1
EXHIBIT 2.9
INDEMNIFICATION AND INSURANCE MATTERS AGREEMENT
BETWEEN
MRV COMMUNICATIONS, INC.
AND
OPTICAL ACCESS, INC.
EFFECTIVE AS OF SEPTEMBER 29, 2000
2
TABLE OF CONTENTS
PAGE
----
ARTICLE I.........................................................................1
MUTUAL RELEASES; INDEMNIFICATION..............................................1
Section 1.1 Release of Pre-Closing Claims.................................1
Section 1.2 Indemnification by Optical Access.............................2
Section 1.3 Indemnification by MRV........................................2
Section 1.4 Indemnification With Respect to
Environmental Actions and Conditions.......................................3
Section 1.5 Reductions for Insurance Proceeds and Other
Recoveries ................................................................4
Section 1.6 Procedures for Defense, Settlement and
Indemnification of Third Party Claims......................................4
Section 1.7 Additional Matters............................................5
Section 1.8 Survival of Indemnities.......................................6
ARTICLE II........................................................................6
INSURANCE MATTERS.............................................................6
Section 2.1 Optical Access Insurance Coverage During
the Transition Period......................................................6
Section 2.2 Cooperation and Agreement Not to Release
Carriers ..................................................................6
Section 2.3 Optical Access Insurance Coverage After the
Insurance Transition Period................................................7
Section 2.4 Responsibilities for Deductibles and/or
Self-insured Obligations...................................................7
Section 2.5 Procedures With Respect to Insured Optical
Access Liabilities.........................................................7
Section 2.6 Insufficient Limits of Liability for MRV
Liabilities and Optical Access Liabilities.................................7
Section 2.7 Cooperation...................................................8
Section 2.8 No Assignment or Waiver.......................................8
Section 2.9 No Liability..................................................8
Section 2.10 Additional or Alternate Insurance.............................8
Section 2.11 Further Agreements............................................8
Section 2.12 Matters Governed by Employee Matters
Agreement .................................................................9
ARTICLE III.......................................................................9
MISCELLANEOUS.................................................................9
i
3
Section 3.1 Entire Agreement..............................................9
Section 3.2 Governing Law.................................................9
Section 3.3 Dispute Resolution............................................9
Section 3.4 Notices......................................................10
Section 3.5 Parties in Interest..........................................10
Section 3.6 Other Agreements Evidencing Indemnification
Obligations ..............................................................10
Section 3.7 Counterparts.................................................11
Section 3.8 Assignment...................................................11
Section 3.9 Severability.................................................11
Section 3.10 Failure or Indulgence Not Waiver.............................11
Section 3.11 Amendment....................................................11
Section 3.12 Authority....................................................11
Section 3.13 Interpretation...............................................12
ARTICLE IV.......................................................................12
DEFINITIONS..................................................................12
Section 4.1 Action.......................................................12
Section 4.2 Affiliated Company...........................................12
Section 4.3 Assets.......................................................12
Section 4.4 Assignment Agreement.........................................12
Section 4.5 Coverage Amount..............................................12
Section 4.6 Employee Matters Agreement...................................12
Section 4.7 Environmental Actions........................................12
Section 4.8 Environmental Conditions.....................................12
Section 4.9 Environmental Laws...........................................13
Section 4.10 Hazardous Materials..........................................13
Section 4.11 Indemnitee...................................................13
Section 4.12 Insurance Policies...........................................13
Section 4.13 Insurance Proceeds...........................................13
Section 4.14 Insurance Transition Period..................................13
Section 4.15 Insured Optical Access Liability.............................13
Section 4.16 IPO Date.....................................................13
Section 4.17 IPO Liabilities..............................................13
ii
4
Section 4.18 IPO Registration Statement...................................13
Section 4.19 Liabilities..................................................13
Section 4.20 Non-US Plan..................................................13
Section 4.21 Optical Access Business......................................13
Section 4.22 Optical Access Contracts.....................................14
Section 4.23 Optical Access Covered Parties...............................14
Section 4.24 Optical Access Facilities....................................14
Section 4.25 Optical Access Group.........................................14
Section 4.26 Optical Access Indemnitees...................................14
Section 4.27 Optical Access Liabilities...................................14
Section 4.28 MRV Business.................................................14
Section 4.29 MRV Facilities...............................................14
Section 4.30 MRV Group....................................................14
Section 4.31 MRV Indemnitees..............................................14
Section 4.32 Person.......................................................14
Section 4.33 Pre-Separation Third Party Site Liabilities..................14
Section 4.34 Release......................................................15
Section 4.35 Separation...................................................15
Section 4.36 Separation Agreement.........................................15
Section 4.37 Separation Date..............................................15
Section 4.38 Shared Percentage............................................15
Section 4.39 Subsidiary...................................................15
Section 4.40 Tax Sharing Agreement........................................15
Section 4.41 Taxes........................................................15
Section 4.42 Third Party Claim............................................15
iii
5
INDEMNIFICATION AND INSURANCE MATTERS AGREEMENT
This Indemnification and Insurance Matters Agreement (this "Agreement") is
entered into as of September 29, 2000 between MRV Communications, Inc., a
Delaware corporation ("MRV"), and Optical Access, Inc., a Delaware corporation
("Optical Access"). Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to such terms in the Article IV below.
