EXHIBIT 10.23
STOCK PURCHASE AGREEMENT
THIS AGREEMENT IS ENTERED INTO AS OF JANUARY 19, 1998, BY AND BETWEEN
▇▇▇▇▇▇▇▇▇ CORPORATION, A DELAWARE CORPORATION (THE "SELLER"), AND MRV
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COMMUNICATIONS, INC. (THE "BUYER"). THE BUYER AND THE SELLER ARE REFERRED TO
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COLLECTIVELY HEREIN AS THE "PARTIES."
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THE SELLER OWNS ALL OF THE OUTSTANDING CAPITAL STOCK OF ▇▇▇▇▇▇▇▇▇ XYPLEX,
INC., A DELAWARE CORPORATION (THE "TARGET"). THE TARGET OWNS ALL OF THE
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OUTSTANDING CAPITAL STOCK OF XYPLEX, INC., A MASSACHUSETTS CORPORATION (THE
"SUBSIDIARY").
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THIS AGREEMENT CONTEMPLATES A TRANSACTION IN WHICH THE BUYER WILL PURCHASE
FROM THE SELLER, AND THE SELLER WILL SELL TO THE BUYER, ALL OF THE OUTSTANDING
CAPITAL STOCK OF THE TARGET IN RETURN FOR THE CONSIDERATION SET FORTH HEREIN.
NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND THE MUTUAL PROMISES
HEREIN MADE, AND IN CONSIDERATION OF THE REPRESENTATIONS, WARRANTIES, AND
COVENANTS HEREIN CONTAINED, THE PARTIES AGREE AS FOLLOWS.
1. Definitions.
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"Accredited Investor" has the meaning set forth in Regulation D promulgated
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under the Securities Act.
"Acquisition Agreement" has the meaning set forth in Section 6(i) below.
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"Adverse Consequences" means all actions, suits, proceedings, hearings,
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investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
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promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of Code
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Section 1504(a).
"Basis" means any past or present fact, situation, circumstance, status,
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condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence.
"Brokers Contract" has the meaning set forth in Section 3(a)(iv).
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"Buyer" has the meaning set forth in the preface above.
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"Buyer's Stock" has the meaning set forth in Section 2(b) below.
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"Closing" has the meaning set forth in Section 2(c) below.
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"Closing Date" has the meaning set forth in Section 2(c) below.
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"Code" means the Internal Revenue Code of 1986, as amended.
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"Confidential Information" means any information concerning the business
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and affairs of the Target that is not already generally available to the public.
"Controlled Group of Corporations" has the meaning set forth in Code
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(S)1563.
"Deferred Intercompany Transaction" has the meaning set forth in Reg.
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(S)1.1502-13.
"Disclosure Schedule" has the meaning set forth in Sections 3 and 4 below.
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"Employee Benefit Plan" means any (a) nonqualified deferred compensation or
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retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), or (d) Employee Welfare Benefit Plan or material fringe
benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA (S)3(2).
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"Employee Welfare Benefit Plan" has the meaning set forth in ERISA (S)3(1).
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"Environmental, Health and Safety Laws" means the Comprehensive
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Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local, and foreign governments (and all
agencies thereof) concerning pollution or protection of the environment, public
health and safety, or employee health and safety, including laws relating to
emissions, discharges, releases, or threatened releases of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes
into ambient air, surface water, ground water, or lands or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes, as in effect on the date hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
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amended.
"Excess Loss Account" has the meaning set forth in Reg. (S)1.1502-19.
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"Extremely Hazardous Substance" has the meaning set forth in (S)302 of the
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Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"Fiduciary" has the meaning set forth in ERISA (S)3(21).
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"Financial Statement" has the meaning set forth in Section 4(f) below.
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"GAAP" means United States generally accepted accounting principles as in
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effect from time to time.
"▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
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Act of 1976, as amended.
"Indemnified Party" has the meaning set forth in Section 8(d) below.
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"Indemnifying Party" has the meaning set forth in Section 8(d) below.
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"Intellectual Property" means (a) all inventions (whether patentable or
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unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (f) all computer software (including data and
related documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"Knowledge" means actual knowledge after reasonable investigation.
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"Liability" means any liability (whether known or unknown, whether asserted
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or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for Taxes.
"Most Recent Balance Sheet" means the balance sheet contained within the
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Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in Section
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4(f) below.
"Most Recent Fiscal Month End" has the meaning set forth in Section 4(f)
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below.
"Most Recent Fiscal Year End" means October 31, 1997.
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"Multiemployer Plan" has the meaning set forth in ERISA (S)3(37).
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"Ordinary Course of Business" means the ordinary course of business
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consistent with past custom and practice (including with respect to quantity and
frequency).
"Party" has the meaning set forth in the preface above.
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"PBGC" means the Pension Benefit Guaranty Corporation.
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"Person" means an individual, a partnership, a corporation, an association,
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a joint stock company, a trust, a joint venture, an unincorporated organization,
or a governmental entity (or any department, agency, or political subdivision
thereof).
"Prohibited Transaction" has the meaning set forth in ERISA (S)406 and Code
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(S)4975.
"Purchase Price" has the meaning set forth in Section 2(b) below.
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"Raytheon" has the meaning set forth in Section 6(i) below.
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"Raytheon Obligations" has the meaning set forth in Section 6(i) below.
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"Reportable Event" has the meaning set forth in ERISA (S)4043.
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"Securities Act" means the Securities Act of 1933, as amended.
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"Securities Exchange Act" means the Securities Exchange Act of 1934, as
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amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
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or other security interest, other than (a) mechanic's, materialmen's, and
similar liens, (b) liens for Taxes not yet due and payable or for Taxes that the
taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
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"Subsidiary" has the meaning set forth in the preface above.
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"Subsidiary Share" means any share of Common Stock of the Subsidiary.
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"S-X" has the meaning set forth in Section 6(g).
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"Target" has the meaning set forth in the preface above.
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"Target Share" means any share of the Common Stock, par value $.01 per
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share, of the Target.
"Tax" means any federal, state, local, or foreign income, gross receipts,
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license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code (S)59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
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"Tax Return" means any return, declaration, report, claim for refund, or
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information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section 8(d) below.
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"Warrants" means the warrants to purchase shares of Buyer's Stock, issued
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in accordance with the Warrant Agreement attached as Exhibit A hereto, which
comprise a portion of the Purchase Price.
2. Purchase and Sale of Target Shares.
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(a) Basic Transaction. On and subject to the terms and conditions of this
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Agreement, the Buyer agrees to purchase from the Seller, and the Seller agrees
to sell to the Buyer, all of the Target Shares for the consideration specified
below in this Section 2.
(b) Purchase Price. The Buyer agrees to deliver to the Seller at the
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Closing $35,000,000 in cash and warrants to purchase 421,402 shares of common
stock of the Buyer ("Buyer's Stock"), such warrants to be issued pursuant to the
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Warrant Agreement, a form of which is attached as Exhibit A hereto, (such cash
and Warrant, together with the Warrant for 78,598 shares of Buyer's Stock to be
issued pursuant to Section 6(g) hereof, if any, the "Purchase Price").
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(c) The Closing. The closing of the transactions contemplated by this
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Agreement (the "Closing") shall take place at the offices of Freshman, Marantz,
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Orlanski, ▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, 8 East, Beverly Hills,
California, commencing at 9:00 a.m. local time on the fifth business day
following the satisfaction or waiver of all conditions to the obligations of the
Parties to consummate the transactions contemplated hereby (other than
conditions with respect to actions the respective Parties will take at the
Closing itself) or such other date as the Buyer and the Seller may mutually
determine (the "Closing Date").
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(d) Deliveries at the Closing. At the Closing, (i) the Seller will
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deliver to the Buyer stock certificates representing all of the Target Shares,
endorsed in blank or accompanied by duly executed assignment documents and a
standard investment representation letter with respect to the Warrants, and (ii)
the Buyer will deliver to the Seller the consideration specified in Section 2(b)
above.
(e) Other Actions. At or immediately prior to the Closing, (i) the
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Subsidiary, the Target and the Seller shall release and cancel any intercompany
loans, guaranties, liens and other intercompany obligations (except for that
certain License Agreement dated as of January 24, 1997 between the Subsidiary,
on one hand, and Seller and ▇▇▇▇▇▇▇▇▇ Communications, Inc., on the other), and
(ii) the Seller will require its lenders to release any liens on the Target
Shares, the Subsidiary Shares or the assets of the Subsidiary in favor of
Seller's lenders.
