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EXHIBIT 2.9
Indemnification and Insurance Matters Agreement
between
MRV COMMUNICATIONS, INC.
and
LUMINENT, INC.
______________, 2000
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TABLE OF CONTENTS
PAGE
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ARTICLE I. MUTUAL RELEASES; INDEMNIFICATION............................................... 1
Section 1.1 Release of Pre-Closing Claims.......................................... 1
Section 1.2 Indemnification by Luminent............................................ 2
Section 1.3 Indemnification by MRV................................................. 2
Section 1.4 Indemnification With Respect to Environmental Actions and
Conditions............................................................. 3
Section 1.5 Reductions for Insurance Proceeds and Other Recoveries................. 3
Section 1.6 Procedures for Defense, Settlement and Indemnification of Third
Party Claims........................................................... 4
Section 1.7 Additional Matters..................................................... 5
Section 1.8 Survival of Indemnities................................................ 6
ARTICLE II. INSURANCE MATTERS............................................................. 6
Section 2.1 Luminent Insurance Coverage During the Transition Period............... 6
Section 2.2 Cooperation and Agreement Not to Release Carriers...................... 6
Section 2.3 Luminent Insurance Coverage After the Insurance Transition Period...... 7
Section 2.4 Responsibilities for Deductibles and/or Self-insured Obligations....... 7
Section 2.5 Procedures With Respect to Insured Luminent Liabilities................ 7
Section 2.6 Insufficient Limits of Liability for MRV Liabilities and
Luminent Liabilities................................................... 7
Section 2.7 Cooperation............................................................ 8
Section 2.8 No Assignment or Waiver................................................ 8
Section 2.9 No Liability........................................................... 8
Section 2.10 Additional or Alternate Insurance..................................... 8
Section 2.11 Further Agreements.................................................... 8
Section 2.12 Matters Governed by Employee Matters Agreement........................ 8
ARTICLE III. MISCELLANEOUS................................................................ 8
Section 3.1 Entire Agreement....................................................... 8
Section 3.2 Governing Law.......................................................... 9
Section 3.3 Dispute Resolution..................................................... 9
Section 3.4 Notices................................................................ 10
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TABLE OF CONTENTS (CONT.)
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Section 3.5 Parties in Interest.................................................... 10
Section 3.6 Other Agreements Evidencing Indemnification Obligations................ 10
Section 3.7 Counterparts........................................................... 11
Section 3.8 Assignment............................................................. 11
Section 3.9 Severability........................................................... 11
Section 3.10 Failure or Indulgence Not Waiver....................................... 11
Section 3.11 Amendment.............................................................. 11
Section 3.12 Authority.............................................................. 11
Section 3.13 Interpretation......................................................... 11
ARTICLE IV. DEFINITIONS................................................................... 12
Section 4.1 MRV Business........................................................... 12
Section 4.2 MRV Facilities......................................................... 12
Section 4.3 MRV Group.............................................................. 12
Section 4.4 MRV Indemnitees........................................................ 12
Section 4.5 Action................................................................. 12
Section 4.6 Affiliated Company..................................................... 12
Section 4.7 Assets................................................................. 12
Section 4.8 Assignment Agreement................................................... 12
Section 4.9 Coverage Amount........................................................ 12
Section 4.10 Employee Matters Agreement........................................... 12
Section 4.11 Environmental Actions................................................ 12
Section 4.12 Environmental Conditions............................................. 13
Section 4.13 Environmental Laws................................................... 13
Section 4.14 Hazardous Materials.................................................. 13
Section 4.15 Indemnitee........................................................... 13
Section 4.16 Insurance Policies................................................... 13
Section 4.17 Insurance Proceeds................................................... 13
Section 4.18 Insurance Transition Period.......................................... 13
Section 4.19 Insured Luminent Liability........................................... 13
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TABLE OF CONTENTS (CONT.)
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Section 4.20 IPO Date............................................................. 13
Section 4.21 IPO Liabilities...................................................... 13
Section 4.22 IPO Registration Statement........................................... 14
Section 4.23 Liabilities.......................................................... 14
Section 4.24 Non-US Plan.......................................................... 14
Section 4.25 Luminent Business.................................................... 14
Section 4.26 Luminent Contracts................................................... 14
Section 4.27 Luminent Covered Parties............................................. 14
Section 4.28 Luminent Facilities.................................................. 14
Section 4.29 Luminent Group....................................................... 14
Section 4.30 Luminent Indemnitees................................................. 14
Section 4.31 Luminent Liabilities................................................. 14
Section 4.32 Person............................................................... 14
Section 4.33 Pre-Separation Third Party Site Liabilities.......................... 14
Section 4.34 Release.............................................................. 15
Section 4.35 Separation............................................................ 15
Section 4.36 Separation Agreement.................................................. 15
Section 4.37 Separation Date....................................................... 15
Section 4.38 Shared MRV Percentage................................................. 15
Section 4.39 Shared Luminent Percentage............................................ 15
Section 4.40 Shared Percentage..................................................... 15
Section 4.41 Subsidiary............................................................ 15
Section 4.42 Tax Sharing Agreement................................................. 15
Section 4.43 Taxes................................................................. 15
Section 4.44 Third Party Claim..................................................... 15
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INDEMNIFICATION AND INSURANCE MATTERS AGREEMENT
This Indemnification and Insurance Matters Agreement (this "Agreement")
is entered into on _________, 2000 between MRV Communications, Inc., a Delaware
corporation ("MRV"), and Luminent, Inc., a Delaware corporation ("Luminent").
Capitalized terms used herein and not otherwise defined herein shall have the
meanings ascribed to such terms in the Article IV below.