RECITALS
WHEREAS, MRV and its Subsidiaries have transferred or will transfer to
Optical Access and its Subsidiaries effective as of the Separation Date,
substantially all of the assets of the Optical Access Business in accordance
with the Master Separation Agreement dated as of September 29, 2000 between MRV
and Optical Access (the "Separation Agreement").
WHEREAS, the parties desire to set forth certain agreements regarding
indemnification and insurance.
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:
ARTICLE I.
MUTUAL RELEASES; INDEMNIFICATION
Section 1.1 Release of Pre-Closing Claims.
(a) Optical Access Release. Except as provided in Section 1.1(c) and the
attached Schedule 1.1(a) to this Agreement, effective as of the Separation Date,
Optical Access does hereby, for itself and as agent for each member of the
Optical Access Group, remise, release and forever discharge the MRV Indemnitees
from any and all Liabilities whatsoever, whether at law or in equity (including
any right of contribution), whether arising under any contract or agreement, by
operation of law or otherwise, existing or arising from any acts or events
occurring or failing to occur or alleged to have occurred or to have failed to
occur or any conditions existing or alleged to have existed on or before the
Separation Date, including in connection with the transactions and all other
activities to implement each of the Separation and the IPO. Notwithstanding the
foregoing language, Optical Access shall not release the MRV Indemnitees from
any Liabilities that relate to, arise out of or result from the following items
(i) the complaint captioned ▇▇▇▇▇▇ v. Jolt, Ltd. as further described in the IPO
Registration Statement; (ii) patent claims related to or stemming from notices
received from Nortel Networks, Inc. as described in the IPO Registration
Statement only as they relate to sales of OptiSwitch products prior to the IPO;
and (iii) claims related to the use of the name Optical Access or Optical
Access, Inc. or the use of any trademarks, service marks or trade names
associated with those names.
(b) MRV Release. Except as provided in Section 1.1(c) and the attached
Schedule 1.1(b) to this Agreement, effective as of the Separation Date, MRV does
hereby, for itself and as agent for each member of the MRV Group, remise,
release and forever discharge the Optical Access Indemnitees from any and all
Liabilities whatsoever, whether at law or in equity (including any right of
contribution), whether arising under any contract or agreement, by operation of
law or otherwise, existing or arising from any acts or events occurring or
failing to occur or alleged to have occurred or to have failed to occur or any
conditions existing or alleged to have existed on or before the Separation Date,
including in connection with the transactions and all other activities to
implement each of the Separation and the IPO.
6
(c) No Impairment. Nothing contained in Section 1.1(a) or (b) shall
impair any right of any Person to enforce the Separation Agreement or any other
Ancillary Agreement (including this Agreement), in each case in accordance with
its terms.
(d) No Actions as to Released Claims. Optical Access agrees, for itself
and as agent for each member of the Optical Access Group, not to make any claim
or demand, or commence any Action asserting any claim or demand, including any
claim of contribution or any indemnification, against MRV or any member of the
MRV Group, or any other Person released pursuant to Section 1.1(a), with respect
to any Liabilities released pursuant to Section 1.1(a). MRV agrees, for itself
and as agent for each member of the MRV Group, not to make any claim or demand,
or commence any Action asserting any claim or demand, including any claim of
contribution or any indemnification, against Optical Access or any member of the
Optical Access Group, or any other Person released pursuant to Section 1.1(b),
with respect to any Liabilities released pursuant to Section 1.1(b).
(e) Further Instruments. At any time, at the request of any other party,
each party shall cause each member of its respective Group to execute and
deliver releases reflecting the provisions hereof.
Section 1.2 Indemnification by Optical Access. Except as otherwise provided in
this Agreement, Optical Access shall, for itself and as agent for each member of
the Optical Access Group, indemnify, defend (or, where applicable, pay the
defense costs for) and hold harmless the MRV Indemnitees from and against any
and all Liabilities that any third party seeks to impose upon the MRV
Indemnitees, or which are imposed upon the MRV Indemnitees, and that relate to,
arise out of or result from any of the following items (without duplication):
(i) the Optical Access Business, any Optical Access Liability or
any Optical Access Contract;
(ii) any breach by Optical Access or any member of the Optical
Access Group of the Separation Agreement or any of the Ancillary Agreements
(including this Agreement); and
(iii) any IPO Liabilities.
Notwithstanding the foregoing language, Optical Access shall not indemnify the
MRV Indemnitees from any Liabilities that any third party seeks to impose upon
the MRV Indemnitees, or which are imposed upon the MRV Indemnitees, and that
relate to, arise out of or result from any of the following items (i) the
complaint captioned ▇▇▇▇▇▇ v. Jolt, Ltd. as further described in the IPO
Registration Statement; (ii) patent claims related to or stemming from notices
received from Nortel Networks, Inc., as described in the IPO Registration
Statement only as they relate to sales of OptiSwitch products prior to the IPO;
and (iii) claims related to the use of the name Optical Access or Optical
Access, Inc., or the use of any trademarks, service marks or trade names
associated with those names. In the event that any member of the Optical Access
Group makes a payment to the MRV Indemnitees hereunder, and any of the MRV
Indemnitees subsequently diminishes the Liability on account of which such
payment was made, either directly or through a third-party recovery, MRV will
promptly repay (or will procure a MRV Indemnitee to promptly repay) such member
of the Optical Access Group the amount by which the payment made by such member
of the Optical Access Group exceeds the actual cost of the associated
indemnified Liability. This Section 1.2 shall not apply to any Liability
indemnified under Section 1.4.