3. Representations and Warranties Concerning the Transaction.
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(a) Representations and Warranties of the Seller. The Seller represents
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and warrants to the Buyer that the statements contained in this Section 3(a) are
correct and complete as of the date of this Agreement, except as set forth in
Schedule 3(a) attached hereto.
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(i) Organization of Seller. The Seller is duly organized, validly
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existing, and in good standing under the laws of the jurisdiction of its
incorporation.
(ii) Authorization of Transaction. The Seller has full corporate
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power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and legally binding
obligation of the Seller, enforceable in accordance with its terms and
conditions. The Seller need not give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or governmental
agency in order to consummate the transactions contemplated by this Agreement,
other than filings required by the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act.
(iii) Noncontravention. Neither the execution and the delivery of this
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Agreement, nor the consummation of the transactions contemplated hereby, will
(A) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Seller is subject or any provision of
its charter or bylaws or (B) conflict with, result in a breach of or constitute
a default under any material contract to which the Seller is a party, including
any agreement to merge the Target or the Subsidiary, sell or transfer the Target
Shares or the Subsidiary Shares, or sell all or substantially all of the
Subsidiary's assets.
(iv) Brokers' Fees. The Seller has no Liability or obligation to pay
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any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Buyer could become
liable or obligated, other than fees and expenses owed to ▇▇▇▇▇▇, Read & Co.,
Inc. pursuant to the Sellers contract with ▇▇▇▇▇▇, Read & Co., Inc. dated as of
February 7, 1997 (the "Broker's Contract").
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(v) Target Shares. The Seller holds of record and owns beneficially
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all of the outstanding Target Shares, and as of the Closing Date such Shares
shall be free and clear of any restrictions on transfer (other than any
restrictions under the Securities Act and state securities laws), Taxes,
Security Interests, options, warrants, purchase rights, contracts, commitments,
equities, claims, and demands. The Seller is not a party to any option, warrant,
purchase right, or other contract or commitment that could require the Seller to
sell, transfer, or otherwise dispose of any capital stock of the Target (other
than this Agreement). The Seller is not a party to any voting trust, proxy, or
other agreement or understanding with respect to the voting of any capital stock
of the Target.
(vi) Guaranties. At the Closing, the Seller will not be the guarantor
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for any obligations or Liabilities of the Target or the Subsidiary.
(vii) Investment. The Seller is not acquiring the Warrants with a view
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to or for sale in connection with any distribution thereof within the meaning of
the Securities Act.
(b) Representations and Warranties of the Buyer. The Buyer represents and
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warrants to the Seller that the statements contained in this Section 3(b) are
correct and complete as of the date of this Agreement, except as set forth in
Schedule 3(b) attached hereto.
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(i) Organization of the Buyer. The Buyer is a corporation duly
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organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
(ii) Authorization of Transaction. The Buyer has full power and
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authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of the Buyer, enforceable
in accordance with its terms and conditions. The Buyer need not give any notice
to, make any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order to consummate the transactions
contemplated by this Agreement other than the filing of a Notice under
Regulation D of the Securities Act and filings required by the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Act.
(iii) Noncontravention. Neither the execution and the delivery of
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this Agreement, nor the consummation of the transactions contemplated hereby,
will (A) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Buyer is subject or any provision of
its charter or bylaws or (B) conflict with, result in a breach of or constitute
a default under any material contract to which the Buyer is a party.
(iv) Brokers' Fees. The Buyer has no Liability or obligation to
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pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Seller could become
liable or obligated.
(v) Investment. The Buyer is not acquiring the Target Shares with a
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view to or for sale in connection with any distribution thereof within the
meaning of the Securities Act.
(vi) Capitalization. The entire authorized capital stock of the Buyer
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consists of 40,000,000 Shares. The Buyer has, and at all times during which the
Warrants are exercisable shall reserve and keep available, free from preemptive
rights, out of its authorized but unissued common stock or its authorized and
issued common stock held in its treasury, for the purpose of enabling it to
satisfy any obligation to issue Buyer's Shares upon the exercise of Warrants.
4. Representations and Warranties Concerning the Target and the Subsidiary.
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The Seller represents and warrants to the Buyer that the statements contained in
this Section 4 are correct and complete as of the date of this Agreement, except
as set forth in the disclosure schedules delivered by the Seller to the Buyer on
the date hereof (the "Disclosure Schedule"). The Disclosure Schedule will be
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arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 4.
(a) Organization, Qualification, and Corporate Power. Each of the Target
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and the Subsidiary is a corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its incorporation. Each of
the Target and the Subsidiary is duly authorized to conduct business and is in
good standing under the laws of each jurisdiction where such qualification is
required. The Subsidiary has full corporate power and authority and all material
licenses, permits, and
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authorizations necessary to carry on the business in which it is engaged and to
own and use the properties owned and used by it. Section 4(a) of the Disclosure
Schedule lists the directors and officers of the Target and the Subsidiary. The
Seller has delivered to the Buyer correct and complete copies of the charter and
bylaws of the Target and the Subsidiary (as amended to date). Neither the Target
nor the Subsidiary is in default under or in violation of any provision of its
charter or bylaws. The Target has no equity interest in any Person, except for
the Subsidiary. The Subsidiary has no equity interest in any other Person.
(b) Capitalization.
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(i) The entire authorized capital stock of the Target consists of
40,000,000 Target Shares, 36,800,000 of which are issued and outstanding. All of
the outstanding Target Shares have been duly authorized, are validly issued,
fully paid, and nonassessable, and are held of record and are beneficially owned
by the Seller. There are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights, or
other contracts or commitments that could require the Target to issue, sell, or
otherwise cause to become outstanding any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to the Target. There are no voting
trusts, proxies, or other agreements or understandings with respect to the
voting of the capital stock of the Target.
(ii) The entire authorized capital stock of the Subsidiary consists
of 1,000 Subsidiary Shares, all of which are issued and outstanding, and there
are no Subsidiary Shares held in the treasury of Subsidiary. All of the
outstanding Subsidiary Shares have been duly authorized, are validly issued,
fully paid, and nonassessable, and are held of record and are beneficially owned
by the Target. There are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights, or
other contracts or commitments that could require the Subsidiary to issue, sell,
or otherwise cause to become outstanding any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to the Subsidiary. There are no
voting trusts, proxies, or other agreements or understandings with respect to
the voting of the capital stock of the Subsidiary.
(c) Noncontravention. Neither the execution and the delivery of this
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Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Target or the Subsidiary is subject
or any provision of the charter or bylaws of the Target or the Subsidiary or
(ii) conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any material agreement, contract,
lease, license, instrument, or other arrangement to which the Subsidiary is a
party or by which it is bound or to which any of its assets is subject (or
result in the imposition of any Security Interest upon any of its assets). The
Subsidiary does not need to give any notice to, make any filing with, or obtain
the authorization, consent, or approval of any government or governmental agency
in order for the Parties
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to consummate the transactions contemplated by this Agreement other than filings
required by the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act.
(d) Brokers' Fees. Neither the Target nor the Subsidiary has any
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Liability or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement.
(e) Title to Assets. The Subsidiary has good and marketable title to, or a
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valid leasehold interest in, the properties and assets used by it, located on
its premises, or shown on the Most Recent Balance Sheet or acquired after the
date thereof, and as of the Closing Date will be free and clear of all Security
Interests, except for properties and assets disposed of in the Ordinary Course
of Business since the date of the Most Recent Balance Sheet.
(f) Financial Statements. Attached hereto as Schedule 4(f) are the
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following financial statements (collectively the "Financial Statements"):
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(i) unaudited balance sheet and statements of income, changes in stockholders'
equity, and cash flow as of and for the fiscal year ended October 31, 1997 for
the Subsidiary; (ii) unaudited balance sheet and statements of income, changes
in stockholders' equity, and cash flow (the "Most Recent Financial Statements")
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as of and for the two months ended January 4, 1998 (the "Most Recent Fiscal
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Month End") for the Subsidiary; and (iii) unaudited balance sheet and statements
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of income, changes in stockholders' equity and cash flow for the period from
April 10, 1996 to October 31, 1996. The Financial Statements (including the
notes thereto) have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby, present fairly the
financial condition of the Subsidiary as of such dates and the results of
operations of the Subsidiary for such periods, are correct and complete, and are
consistent with the books and records of the Subsidiary (which books and records
are correct and complete); provided, however, that the Most Recent Financial
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Statements are subject to normal year-end adjustments (which will not be
material individually or in the aggregate) and lack footnotes and other
presentation items.
