party in the event that the
other party undergoes a Change in Control, such termination to be effective upon
thirty (30) days written notice. Alternatively, in the event of a Change in
Control of a party, the other party may elect to continue this Agreement on a
nonexclusive basis, meaning that KLA-Tencor shall be released from its
obligations under Section 2.8, and Uniphase shall be released from its
obligations under Section 2.7, for the remainder of the year of this Agreement
in which the Change in Control occurs and, at such electing party's option, for
one additional extension year. For these purposes "Change in Control" shall mean
the occurrence of any one of the following:
(a) any direct competitor of a party is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934 (the
"Exchange Act") or any successor rule), directly or indirectly, of securities of
the other party representing 10% or more of the combined voting power of the
other party's then outstanding securities; or
(b) the solicitation of proxies (within the meaning of Rule 14a-1(k)
under the Exchange Act or any successor rule) by a direct competitor of a party
with respect to the election of any director of the other party where such
solicitation is for any candidate who is not a candidate proposed by a majority
of the Board in office prior to the time of such election, and the election of
such candidate.
12.5. KLA-Tencor may elect to terminate the Exclusive Period for
convenience upon ninety (90) days prior written notice to Uniphase. In the event
of such termination, this Agreement shall continue on a nonexclusive basis, as
described in Section 12.4, for a period of one (1) year thereafter, after which
this Agreement shall terminate.
12.6. Uniphase may elect to terminate the Exclusive Period in the event
that KLA-Tencor fails to meet the minimum purchase obligation provided for in
Section 2.2 or 12.2 above, as applicable, such termination to be effective as of
the end of the year in question, which shall be Uniphase's sole remedy in
connection therewith. In the event of such termination, this Agreement shall
continue on a nonexclusive basis, as described in Section 12.4, for a period of
one (1) year thereafter, after which this Agreement shall terminate.
12.7. Termination of this Agreement shall not relieve either party from
obligations, including payment obligations, to the other party incurred prior to
termination.
12.8. Sections 14, 15, 16 and 18 hereof shall survive any termination of
this Agreement.
13. FORCE MAJEURE. Neither party shall be liable for any delay or
failure in performance to the extent such delay or failure is caused by fire,
flood, earthquake, other natural disaster, explosion, war, strike, labor
stoppage, embargo, government requirement, civil or
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military authority, act of God, inability to secure raw material or
transportation facilities, or for any act or omission of carriers or suppliers
or any other causes beyond its reasonable control, whether or not similar to the
foregoing, but any such delay or failure shall be remedied as soon as possible.
The provisions of this Section 13 shall not excuse the failure to pay monies due
hereunder.
14. WARRANTIES; CONTINUING FAULTS.
14.1. Uniphase warrants that, to the best of its knowledge, it is the
owner or licensee of all Intellectual Property Rights covering or embodied in
the Uniphase Products and has all rights necessary to enter into this Agreement.
Uniphase further warrants that, at the time of shipment, the Uniphase Products
will comply with all applicable industry and environmental regulations.
14.2. Uniphase warrants that (a) good and marketable title to the
Uniphase Products purchased hereunder, free and clear of liens and adverse
claims, will be transferred to KLA-Tencor and its Affiliates, and (b) the
Uniphase Products purchased hereunder will meet the Specifications, including
the ADC Software specifications, and will be free from faulty workmanship and
use of defective materials for a period of 12 months from the date of acceptance
of the Uniphase Products by a KLA-Tencor customer or 18 months from the date of
shipment to KLA-Tencor, whichever first occurs. Spare Parts are warranted for a
period of 90 days from the date of installation or 18 months from the date of
shipment, whichever first occurs, provided that the foregoing 18 month period
shall be reduced (x) for the Spare Parts listed on Exhibit G attached hereto, to
the period set forth thereon, and (y) with respect to Spare Parts acquired by
Uniphase from third parties, to the maximum period for which such Spare Parts
are warranted by such third parties. Notwithstanding the foregoing, if
KLA-Tencor is required to offer a longer warranty period to its customers,
including for Spare Parts, Uniphase will honor such longer warranty period with
mutually acceptable pricing. In the event of a breach of the warranty set forth
in clause (b), Uniphase's sole liability and KLA-Tencor's sole remedy shall be
for Uniphase, at its option and expense, to repair or replace the defective
Uniphase Product or component; provided that if such defective Uniphase Product
or component cannot be repaired or replaced, then Uniphase shall refund the
purchase price. The warranty set forth in clause (b) shall not apply in the
event that the Uniphase Products are subjected to abuse, misuse or operation
outside proper environmental parameters (as indicated in the manuals for such
Uniphase Products) or are modified other than by Uniphase or are repaired other
than by Uniphase or its authorized agents or by KLA-Tencor. Uniphase does not
represent that the ADC Software will be error-free, but will maintain an active
"bug fix" program and will provide new releases containing bug fixes to
KLA-Tencor and its customers without charge.