Section 1.3 Indemnification by MRV. Except as otherwise provided in this
Agreement, MRV shall, for itself and as agent for each member of the MRV Group,
indemnify, defend (or, where applicable, pay the defense costs for) and hold
harmless the Optical Access Indemnitees from
2
7
and against any and all Liabilities that any third party seeks to impose upon
the Optical Access Indemnitees, or which are imposed upon the Optical Access
Indemnitees, and that relate to, arise out of or result from any of the
following items (without duplication):
(i) the MRV Business or any Liability of the MRV Group other than
the Optical Access Liabilities; and
(ii) any breach by MRV or any member of the MRV Group of the
Separation Agreement or any of the Ancillary Agreements (including this
Agreement).
Notwithstanding the foregoing language, MRV shall indemnify the Optical Access
Indemnitees from any Liabilities that any third party seeks to impose upon the
Optical Access Indemnitees, or which are imposed upon the Optical Access
Indemnitees, and that relate to, arise out of or result from any of the
following items (i) the complaint captioned ▇▇▇▇▇▇ v. Jolt, Ltd. as further
described in the IPO Registration Statement; (ii) patent claims related to or
stemming from notices received from Nortel Networks, Inc., as described in the
IPO Registration Statement only as they relate to sales of OptiSwitch products
prior to the IPO; and (iii) claims related to the use of the name Optical Access
or Optical Access, Inc., or the use of any trademarks, service marks or trade
names associated with those names. In the event that any member of the MRV Group
makes a payment to the Optical Access Indemnitees hereunder, and any of the
Optical Access Indemnitees subsequently diminishes the Liability on account of
which such payment was made, either directly or through a third-party recovery,
Optical Access will promptly repay (or will procure a Optical Access Indemnitee
to promptly repay) such member of the MRV Group the amount by which the payment
made by such member of the MRV Group exceeds the actual cost of the indemnified
Liability. This Section 1.3 shall not apply to any Liability indemnified under
Section 1.4.
Section 1.4 Indemnification With Respect to Environmental Actions and
Conditions.
(a) Indemnification by Optical Access. Optical Access shall, for itself
and as agent for each member of the Optical Access Group, indemnify, defend and
hold harmless the MRV Indemnitees from and against any and all Environmental
Actions relating to, arising out of or resulting from Environmental Conditions
(i) arising out of operations occurring on and after the Separation Date at any
of the Optical Access Facilities, or (ii) on any of the Optical Access
Facilities arising from an event causing contamination that first occurs on or
after the Separation Date (including any Release of Hazardous Materials
occurring after the Separation Date that migrates to any of the Optical Access
Facilities), except to the extent that such Environmental Conditions arise out
of the operations of the MRV Group on and after the Separation Date.
(b) Indemnification by MRV. MRV shall, for itself and as agent for each
member of the MRV Group, indemnify, defend and hold harmless the Optical Access
Indemnitees from and against any and all Environmental Actions relating to,
arising out of or resulting from any of the following items:
(i) Environmental Conditions (x) existing on, under, about or in
the vicinity of any of the Optical Access Facilities prior to the Separation
Date, or (y) arising out of operations occurring on or before the Separation
Date at any of the Optical Access Facilities;
(ii) Except as arising out of the operations of the Optical
Access Group on and after the Separation Date, Environmental Conditions on,
under, about or arising out of operations occurring at any time, whether before
or after the Separation Date, at any of the MRV Facilities; and
(iii) Pre-Separation Third Party Site Liabilities.
(c) Agreement Regarding Payments to Indemnitee. In the event an
Indemnifying Party makes any payment to or on behalf of an Indemnitee with
respect to an Environmental
3
8
Action for which the Indemnifying Party is obligated to indemnify under this
Section 1.4, and the Indemnitee subsequently receives any payment from a third
party on account of the same financial obligation covered by the payment made by
the Indemnifying Party for that Environmental Action or otherwise diminishes the
financial obligation, the Indemnitee will promptly pay the Indemnifying Party
the amount by which the payment made by the Indemnifying Party, exceeds the
actual cost of the financial obligation.
Section 1.5 Reductions for Insurance Proceeds and Other Recoveries. The amount
that any party (an "Indemnifying Party") is or may be required to pay to any
other Person (an "Indemnitee") pursuant to Section 1.2, 1.3 or 1.4, as
applicable, shall be reduced (retroactively or prospectively) by any Insurance
Proceeds or other amounts actually recovered from third parties by or on behalf
of such Indemnitee in respect of the related loss. The existence of a claim by
an Indemnitee for monies from an insurer or against a third party in respect of
any indemnifiable loss shall not, however, delay any payment pursuant to the
indemnification provisions contained herein and otherwise determined to be due
and owing by an Indemnifying Party. Rather the Indemnifying Party shall make
payment in full of the amount determined to be due and owing by it against an
assignment by the Indemnitee to the Indemnifying Party of the entire claim of
the Indemnitee for Insurance Proceeds or against such third party.