(g) Events Subsequent to Most Recent Fiscal Year End. Since the Most
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Recent Fiscal Year End, there has not been any material adverse change in the
business, financial condition, operations or results of operations of the
Subsidiary. Without limiting the generality of the foregoing, since that date:
(i) the Subsidiary has not sold, leased, transferred, or assigned
any of its assets, tangible or intangible, outside the Ordinary Course of
Business;
(ii) the Subsidiary has not entered into any material agreement,
contract, lease, or license (or series of related agreements, contracts, leases,
and licenses) outside the Ordinary Course of Business;
(iii) no party (including the Subsidiary) has accelerated,
terminated, modified, or canceled any material agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and licenses) to
which the Subsidiary is a party or by which it is bound;
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(iv) the Subsidiary has not imposed any Security Interest upon any
of its assets, tangible or intangible outside the Ordinary Course of Business;
(v) the Subsidiary has not made any material capital expenditures
outside the Ordinary Course of Business;
(vi) the Subsidiary has not made any material capital investment
in, any loan to, or any acquisition of the securities or assets of, any other
Person outside the Ordinary Course of Business;
(vii) the Subsidiary has not accelerated the collection of
outstanding accounts receivable, through the offer of discounts or otherwise,
outside the Ordinary Course of Business;
(viii) the Subsidiary has not created, incurred, assumed, or
guaranteed any indebtedness for borrowed money or capitalized lease obligation
either involving more than $200,000 singly or $1.5 million in the aggregate;
(ix) the Subsidiary has not delayed or postponed the payment of
accounts payable and other Liabilities outside the Ordinary Course of Business;
(x) the Subsidiary has not canceled, compromised, waived, or
released any material right or claim outside the Ordinary Course of Business;
(xi) the Subsidiary has not granted any license or sublicense of
any rights under or with respect to any Intellectual Property outside the
Ordinary Course of Business;
(xii) the Subsidiary has not declared, set aside, or paid any
dividend or made any distribution with respect to its capital stock (whether in
cash or in kind) or redeemed, purchased, or otherwise acquired any of its
capital stock;
(xiii) there has been no change made or authorized in the charter or
bylaws of the Subsidiary;
(xiv) the Subsidiary has not issued, sold, or otherwise disposed of
any of its capital stock, or granted any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange, or exercise) any of its
capital stock;
(xv) the Subsidiary has not experienced any damage, destruction,
or loss (whether or not covered by insurance) to its property;
(xvi) the Subsidiary has not made any loan to, or entered into any
other transaction with, any of its directors, officers, and employees outside
the Ordinary Course of Business;
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(xvii) the Subsidiary has not entered into any employment contract
or collective bargaining agreement, written or oral, or modified the terms of
any existing such contract or agreement outside the Ordinary Course of Business;
(xviii) the Subsidiary has not granted any increase in the base
compensation of any of its directors, officers or employees outside the Ordinary
Course of Business;
(xix) the Subsidiary has not adopted, amended, modified, or
terminated any bonus, profit-sharing, incentive, severance, or other plan,
contract, or commitment for the benefit of any of its directors, officers, and
employees (or taken any such action with respect to any other Employee Benefit
Plan);
(xx) the Subsidiary has not made any other material change in
employment terms for any of its directors, officers, or employees outside the
Ordinary Course of Business;
(xxi) there has not been any other material occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary Course of
Business involving the Subsidiary; and
(xxii) the Subsidiary has not committed to any of the foregoing.
(h) Undisclosed Liabilities. The Subsidiary does not have any Liability
------------------------
(and there is no Basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against it giving
rise to any Liability), except for (i) Liabilities set forth on the face of the
Most Recent Balance Sheet (rather than in any notes thereto) and (ii)
Liabilities which have arisen after the Most Recent Fiscal Month End in the
Ordinary Course of Business (none of which results from, arises out of, relates
to, is in the nature of, or was caused by any breach of contract, breach of
warranty, tort, infringement, or violation of law).
(i) Legal Compliance. The Subsidiary, and its predecessors and Affiliates,
-----------------
has complied with all applicable laws (including rules, regulations, codes,
plans, injunctions, judgments, orders, decrees, rulings, and charges thereunder)
of federal, state, local, and foreign governments (and all agencies thereof)
other than where noncompliance with such laws would not have a material adverse
effect on the Subsidiary, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against any of them alleging any failure so to comply.
(j) Tax Matters.
------------
(i) The Subsidiary has filed all Tax Returns that it was required to
file. All such Tax Returns were correct and complete in all material
respects. All Taxes owed by the Subsidiary (whether or not shown on any Tax
Return) have been paid. The Subsidiary currently is not the beneficiary of
any extension of time within which to file any Tax Return. No claim has
been made since April 10, 1996 by an authority in a jurisdiction where the
Subsidiary does not file Tax Returns that it is or may be subject to
taxation by that jurisdiction.
11
There are no Security Interests on any of the assets of the Subsidiary that
arose in connection with any failure (or alleged failure) to pay any Tax.
(ii) The Subsidiary has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third
party.
(iii) No Seller or director or officer (or employee responsible for
Tax matters) of the Subsidiary expects any authority to assess any
additional Taxes for any period for which Tax Returns have been filed.
There is no dispute or claim concerning any Tax Liability of the Subsidiary
either (A) claimed or raised by any authority in writing or (B) as to which
any of the Seller and the directors and officers (and employees responsible
for Tax matters) of the Subsidiary has Knowledge based upon personal
contact with any agent of such authority. Schedule 4(j) lists all federal,
state, local, and foreign income Tax Returns filed with respect to the
Subsidiary for taxable periods ended on or after October 31, 1996,
indicates those Tax Returns that have been audited, and indicates those Tax
Returns that currently are the subject of audit. The Seller has delivered
to the Buyer correct and complete copies of all federal income Tax Returns,
examination reports, and statements of deficiencies assessed against or
agreed to by the Subsidiary since October 31, 1996.
(iv) The Subsidiary has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
(v) The Subsidiary has not filed a consent under Code (S)341(f)
concerning collapsible corporations. The Subsidiary has not made any
payments, is not obligated to make any payments, and is not a party to any
agreement that under certain circumstances could obligate it to make any
payments that will not be deductible under Code (S)280G. The Subsidiary has
not been a United States real property holding corporation within the
meaning of Code (S)897(c)(2) during the applicable period specified in Code
(S)897(c)(1)(A)(ii). The Subsidiary is not a party to any Tax allocation or
sharing agreement. The Subsidiary (A) has not been a member of an
Affiliated Group filing a consolidated federal income Tax Return (other
than a group the common parent of which was the Subsidiary) and (B) does
not have any Liability for the Taxes of any Person (other than the
Subsidiary) under Reg. (S)1.1502-6 (or any similar provision of state,
local, or foreign law), as a transferee or successor, by contract, or
otherwise.
(vi) The unpaid Taxes of the Subsidiary (A) did not, as of the Most
Recent Fiscal Month End, exceed the reserve for Tax Liability (rather than
any reserve for deferred Taxes established to reflect timing differences
between book and Tax income) set forth on the face of the Most Recent
Balance Sheet (rather than in any notes thereto) and (B) do not exceed that
reserve as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Subsidiary in filing
its Tax Returns.
(k) Real Property. Schedule 4(k) lists and describes briefly all real
--------------
property leased or subleased to the Subsidiary. The Seller has delivered
to the Buyer correct and complete copies of the
12
leases and subleases listed in Schedule 4(k) (as amended to date). With respect
to each lease and sublease listed in Schedule 4(k):
(A) the lease or sublease is legal, valid, binding and enforceable
against the Subsidiary, and in full force and effect;
(B) as to each lease and sublease, the Subsidiary is not in default,
and no event has occurred which, with notice or lapse of time, would constitute
a breach or default or permit termination, modification, or acceleration
thereunder;
(C) as to each lease and sublease, the Subsidiary has not repudiated
any provision thereof;
(D) there are no material disputes, oral agreements, or forbearance
programs in effect as to the lease or sublease;
(E) the Subsidiary has not assigned, transferred, conveyed, mortgaged,
deeded in trust, or encumbered any interest in the leasehold or subleasehold;
and
(F) to the Knowledge of the Subsidiary, all facilities leased or
subleased thereunder have received all approvals of governmental authorities
(including licenses and permits) required in connection with the operation
thereof and have been operated and maintained in accordance with applicable
laws, rules, and regulations.