RECITALS
WHEREAS, MRV and its Subsidiaries have transferred or will transfer to
Luminent and its Subsidiaries effective as of the Separation Date, substantially
all of the assets of the Luminent Business in accordance with the Master
Separation and Distribution Agreement dated as of _____________, 2000 between
MRV and Luminent (the "Separation Agreement").
WHEREAS, the parties desire to set forth certain agreements regarding
indemnification and insurance.
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:
ARTICLE I.
MUTUAL RELEASES; INDEMNIFICATION
Section 1.1 Release of Pre-Closing Claims.
(a) Luminent Release. Except as provided in Section 1.1(c) and Schedule
1.1 to this Agreement, effective as of the Separation Date, Luminent does
hereby, for itself and as agent for each member of the Luminent Group, remise,
release and forever discharge the MRV Indemnitees from any and all Liabilities
whatsoever, whether at law or in equity (including any right of contribution),
whether arising under any contract or agreement, by operation of law or
otherwise, existing or arising from any acts or events occurring or failing to
occur or alleged to have occurred or to have failed to occur or any conditions
existing or alleged to have existed on or before the Separation Date, including
in connection with the transactions and all other activities to implement any of
the Separation, the IPO and the Distribution.
(b) MRV Release. Except as provided in Section 1.1(c) and Schedule 1.1
to this Agreement, effective as of the Separation Date, MRV does hereby, for
itself and as agent for each member of the MRV Group, remise, release and
forever discharge the Luminent Indemnitees from any and all Liabilities
whatsoever, whether at law or in equity (including any right of contribution),
whether arising under any contract or agreement, by operation of law or
otherwise, existing or arising from any acts or events occurring or failing to
occur or alleged to have occurred or to have failed to occur or any conditions
existing or alleged to have existed on or before the Separation Date, including
in connection with the transactions and all other activities to implement any of
the Separation, the IPO and the Distribution.
(c) No Impairment. Nothing contained in Section 1.1(a) or (b) shall
impair any right of any Person to enforce the Separation Agreement or any other
Ancillary Agreement (including this Agreement), in each case in accordance with
its terms.
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(d) No Actions as to Released Claims. Luminent agrees, for itself and as
agent for each member of the Luminent Group, not to make any claim or demand, or
commence any Action asserting any claim or demand, including any claim of
contribution or any indemnification, against MRV or any member of the MRV Group,
or any other Person released pursuant to Section 1.1(a), with respect to any
Liabilities released pursuant to Section 1.1(a). MRV agrees, for itself and as
agent for each member of the MRV Group, not to make any claim or demand, or
commence any Action asserting any claim or demand, including any claim of
contribution or any indemnification, against Luminent or any member of the
Luminent Group, or any other Person released pursuant to Section 1.1(b), with
respect to any Liabilities released pursuant to Section 1.1(b).
(e) Further Instruments. At any time, at the request of any other party,
each party shall cause each member of its respective Group to execute and
deliver releases reflecting the provisions hereof.
Section 1.2 Indemnification by Luminent . Except as otherwise provided in this
Agreement, Luminent shall, for itself and as agent for each member of the
Luminent Group, indemnify, defend (or, where applicable, pay the defense costs
for) and hold harmless the MRV Indemnitees from and against any and all
Liabilities that any third party seeks to impose upon the MRV Indemnitees, or
which are imposed upon the MRV Indemnitees, and that relate to, arise out of or
result from any of the following items (without duplication):
(i) the Luminent Business, any Luminent Liability or any
Luminent Contract;
(ii) any breach by Luminent or any member of the Luminent Group
of the Separation Agreement or any of the Ancillary Agreements (including this
Agreement); and
(iii) any IPO Liabilities.
In the event that any member of the Luminent Group makes a payment to the MRV
Indemnitees hereunder, and any of the MRV Indemnitees subsequently diminishes
the Liability on account of which such payment was made, either directly or
through a third-party recovery, MRV will promptly repay (or will procure a MRV
Indemnitee to promptly repay) such member of the Luminent Group the amount by
which the payment made by such member of the Luminent Group exceeds the actual
cost of the associated indemnified Liability. This Section 1.2 shall not apply
to any Liability indemnified under Section 1.4.
Section 1.3 Indemnification by MRV. Except as otherwise provided in this
Agreement, MRV shall, for itself and as agent for each member of the MRV Group,
indemnify, defend (or, where applicable, pay the defense costs for) and hold
harmless the Luminent Indemnitees from and against any and all Liabilities that
any third party seeks to impose upon the Luminent Indemnitees, or which are
imposed upon the Luminent Indemnitees, and that relate to, arise out of or
result from any of the following items (without duplication):
(i) the MRV Business or any Liability of the MRV Group other
than the Luminent Liabilities; and
(ii) any breach by MRV or any member of the MRV Group of the
Separation Agreement or any of the Ancillary Agreements (including this
Agreement).
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In the event that any member of the MRV Group makes a payment to the Luminent
Indemnitees hereunder, and any of the Luminent Indemnitees subsequently
diminishes the Liability on account of which such payment was made, either
directly or through a third-party recovery, Luminent will promptly repay (or
will procure a Luminent Indemnitee to promptly repay) such member of the MRV
Group the amount by which the payment made by such member of the MRV Group
exceeds the actual cost of the indemnified Liability. This Section 1.3 shall not
apply to any Liability indemnified under Section 1.4.
Section 1.4 Indemnification With Respect to Environmental Actions and
Conditions.
(a) Indemnification by Luminent. Luminent shall, for itself and as agent
for each member of the Luminent Group, indemnify, defend and hold harmless the
MRV Indemnitees from and against any and all Environmental Actions relating to,
arising out of or resulting from Environmental Conditions (i) arising out of
operations occurring on and after the Separation Date at any of the Luminent
Facilities, or (ii) on any of the Luminent Facilities arising from an event
causing contamination that first occurs on or after the Separation Date
(including any Release of Hazardous Materials occurring after the Separation
Date that migrates to any of the Luminent Facilities), except to the extent that
such Environmental Conditions arise out of the operations of the MRV Group on
and after the Separation Date.