Notwithstanding any other provisions of this Agreement, it is the intention of
the parties that no insurer or any other third party shall be (i) entitled to a
benefit it would not be entitled to receive in the absence of the foregoing
indemnification provisions, or (ii) relieved of the responsibility to pay any
claims for which it is obligated. If an Indemnitee has received the payment
required by this Agreement from an Indemnifying Party in respect of any
indemnifiable loss and later receives Insurance Proceeds or other amounts in
respect of such indemnifiable loss, then such Indemnitee shall hold such
Insurance Proceeds or other amounts in trust for the benefit of the Indemnifying
Party (or Indemnifying Parties) and shall pay to the Indemnifying Party, as
promptly as practicable after receipt, a sum equal to the amount of such
Insurance Proceeds or other amounts received, up to the aggregate amount of any
payments received from the Indemnifying Party pursuant to this Agreement in
respect of such indemnifiable loss (or, if there is more than one Indemnifying
Party, the Indemnitee shall pay each Indemnifying Party, its proportionate share
(based on payments received from the Indemnifying Parties) of such Insurance
Proceeds).
Section 1.6 Procedures for Defense, Settlement and Indemnification of Third
Party Claims.
(a) Notice of Claims. If an MRV Indemnitee or a Optical Access
Indemnitee (as applicable) (an "Indemnitee") shall receive notice or otherwise
learn of the assertion by a Person (including any Governmental Authority) who is
not a member of the MRV Group or the Optical Access Group of any claim or of the
commencement by any such Person of any Action (collectively, a "Third Party
Claim") with respect to which a party (an "Indemnifying Party") may be obligated
to provide indemnification to such Indemnitee pursuant to Section 1.2, 1.3 or
1.4, or any other section of the Separation Agreement or any Ancillary Agreement
(including this Agreement), MRV and Optical Access (as applicable) will ensure
that such Indemnitee shall give such Indemnifying Party written notice thereof
within 30 days after becoming aware of such Third Party Claim. Any such notice
shall describe the Third Party Claim in reasonable detail. Notwithstanding the
foregoing, the delay or failure of any Indemnitee or other Person to give notice
as provided in this Section 1.6(a) shall not relieve the related Indemnifying
Party of its obligations under this Article I, except to the extent that such
Indemnifying Party is actually and substantially prejudiced by such delay or
failure to give notice.
4
9
(b) Defense By Indemnifying Party. An Indemnifying Party will manage the
defense of and may settle or compromise any Third Party Claim. Within 30 days
after the receipt of notice from an Indemnitee in accordance with Section 1.6(a)
(or sooner, if the nature of such Third Party Claim so requires), the
Indemnifying Party shall notify the Indemnitee that the Indemnifying Party will
assume responsibility for managing the defense of such Third Party Claim, which
notice shall specify any reservations or exceptions.
(c) Defense By Indemnitee. If an Indemnifying Party fails to assume
responsibility for managing the defense of a Third Party Claim, or fails to
notify an Indemnitee that it will assume responsibility as provided in Section
1.6(a), such Indemnitee may manage the defense of such Third Party Claim;
provided, however, that the Indemnifying Party shall reimburse all such costs
and expenses in the event it is ultimately determined that the Indemnifying
Party is obligated to indemnify the Indemnitee with respect to such Third Party
Claim.
(d) No Settlement By Indemnitee Without Consent. Unless the Indemnifying
Party has failed to manage the defense of the Third Party Claim in accordance
with the terms of this Agreement, no Indemnitee may settle or compromise any
Third Party Claim without the consent of the Indemnifying Party.
(e) No Consent to Certain Judgments or Settlements Without Consent.
Notwithstanding any provision of this Section 1.6, no party shall consent to
entry of any judgment or enter into any settlement of a Third Party Claim
without the consent of the other party (such consent not to be unreasonably
withheld) if the effect of such judgment or settlement is to (i) permit any
injunction, declaratory judgment, other order or other nonmonetary relief to be
entered, directly or indirectly, against the other party or (ii) affect the
other party in a material fashion due to the allocation of Liabilities and
related indemnities set forth in the Separation Agreement, this Agreement or any
other Ancillary Agreement.
Section 1.7 Additional Matters.
(a) Cooperation in Defense and Settlement. With respect to any Third
Party Claim that implicates both Optical Access and MRV in a material fashion
due to the allocation of Liabilities, responsibilities for management of defense
and related indemnities set forth in the Separation Agreement, this Agreement or
any of the Ancillary Agreements, the parties agree to cooperate fully and
maintain a joint defense (in a manner that will preserve the attorney-client
privilege with respect thereto) so as to minimize such Liabilities and defense
costs associated therewith. The party that is not responsible for managing the
defense of such Third Party Claims shall, upon reasonable request, be consulted
with respect to significant matters relating thereto and may, if necessary or
helpful, associate counsel to assist in the defense of such claims.