(l) Intellectual Property.
----------------------
(i) The Subsidiary has not interfered with, infringed upon,
misappropriated, or violated any material Intellectual Property rights of third
parties in any material respect, and neither the Seller nor the directors and
officers of the Subsidiary have received any charge, complaint, claim, demand,
or notice alleging any such interference, infringement, misappropriation, or
violation by the Subsidiary (including any claim that the Subsidiary must
license or refrain from using any Intellectual Property rights of any third
party). To the Knowledge of the Subsidiary, no third party has interfered with,
infringed upon, misappropriated, or violated any material Intellectual Property
rights of the Subsidiary in any material respect.
(ii) The Subsidiary owns or has the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property necessary for the
operation of the business of the Subsidiary as presently conducted. Each item of
Intellectual Property owned or used by the Subsidiary immediately prior to the
Closing hereunder will be owned or available for use by the Subsidiary on
identical terms and conditions immediately subsequent to the Closing hereunder.
The Subsidiary has taken all necessary action to maintain and protect each item
of Intellectual Property that it owns or uses.
(iii) Schedule 4(l)(iii) identifies each patent or registration which
has been issued to the Subsidiary with respect to any of its Intellectual
Property, identifies each pending patent
13
application or application for registration which the Subsidiary has made with
respect to any of its Intellectual Property, and identifies each license,
agreement, or other permission which the Subsidiary has granted to any third
party with respect to any of its Intellectual Property (together with any
exceptions). The Seller has delivered to the Buyer correct and complete copies
of all such patents, registrations, applications, licenses, agreements, and
permissions (as amended to date). Schedule 4(l)(iii) also identifies each trade
name or unregistered trademark used by the Subsidiary in connection with its
business. With respect to each item of Intellectual Property identified in
Schedule 4(l)(iii):
(A) the Subsidiary possesses all right, title, and interest in and to
the item, free and clear of any Security Interest, license, or other
restriction;
(B) the item is not subject to any outstanding injunction, judgment,
order, decree, ruling, or charge;
(C) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or, to the Knowledge of the
Subsidiary, is threatened which challenges the legality, validity,
enforceability, use, or ownership of the item; and
(D) the Subsidiary has no existing contracts or indemnification
agreements whereby it is obligated to indemnify any Person for or against
any interference, infringement or misappropriation with respect to the
items.
(iv) Schedule 4(l)(iv) identifies each material item of Intellectual
Property that any third party owns and that the Subsidiary uses pursuant to
license, sublicense, agreement, or permission. With respect to each item of
Intellectual Property required to be identified in Schedule 4(l)(iv):
(A) the license, sublicense, agreement, or permission covering the
item is legal, valid, binding, enforceable, and in full force and effect;
(B) the license, sublicense, agreement, or permission will continue
to be legal, valid, binding, enforceable, and in full force and effect on
identical terms following the consummation of the transactions contemplated
hereby (including the assignments and assumptions referred to in Section 2
above);
(C) no party to the license, sublicense, agreement, or permission is
in breach or default, and no event has occurred which with notice or lapse
of time would constitute a breach or default or permit termination,
modification, or acceleration thereunder;
(D) no party to the license, sublicense, agreement, or permission has
repudiated any provision thereof;
14
(E) with respect to each sublicense, the representations and
warranties set forth in subsections (A) through (D) above are true and
correct with respect to the underlying license;
(F) to the Knowledge of the Subsidiary the underlying item of
Intellectual Property is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(G) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or, to the Knowledge of the
Subsidiary, is threatened which challenges the legality, validity, or
enforceability of the underlying item of Intellectual Property; and
(H) the Subsidiary has not granted any sublicense or similar right
with respect to the license, sublicense, agreement, or permission.
(v) To the Knowledge of the Subsidiary, the Subsidiary will not, prior to
the Closing, knowingly interfere with, infringe upon, misappropriate, or
otherwise come into conflict with, any Intellectual Property rights of third
parties as a result of the continued operation of its business as presently
conducted.
(m) Tangible Assets. The Subsidiary owns or leases all buildings, machinery,
----------------
equipment, and other tangible assets necessary for the conduct of its business
as presently conducted. Each such tangible asset is free from defects (patent
and latent), has been maintained in accordance with normal industry practice, is
in good operating condition and repair (subject to normal wear and tear), and is
suitable for the purposes for which it presently is used.
(n) Inventory. The inventory of the Subsidiary consists of raw materials
----------
and supplies, manufactured and purchased parts, goods in process, and finished
goods, all of which is merchantable and fit for the purpose for which it was
procured or manufactured, and none of which is slow-moving, obsolete, damaged,
or defective, subject only to the reserve for inventory writedown set forth in
the Most Recent Balance Sheet, as adjusted for the passage of time through the
Closing Date, in accordance with the past custom and practice of the Subsidiary
and in accordance with GAAP.
(o) Contracts. Schedule 4(o) lists the following contracts and other
----------
agreements to which the Subsidiary is a party:
(i) any agreement (or group of related agreements) for the lease of
personal property to or from any Person providing for lease payments in
excess of $300,000 per annum;
(ii) any agreement (or group of related agreements) for the purchase
or sale of raw materials, commodities, supplies, products, or other
personal property, or for the furnishing or receipt of services, the
performance of which will extend over a period of more than one year,
result in a material loss to the Subsidiary, or involve consideration in
excess of $1.6 million;
15
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) under which it
has created, incurred, assumed, or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation, in excess of $1.6 million or
under which it has imposed a Security Interest on any of its assets,
tangible or intangible;
(v) any agreement concerning confidentiality or noncompetition;
(vi) any agreement with any of the Seller and its Affiliates (other
than the Subsidiary);
(vii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material plan or
arrangement for the benefit of its current or former directors, officers,
and employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual on a full-
time, part-time, consulting, or other basis providing annual compensation
in excess of $100,000 or providing severance benefits in excess of
$100,000;
(x) any agreement under which it has advanced or loaned any amount
to any of its directors, officers, and employees outside the Ordinary
Course of Business;
(xi) any agreement under which the consequences of a default or
termination could have a material adverse effect on the business, financial
condition, operations or results of operations of the Subsidiary; or
(xii) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $1.6 million.
The Seller has provided Buyer with access to a correct and complete copy of
each written agreement listed in Schedule 4(o) and a written summary setting
forth the material terms and conditions of each oral agreement referred to in
Schedule 4(o).
With respect to each such agreement: (A) the agreement is legal, valid,
binding, enforceable, and in full force and effect; (B) no party is in breach or
default, and no event has occurred which with notice or lapse of time would
constitute a breach or default, or permit termination, modification, or
acceleration, under the agreement; and (C) no party has repudiated any provision
of the agreement.
(p) Notes and Accounts Receivable. All notes and accounts receivable of
------------------------------
the Subsidiary are reflected properly on their books and records, are valid
receivables subject to no setoffs or counterclaims and are current and
collectible at their recorded amounts, subject only to the reserve for bad debts
set forth in the Most Recent Balance Sheet as adjusted for the passage of time
through the
16
Closing Date in accordance with the past custom and practice of the Subsidiary
and in accordance with GAAP.
(q) Powers of Attorney. There are no outstanding powers of attorney
-------------------
executed on behalf of the Target or the Subsidiary.
(r) Insurance. Schedule 4(r) sets forth the following information with
----------
respect to each insurance policy (including policies providing property,
casualty, liability, and workers' compensation coverage and bond and surety
arrangements) to which the Subsidiary has been a party, a named insured, or
otherwise the beneficiary of coverage at any time since April 10, 1996:
(i) the name, addresses and phone numbers of the agents;
(ii) the name of the insurer, the name of the policyholder, and the
name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the type and amount (including deductible and ceiling amounts)
of coverage; and
(v) the description of any retroactive premium adjustments or other
material loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is legal, valid,
binding, enforceable, and in full force and effect; (B) the Subsidiary is not in
breach or default (including with respect to the payment of premiums or the
giving of notices), and no event has occurred which, with notice or the lapse of
time, would constitute such a breach or default, or permit termination,
modification, or acceleration, under the policy; and (C) no party to the policy
has repudiated any provision thereof. Schedule 4(r) describes any self-insurance
arrangements affecting the Subsidiary.