(b) Indemnification by MRV. MRV shall, for itself and as agent for each
member of the MRV Group, indemnify, defend and hold harmless the Luminent
Indemnitees from and against any and all Environmental Actions relating to,
arising out of or resulting from any of the following items:
(i) Environmental Conditions (x) existing on, under, about or
in the vicinity of any of the Luminent Facilities prior to the Separation Date,
or (y) arising out of operations occurring on or before the Separation Date at
any of the Luminent Facilities;
(ii) Except as arising out of the operations of the Luminent
Group on and after the Separation Date, Environmental Conditions on, under,
about or arising out of operations occurring at any time, whether before or
after the Separation Date, at any of the MRV Facilities; and
(iii) Pre-Separation Third Party Site Liabilities.
(c) Agreement Regarding Payments to Indemnitee. In the event an
Indemnifying Party makes any payment to or on behalf of an Indemnitee with
respect to an Environmental Action for which the Indemnifying Party is obligated
to indemnify under this Section 1.4, and the Indemnitee subsequently receives
any payment from a third party on account of the same financial obligation
covered by the payment made by the Indemnifying Party for that Environmental
Action or otherwise diminishes the financial obligation, the Indemnitee will
promptly pay the Indemnifying Party the amount by which the payment made by the
Indemnifying Party, exceeds the actual cost of the financial obligation.
Section 1.5 Reductions for Insurance Proceeds and Other Recoveries. The amount
that any party (an "Indemnifying Party") is or may be required to pay to any
other Person (an "Indemnitee") pursuant to Section 1.2, 1.3 or 1.4, as
applicable, shall be reduced (retroactively or prospectively) by any Insurance
Proceeds or other amounts actually recovered from third parties by or on behalf
of such Indemnitee in respect of the related loss. The existence of a claim by
an
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Indemnitee for monies from an insurer or against a third party in respect of any
indemnifiable loss shall not, however, delay any payment pursuant to the
indemnification provisions contained herein and otherwise determined to be due
and owing by an Indemnifying Party. Rather the Indemnifying Party shall make
payment in full of the amount determined to be due and owing by it against an
assignment by the Indemnitee to the Indemnifying Party of the entire claim of
the Indemnitee for Insurance Proceeds or against such third party.
Notwithstanding any other provisions of this Agreement, it is the intention of
the parties that no insurer or any other third party shall be (i) entitled to a
benefit it would not be entitled to receive in the absence of the foregoing
indemnification provisions, or (ii) relieved of the responsibility to pay any
claims for which it is obligated. If an Indemnitee has received the payment
required by this Agreement from an Indemnifying Party in respect of any
indemnifiable loss and later receives Insurance Proceeds or other amounts in
respect of such indemnifiable loss, then such Indemnitee shall hold such
Insurance Proceeds or other amounts in trust for the benefit of the Indemnifying
Party (or Indemnifying Parties) and shall pay to the Indemnifying Party, as
promptly as practicable after receipt, a sum equal to the amount of such
Insurance Proceeds or other amounts received, up to the aggregate amount of any
payments received from the Indemnifying Party pursuant to this Agreement in
respect of such indemnifiable loss (or, if there is more than one Indemnifying
Party, the Indemnitee shall pay each Indemnifying Party, its proportionate share
(based on payments received from the Indemnifying Parties) of such Insurance
Proceeds).
Section 1.6 Procedures for Defense, Settlement and Indemnification of Third
Party Claims.
(a) Notice of Claims. If a MRV Indemnitee or a Luminent Indemnitee (as
applicable) (an "Indemnitee") shall receive notice or otherwise learn of the
assertion by a Person (including any Governmental Authority) who is not a member
of the MRV Group or the Luminent Group of any claim or of the commencement by
any such Person of any Action (collectively, a "Third Party Claim") with respect
to which a party (an "Indemnifying Party") may be obligated to provide
indemnification to such Indemnitee pursuant to Section 1.2, 1.3 or 1.4, or any
other section of the Separation Agreement or any Ancillary Agreement (including
this Agreement), MRV and Luminent (as applicable) will ensure that such
Indemnitee shall give such Indemnifying Party written notice thereof within 30
days after becoming aware of such Third Party Claim. Any such notice shall
describe the Third Party Claim in reasonable detail. Notwithstanding the
foregoing, the delay or failure of any Indemnitee or other Person to give notice
as provided in this Section 1.6(a) shall not relieve the related Indemnifying
Party of its obligations under this Article I, except to the extent that such
Indemnifying Party is actually and substantially prejudiced by such delay or
failure to give notice.
(b) Defense By Indemnifying Party. An Indemnifying Party will manage the
defense of and may settle or compromise any Third Party Claim. Within 30 days
after the receipt of notice from an Indemnitee in accordance with Section 1.6(a)
(or sooner, if the nature of such Third Party Claim so requires), the
Indemnifying Party shall notify the Indemnitee that the Indemnifying Party will
assume responsibility for managing the defense of such Third Party Claim, which
notice shall specify any reservations or exceptions.
(c) Defense By Indemnitee. If an Indemnifying Party fails to assume
responsibility for managing the defense of a Third Party Claim, or fails to
notify an Indemnitee that it will assume responsibility as provided in Section
1.6(a), such Indemnitee may manage the defense of
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such Third Party Claim; provided, however, that the Indemnifying Party shall
reimburse all such costs and expenses in the event it is ultimately determined
that the Indemnifying Party is obligated to indemnify the Indemnitee with
respect to such Third Party Claim.