14.3. EXCEPT AS SET FORTH IN SECTIONS 14.1 AND 14.2 HEREOF, UNIPHASE
DISCLAIMS ALL WARRANTIES AND REPRESENTATIONS, WHETHER EXPRESS OR IMPLIED, WITH
RESPECT TO THE UNIPHASE PRODUCTS, INCLUDING, WITHOUT LIMITATION, THE WARRANTIES
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WARRANTIES ARISING FROM
A COURSE OF
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DEALING, USAGE OR TRADE PRACTICE, OR WARRANTIES CONCERNING THE NONINFRINGEMENT
OF THIRD PARTY RIGHTS.
14.4. THE REMEDY OF REPAIR, REPLACEMENT OR REFUND SET FORTH IN SECTION
14.2 SHALL BE KLA-TENCOR'S SOLE REMEDY AND UNIPHASE'S SOLE LIABILITY IN THE
EVENT OF BREACH OF THE WARRANTY PROVIDED IN SECTION 14.2(b).
15. INTELLECTUAL PROPERTY; PROHIBITED TRANSACTIONS; INDEMNITY;
TRADEMARKS.
15.1. Uniphase shall retain ownership of all of the Intellectual
Property Rights relating to the Uniphase Products. Subject to the preceding
sentence, KLA-Tencor shall retain ownership of all Intellectual Property Rights
in and to KLA-Tencor Options. Uniphase and KLA-Tencor shall each own all
Intellectual Property Rights developed solely by such party without reference to
any Intellectual Property Rights owned by the other party. Uniphase and
KLA-Tencor shall jointly own all Intellectual Property Rights developed jointly
by the parties hereunder, except that in the event that Uniphase and KLA-Tencor
jointly develop any Intellectual Property Rights pursuant to the development
project contemplated by Section 11.3 above and such Intellectual Property Rights
are embodied in KLA-Tencor's Impact product, then KLA-Tencor shall own all such
Intellectual Property Rights and Uniphase agrees to assign to KLA-Tencor all of
Uniphase's right, title and interest in and to such Intellectual Property
Rights. Uniphase is not hereby receiving any license, implied or express, to any
KLA-Tencor Intellectual Property Rights in or to KLA-Tencor Options, and during
the term of this Agreement Uniphase will not reverse engineer any KLA-Tencor
Options. The foregoing shall not be deemed to prevent Uniphase from fulfilling
its research and development obligations pursuant to Section 11.3 above.
15.2. Uniphase agrees not to sell or otherwise transfer its Uniphase
Product business or all or substantially all of the Intellectual Property Rights
that cover the Uniphase Products (other than as part of a sale of Uniphase or
its entire business) (*). The foregoing restriction shall terminate on the
earliest to occur of (i) five (5) years following the Effective Date, (ii) two
(2) years following the termination of the Exclusive Period, (iii) immediately
upon KLA-Tencor's giving notice of termination of the Exclusive Period pursuant
to Section 12.5, or (iv) immediately upon KLA-Tencor's failing to meet the
minimum purchase obligation set forth in Section 2.2 above for the initial year
of this Agreement (the period from June 30, 1997 throught and including June 30,
1998).