(b) Substitution. In the event of an Action in which the Indemnifying
Party is not a named defendant, if either the Indemnitee or the Indemnifying
Party shall so request, the parties shall endeavor to substitute the
Indemnifying Party for the named defendant. If such substitution or addition
cannot be achieved for any reason or is not requested, the rights and
obligations of the parties regarding indemnification and the management of the
defense of claims as set forth in this Article I shall not be altered.
(c) Subrogation. In the event of payment by or on behalf of any
Indemnifying Party to or on behalf of any Indemnitee in connection with any
Third Party Claim, such Indemnifying Party shall be subrogated to and shall
stand in the place of such Indemnitee, in whole or in part
5
10
based upon whether the Indemnifying Party has paid all or only part of the
Indemnitee's Liability, as to any events or circumstances in respect of which
such Indemnitee may have any right, defense or claim relating to such Third
Party Claim against any claimant or plaintiff asserting such Third Party Claim
or against any other person. Such Indemnitee shall cooperate with such
Indemnifying Party in a reasonable manner, and at the cost and expense of such
Indemnifying Party, in prosecuting any subrogated right, defense or claim.
(d) Not Applicable to Taxes. This Agreement shall not apply to Taxes
(which are covered by the Tax Sharing Agreement).
Section 1.8 Survival of Indemnities. Subject to Section 3.8, the rights and
obligations of the members of the MRV Group and the Optical Access Group under
this Article I shall survive the sale or other transfer by any party of any
Assets or businesses or the assignment by it of any Liabilities or the sale by
any member of the MRV Group or the Optical Access Group of the capital stock or
other equity interests of any Subsidiary to any Person.
ARTICLE II.
INSURANCE MATTERS
Section 2.1 Optical Access Insurance Coverage During the Transition Period.
(a) Maintain Comparable Insurance. Throughout the period beginning on
the Separation Date and ending on the Effective Date (i.e., the "Insurance
Transition Period"), MRV shall, subject to insurance market conditions and other
factors beyond its control, maintain policies of insurance, including for the
benefit of Optical Access or any of its Subsidiaries, directors, officers,
employees or other covered parties (collectively, the "Optical Access Covered
Parties") which are comparable to those maintained generally by MRV; provided,
however, that if MRV determines that (i) the amount or scope of such coverage
will be reduced to a level materially inferior to the level of coverage in
existence immediately prior to the Insurance Transition Period or (ii) the
retention or deductible level applicable to such coverage, if any, will be
increased to a level materially greater than the levels in existence immediately
prior to the Insurance Transition Period, MRV shall give Optical Access notice
of such determination as promptly as practicable. Upon notice of such
determination, Optical Access shall be entitled to no less than sixty (60) days
to evaluate its options regarding continuance of coverage hereunder and may
cancel its interest in all or any portion of such coverage as of any day within
such sixty (60) day period.
(b) Reimbursement for Premiums. Optical Access shall promptly pay or
reimburse MRV, as the case may be, for premium expenses, and Optical Access
Covered Parties shall promptly pay or reimburse MRV for any costs and expenses
which MRV may incur in connection with the insurance coverages maintained
pursuant to this Section 2.1, including but not limited to any subsequent
premium adjustments. All payments and reimbursements by Optical Access and
Optical Access Covered Parties to MRV shall be made within thirty (30) days
after Optical Access's receipt of an invoice from MRV.
Section 2.2 Cooperation and Agreement Not to Release Carriers. Each of MRV and
Optical Access will share such information as is reasonably necessary in order
to permit the other to manage and conduct its insurance matters in an orderly
fashion. Each of MRV and Optical
6
11
Access, at the request of the other, shall cooperate with and use commercially
reasonable efforts to assist the other in recoveries for claims made under any
insurance policy for the benefit of any insured party, and neither MRV nor
Optical Access, nor any of their Subsidiaries, shall take any action which would
intentionally jeopardize or otherwise interfere with either party's ability to
collect any proceeds payable pursuant to any insurance policy. Except as
otherwise contemplated by the Separation Agreement, this Agreement or any
Ancillary Agreement, after the Separation Date, neither MRV nor Optical Access
shall (and shall ensure that no member of their respective Groups shall),
without the consent of the other, provide any insurance carrier with a release,
or amend, modify or waive any rights under any such policy or agreement, if such
release, amendment, modification or waiver would adversely affect any rights or
potential rights of any member of the other Group thereunder. However, nothing
in this Section 2.2 shall (a) preclude any member of any Group from presenting
any claim or from exhausting any policy limit, (b) require any member of any
Group to pay any premium or other amount or to incur any Liability, or (c)
require any member of any Group to renew, extend or continue any policy in
force.
Section 2.3 Optical Access Insurance Coverage After the Insurance Transition
Period. From and after expiration of the Insurance Transition Period, Optical
Access shall be responsible for obtaining and maintaining insurance programs for
its risk of loss and such insurance arrangements shall be separate and apart
from MRV's insurance programs. Notwithstanding the foregoing, MRV, upon the
request of Optical Access, shall use all commercially reasonable efforts to
assist Optical Access in the transition to its own separate insurance programs
from and after the Insurance Transition Period, and shall provide Optical Access
with any information that is in the possession of MRV and is reasonably
available and necessary to either obtain insurance coverages for Optical Access
or to assist Optical Access in preventing unintended self- insurance, in
whatever form.