(d) No Settlement By Indemnitee Without Consent. Unless the Indemnifying
Party has failed to manage the defense of the Third Party Claim in accordance
with the terms of this Agreement, no Indemnitee may settle or compromise any
Third Party Claim without the consent of the Indemnifying Party.
(e) No Consent to Certain Judgments or Settlements Without Consent.
Notwithstanding any provision of this Section 1.6, no party shall consent to
entry of any judgment or enter into any settlement of a Third Party Claim
without the consent of the other party (such consent not to be unreasonably
withheld) if the effect of such judgment or settlement is to (A) permit any
injunction, declaratory judgment, other order or other nonmonetary relief to be
entered, directly or indirectly, against the other party or (B) affect the other
party in a material fashion due to the allocation of Liabilities and related
indemnities set forth in the Separation Agreement, this Agreement or any other
Ancillary Agreement.
Section 1.7 Additional Matters.
(a) Cooperation in Defense and Settlement. With respect to any Third
Party Claim that implicates both Luminent and MRV in a material fashion due to
the allocation of Liabilities, responsibilities for management of defense and
related indemnities set forth in the Separation Agreement, this Agreement or any
of the Ancillary Agreements, the parties agree to cooperate fully and maintain a
joint defense (in a manner that will preserve the attorney-client privilege with
respect thereto) so as to minimize such Liabilities and defense costs associated
therewith. The party that is not responsible for managing the defense of such
Third Party Claims shall, upon reasonable request, be consulted with respect to
significant matters relating thereto and may, if necessary or helpful, associate
counsel to assist in the defense of such claims.
(b) Substitution. In the event of an Action in which the Indemnifying
Party is not a named defendant, if either the Indemnitee or the Indemnifying
Party shall so request, the parties shall endeavor to substitute the
Indemnifying Party for the named defendant. If such substitution or addition
cannot be achieved for any reason or is not requested, the rights and
obligations of the parties regarding indemnification and the management of the
defense of claims as set forth in this Article I shall not be altered.
(c) Subrogation. In the event of payment by or on behalf of any
Indemnifying Party to or on behalf of any Indemnitee in connection with any
Third Party Claim, such Indemnifying Party shall be subrogated to and shall
stand in the place of such Indemnitee, in whole or in part based upon whether
the Indemnifying Party has paid all or only part of the Indemnitee's Liability,
as to any events or circumstances in respect of which such Indemnitee may have
any right, defense or claim relating to such Third Party Claim against any
claimant or plaintiff asserting such Third Party Claim or against any other
person. Such Indemnitee shall cooperate with such Indemnifying Party in a
reasonable manner, and at the cost and expense of such Indemnifying Party, in
prosecuting any subrogated right, defense or claim.
(d) Not Applicable to Taxes. This Agreement shall not apply to Taxes
(which are covered by the Tax Sharing Agreement).
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Section 1.8 Survival of Indemnities. Subject to Section 3.8, the rights and
obligations of the members of the MRV Group and the Luminent Group under this
Article I shall survive the sale or other transfer by any party of any Assets or
businesses or the assignment by it of any Liabilities or the sale by any member
of the MRV Group or the Luminent Group of the capital stock or other equity
interests of any Subsidiary to any Person.
ARTICLE II.
INSURANCE MATTERS
Section 2.1 Luminent Insurance Coverage During the Transition Period.
(a) Maintain Comparable Insurance. Throughout the period beginning on
the Separation Date and ending on the Distribution Date (i.e., the "Insurance
Transition Period"), MRV shall, subject to insurance market conditions and other
factors beyond its control, maintain policies of insurance, including for the
benefit of Luminent or any of its Subsidiaries, directors, officers, employees
or other covered parties (collectively, the "Luminent Covered Parties") which
are comparable to those maintained generally by MRV; provided, however, that if
MRV determines that (i) the amount or scope of such coverage will be reduced to
a level materially inferior to the level of coverage in existence immediately
prior to the Insurance Transition Period or (ii) the retention or deductible
level applicable to such coverage, if any, will be increased to a level
materially greater than the levels in existence immediately prior to the
Insurance Transition Period, MRV shall give Luminent notice of such
determination as promptly as practicable. Upon notice of such determination,
Luminent shall be entitled to no less than 60 days to evaluate its options
regarding continuance of coverage hereunder and may cancel its interest in all
or any portion of such coverage as of any day within such 60 day period.
(b) Reimbursement for Premiums. Luminent shall promptly pay or reimburse
MRV, as the case may be, for premium expenses, and Luminent Covered Parties
shall promptly pay or reimburse MRV for any costs and expenses which MRV may
incur in connection with the insurance coverages maintained pursuant to this
Section 2.1, including but not limited to any subsequent premium adjustments.
All payments and reimbursements by Luminent and Luminent Covered Parties to MRV
shall be made within thirty (30) days after Luminent's receipt of an invoice
from MRV.
Section 2.2 Cooperation and Agreement Not to Release Carriers. Each of MRV and
Luminent will share such information as is reasonably necessary in order to
permit the other to manage and conduct its insurance matters in an orderly
fashion. Each of MRV and Luminent, at the request of the other, shall cooperate
with and use commercially reasonable efforts to assist the other in recoveries
for claims made under any insurance policy for the benefit of any insured party,
and neither MRV nor Luminent, nor any of their Subsidiaries, shall take any
action which would intentionally jeopardize or otherwise interfere with either
party's ability to collect any proceeds payable pursuant to any insurance
policy. Except as otherwise contemplated by the Separation Agreement, this
Agreement or any Ancillary Agreement, after the Separation Date, neither MRV nor
Luminent shall (and shall ensure that no member of their respective Groups
shall), without the consent of the other, provide any insurance carrier with a
release, or amend, modify or waive any rights under any such policy or
agreement, if such release, amendment, modification or waiver would adversely
affect any rights or potential rights of any member of the other Group
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thereunder. However, nothing in this Section 2.2 shall (A) preclude any member
of any Group from presenting any claim or from exhausting any policy limit, (B)
require any member of any Group to pay any premium or other amount or to incur
any Liability, or (C) require any member of any Group to renew, extend or
continue any policy in force.