15.3. Subject to the paragraphs below, Uniphase (the "Indemnifying
Party") shall indemnify, defend and otherwise hold KLA-Tencor and its Affiliates
and any of their officers, directors, shareholders, employees, agents or
customers (the "Indemnified Parties") harmless from any claims, demand, loss,
damage, settlement, judgment, costs, fees, expense or liability that any of them
may incur (including reasonable attorneys' fees) as a result of any claim or
allegation that the Uniphase Products infringe, misuse or misappropriate any
patent, copyright, trade secret or other Intellectual Property Right of any
other person or entity. Uniphase shall not have any obligation to indemnify the
Indemnified Parties pursuant to this Section 15.3 to the
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extent that the infringement, misuse or misappropriation results from (i)
combination of the Uniphase Products with any products not supplied by Uniphase,
where such infringement, misuse or misappropriation would not arise based on the
use of the Uniphase Products alone, or (ii) modification of the Uniphase
Products other than by Uniphase or its authorized agents, or (iii) use of the
Uniphase Products for any purpose for which they were not intended.
15.4. In the event of any claim or allegation (including any cease and
desist or similar letter), suit or legal action brought against any of the
Indemnified Parties alleging such infringement, misuse or misappropriation, the
Indemnifying Party shall pay all costs and expenses incurred and satisfy all
settlements, judgments and decrees against the Indemnified Parties, provided
that (i) the Indemnified Parties promptly notify the Indemnifying Party when
such claim, suit or action becomes known to the Indemnified Parties, (ii) the
Indemnified Parties grant the Indemnifying Party sole control over the defense
of the claim, suit or action, and (iii) the Indemnified Parties provide such
assistance and cooperation as the Indemnifying Party shall reasonably request,
at the Indemnifying Party's expense. The Indemnifying Party shall not be liable
for any settlement agreed to without its prior written consent. The Indemnifying
Party shall not agree to any settlement without the prior written consent of the
Indemnified Parties, such consent not to be unreasonably withheld, unless such
settlement involves solely the payment of money by the Indemnifying Party.
Failure to provide the notice required by this Section shall not relieve an
Indemnified Party from any obligation hereunder except to the extent actually
prejudiced by such failure.
15.5. In the event that KLA-Tencor or any of its Affiliates or any of
their customers are enjoined from the use of the Uniphase Products due to a
proceeding based upon the infringement, misuse or misappropriation of any
Intellectual Property Rights as to which Uniphase is obligated to indemnify the
Indemnified Parties pursuant to Section 15.3, Uniphase at its option shall
either:
(a) promptly render the Uniphase Products non-infringing and
complying with the Specifications; or
(b) procure for KLA-Tencor and its Affiliates and their customers the
right to continue using the Uniphase Products; or
(c) replace the Uniphase Products with non-infringing equipment
complying with the Specifications; or
(d) repurchase the Uniphase Products at their original purchase price
(but if the Product was purchased by a KLA-Tencor customer more than one-year
prior to the date of such injunction, less depreciation calculated on a
straight-line basis assuming a five-year useful life from the date of purchase
by such customer), in case any of the options in paragraphs (a), (b) or (c) are
not reasonably available.
15.6. THIS SECTION 15 STATES THE ENTIRE LIABILITY AND SOLE REMEDY OF
KLA-TENCOR AND UNIPHASE FOR THIRD PARTY CLAIMS RELATING TO INTELLECTUAL PROPERTY
RIGHTS.
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15.7. KLA-Tencor acknowledges that the symbols, trademarks and service
marks adopted by Uniphase or its suppliers to identify the Uniphase Products, as
set forth in Exhibit H attached to this Agreement (the "Trademarks"), belong to
Uniphase and that KLA-Tencor shall have no rights in such Trademarks, or any
similar marks or marks which comprise the elements of such marks, except as
expressly set forth herein. Subject to Uniphase's prior written approval and
such written guidelines as Uniphase shall issue from time to time, KLA-Tencor
may, at its discretion, use the Trademark solely in connection with the
marketing and sale of the Uniphase Products. Further, KLA-Tencor may also use
its own marks in connection with the marketing and sale of the Uniphase Products
in conjunction with the Trademarks, upon Uniphase's reasonable approval.