(s) Litigation. Schedule 4(s) sets forth each instance in which the
-----------
Subsidiary (i) is subject to any outstanding injunction, judgment, order,
decree, ruling, or charge or (ii) is a party or, to the Knowledge of the
Subsidiary, is threatened to be made a party to any action, suit, proceeding,
hearing, or investigation of, in, or before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator. None of the actions, suits, proceedings, hearings, and
investigations set forth in Schedule 4(s) could result in any material adverse
change in the business, financial condition, operations or results of operations
of the Subsidiary. The Subsidiary has no reason to believe that any such action,
suit, proceeding, hearing, or investigation will be brought or threatened
against the Subsidiary.
(t) Product Warranty. Each product manufactured, sold, leased, or
-----------------
delivered by the Subsidiary has been in conformity with all applicable
contractual commitments and all express and implied warranties, and the
Subsidiary does not have any Liability (and there is no Basis for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against it giving rise to any Liability) for replacement or
repair thereof or other damages in connection therewith,
17
subject only to the reserve for product warranty claims set forth in Most Recent
Balance Sheet as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Subsidiary and in accordance
with GAAP. No product manufactured, sold, leased, or delivered by the Subsidiary
is subject to any guaranty, warranty, or other indemnity beyond the applicable
standard terms and conditions of sale or lease. Schedule 4(t) includes copies of
the standard terms and conditions of sale or lease for the Subsidiary
(containing applicable guaranty, warranty, and indemnity provisions).
(u) Product Liability. The Subsidiary does not have any Liability (and
------------------
there is no Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against it giving rise to any
Liability) arising out of any injury to individuals or property as a result of
the ownership, possession, or use of any product sold, leased or delivered by
the Subsidiary prior to the Closing Date.
(v) Employees. To the Knowledge of any of the Seller and the directors and
----------
officers of the Subsidiary, no executive, key employee, or significant group of
employees plans to terminate employment with the Subsidiary during the next 12
months. The Subsidiary is not a party to or bound by any collective bargaining
agreement, nor has it experienced any strikes, grievances, claims of unfair
labor practices, or other collective bargaining disputes since April 10, 1996.
The Subsidiary has not committed any unfair labor practice since April 10, 1996.
The Subsidiary does not have Knowledge of any organizational effort presently
being made or threatened by or on behalf of any labor union with respect to
employees of the Subsidiary.
(w) Employee Benefits.
------------------
(i) Schedule 4(w) lists each Employee Benefit Plan that the
Subsidiary maintains or to which the Subsidiary contributes.
(ii) With respect to each Employee Benefit Plan that the Subsidiary
maintains or to which the Subsidiary contributes, except for such matters as,
individually or in the aggregate, could not reasonably be expected to have a
material adverse effect on the financial condition of the Subsidiary:
(A) Each such Employee Benefit Plan (other than any
Multiemployer Plan) (and each related trust, insurance contract, or fund),
complies in form and in operation in all material respects with the
applicable requirements of ERISA, the Code, and other applicable laws.
(B) All required reports and descriptions (including Form 5500
Annual Reports, Summary Annual Reports, PBGC-1's, and Summary Plan
Descriptions) have been filed or distributed appropriately with respect to
each such Employee Benefit Plan (other than any Multiemployer Plan). The
requirements of Part 6 of Subtitle B of Title I of ERISA and of Code
(S)4980B have been met in all material respects with respect to each such
Employee Benefit Plan which is an Employee Welfare Benefit Plan.
18
(C) All contributions (including all employer contributions and
employee salary reduction contributions) which are due have been paid to
each such Employee Benefit Plan which is an Employee Pension Benefit Plan
and all contributions for any period ending on or before the Closing Date
which are not yet due have been paid to each such Employee Pension Benefit
Plan or accrued in accordance with the past custom and practice of the
Subsidiary. All premiums or other payments for all periods ending on or
before the Closing Date have been paid with respect to each such Employee
Benefit Plan which is an Employee Welfare Benefit Plan.
(D) Each such Employee Benefit Plan which is an Employee Pension
Benefit Plan (other than any Multiemployer Plan) meets the requirements of
a "qualified plan" under Code (S)401(a) and has received, within the last
two years, a favorable determination letter from the Internal Revenue
Service.
(E) The market value of assets under each such Employee Benefit
Plan which is an Employee Pension Benefit Plan (other than any
Multiemployer Plan) equals or exceeds the present value of all vested and
nonvested Liabilities thereunder determined in accordance with PBGC
methods, factors, and assumptions applicable to an Employee Pension Benefit
Plan terminating on the date for determination.
(F) The Seller has delivered to the Buyer correct and complete
copies of the plan documents and summary plan descriptions, the most recent
determination letter received from the Internal Revenue Service, the most
recent Form 5500 Annual Report, and all related trust agreements, insurance
contracts, and other funding agreements which implement each such Employee
Benefit Plan (other than any Multiemployer Plan).
(iii) With respect to each Employee Benefit Plan that the Subsidiary, or
the Controlled Group of Corporations which includes the Subsidiary, has
maintained since April 10, 1996 for the benefit of the Subsidiary or to which
any of them has contributed since April 10, 1996 for the benefit of the
Subsidiary:
(A) No such Employee Benefit Plan which is an Employee Pension
Benefit Plan (other than any Multiemployer Plan) has been completely or
partially terminated or been the subject of a Reportable Event as to which
notices would be required to be filed with the PBGC. No proceeding by the
PBGC to terminate any such Employee Pension Benefit Plan (other than any
Multiemployer Plan) has been instituted or, to the Knowledge of the
Subsidiary, threatened.
(B) To the Knowledge of the Seller, there have been no Prohibited
Transactions with respect to any such Employee Benefit Plan (other than any
Multiemployer Plan). To the Knowledge of the Seller, no Fiduciary has any
Liability for breach of fiduciary duty or any other failure to act or
comply in connection with the administration or investment of the assets of
any such Employee Benefit Plan (other than any Multiemployer Plan). No
action, suit, proceeding, hearing, or investigation
19
with respect to the administration or the investment of the assets of any
such Employee Benefit Plan (other than any Multiemployer Plan) (other than
routine claims for benefits) is pending or, to the Knowledge of the
Subsidiary, threatened. The Subsidiary has no Knowledge of any Basis for
any such action, suit, proceeding, hearing, or investigation.
(C) The Subsidiary has not incurred, and the Subsidiary has no
reason to expect that the Subsidiary will incur, any Liability to the PBGC
(other than PBGC premium payments) or otherwise under Title IV of ERISA
(including any withdrawal Liability) or under the Code with respect to any
such Employee Benefit Plan which is an Employee Pension Benefit Plan (other
than any Multiemployer Plan).
(iv) The Subsidiary, or the Controlled Group of Corporations that includes
the Subsidiary, has not since April 10, 1996 contributed to any Multiemployer
Plan for the benefit of the Subsidiary, and does not have any Liability
(including withdrawal Liability) under any Multiemployer Plan.
(v) The Subsidiary does not maintain or contribute, or is required to
contribute, to any Employee Welfare Benefit Plan providing medical, health, or
life insurance or other welfare-type benefits for current or future retired or
terminated employees, their spouses, or their dependents (other than in
accordance with Code (S)4980B, Title I of ERISA, or any applicable state
statute).
(x) Guaranties. Neither the Target nor the Subsidiary is a guarantor or is
-----------
otherwise liable for any Liability or obligation (including indebtedness) of any
other Person.
(y) Environmental, Health, and Safety Laws.
---------------------------------------
(i) The Subsidiary has complied with all Environmental, Health, and
Safety Laws, and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or commenced
against any of them alleging any failure so to comply other than failure to
comply which would not have a material adverse effect on the Subsidiary.
Without limiting the generality of the preceding sentence, the Subsidiary
has obtained and been in compliance with all of the terms and conditions of
all permits, licenses, and other authorizations which are required under,
and has complied with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all Environmental, Health, and Safety
Laws.
(ii) The Subsidiary does not have any material Liability under any
Environmental Law.