Section 2.3 Luminent Insurance Coverage After the Insurance Transition Period.
From and after expiration of the Insurance Transition Period, Luminent shall be
responsible for obtaining and maintaining insurance programs for its risk of
loss and such insurance arrangements shall be separate and apart from MRV's
insurance programs. Notwithstanding the foregoing, MRV, upon the request of
Luminent, shall use all commercially reasonable efforts to assist Luminent in
the transition to its own separate insurance programs from and after the
Insurance Transition Period, and shall provide Luminent with any information
that is in the possession of MRV and is reasonably available and necessary to
either obtain insurance coverages for Luminent or to assist Luminent in
preventing unintended self- insurance, in whatever form.
Section 2.4 Responsibilities for Deductibles and/or Self-insured Obligations.
Luminent will reimburse MRV for all amounts necessary to exhaust or otherwise
satisfy all applicable self-insured retentions, amounts for fronted policies,
deductibles and retrospective premium adjustments and similar amounts not
covered by Insurance Policies in connection with Luminent Liabilities and
Insured Luminent Liabilities.
Section 2.5 Procedures With Respect to Insured Luminent Liabilities.
(a) Reimbursement. Luminent will reimburse MRV for all amounts incurred
to pursue insurance recoveries from Insurance Policies for Insured Luminent
Liabilities.
(b) Management of Claims. The defense of claims, suits or actions giving
rise to potential or actual Insured Luminent Liabilities will be managed (in
conjunction with MRV's insurers, as appropriate) by the party that would have
had responsibility for managing such claims, suits or actions had such Insured
Luminent Liabilities been Luminent Liabilities.
Section 2.6 Insufficient Limits of Liability for MRV Liabilities and Luminent
Liabilities.
In the event that there are insufficient limits of liability available
under MRV's Insurance Policies in effect prior to the Distribution Date to cover
the Liabilities of MRV and/or Luminent that would otherwise be covered by such
Insurance Policies, then to the extent that other insurance is not available to
MRV and/or Luminent for such Liabilities an adjustment will be made in
accordance with the following procedures:
(a) Each party will be allocated an amount equal to their Shared
Percentage of the lesser of (i) the available limits of liability available
under MRV's Insurance Policies in effect prior to the Distribution Date net of
uncollectible amounts attributable to insurer insolvencies, and (ii) the
proceeds received from MRV's Insurance Policies if the Liabilities are the
subject of disputed coverage claims and, following consultation with each other,
MRV and/or Luminent agree to accept less than full policy limits from MRV's and
Luminent's insurers (the "Coverage Amount").
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(b) A party who receives more than its share of the Coverage Amount (the
"Overallocated Party") agrees to reimburse the other party (the "Underallocated
Party") to the extent that the Liabilities of the Underallocated Party that
would have been covered under such Insurance Policies is less than the
Underallocated Party's share of the Coverage Amount.
(c) This Section 2.6(a) shall terminate ten years following the
Distribution Date.
Section 2.7 Cooperation. MRV and Luminent will cooperate with each other in all
respects, and they shall execute any additional documents which are reasonably
necessary to effectuate the provisions of this Article II.
Section 2.8 No Assignment or Waiver. This Agreement shall not be considered as
an attempted assignment of any policy of insurance or as a contract of insurance
and shall not be construed to waive any right or remedy of any member of the MRV
Group in respect of any Insurance Policy or any other contract or policy of
insurance.
Section 2.9 No Liability. Luminent does hereby, for itself and as agent for each
other member of the Luminent Group, agree that no member of the MRV Group or any
MRV Indemnitee shall have any Liability whatsoever as a result of the insurance
policies and practices of MRV and its Subsidiaries as in effect at any time
prior to the Distribution Date, including as a result of the level or scope of
any such insurance, the creditworthiness of any insurance carrier, the terms and
conditions of any policy, the adequacy or timeliness of any notice to any
insurance carrier with respect to any claim or potential claim or otherwise.
Section 2.10 Additional or Alternate Insurance. Notwithstanding any provision of
this Agreement, during the Insurance Transition Period MRV and Luminent shall
work together to evaluate insurance options and secure additional or alternate
insurance for Luminent and/or MRV if desired and cost effective. Nothing in this
Agreement shall be deemed to restrict any member of the Luminent Group from
acquiring at its own expense any other insurance policy in respect of any
Liabilities or covering any period.
Section 2.11 Further Agreements. The Parties acknowledge that they intend to
allocate financial obligations without violating any laws regarding insurance,
self-insurance or other financial responsibility. If it is determined that any
action undertake pursuant to the Separation Agreement, this Agreement or any
Ancillary Agreement is violative of any insurance, self-insurance or related
financial responsibility law or regulation, the parties agree to work together
to do whatever is necessary to comply with such law or regulation while trying
to accomplish, as much as possible, the allocation of financial obligations as
intended in the Separation Agreement, this Agreement and any Ancillary
Agreement.
Section 2.12 Matters Governed by Employee Matters Agreement. This Article II
shall not apply to any insurance policies that are the subject of the Employee
Matters Agreement.
ARTICLE III.
MISCELLANEOUS
Section 3.1 Entire Agreement. This Agreement, the Master Separation Agreement,
the other Ancillary Agreements and the Exhibits and Schedules attached hereto
and thereto, constitute the entire agreement between the parties with respect to
the subject matter hereof and shall supersede
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all prior written and oral and all contemporaneous oral agreements and
understandings with respect to the subject matter hereof.
