Orckit Signs Agreement for Arrangement With Note Holders

Orckit Communications Ltd ORCT today announced that it has reached a written agreement with the respective representatives of the holders of its Series A convertible notes and the holders of its Series B convertible notes with respect to a proposed arrangement under Section 350 of the Israeli Companies Law. The proposed arrangement contemplates the deferral of the March 2012 early redemption right of the Series A note holders over 26 months, with aggregate payments of $9.8 million in May 2012, $2.6 million in September 2012, $1.4 million in March 2013 and $11.7 million (plus all accrued and unpaid interest) in July 2014. The proposed arrangement would not reduce the total amounts payable to the note holders. In order to encourage note holders to convert their notes, the conversion price of the Series A notes and Series B notes would be decreased to a price below the current market price of the Company's shares for a specified period and to approximately $2.00 per share thereafter. The proposed arrangement would also give each Series B note holder the right to request early redemption of a portion of its notes, on the same four payment dates for the early redemption of the Series A notes (see details below). To the extent Series A notes are converted, the required payments to the Series A note holders will be reduced in the reverse order of maturity, beginning with the last payment to be made according to the schedule of payments. In addition, the prevailing market price of the Company's shares at which the Company would be entitled to force the conversion of the Series A and Series B notes would be set at $3.00 per share. Currently, the Company does not have the right to force conversion of Series B notes, and the market price at which the Company is entitled to force conversion of the Series A notes is $30.00 per share. More information about the material provisions of the proposed arrangement, including the required approvals and other conditions precedent to the effectiveness of the arrangement, are summarized below.