(z) Target Operations. The Target has no material business or operations,
-----------------
except for its ownership of the stock of the Subsidiary and maintenance of a
stock option plan for the benefit of officers, directors and employees of the
Subsidiary.
20
(aa) Disclosure. representations and warranties contained in this Section 4
----------
do not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements and information
contained in this Section 4 not misleading.
5. Pre-Closing Covenants. The Parties agree as follows with respect to
----------------------
the period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use its best efforts to take all
--------
action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
Section 7 below).
(b) Notices and Consents. The Seller will cause the Subsidiary to give any
---------------------
notices to third parties, and will cause the Subsidiary to use its best efforts
to obtain any third party consents, that the Buyer reasonably may request in
connection with the matters referred to in Section 4(c) above. Each of the
Parties will (and the Seller will cause the Subsidiary to) give any notices to,
make any filings with, and use its best efforts to obtain any authorizations,
consents, and approvals of governments and governmental agencies in connection
with the matters referred to in Sections 3(a)(ii), 3(b)(ii), and 4(c) above.
Without limiting the generality of the foregoing, each of the Parties will file
any Notification and Report Forms and related material that he or it may be
required to file with the Federal Trade Commission and the Antitrust Division of
the United States Department of Justice under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act no later
than five business days after the date hereof, will use its best efforts to
obtain an early termination of the applicable waiting period, and will make any
further filings pursuant thereto that may be necessary, proper, or advisable in
connection therewith.
(c) Operation of Business. The Seller will not cause or permit the
----------------------
Subsidiary to engage in any practice or take any action outside the Ordinary
Course of Business of the Subsidiary or which results in a material adverse
change in the business, financial condition, operations or results of operations
of the Subsidiary, except for actions to which Buyer has given its prior
consent.
(d) Preservation of Business. The Seller will cause the Subsidiary to keep
-------------------------
its business and properties substantially intact, including its present
operations, physical facilities, working conditions, and relationships with
lessors, licensors, suppliers, customers, and employees.
(e) Full Access. The Seller will permit, and the Seller will cause the
------------
Subsidiary to permit, representatives of the Buyer to have full access at all
reasonable times, and in a manner so as not to interfere with the normal
business operations of the Subsidiary, to all premises, properties, personnel,
books, records (including Tax records), contracts, and documents of or
pertaining to the Subsidiary; provided, however, that the Seller and the
-------- -------
Subsidiary shall not be required to allow Buyer access to competitively
sensitive information, such as that relating to prices or customers.
(f) Notice of Developments. The Seller will give prompt written notice to
-----------------------
the Buyer of any material adverse development causing a breach of any of the
representations and warranties in Section 4 above. Each Party will give prompt
written notice to the others of any material adverse development causing a
breach of any of its own representations and warranties in Section 3 above.
21
(g) Exclusivity. Seller will not (and Seller will not cause or permit the
------------
Subsidiary or the Target to) solicit, initiate, or encourage the submission of
any proposal or offer from any other Person relating to the acquisition of any
capital stock or other voting securities, or any substantial portion of the
assets, of the Subsidiary (including any acquisition structured as a merger,
consolidation or share exchange).
6. Post-Closing Covenants. Parties agree as follows with respect to
-----------------------
the period following the Closing.
(a) General. In case at any time after the Closing any further action is
--------
necessary or desirable to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other Party reasonably may
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under Section 8 below).
The Seller acknowledges and agrees that from and after the Closing the Buyer
will be entitled to possession of all documents, books, records (including Tax
records), agreements, and financial data of any sort relating to the Subsidiary.
(b) Litigation Support. In the event and for so long as any Party actively
-------------------
is contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing Date
involving the Subsidiary, each of the other Parties will cooperate with him or
it and its counsel in the contest or defense, make available their personnel,
and provide such testimony and access to their books and records as shall be
necessary in connection with the contest or defense, all at the sole cost and
expense of the contesting or defending Party (unless the contesting or defending
Party is entitled to indemnification therefor under Section 8 below).
(c) Transition. The Seller will not take any action that is designed or
-----------
intended to have the effect of discouraging any lessor, licensor, customer,
supplier, or other business associate of the Subsidiary from maintaining the
same business relationships with the Subsidiary after the Closing as it
maintained with the Subsidiary prior to the Closing. the Seller will refer all
customer inquiries relating to the business of the Subsidiary to the Buyer from
and after the Closing.
(d) Confidentiality. The Seller will treat and hold as such all of the
----------------
Confidential Information, refrain from using any of the Confidential Information
except in connection with this Agreement, and deliver promptly to the Buyer or
destroy, at the request and option of the Buyer, all tangible embodiments (and
all copies) of the Confidential Information which are in its possession. In the
event that any of the Seller is requested or required (by oral question or
request for information or documents in any legal proceeding, interrogatory,
subpoena, civil investigative demand, or similar process) to disclose any
Confidential Information, that Seller will notify the Buyer promptly of the
request or requirement so that the Buyer may seek an appropriate protective
order or waive compliance with the provisions of this Section 6(d). If, in the
absence of a protective order or the receipt of a waiver hereunder, the Seller
is, on the advice of counsel, compelled to disclose any Confidential Information
to any tribunal or else stand liable for contempt, that Seller may disclose the
22
Confidential Information to the tribunal; provided, however, that the Seller
-------- -------
shall use its best efforts to obtain, at the reasonable request of the Buyer, an
order or other assurance that confidential treatment will be accorded to such
portion of the Confidential Information required to be disclosed as the Buyer
shall designate. The foregoing provisions shall not apply to any Confidential
Information which is generally available to the public immediately prior to the
time of disclosure (other than as a result of a disclosure directly or
indirectly by Seller or its agents or representatives in violation of this
Section 6(d)).
(e) Covenant Not to Compete. For a period of three years from and after
------------------------
the Closing Date, the Seller will not engage directly or indirectly in any
business that the Subsidiary conducts as of the Closing Date in any geographic
area in which the Subsidiary conducts that business as of the Closing Date;
provided, however, that no owner of less than 10% of the outstanding stock of
-------- -------
any publicly-traded corporation shall be deemed to engage in such business by
virtue of such stock ownership. If the final judgment of a court of competent
jurisdiction declares that any term or provision of this Section 6(e) is invalid
or unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provisions, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
(f) Name Change. Seller will, within 30 days after the Closing Date,
------------
change the name of the Target to a name which does not include the word
"▇▇▇▇▇▇▇▇▇."
(g) Delivery of Audited Financial Statements. As soon as reasonably
-----------------------------------------
practical following the Closing and in any event within 60 days thereafter,
Seller shall deliver to Buyer the balance sheets and statements of operations,
changes in stockholders' equity, and cash flow covering the periods either (i)
(A) for the fiscal year ended October 31, 1997, (B) for the period from April
10, 1996 to October 31, 1996, (C) for the period from January 1, 1996 through
April 9, 1996, and (D) from January 1, 1995 through December 31, 1995, or (ii)
(A) for the period from April 1, 1996 to December 31, 1996, and (B) for the
period from January 1, 1997 to December 31, 1997, in either case prepared in
accordance with Regulation S-X promulgated by the Securities and Exchange
Commission ("S-X"), audited by a nationally recognized accounting firm, and
together with a manually signed accountant's report thereon that complies with
Rule 2-02 of S-X. If Seller delivers such audited financial statements to Buyer
within 60 days of the Closing Date, Buyer shall deliver to Seller a warrant to
purchase 78,598 shares of the Buyer's common stock exercisable from the date of
delivery of such financial statements to the third anniversary of the Closing
Date, pursuant to the Warrant Agreement attached as Exhibit A hereto.
(h) Auditors' Consents. Each of the parties shall use its best efforts to
------------------
obtain consents of the accounting firm performing such audits to the use of the
accountant's reports described in Section 6(g) above in any registration
statement of Buyer within three business days of any request for such a consent;
provided that Buyer shall have the sole responsibility for payment of any fees
--------
in connection with such consents.
