[*] -- Certain information omitted and filed separately with the Commission
pursuant to a confidential treatment request under Rule 24b-2 of the Commission.
FIRST AMENDMENT
TO PURCHASE AGREEMENT
FIRST AMENDMENT (this "Amendment"), dated and effective as of the 22nd
day of April, 1997 (the "Effective Date"), to the Purchase Agreement
dated as of September 6, 1996 (the "Purchase Agreement" or "Agreement")
between CREE RESEARCH, INC. ("Seller"), a corporation organized under
the laws of the State of North Carolina, the United States of America,
and SIEMENS AKTIENGESELLSCHAFT ("Purchaser"), a corporation organized
under the laws of the Federal Republic of Germany. As used in this
Amendment, capitalized terms not defined herein which are defined in
the Purchase Agreement shall have the meaning defined in the Purchase
Agreement.
In consideration of the mutual provisions below the parties hereby agree as
follows:
1. The Purchase Agreement is amended by replacing Schedule 1 in its
entirety with the First Amended Schedule 1 annexed to this Amendment.
2. The Purchase Agreement is amended by replacing Schedule 2 in its
entirety with the First Amended Schedule 2 annexed to this Amendment.
3. The Purchase Agreement is amended by replacing Schedule 3 in its
entirety with the First Amended Schedule 3 annexed to this Amendment.
4. Purchaser acknowledges that all Products delivered under the Purchase
Agreement prior to the Effective Date of this Amendment conformed to
the then applicable Product Specifications.
5. Seller and Purchaser will work to improve, among other things, the ESD
sensitivity of the Product, with a goal of ******* by December 31,
1997, as provided in Schedule 4 of the Purchase Agreement. However,
Purchaser has no further obligation to make the services of its
personnel available under Section 2(a) of Schedule 4, nor is Seller
obligated to permit Purchaser's personnel into Seller's facilities. If
by mutual agreement Purchaser's personnel are assigned to work at
Seller's facilities to assist with the production of or improvement to
Products to be purchased under this Agreement, then unless otherwise
agreed in writing the services of such personnel will be governed by
the terms of Schedule 4 to the Purchase Agreement and be considered
part of the Joint Development Program.
6. Except as amended hereby, the terms and conditions of the Purchase
Agreement shall continue in effect.
IN WITNESS WHEREOF, the parties, through their respective duly authorized
officers, have executed this Amendment to be effective as of the Effective Date
set out in the preamble hereto.
CREE RESEARCH, INC. SIEMENS AKTIENGESELLSCHAFT
By /s/ F. Neal Hunter By /s/ R. Mueller /s/ C. Hagan
F. Neal Hunter, President R. Mueller, Pres. Opto Semi. C. Hagan, VP-F&A
Date April 25, 1997 Date April 25, 1997
FIRST AMENDED SCHEDULE 1
Quantity and Shipment Schedule
1. Quantity and Selection. Purchaser will purchase a total of **********
** units of the Product under this Agreement (one unit being one LED
die). Of the total, ************** units have been shipped prior to
March 1, 1997, leaving a balance of *************** units to be shipped
thereafter. All Products shipped on or after March 1, 1997 will be
either the "***** Part" or the "***** Part," as such terms are defined
in First Amended Schedule 3. Purchaser may elect to purchase quantities
of the ***** Part by giving Seller written notice specifying the
required quantities at least six weeks (i.e., 42 days) prior to the
beginning of the calendar month in which such quantities are due to be
shipped pursuant to the provisions of this Schedule. Absent a timely
election in accordance with the foregoing, all shipments will consist
solely of ***** Parts.
2. Shipment Schedule. The shipment schedule for the remaining ***********
*** units to be shipped is set out below. Subject to the provisions of
this Agreement, each monthly quantity shown below shall be shipped on
the last day of the month unless otherwise mutually agreed.
--------------------------------- ---------------------------
Month Quantity
--------------------------------- ---------------------------
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
--------------------------------- ---------------------------
Total *
--------------------------------- ---------------------------
3. Rescheduling of Shipments. Purchaser may without charge reschedule
shipment of up to ten percent (10%) of a monthly quantity shown above
to a date not later than ninety (90) days after the originally
scheduled shipment date, provided Purchaser gives Seller written notice
at least ninety (90) days prior to the originally scheduled date.
Purchaser's notice must specify the quantity to be deferred and the
date on which shipment is to be made. In no event, however, shall
Seller be obligated to ship more than ************* units in any
calendar month. No shipment shall be delayed beyond March 31, 1998.
Subject to the foregoing, a shipment may be rescheduled any number of
times under this paragraph.
4. Cancellation of Shipments. Purchaser shall be entitled to cancel
shipment of all or any portion of the monthly quantities scheduled as
shown above for shipment during the period from October 1997 through
December 1997, provided Purchaser pays Seller a cancellation charge of
$***** per unit for all quantities canceled and gives Seller written
notice specifying the canceled quantities at least ninety (90) days
prior to the beginning of the calendar month in which such quantities
are scheduled to be shipped. The cancellation charges shall be due and
payable within thirty (30) days after the date notice of cancellation
is given. The parties agree that the amount of such cancellation
charges represents a reasonable estimate of Seller's damages resulting
from cancellation of the shipments scheduled during the period from
October 1997 through December 1997 and shall be due and payable as
liquidated damages and not as a penalty.