Section 2.4 Responsibilities for Deductibles and/or Self-insured Obligations.
Optical Access will reimburse MRV for all amounts necessary to exhaust or
otherwise satisfy all applicable self-insured retentions, amounts for fronted
policies, deductibles and retrospective premium adjustments and similar amounts
not covered by Insurance Policies in connection with Optical Access Liabilities
and Insured Optical Access Liabilities.
Section 2.5 Procedures With Respect to Insured Optical Access
Liabilities.
(a) Reimbursement. Optical Access will reimburse MRV for all amounts
incurred to pursue insurance recoveries from Insurance Policies for Insured
Optical Access Liabilities.
(b) Management of Claims. The defense of claims, suits or actions giving
rise to potential or actual Insured Optical Access Liabilities will be managed
(in conjunction with MRV's insurers, as appropriate) by the party that would
have had responsibility for managing such claims, suits or actions had such
Insured Optical Access Liabilities been Optical Access Liabilities.
Section 2.6 Insufficient Limits of Liability for MRV Liabilities and Optical
Access Liabilities.
In the event that there are insufficient limits of liability available
under MRV's Insurance Policies in effect prior to the Separation Date to cover
the Liabilities of MRV and/or Optical Access that would otherwise be covered by
such Insurance Policies, then to the extent that other
7
12
insurance is not available to MRV and/or Optical Access for such Liabilities an
adjustment will be made in accordance with the following procedures:
(a) Each party will be allocated an amount equal to their Shared
Percentage of the lesser of (i) the available limits of liability available
under MRV's Insurance Policies in effect prior to the Separation Date net of
uncollectible amounts attributable to insurer insolvencies, and (ii) the
proceeds received from MRV's Insurance Policies if the Liabilities are the
subject of disputed coverage claims and, following consultation with each other,
MRV and/or Optical Access agree to accept less than full policy limits from
MRV's and Optical Access's insurers (the "Coverage Amount").
(b) A party who receives more than its share of the Coverage Amount (the
"Overallocated Party") agrees to reimburse the other party (the "Underallocated
Party") to the extent that the Liabilities of the Underallocated Party that
would have been covered under such Insurance Policies is less than the
Underallocated Party's share of the Coverage Amount.
(c) This Section 2.6 shall terminate ten years following the Separation
Date.
Section 2.7 Cooperation. MRV and Optical Access will cooperate with each other
in all respects, and they shall execute any additional documents which are
reasonably necessary to effectuate the provisions of this Article II.
Section 2.8 No Assignment or Waiver. This Agreement shall not be considered as
an attempted assignment of any policy of insurance or as a contract of insurance
and shall not be construed to waive any right or remedy of any member of the MRV
Group in respect of any Insurance Policy or any other contract or policy of
insurance.
Section 2.9 No Liability. Optical Access does hereby, for itself and as agent
for each other member of the Optical Access Group, agree that no member of the
MRV Group or any MRV Indemnitee shall have any Liability whatsoever as a result
of the insurance policies and practices of MRV and its Subsidiaries as in effect
at any time prior to the Separation Date, including as a result of the level or
scope of any such insurance, the creditworthiness of any insurance carrier, the
terms and conditions of any policy, the adequacy or timeliness of any notice to
any insurance carrier with respect to any claim or potential claim or otherwise.
Section 2.10 Additional or Alternate Insurance. Notwithstanding any provision of
this Agreement, during the Insurance Transition Period MRV and Optical Access
shall work together to evaluate insurance options and secure additional or
alternate insurance for Optical Access and/or MRV if desired and cost effective.
Nothing in this Agreement shall be deemed to restrict any member of the Optical
Access Group from acquiring at its own expense any other insurance policy in
respect of any Liabilities or covering any period.
Section 2.11 Further Agreements. The Parties acknowledge that they intend to
allocate financial obligations without violating any laws regarding insurance,
self-insurance or other financial responsibility. If it is determined that any
action undertaken pursuant to the Separation Agreement, this Agreement or any
Ancillary Agreement is violative of any insurance, self-insurance or related
financial responsibility law or regulation, the parties agree to work together
to do whatever is necessary to comply with such law or regulation while trying
to accomplish, as much as possible, the allocation of financial obligations as
intended in the Separation Agreement, this Agreement and any Ancillary
Agreement.
8
13
Section 2.12 Matters Governed by Employee Matters Agreement. This Article II
shall not apply to any insurance policies that are the subject of the Employee
Matters Agreement.
ARTICLE III.
MISCELLANEOUS
Section 3.1 Entire Agreement. This Agreement, the Master Separation Agreement,
the other Ancillary Agreements and the Exhibits and Schedules attached hereto
and thereto, constitute the entire agreement between the parties with respect to
the subject matter hereof and shall supersede all prior written and oral and all
contemporaneous oral agreements and understandings with respect to the subject
matter hereof.