23
(i) Rights Against Raytheon. Seller and Buyer acknowledge that Seller
-----------------------
acquired the capital stock of Subsidiary from Raytheon Company ("Raytheon")
pursuant to that certain Stock Purchase Agreement, dated as of March 2, 1996
between Raytheon and Seller (the "Acquisition Agreement") under which Raytheon
made certain representations, warranties and agreements (collectively the
"Raytheon Obligations") to Seller relative to Subsidiary and that the Raytheon
Obligations may overlap or cover matters in addition to the representations,
warranties and agreements of Seller to Buyer under this Agreement. Seller
agrees to use its best efforts to obtain the consent of Raytheon to its
assignment of the Raytheon obligations to Buyer and upon obtaining such consent,
shall assign the Raytheon Obligations to Buyer. In the event that Seller is
unable to obtain Raytheon's consent to such assignment and a matter or event
occurs or a liability is discovered for which Seller could pursue a claim or
action under the Raytheon Obligations or for indemnity, Seller agrees to
cooperate with Buyer and at Buyer's request to diligently prosecute such claim
or action in Seller's name on behalf and for the benefit of Buyer. Any such
claim or action shall be prosecuted at Buyer's sole cost and expense using
counsel of Buyer's choice and any recovery obtained shall be allocated between
Buyer and Seller in accordance with each Party's claim. Nothing herein shall
preclude Seller from bringing an action against Raytheon on its own behalf and
at its own expense.
7. Conditions to Obligation to Close.
----------------------------------
(a) Conditions to Obligation of the Buyer. The obligation of the Buyer to
--------------------------------------
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) (A) the representations and warranties set forth in Sections
2(e), 3(a)(i), 3(a)(iii)(A), 3(a)(v), 4(b) and 5(c) (except as the
Disclosure Schedule sets forth exceptions to such Sections) above shall be
true and correct in all material respects as of the Closing Date, (B) the
Seller shall have full corporate power and authority to execute and deliver
this Agreement and perform its obligations hereunder, (C) neither the
execution and the delivery of this Agreement nor the consummation of the
transactions contemplated hereby will violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge or
other restriction of any government, governmental agency or court to which
any of the Seller, the Target or the Subsidiary is a party or any provision
of their respective charters or bylaws, and (D) each of the Target and the
Subsidiary is a corporation duly organized, validly existing, and in good
standing under the laws of its jurisdiction of incorporation;
(ii) all applicable waiting periods (and any extensions thereof)
under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have expired or otherwise been terminated;
and
(iii) the Buyer shall have received the resignations, effective as of
the Closing, of each director on the board of directors of the Target.
The Buyer may waive any condition specified in this Section 7(a) if it executes
a writing so stating at or prior to the Closing.
24
(b) Conditions to Obligation of the Seller. The obligation of the Seller
---------------------------------------
to consummate the transactions to be performed by them in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 3(b)
above shall be true and correct in all material respects as of the Closing
Date; and
(ii) all applicable waiting periods (and any extensions thereof) under
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have expired or otherwise been terminated.
The Seller may waive any condition specified in this Section 7(b) if it executes
a writing so stating at or prior to the Closing.
8. Remedies for Breaches of This Agreement.
----------------------------------------
(a) Survival of Representations and Warranties. All of the representations
------------------------------------------
and warranties of the Seller contained in Section 4 above, other than the
representations contained in Sections 4(j) and 4(y), shall survive the Closing
hereunder (even if the Buyer knew or had reason to know of any misrepresentation
or breach of warranty at the time of Closing) and continue in full force and
effect for a period of two years thereafter; provided, however, that the
-------- -------
representations and warranties contained in Sections 4(j) and 4(y) above
relating to Tax Matters and Environmental, Health, and Safety Laws,
respectively, shall survive the Closing hereunder (even if the Buyer knew or had
reason to know of any misrepresentation or breach of warranty at the time of
Closing) and continue in full force and effect for the relevant statute of
limitations periods; provided further, that the representations and warranties
----------------
contained in Section 4(l)(v) shall not survive the Closing. All of the other
representations and warranties of the Parties contained in this Agreement
(including the representations and warranties of the Parties contained in
Section 3 above) shall survive the Closing (even if the damaged Party knew or
had reason to know of any misrepresentation or breach of warranty at the time of
Closing) and continue in full force and effect for two years thereafter (subject
to any applicable statutes of limitations).
(b) Indemnification Provisions for Benefit of the Buyer.
----------------------------------------------------
(i) In the event the Seller breaches any of its representations,
warranties, and covenants contained herein (other than the covenants in
Section 2(a) above and the representations and warranties in Section 3(a)
above), and, if there is an applicable survival period pursuant to Section
8(a) above, provided that the Buyer makes a written claim for
--------
indemnification against the Seller pursuant to Section 11(g) below within
such survival period, then the Seller agrees to indemnify the Buyer from
and against the entirety of any Adverse Consequences the Buyer may suffer
through and after the date of the claim for indemnification (including any
Adverse Consequences the Buyer may suffer after the end of any applicable
survival period) resulting from, arising out of, relating to, in the nature
of, or caused by the breach; provided, however, that the Seller shall not
-------- -------
have any obligation to indemnify the Buyer from and against any Adverse
Consequences resulting from, arising out of, relating to, in the nature of,
or caused by the breach of any representation or warranty of the Seller
25
contained in Section 4 above until the Buyer has suffered Adverse
Consequences by reason of all such breaches in excess of a $500,000
aggregate threshold (at which point the Seller will be obligated to
indemnify the Buyer from and against all such Adverse Consequences relating
back to the first dollar).
(ii) In the event Seller breaches any of its covenants in Section 2(a)
above or any of its representations and warranties in Section 3(a) above,
and, if there is an applicable survival period pursuant to Section 8(a)
above, provided that the Buyer makes a written claim for indemnification
--------
against the Seller pursuant to Section 11(g) below within such survival
period, then the Seller agrees to indemnify the Buyer from and against the
entirety of any Adverse Consequences the Buyer may suffer through and after
the date of the claim for indemnification (including any Adverse
Consequences the Buyer may suffer after the end of any applicable survival
period) resulting from, arising out of, relating to, in the nature of, or
caused by the breach.
(c) Indemnification Provisions for Benefit of the Seller. In the event the
-----------------------------------------------------
Buyer breaches any of its representations, warranties, and covenants contained
herein, and, if there is an applicable survival period pursuant to Section 8(a)
above, provided that any of the Seller makes a written claim for indemnification
--------
against the Buyer pursuant to Section 11(g) below within such survival period,
then the Buyer agrees to indemnify the Seller from and against the entirety of
any Adverse Consequences the Seller may suffer through and after the date of the
claim for indemnification (including any Adverse Consequences the Seller may
suffer after the end of any applicable survival period) resulting from, arising
out of, relating to, in the nature of, or caused by the breach.
(d) Matters Involving Third Parties.
--------------------------------
(i) If any third party shall notify any Party (the "Indemnified
-----------
Party") with respect to any matter (a "Third Party Claim") which may give
----- -----------------
rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this Section 8, then the Indemnified Party
------------------
shall promptly notify each Indemnifying Party thereof in writing; provided,
--------
however, that no delay on the part of the Indemnified Party in notifying
--------
any Indemnifying Party shall relieve the Indemnifying Party from any
obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (A) the
Indemnifying Party notifies the Indemnified Party in writing within 15 days
after the Indemnified Party has given notice of the Third Party Claim that
the Indemnifying Party will indemnify the Indemnified Party from and
against the entirety of any Adverse Consequences the Indemnified Party may
suffer resulting from, arising out of, relating to, in the nature of, or
caused by the Third Party Claim, (B) the Indemnifying Party provides the
Indemnified Party with evidence reasonably acceptable to the Indemnified
Party that the Indemnifying Party will have the financial resources to
defend against the Third Party Claim and fulfill its indemnification
obligations hereunder, (C) the Third Party Claim involves only money
damages and does not seek an injunction or other equitable relief, (D)
settlement
26
of, or an adverse judgment with respect to, the Third Party Claim is not,
in the good faith judgment of the Indemnified Party, likely to establish a
precedential custom or practice materially adverse to the continuing
business interests of the Indemnified Party, and (E) the Indemnifying Party
conducts the defense of the Third Party Claim actively and diligently.
(iii) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 8(d)(ii) above, (A) the
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (B) the
Indemnified Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnifying Party, and (C) the Indemnifying Party
will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of
the Indemnified Party.