Page 2
FIRST AMENDED SCHEDULE 2
Price and Payment Schedule
1. Prices.
(a) The prices of the units shipped prior to March 1, 1997 are set
forth in the original Schedule 2 to this Agreement. Such
prices are final and no adjustment is made by this amended
schedule. The prices for the remaining *********** units to be
shipped shall be as set forth in paragraphs (b) and (c) below,
subject to adjustment as provided in paragraph (d) below.
(b) The unit price of ***** Parts shipped on or after March 1,
1997 shall be determined in accordance with the following
schedule:
----------------------------------------------------- ---------------------------------
Incremental Quantities of ***** Part Shipped on or Unit Price (US$)
after March 1, 1997
----------------------------------------------------- ---------------------------------
* *
* *
* *
* *
* *
* *
* *
----------------------------------------------------- ---------------------------------
(c) The unit price of ***** Parts shipped on or after March 1,
1997 shall be determined in accordance with the following
schedule:
----------------------------------------------------- ---------------------------------
Incremental Quantities of ***** Part Shipped on or Unit Price (US$)
after March 1, 1997
----------------------------------------------------- ---------------------------------
* *
* *
----------------------------------------------------- ---------------------------------
(d) The per unit price for shipments made on or after May 1, 1997
shall be reduced by the applicable amount specified below if
the "DM-Dollar Exchange Rate" on the shipment date equals or
exceeds 1.75. For purposes of this paragraph, the "DM-Dollar
Exchange Rate" means the average of the foreign exchange
selling rates for German Marks per U.S. Dollar, as published
in the Wall Street Journal during the thirty (30) calendar
days preceding the date of shipment, for rates quoted in New
York at 3 p.m. Eastern time the preceding business day for
trading among banks in amounts of $1 million or more.
------------------------------------------------------------- -------------------------
DM-Dollar Exchange Rate Unit Price (US$)
Reduction
------------------------------------------------------------- -------------------------
Less than 1.75 --
Equal to or greater than 1.75 and less than 1.80 *
Equal to or greater than 1.80 and less than 1.90 *
Equal to or greater than 1.90 *
------------------------------------------------------------- -------------------------
Page 3
(e) The reduction in per unit prices for larger quantities of each
part reflects Seller's expectation that it will improve
manufacturing yields and reduce per unit costs for a part as
the quantities of that part manufactured increase.
Nonetheless, the prices shown above are firm and will apply
regardless of whether Seller is able to reduce its costs or
when such reductions may be achieved. Further, it is
understood and agreed that the prices for units shipped shall
be determined by the schedules above notwithstanding any
earlier termination of this Agreement.
(f) Purchaser acknowledges that the Products to be shipped under
this Agreement have different specifications than the standard
products generally offered by Seller and that the prices in
this Agreement may be higher than the prices Seller charges
for its standard products. If Seller commences offering a
standard product having the same specifications as the
Products to be purchased under this Agreement, and if the
prices charged by Seller for purchase of the standard product,
under terms and conditions comparable to those of this
Agreement, are less than the prices applicable to the Products
not then shipped hereunder, Seller will offer in writing to
amend this Agreement to reduce the prices applicable to
Products not then shipped hereunder to the prices Seller
charges for the standard product.
2. Payment Terms.
The balance of the purchase price of units shipped prior to March 1,
1997 will be paid in accordance with the terms of the original Schedule
2. The price of the remaining ********* units will be invoiced to
Purchaser upon shipment and shall be due and payable within twenty (20)
days from the date of the invoice.
Purchaser acknowledges that Seller has shipped all Products for which
Purchaser advanced payment under this Agreement, that all secured
obligations under the Security Agreement between the parties dated
October 1, 1996 are therefore discharged, and that such Security
Agreement has expired in accordance with its terms.
Page 4
FIRST AMENDED SCHEDULE 3
Product Specifications
1. Product Specifications for Products shipped prior to March 1, 1997
shall be those set forth in the original Schedule 3 and Attachment A to
the Agreement. Product Specifications for Products shipped on and after
March 1, 1997 shall be the specifications set forth in Attachment A
annexed to this First Amended Schedule 3.
2. Seller may elect to substitute a version of either or both of the
Products (the ***** Part or the ***** Part) which uses a conductive
buffer layer, subject to Purchaser's approval which shall be given
under the terms and conditions set forth below. Commencing thirty (30)
days after the date of such approval, or such earlier date as may be
agreed by the parties, the Product Specifications applicable to
shipments made thereafter shall be the specifications of the new
version supplied by Seller as provided below, and Seller may not ship
the original version without Purchaser's prior written consent.
(a) The new version must meet the original specifications except
that*********************************************************
************************************************************
********************************************.
(b) Seller will provide Purchaser with production prototypes of
the new version manufactured from wafers from at least three
different epi runs and will provide Purchaser the
specifications applicable to the new version and such
qualification data as may then be available to Seller.
(c) Purchaser will give Seller notice of Purchaser's approval or
disapproval within seventy-five (75) days after receipt of the
prototypes and specifications.
(d) Purchaser may withhold its approval only if new version does
not meet the minimum specifications described in (a) above.
Page 5
Information in attachment omitted in its entirety and ATTACHMENT A
filed separately with the Commission pursuant to a confidential
treatment request under Rule 24b-2 of the Commission.