16. INFORMATION EXCHANGE.
16.1. Uniphase and KLA-Tencor have exchanged prior to the date of this
Agreement and intend to continue to exchange various types of information (i.e.,
technical and non-technical information, patents, trade and industrial secrets,
manufacturing processes, and other confidential and proprietary information) in
order to accomplish the work to be performed under this Agreement. Information
shall be considered confidential if it is disclosed in writing and marked
"confidential," "proprietary," or words of similar import, or disclosed orally
and delivered to the other party in such written and marked form within one
month of its disclosure. Nothwithstanding the foregoing, all source code of
either party hereto shall be considered confidential. The parties shall treat
all such information as strictly confidential, unless the information is:
(a) available to the public at the time of disclosure to the
receiving party, or thereafter becomes available to the public through no fault
of the receiving party, but in such event only as of such later date;
(b) independently made available to the receiving party by a third
party without restrictions on disclosure; or
(c) known to the receiving party before disclosure to the receiving
party by the disclosing party or developed by the receiving party without
reference to any confidential information of the disclosing party.
In addition, the parties shall treat as confidential information the
terms and provisions of this Agreement and any information exchanged pursuant to
the License Agreement and the OEM Agreement, each dated as of November 20, 1995,
by and between Uniphase and Tencor Instruments.
16.2. The receiving party shall use the information solely for its own
internal use consistent with this Agreement, not disclose the information to any
person or persons outside its organization, and disclose the information to any
person or persons within its organization only on a "need to know" basis.
Notwithstanding the foregoing, the-receiving party shall not be liable for:
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(a) inadvertent disclosure or use of confidential information
provided that:
(i) it uses the same degree of care in safeguarding the
information as it uses for its own confidential information of like importance,
but in no event less than reasonable care; and
(ii) upon the disclosure of any inadvertent disclosure or misuse
of any information, it shall endeavor to prevent any further inadvertent
disclosure or misuse; or
(b) unauthorized disclosure or use of confidential information by
persons who are or have been in its employ, unless the receiving party fails to
protect the information with the same degree of care as it uses for its own
information or similar importance, but in no event less than reasonable care; or
(c) disclosure of confidential information where such information is
disclosed with the prior written approval of the other party; or
(d) disclosure of confidential information where such information has
been received by the disclosing party, without restriction on disclosure, from a
source other than the other party without breach of this Agreement and otherwise
not in violation of the other party's rights.
16.3. If either party is compelled to make a disclosure of any
confidential information of the other party by law or government rule or
regulation:
(a) such disclosure shall be limited to the extent required;
(b) the other party shall have an opportunity to review the
information (and any request for confidential treatment) at least thirty (30)
days (or such shorter period as is required by the rule or regulation) before
disclosure; and
(c) the disclosing party shall promptly apply for applicable
protective orders.
Notwithstanding the foregoing, such review shall not make the
reviewing party responsible for the content of the disclosure.
16.4. Each party agrees that injunctive relief shall be appropriate
in the event of any breach or threatened breach of this Section 16, due to the
irreparable harm (for which monetary damages would not be an adequate remedy)
that would be suffered by the party whose confidential information is disclosed.
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17. ARBITRATION.
17.1. Any dispute over either (i) the initial Transfer Prices for
Uniphase Products or changes thereto pursuant to Section 3.2 above, or (ii) the
minimum number of Systems to be purchased hereunder by KLA-Tencor during any
year of this Agreement following the initial such year, as provided in Section
12.2 above, shall be settled by final and binding arbitration in Santa Clara
County, California before a single neutral arbitrator, chosen by the parties
within two weeks of the making of a written arbitration demand by either party.
Except as varied by the provisions of this Section 17, the American Arbitration
Association's then-prevailing Commercial Arbitration Rules shall apply to the
arbitration. The parties shall exercise their best efforts to commence the
arbitration hearing not later than 30 days after the selection of the
arbitrator. The arbitration shall be completed within 20 days of its initiation,
and the arbitrator shall render the decision within 10 days of the completion of
the arbitration hearing. Unless the parties otherwise agree, no pre-arbitration
discovery shall be allowed; the California Evidence Code shall apply to the
taking of evidence at the arbitration; and the arbitration proceedings and
evidence shall be confidential. The arbitrator shall have no authority to award
any remedy or relief except as explicitly provided in the last sentence of this
Section 17, and shall limit the arbitration decision to (depending on which of
the two arbitrable issues is submitted) specifying the initial Transfer Prices
or changes thereto pursuant to Section 3.2 above, or specifying the minimum
number of Systems to be purchased pursuant to Section 12.2 above. In determining
any dispute regarding the minimum number of Systems to be purchased, the
arbitrator shall explicitly address in the grounds for the decision the factors
set forth in Sections 2.2 and 12.2 above. The arbitrator's decision shall be
based on substantial evidence in the record as a whole, and shall be accompanied
by a written statement of the facts found and the rules of law applied in
reaching the decision. Judgment on an arbitration decision may be entered and
enforced only in the Superior Court of the State of California, and the court
shall not enforce any decision that is erroneous in its application of
substantive law. The arbitrator shall impose sanctions for the abuse or
frustration by any party of the arbitration process, and shall award the
prevailing party, if any, reimbursement from the other party for its costs and
expenses, including reasonable attorneys' fees, and such other party shall also
pay the costs of the arbitration.