Section 3.2 Governing Law. This Agreement shall be construed in accordance with
and all Disputes hereunder shall be governed by the laws of the State of
California, excluding its conflict of law rules and the United Nations
Convention on Contracts for the International Sale of Goods. The Superior Court
of Los Angeles County and/or the United States District Court for the Southern
District of California shall have jurisdiction and venue over all Disputes
between the parties that are permitted to be brought in a court of law pursuant
to Section 3.3.
Section 3.3 Dispute Resolution. If a dispute, controversy or claim ("Dispute")
arises between the parties relating to the interpretation or performance of this
Agreement, or the grounds for the termination hereof, appropriate senior
executives (e.g. director or V.P. level) of each party who shall have the
authority to resolve the matter shall meet to attempt in good faith to negotiate
a resolution of the Dispute prior to pursuing other available remedies. The
initial meeting between the appropriate senior executives shall be referred to
herein as the "Dispute Resolution Commencement Date." Discussions and
correspondence relating to trying to resolve such Dispute shall be treated as
confidential information developed for the purpose of settlement and shall be
exempt from discovery or production and shall not be admissible. If the senior
executives are unable to resolve the Dispute within thirty (30) days from the
Dispute Resolution Commencement Date, and either party wishes to pursue its
rights relating to such Dispute, then the Dispute will be mediated by a mutually
acceptable mediator appointed pursuant to the mediation rules of JAMS/Endispute
within thirty (30) days after written notice by one party to the other demanding
non-binding mediation. Neither party may unreasonably withhold consent to the
selection of a mediator or the location of the mediation. Both parties will
share the costs of the mediation equally, except that each party shall bear its
own costs and expenses, including attorney's fees, witness fees, travel
expenses, and preparation costs. The parties may also agree to replace mediation
with some other form of non-binding or binding ADR.
Any Dispute which the parties cannot resolve through mediation within
ninety (90) days of the Dispute Resolution Commencement Date, unless otherwise
mutually agreed, shall be submitted to final and binding arbitration under the
then current Commercial Arbitration Rules of the American Arbitration
Association ("AAA"), by three (3) arbitrators in Los Angeles County, California.
Such arbitrators shall be selected by the mutual agreement of the parties or,
failing such agreement, shall be selected according to the aforesaid AAA rules.
The arbitrators will be instructed to prepare and deliver a written, reasoned
opinion stating their decision within thirty (30) days of the completion of the
arbitration. The prevailing party in such arbitration shall be entitled to
expenses, including costs and attorneys' and other professional fees, incurred
in connection with the arbitration (but excluding any costs and fees associated
with prior negotiation or mediation). The decision of the arbitrator shall be
final and non-appealable and may be enforced in any court of competent
jurisdiction. The use of any ADR procedures will not be construed under the
doctrine of laches, waiver or estoppel to adversely affect the rights of either
party.
Any Dispute regarding the following is not required to be negotiated,
mediated or arbitrated prior to seeking relief from a court of competent
jurisdiction: breach of any obligation of confidentiality; infringement,
misappropriation, or misuse of any intellectual property right;
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any other claim where interim relief from the court is sought to prevent serious
and irreparable injury to one of the parties or to others.
Section 3.4 Notices. Notices, offers, requests or other communications required
or permitted to be given by either party pursuant to the terms of this Agreement
shall be given in writing to the respective parties to the following addresses:
if to MRV:
MRV Communications, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇, Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
if to Luminent:
Luminent, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the party to whom notice is given may have
previously furnished to the other in writing as provided herein. Any notice
involving non-performance, termination, or renewal shall be sent by hand
delivery, recognized overnight courier or, within the United States, may also be
sent via certified mail, return receipt requested. All other notices may also be
sent by fax, confirmed by first class mail. All notices shall be deemed to have
been given and received on the earlier of actual delivery or three (3) days from
the date of postmark.
Section 3.5 Parties in Interest. This Agreement, including the Schedules and
Exhibits hereto, and the other documents referred to herein, shall be binding
upon MRV, MRV's Subsidiaries, Luminent and Luminent's Subsidiaries and inure
solely to the benefit of the Luminent Indemnitees and the MRV Indemnitees and
their respective permitted assigns, and nothing in this Agreement, express or
implied, is intended to confer upon any other Person any rights or remedies of
any nature whatsoever under or by reason of this Agreement.
Section 3.6 Other Agreements Evidencing Indemnification Obligations. MRV hereby
agrees to execute, for the benefit of any Luminent Indemnitee, such documents as
may be reasonably requested by such Luminent Indemnitee, evidencing MRV's
agreement that the indemnification obligations of MRV set forth in this
Agreement inure to the benefit of and are enforceable by such Luminent
Indemnitee. Luminent hereby agrees to execute, for the benefit of any MRV
Indemnitee, such documents as may be reasonably requested by such MRV
Indemnitee, evidencing Luminent's agreement that the indemnification obligations
of Luminent set forth in this Agreement inure to the benefit of and are
enforceable by such MRV Indemnitee.
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Section 3.7 Counterparts. This Agreement, including the Schedules and Exhibits
hereto, and the other documents referred to herein, may be executed in
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.
Section 3.8 Assignment. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective legal representatives and
successors, and nothing in this Agreement, express or implied, is intended to
confer upon any other Person any rights or remedies of any nature whatsoever
under or by reason of this Agreement. This Agreement may be enforced separately
by each member of the MRV Group and each member of the Luminent Group. Neither
party may assign this Agreement or any rights or obligations hereunder, without
the prior written consent of the other party, and any such assignment shall be
void; provided, however, either party may assign this Agreement to a successor
entity in conjunction with such party's reincorporation.