Section 3.2 Governing Law. This Agreement shall be construed in accordance with
and all Disputes hereunder shall be governed by the laws of the State of
California, excluding its conflict of law rules and the United Nations
Convention on Contracts for the International Sale of Goods. The Superior Court
of Los Angeles County and/or the United States District Court for the Central
District of California shall have jurisdiction and venue over all Disputes
between the parties that are permitted to be brought in a court of law pursuant
to Section 3.3.
Section 3.3 Dispute Resolution. If a dispute, controversy or claim ("Dispute")
arises between the parties relating to the interpretation or performance of this
Agreement, or the grounds for the termination hereof, appropriate senior
executives (e.g. director or V.P. level) of each party who shall have the
authority to resolve the matter shall meet to attempt in good faith to negotiate
a resolution of the Dispute prior to pursuing other available remedies. The
initial meeting between the appropriate senior executives shall be referred to
herein as the "Dispute Resolution Commencement Date." Discussions and
correspondence relating to trying to resolve such Dispute shall be treated as
confidential information developed for the purpose of settlement and shall be
exempt from discovery or production and shall not be admissible. If the senior
executives are unable to resolve the Dispute within thirty (30) days from the
Dispute Resolution Commencement Date, and either party wishes to pursue its
rights relating to such Dispute, then the Dispute will be mediated by a mutually
acceptable mediator appointed pursuant to the mediation rules of JAMS/Endispute
within thirty (30) days after written notice by one party to the other demanding
non-binding mediation. Neither party may unreasonably withhold consent to the
selection of a mediator or the location of the mediation. Both parties will
share the costs of the mediation equally, except that each party shall bear its
own costs and expenses, including attorney's fees, witness fees, travel
expenses, and preparation costs. The parties may also agree to replace mediation
with some other form of non-binding or binding alternative dispute resolution
("ADR").
Any Dispute which the parties cannot resolve through mediation within
ninety (90) days of the Dispute Resolution Commencement Date, unless otherwise
mutually agreed, shall be submitted to final and binding arbitration under the
then current Commercial Arbitration Rules of the American Arbitration
Association ("AAA"), by three (3) arbitrators in Los Angeles County, California.
Such arbitrators shall be selected by the mutual agreement of the parties or,
failing such agreement, shall be selected according to the aforesaid AAA rules.
The arbitrators will be instructed to prepare and deliver a written, reasoned
opinion stating their decision within thirty (30) days of the completion of the
arbitration. The prevailing party in such arbitration shall
9
14
be entitled to expenses, including costs and attorneys' and other professional
fees, incurred in connection with the arbitration (but excluding any costs and
fees associated with prior negotiation or mediation). The decision of the
arbitrator shall be final and non-appealable and may be enforced in any court of
competent jurisdiction. The use of any ADR procedures will not be construed
under the doctrine of laches, waiver or estoppel to adversely affect the rights
of either party.
Any Dispute regarding the following is not required to be negotiated,
mediated or arbitrated prior to seeking relief from a court of competent
jurisdiction: breach of any obligation of confidentiality; infringement,
misappropriation, or misuse of any intellectual property right; any other claim
where interim relief from the court is sought to prevent serious and irreparable
injury to one of the parties or to others.
Section 3.4 Notices. Notices, offers, requests or other communications required
or permitted to be given by either party pursuant to the terms of this Agreement
shall be given in writing to the respective parties to the following addresses:
if to MRV:
MRV Communications, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇, Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
if to Optical Access:
Optical Access, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇, Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the party to whom notice is given may have
previously furnished to the other in writing as provided herein. Any notice
involving non-performance, termination, or renewal shall be sent by hand
delivery, recognized overnight courier or, within the United States, may also be
sent via certified mail, return receipt requested. All other notices may also be
sent by fax, confirmed by first class mail. All notices shall be deemed to have
been given and received on the earlier of actual delivery or three (3) days from
the date of postmark.
Section 3.5 Parties in Interest. This Agreement, including the Schedules and
Exhibits hereto, and the other documents referred to herein, shall be binding
upon MRV, MRV's Subsidiaries, Optical Access and Optical Access's Subsidiaries
and inure solely to the benefit of the Optical Access Indemnitees and the MRV
Indemnitees and their respective permitted assigns, and nothing in this
Agreement, express or implied, is intended to confer upon any other Person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
Section 3.6 Other Agreements Evidencing Indemnification Obligations. MRV hereby
agrees to execute, for the benefit of any Optical Access Indemnitee, such
documents as may be reasonably requested by such Optical Access Indemnitee,
evidencing MRV's agreement that the
10
15
indemnification obligations of MRV set forth in this Agreement inure to the
benefit of and are enforceable by such Optical Access Indemnitee. Optical Access
hereby agrees to execute, for the benefit of any MRV Indemnitee, such documents
as may be reasonably requested by such MRV Indemnitee, evidencing Optical
Access's agreement that the indemnification obligations of Optical Access set
forth in this Agreement inure to the benefit of and are enforceable by such MRV
Indemnitee.
Section 3.7 Counterparts. This Agreement, including the Schedules and Exhibits
hereto, and the other documents referred to herein, may be executed in
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.