18. GENERAL.
18.1. This Agreement shall be governed by, and construed in
accordance with, the laws of the state of California, excluding any laws which
direct the application of another jurisdiction's laws.
18.2. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but which together shall constitute one and the
same instrument.
18.3. The headings of the Sections of this Agreement are for
convenience and shall not be used to interpret this Agreement.
18.4. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given seven
(7) days after mailing if
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<PAGE> 21
delivered or mailed by certified or registered mail with return receipt
requested, or upon the date of hand delivery, or upon the date of facsimile
transmission if receipt is confirmed:
To KLA-Tencor:
160 Rio Robles
San Jose, CA 95161
(408) 875-5497
Fax: (408) 468-2213
ATTN: Ian Smith
with a copy to:
Lisa Berry, Esq.
KLA-Tencor Corporation
160 Rio Robles
San Jose, CA 95161
(408) 468-2423
Fax: (408) 468-4266
To Uniphase:
163 Baypointe Parkway
San Jose, California 95134
(408) 434-1800
Fax: (408) 954-0760
ATTN: President
with a copy to:
Michael C. Phillips, Esq.
Morrison & Foerster LLP
755 Page Mill Road
Palo Alto, California 94304
(415) 813-5600
Fax: (415) 494-0792
Addresses may be changed by a notice given in accordance with this Section.
18.5. Any provision of this Agreement may be amended only by a written
instrument signed by the parties.
18.6. This Agreement constitutes the entire agreement between the
parties regarding the subject matter hereof and supersedes any and all prior
negotiations, correspondence, understandings and agreements regarding such
subject matter.
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<PAGE> 22
18.7. This Agreement shall be binding on and inure to the benefit of the
parties hereto and their respective successors and assigns; provided that
neither party shall assign any of its rights or obligations hereunder, whether
by operation of law or otherwise, without the prior written consent of the other
party.
18.8. If any provision of this Agreement is held to be unenforceable for
any reason, it shall be adjusted rather than voided, if possible, in order to
achieve the intent of the parties to the extent possible. In any event, all
other provisions of this Agreement shall be deemed valid and enforceable to the
full extent.
18.9. Remedies provided herein are not exclusive unless otherwise
expressly provided herein. Delay in enforcing any right or remedy as a result of
any breach hereof shall not be deemed a waiver of that or any subsequent breach,
except to the extent that a party is prejudiced by such delay.
18.10. Each party warrants to the other party that:
(a) it has taken all necessary corporate and other internal actions
necessary to enter into this Agreement and the persons signing this Agreement
have been authorized to do so; and
(b) it has not entered into and will not enter into any other
agreements that in any way conflict with this Agreement.
18.11. Each party shall be responsible for obtaining all such approvals,
permits, consents, waivers and governmental clearances to the extent that they
affect its obligations under this Agreement.
18.12. The Uniphase Products to be furnished under this Agreement may be
or may become subject to the export control laws and regulations of the United
States and other national governments and international authorities. KLA-Tencor
agrees that it shall be responsible for complying with all such laws and
regulations in respect of Uniphase Products purchased hereunder, including
responsibility for paying any and all export fees, duties and the like. In
addition, a party receiving technical data or materials from the other party
shall not export, either directly or indirectly, any commodities, software or
technology provided to it by the other party, nor the direct products of any
such commodities, software or technology, to any proscribed country or to the
nationals thereof as stated in any such applicable export control laws and
regulations.