(iv) In the event any of the conditions in Section 8(d)(ii) above is
or becomes unsatisfied, however, (A) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter into any
settlement with respect to, the Third Party Claim in any manner it
reasonably may deem appropriate (and the Indemnified Party need not consult
with, or obtain any consent from, any Indemnifying Party in connection
therewith), (B) the Indemnifying Parties will reimburse the Indemnified
Party promptly and periodically for the costs of defending against the
Third Party Claim (including reasonable attorneys' fees and expenses), and
(C) the Indemnifying Parties will remain responsible for any Adverse
Consequences the Indemnified Party may suffer resulting from, arising out
of, relating to, in the nature of, or caused by the Third Party Claim to
the fullest extent provided in this Section 8.
9. Tax Matters. The following provisions shall govern the allocation of
------------
responsibility as between Buyer and Seller for certain tax matters following the
Closing Date:
(a) Seller will include the income of the Subsidiary on Seller's Returns
for all periods through the Closing Date in which the Subsidiary was included in
such Returns and account for and pay any federal income taxes attributable to
such income on such returns. Seller shall deliver to Buyer copies of such
Returns and any Returns relating to the Subsidiary for the period prior to the
Closing Date within 10 days of the filing of such Returns with the appropriate
Tax Authority. The Subsidiary shall be responsible for and shall pay to Seller
the portion of the consolidated tax liability for such periods chargeable to the
Subsidiary under the principles of Treas. Reg. 1.1552-1(a)(2) and applicable
state and local laws and regulations. The Subsidiary will furnish tax
information to Seller for inclusion in Seller's Returns for the period which
includes the Closing Date in accordance with the Subsidiary's past custom and
practice. The income of the Subsidiary will be apportioned between the period up
to and including the Closing Date and the period after the Closing Date by
closing the books of the Subsidiary as of the end of the Closing Date.
(b) At Seller's request, Buyer will cause the Subsidiary to make or join
with Seller in making any election if the making of such election does not have
a material adverse impact on Buyer (or the Subsidiary) for any tax period
beginning on or after the Closing Date.
27
(c) It is agreed and understood that the parties shall not make an
election under Section 338(h)(10) of the Code in respect of the purchase and
sale of the Target Shares pursuant to this Stock Purchase Agreement.
(d) Seller will elect to retain any net operating loss carryovers or
capital loss carryovers of the Subsidiary or the Target under Treasury
Regulation (S) 1.1502-20(g), or have any such losses reattributed to Seller
prior to the Closing.
(e) Any refunds received after the Closing Date by Seller attributable to
any Tax losses or Tax credits of the Subsidiary arising after the Closing Date
shall be remitted promptly to Buyer.
(f) Each of Seller and Buyer shall (i) make available for inspection and
copying upon the reasonable request of the other party all working papers, books
of account and records relating to the periods before and after, respectively,
the Closing Date, and (ii) shall cooperate with each other in the event of any
Tax audit, dispute or protest.
10. Termination.
------------
(a) Termination of Agreement. Certain of the Parties may terminate this
-------------------------
Agreement as provided below:
(i) the Buyer and the Seller may terminate this Agreement by mutual
written consent at any time prior to the Closing; and
(ii) either the Buyer or the Seller may terminate this Agreement by
giving written notice to the other party if the Closing shall not have occurred
on or before March 31, 1998.
(b) Effect of Termination. If any Party terminates this Agreement pursuant
----------------------
to Section 10(a) above, all rights and obligations of the Parties hereunder
shall terminate without any Liability of any Party to any other Party (except
for any Liability of any Party then in breach).
11. Miscellaneous.
-------------
(a) Press Releases and Public Announcements. No Party shall issue any
----------------------------------------
press release or make any public announcement relating to the subject matter of
this Agreement prior to the Closing without the prior written approval of the
Buyer and the Seller; provided, however, that any Party may make any public
-------- --------
disclosure it believes in good faith is required by applicable law or any
listing or trading requirement concerning its publicly-traded securities (in
which case the disclosing Party will notify the other Parties of such disclosure
48 hours prior to making the disclosure).
(b) No Third-Party Beneficiaries. This Agreement shall not confer any
-----------------------------
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the documents referred to
-----------------
herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings,
28
agreements, or representations by or among the Parties, written or oral, to the
extent they related in any way to the subject matter hereof.
(d) Succession and Assignment. This Agreement shall be binding upon and
--------------------------
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the Buyer and the Seller; provided, however, that the Buyer may (i) assign
-------- -------
any or all of its rights and interests hereunder to one or more of its
Affiliates and (ii) designate one or more of its Affiliates to perform its
obligations hereunder (in any or all of which cases the Buyer nonetheless shall
remain responsible for the performance of all of its obligations hereunder).
(e) Counterparts. This Agreement may be executed in one or more
-------------
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement are
---------
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
--------
communications hereunder will be in writing and shall be deemed effectively
given (i) upon personal delivery to the party notified, (ii) five days after
deposit with the United States Post Office, by registered or certified mail,
postage prepaid, return receipt requested, (iii) one business day after deposit
with a nationally recognized air courier service such as DHL or Federal Express
for next day delivery, or (iv) on the day of facsimile transmission, with
confirmed transmission, to the facsimile number shown below (or to such other
facsimile number as the party to be notified may indicate by ten days advance
written notice to the other party in the manner herein provided), provided that
--------
notice is also given under clauses (i), (ii) or (iii) above; in any such case
addressed to the party to be notified at the address indicated below for that
party, or at such other address as that party may indicate by ten days advance
written notice to the other party in the manner herein provided:
If to the Seller:
-----------------
▇▇▇▇ ▇. ▇▇▇▇
Chief Financial Officer
▇▇▇▇▇▇▇▇▇ Corporation
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
---------------
▇▇▇▇ ▇. Light, Esq.
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
29
If to the Buyer:
----------------
▇▇▇▇ ▇▇▇▇▇
President and Chief Executive Officer
MRV Communications, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
---------------
▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Freshman, Marantz, Orlanski, ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
------------- ----------------------------------------------------
ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT
--------------------------------------------------------------------------------
TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF
---------------------------------------------------------------------------
DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS
--------------------------------------------------------------------------------
OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE.
----------------------------------------------------
(i) Amendments and Waivers No amendment of any provision of this
----------------------
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Seller. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
(j) Severability Any term or provision of this Agreement that is invalid
-------------
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
30
(k) Expenses. Each of the Parties shall bear its own costs and expenses
---------
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby. The Seller agrees that the Subsidiary
has not borne or will bear any of the Seller' costs and expenses (including any
of their legal fees and expenses) in connection with this Agreement or any of
the transactions contemplated hereby.
(l) Construction. The Parties have participated jointly in the negotiation
-------------
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any of the or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
(m) Incorporation of Exhibits, Annexes, and Schedules. The Exhibits,
--------------------------------------------------
Annexes, and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
(n) Specific Performance. Each of the Parties acknowledges and agrees
---------------------
the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that,
subject to Section 11(p), the other Parties shall be entitled to an injunction
or injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof in any
action instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter (subject to the provisions set
forth in Section 11(o) below), in addition to any other remedy to which they may
be entitled, at law or in equity.
(o) Submission to Jurisdiction. Subject to the provisions of Section 11
---------------------------
(p) below, each of the Parties submits to the jurisdiction of any state or
federal court sitting in Delaware, in any action or proceeding arising out of or
relating to this Agreement and agrees that all claims in respect of the action
or proceeding may be heard and determined in any such court. Each Party further
agrees not to bring any action or proceeding arising out of or relating to this
Agreement in any other court. Each of the Parties waives any defense of
inconvenient forum to the maintenance of any action or proceeding so brought and
waives any bond, surety, or other security that might be required of any other
Party with respect thereto. Any Party may make service on any other Party by
sending or delivering a copy of the process to the Party to be served at the
address and in the manner provided for the giving of notices in Section 11(g)
above. Nothing in this Section 11(o), however, shall affect the right of any
Party to serve legal process in any other manner permitted by law or at equity.
Each Party agrees that a final judgment in any action or proceeding so brought
shall be conclusive and may be enforced by suit on the judgment or in any other
manner provided by law or at equity.
31
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
MRV COMMUNICATIONS, INC.
/s/ Zeev Rav Noy
-----------------------------------
By: Zeev Rav Noy
Title: Chief Operating Officer
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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By: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President of Finance and
Administration, and Chief Financial Officer
▇▇▇▇▇▇▇▇▇ CORPORATION
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
/s/ ▇▇▇▇ ▇. ▇▇▇▇
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By: ▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President, Chief Financial Officer
and Treasurer
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