Section 3.9 Severability. If any term or other provision of this Agreement or
the Schedules or Exhibits attached hereto is determined by a nonappealable
decision by a court, administrative agency or arbitrator to be invalid, illegal
or incapable of being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the fullest extent possible.
Section 3.10 Failure or Indulgence Not Waiver. No failure or delay on the part
of either party hereto in the exercise of any right hereunder shall impair such
right or be construed to be a waiver of, or acquiescence in, any breach of any
representation, warranty or agreement herein, nor shall any single or partial
exercise of any such right preclude other or further exercise thereof or of any
other right.
Section 3.11 Amendment. No change or amendment will be made to this Agreement
except by an instrument in writing signed on behalf of each of the parties to
this Agreement.
Section 3.12 Authority. Each of the parties hereto represents to the other that
(a) it has the corporate or other requisite power and authority to execute,
deliver and perform this Agreement, (b) the execution, delivery and performance
of this Agreement by it have been duly authorized by all necessary corporate or
other action, (c) it has duly and validly executed and delivered this Agreement,
and (d) this Agreement is a legal, valid and binding obligation, enforceable
against it in accordance with its terms subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and general equity principles.
Section 3.13 Interpretation. The headings contained in this Agreement, in any
Exhibit or Schedule hereto and in the table or contents to this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Any capitalized term used in any Schedule or
Exhibit but not otherwise defined therein, shall have the meaning assigned to
such term in this Agreement. When a reference is made in this Agreement to an
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Article or a Section, Exhibit or Schedule, such reference shall be to an Article
or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated.
ARTICLE IV.
DEFINITIONS
Section 4.1 MRV Business. "MRV Business" means any business of MRV other than
the Luminent Business.
Section 4.2 MRV Facilities. "MRV Facilities" means all of the real property and
improvements thereon owned or occupied at any time on or before the Separation
Date by any member of the MRV Group, whether for the MRV Business or the
Luminent Business, excluding the Luminent Facilities.
Section 4.3 MRV Group. "MRV Group" means MRV, each Subsidiary and Affiliated
Company of MRV (other than any member of the Luminent Group) immediately after
the Separation Date, after giving effect to the Non-US Plan and each Person that
becomes a Subsidiary or Affiliate Company of MRV after the Separation Date.
Section 4.4 MRV Indemnitees. "MRV Indemnitees" means MRV, each member of the MRV
Group and each of their respective directors, officers and employees.
Section 4.5 Action. "Action" means any demand, action, suit, countersuit,
arbitration, inquiry, proceeding or investigation by or before any federal,
state, local, foreign or international governmental authority or any arbitration
or mediation tribunal.
Section 4.6 Affiliated Company. "Affiliated Company" of any Person means any
entity that controls, is controlled by, or is under common control with such
Person. As used herein, "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such entity, whether through ownership of voting securities or other interests,
by contract or otherwise.
Section 4.7 Assets. "Assets" has the meaning set forth in Section 4.4 of the
Assignment Agreement.
Section 4.8 Assignment Agreement. "Assignment Agreement" means the General
Assignment and Assumption Agreement attached as Exhibit C to the Separation
Agreement.
Section 4.9 Coverage Amount. "Coverage Amount" has the meaning set forth in
Section 2.6(a) of this Agreement.
Section 4.10 Employee Matters Agreement. "Employee Matters Agreement" means the
Employee Matters Agreement attached as Exhibit E to the Separation Agreement.
Section 4.11 Environmental Actions. "Environmental Actions" means any notice,
claim, act, cause of action, order, decree or investigation by any third party
(including, without limitation, any Governmental Authority) alleging potential
liability (including potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, damage to flora or fauna
caused by Environmental Conditions, real property damages, personal
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injuries or penalties) arising out of, based on or resulting from the Release of
or exposure of any individual to any Hazardous Materials.
Section 4.12 Environmental Conditions. "Environmental Conditions" means the
presence in the environment, including the soil, groundwater, surface water or
ambient air, of any Hazardous Material at a level which exceeds any applicable
standard or threshold under any Environmental Law or otherwise requires
investigation or remediation (including, without limitation, investigation,
study, health or risk assessment, monitoring, removal, treatment or transport)
under any applicable Environmental Laws.
Section 4.13 Environmental Laws. "Environmental Laws" means all laws and
regulations of any Governmental Authority with jurisdiction that relate to the
protection of the environment (including ambient air, surface water, ground
water, land surface or subsurface strata) including laws and regulations
relating to the Release of Hazardous Materials, or otherwise relating to the
treatment, storage, disposal, transport or handling of Hazardous Materials, or
to the exposure of any individual to a Release of Hazardous Materials.
Section 4.14 Hazardous Materials. "Hazardous Materials" means chemicals,
pollutants, contaminants, wastes, toxic substances, radioactive and biological
materials, hazardous substances, petroleum and petroleum products or any
fraction thereof.
Section 4.15 Indemnitee. "Indemnitee" has the meaning set forth in Section
1.5(a) hereof.
Section 4.16 Insurance Policies. "Insurance Policies" means insurance policies
pursuant to which a Person makes a true risk transfer to an insurer.
Section 4.17 Insurance Proceeds. "Insurance Proceeds" means those monies:
(a) received by an insured from an insurance carrier; or
(b) paid by an insurance carrier on behalf of the insured;
from Insurance Policies.
Section 4.18 Insurance Transition Period. "Insurance Transition Period" has the
meaning set forth in Section 2.1 of this Agreement.
Section 4.19 Insured Luminent Liability. "Insured Luminent Liability" means any
Luminent Liability to the extent that (a) it is covered under the terms of MRV's
Insurance Policies in effect prior to the Distribution Date, and (b) Luminent is
not a named insured under, or otherwise entitled to the benefits of, such
Insurance Policies.