18.13. EXCEPT FOR BREACHES OF SECTION 16, IN NO EVENT SHALL EITHER PARTY
BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES OF ANY
KIND OR NATURE WHATSOEVER, INCLUDING (WITHOUT LIMITATION) LOST PROFITS, LOST
DATA, BUSINESS INTERRUPTIONS, OR LOSS OF BUSINESS OPPORTUNITY, OR OTHER ECONOMIC
LOSS, ARISING IN ANY WAY OUT OF THE AGREEMENT OR THE PERFORMANCE
22
<PAGE> 23
HEREOF, HOWEVER CAUSED AND ON THEORY OF LIABILITY, EVEN IF SUCH PARTY HAD BEEN
ADVISED OF POSSIBILITY OF SUCH DAMAGES.
18.14. The prevailing party in any action to enforce the terms of this
Agreement shall be entitled to reimbursement from the non-prevailing party for
its costs and expenses (including reasonable attorneys' fees) incurred in
connection therewith, in addition to any other relief to which the prevailing
party shall be entitled
18.15. By its execution of this Agreement, Tencor Instruments agrees
with Uniphase that the License Agreement and the OEM Agreement, each dated as of
November 20, 1995, between Uniphase and Tencor Instruments shall terminate as of
the Effective Date. It is understood and agreed that no further license
payments, following the payment made on or about April 20, 1997, are due from
Tencor to Uniphase under the foregoing License Agreement.
18.16. By its execution of this Agreement, Ultrapointe Corporation
agrees to be bound by all terms and conditions hereof that are binding upon
Uniphase.
18.17. Unless otherwise required by law (including, without limitation,
as deemed advisable by a party hereto for purposes of compliance with applicable
securities laws), in which case there will be prior disclosure to the other
party, no disclosure (whether or not in response to an inquiry) of the subject
matter of this Agreement shall be made by any party hereto unless approved by
KLA-Tencor and Uniphase prior to release, provided that such approval shall not
be unreasonably withheld.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
UNIPHASE CORPORATION KLA-TENCOR CORPORATION
By:/s/ Dan E. Pettit By:/s/ Jon D. Tompkins
---------------------------- --------------------------------
Name: Dan E. Pettit Name: Jon D. Tompkins
-------------------------- ------------------------------
Title: Chief Financial Officer Title: Chief Executive Oficer
------------------------- -----------------------------
ULTRAPOINTE CORPORATION TENCOR INSTRUMENTS
By:/s John M. Scott By:/s/ Lisa C. Berry
---------------------------- --------------------------------
Name: John M. Scott Name: Lisa C. Berry
-------------------------- ------------------------------
Title: President Title: Secretary
------------------------- -----------------------------
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The following exhibits to this Agreement have been
omitted. Copies of these exhibits will be submitted
the the Securities and Exchange Commission upon
request.
A. ADC Software
B. Systems
C. Specifications
D. Uniphase Software License
E. Uniphase Customers(*)
F. Uniphase Quotations
G. Uniphase Spare Parts
H. Uniphase Trademarks
24
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 2 to the Registration Statement (Form S-3 No. 333-27931) and the
related Prospectus of Uniphase Corporation for the registration of 665,568
shares of its common stock and to the incorporation by reference therein of our
report dated July 30, 1996, with respect to the consolidated financial
statements of Uniphase Corporation incorporated by reference in its Annual
Report (Form 10-K) for the year ended June 30, 1996 and the related financial
statement schedule included therein, filed with the Securities and Exchange
Commission.
/s/ Ernst and Young LLP
San Jose, California
August 11, 1997
<PAGE> 1
EXHIBIT 23.3
CONSENT OF ATAG ERNST & YOUNG AG, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 2 to the Registration Statement (Form S-3 No. 333-27931) and the
related Prospectus of Uniphase Corporation for the registration of 665,568
shares of its common stock and to the incorporation by reference therein of our
report dated May 7, 1997, with respect to the financial statements of Laser
Enterprise, a Division of International Business Machines, New York included in
its Amendment No. 3 to the Current Report on Form 8-K/A dated August 11, 1997,
filed with the Securities and Exchange Commission.
Zurich, Switzerland ATAG Ernst & Young AG
August 11, 1997
/s/ Robert G. Wightman /s/ Yves Vontobel
---------------------- -----------------
Robert G. Wightman Yves Vontobel
Chartered Accountant Certified Accountant