Section 4.20 IPO Date. "IPO Date" means the date on which Luminent effects its
initial public offering of common stock. Scheduled to occur on or before
________, 2000.
Section 4.21 IPO Liabilities. "IPO Liabilities" means any Liabilities relating
to, arising out of or resulting from any untrue statement or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, with respect to all information contained in the IPO
Registration Statement or any preliminary, final or supplemental prospectus
forming a part of a IPO Registration Statement.
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Section 4.22 IPO Registration Statement. "IPO Registration Statement" means the
registration statement on Form S-1 pursuant to the Securities Act to be filed
with the SEC registering the shares of common stock of Luminent to be issued in
the IPO, together with all amendments thereto.
Section 4.23 Liabilities. "Liabilities" has the meaning set forth in Section
4.15 of the Assignment Agreement.
Section 4.24 Non-US Plan. "Non-US Plan" means the plan of reorganization
described in Exhibit K of the Separation Agreement.
Section 4.25 Luminent Business. "Luminent Business" means the business and
operations of Luminent, as described in the IPO Registration Statement and
except as otherwise expressly provided herein, any terminated, divested or
discontinued businesses or operations that at the time of termination,
divestiture or discontinuation primarily related to the Luminent Business as
then conducted.
Section 4.26 Luminent Contracts. "Luminent Contracts" has the meaning set forth
in Section 4.23 of the Assignment Agreement.
Section 4.27 Luminent Covered Parties. "Luminent Covered Parties" shall have the
meaning set forth in Section 2.1(a) of this Agreement.
Section 4.28 Luminent Facilities. "Luminent Facilities" means all of those
facilities to be transferred to Luminent on the Separation Date as set forth on
Schedule 1 to the Real Estate Matters Agreement.
Section 4.29 Luminent Group. "Luminent Group" means Luminent, each Subsidiary
and Affiliated Company of Luminent immediately after the Separation Date or that
is contemplated to be a Subsidiary or Affiliated Company of Luminent pursuant to
the Non-US Plan and each Person that becomes a Subsidiary or Affiliate Company
of Luminent after the Separation Date.
Section 4.30 Luminent Indemnitees. "Luminent Indemnitees" means Luminent, each
member of the Luminent Group and each of their respective directors, officers
and employees.
Section 4.31 Luminent Liabilities. "Luminent Liabilities" has the meaning set
forth in Section 1.3 of the Assignment Agreement.
Section 4.32 Person. "Person" means an individual, a partnership, a corporation,
a limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
Section 4.33 Pre-Separation Third Party Site Liabilities. "Pre-Separation Third
Party Site Liabilities" means any and all Environmental Actions arising out of
Hazardous Materials found on, under or about any landfill any waste, storage,
transfer or recycling site and resulting from or arising out of Hazardous
Materials stored, treated, recycled disposed or otherwise handled at such site
prior to the Separation Date (whether for the operation of the Luminent Business
or for the operation of any past or presently (as of the date hereof) existing
MRV Business as operated on or before the Separation Date).
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Section 4.34 Release. "Release" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment, including, without limitation,
the movement of Hazardous Materials through ambient air, soil, surface water,
groundwater, wetlands, land or subsurface strata.
Section 4.35 Separation. "Separation" means the transfer and contribution from
MRV to Luminent, and Luminent's receipt and assumption of, directly or
indirectly, substantially all of the Assets and Liabilities currently associated
with the Luminent Business and the stock, investments or similar interests
currently held by MRV in subsidiaries and other entities that conduct such
business.
Section 4.36 Separation Agreement. "Separation Agreement" means the Master
Separation and Distribution Agreement dated as of _________, 2000, of which this
is an Exhibit thereto.
Section 4.37 Separation Date. " Separation Date" means the effective date and
time of each transfer of property, assumption of liability, license,
undertaking, or agreement in connection with the Separation, which shall be
12:01 a.m., Pacific Time, ___________, 2000, or such date as may be fixed by the
Board of Directors of MRV.
Section 4.38 Shared MRV Percentage. "Shared MRV Percentage" means [___%].
Section 4.39 Shared Luminent Percentage. "Shared Luminent Percentage" means
[___%].
Section 4.40 Shared Percentage. "Shared Percentage" means the Shared Luminent
Percentage or the Shared MRV Percentage, as the case may be.
Section 4.41 Subsidiary. "Subsidiary" of any Person means a corporation or other
organization whether incorporated or unincorporated of which at least a majority
of the securities or interests having by the terms thereof ordinary voting power
to elect at least a majority of the board of directors or others performing
similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such Person or by any one or more
of its Subsidiaries, or by such Person and one or more of its Subsidiaries;
provided, however, that no Person that is not directly or indirectly
wholly-owned by any other Person shall be a Subsidiary of such other Person
unless such other Person controls, or has the right, power or ability to
control, that Person.
Section 4.42 Tax Sharing Agreement. "Tax Sharing Agreement" means the Tax
Sharing Agreement, attached as Exhibit F to the Separation Agreement.
Section 4.43 Taxes. "Taxes" has the meaning set forth in the Tax Sharing
Agreement.
Section 4.44 Third Party Claim. "Third Party Claim" has the meaning set forth in
Section 1.5(a) of this Agreement.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, each of the parties has caused this Indemnification
and Insurance Matters Agreement to be executed on its behalf by its officers
thereunto duly authorized on the day and year first above written.
MRV COMMUNICATIONS, INC.
By:
-----------------------------------------
▇▇▇▇ ▇▇▇▇▇, Chief Executive Officer
LUMINENT, INC.
By:
-----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Executive
Officer
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