Section 3.8 Assignment. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective legal representatives and
successors, and nothing in this Agreement, express or implied, is intended to
confer upon any other Person any rights or remedies of any nature whatsoever
under or by reason of this Agreement. This Agreement may be enforced separately
by each member of the MRV Group and each member of the Optical Access Group.
Neither party may assign this Agreement or any rights or obligations hereunder,
without the prior written consent of the other party, and any such assignment
shall be void; provided, however, either party may assign this Agreement to a
successor entity in conjunction with such party's reincorporation.
Section 3.9 Severability. If any term or other provision of this Agreement or
the Schedules or Exhibits attached hereto is determined by a nonappealable
decision by a court, administrative agency or arbitrator to be invalid, illegal
or incapable of being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the fullest extent possible.
Section 3.10 Failure or Indulgence Not Waiver. No failure or delay on the part
of either party hereto in the exercise of any right hereunder shall impair such
right or be construed to be a waiver of, or acquiescence in, any breach of any
representation, warranty or agreement herein, nor shall any single or partial
exercise of any such right preclude other or further exercise thereof or of any
other right.
Section 3.11 Amendment. No change or amendment will be made to this Agreement
except by an instrument in writing signed on behalf of each of the parties to
this Agreement.
Section 3.12 Authority. Each of the parties hereto represents to the other that
(a) it has the corporate or other requisite power and authority to execute,
deliver and perform this Agreement, (b) the execution, delivery and performance
of this Agreement by it have been duly authorized by all necessary corporate or
other action, (c) it has duly and validly executed and delivered this Agreement,
and (d) this Agreement is a legal, valid and binding obligation, enforceable
against it in accordance with its terms subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and general equity principles.
11
16
Section 3.13 Interpretation. The headings contained in this Agreement, in any
Exhibit or Schedule hereto and in the table or contents to this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Any capitalized term used in any Schedule or
Exhibit but not otherwise defined therein, shall have the meaning assigned to
such term in this Agreement. When a reference is made in this Agreement to an
Article or a Section, Exhibit or Schedule, such reference shall be to an Article
or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated.
ARTICLE IV.
DEFINITIONS
Section 4.1 Action. "Action" means any demand, action, suit, countersuit,
arbitration, inquiry, proceeding or investigation by or before any federal,
state, local, foreign or international governmental authority or any arbitration
or mediation tribunal.
Section 4.2 Affiliated Company. "Affiliated Company" of any Person means any
entity that controls, is controlled by, or is under common control with such
Person. As used herein, "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such entity, whether through ownership of voting securities or other interests,
by contract or otherwise.
Section 4.3 Assets. "Assets" has the meaning set forth in Section 4.5 of the
Assignment Agreement.
Section 4.4 Assignment Agreement. "Assignment Agreement" means the General
Assignment and Assumption Agreement attached as Exhibit C to the Separation
Agreement.
Section 4.5 Coverage Amount. "Coverage Amount" has the meaning set forth in
Section 2.6(a) of this Agreement.
Section 4.6 Employee Matters Agreement. "Employee Matters Agreement" means the
Employee Matters Agreement attached as Exhibit E to the Separation Agreement.
Section 4.7 Environmental Actions. "Environmental Actions" means any notice,
claim, act, cause of action, order, decree or investigation by any third party
(including, without limitation, any Governmental Authority) alleging potential
liability (including potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, damage to flora or fauna
caused by Environmental Conditions, real property damages, personal injuries or
penalties) arising out of, based on or resulting from the Release of or exposure
of any individual to any Hazardous Materials.
Section 4.8 Environmental Conditions. "Environmental Conditions" means the
presence in the environment, including the soil, groundwater, surface water or
ambient air, of any Hazardous Material at a level which exceeds any applicable
standard or threshold under any Environmental Law or otherwise requires
investigation or remediation (including, without limitation, investigation,
study, health or risk assessment, monitoring, removal, treatment or transport)
under any applicable Environmental Laws.
12
17
Section 4.9 Environmental Laws. "Environmental Laws" means all laws and
regulations of any Governmental Authority with jurisdiction that relate to the
protection of the environment (including ambient air, surface water, ground
water, land surface or subsurface strata) including laws and regulations
relating to the Release of Hazardous Materials, or otherwise relating to the
treatment, storage, disposal, transport or handling of Hazardous Materials, or
to the exposure of any individual to a Release of Hazardous Materials.
Section 4.10 Hazardous Materials. "Hazardous Materials" means chemicals,
pollutants, contaminants, wastes, toxic substances, radioactive and biological
materials, hazardous substances, petroleum and petroleum products or any
fraction thereof.
Section 4.11 Indemnitee. "Indemnitee" has the meaning set forth in Section
1.5(a) hereof.
Section 4.12 Insurance Policies. "Insurance Policies" means insurance policies
pursuant to which a Person makes a true risk transfer to an insurer.
Section 4.13 Insurance Proceeds. "Insurance Proceeds" means those monies:
received by an insured from an insurance carrier; or paid by an insurance
carrier on behalf of the insured; from Insurance Policies.
Section 4.14 Insurance Transition Period. "Insurance Transition Period" has the
meaning set forth in Section 2.1 of this Agreement.
Section 4.15 Insured Optical Access Liability. "Insured Optical Access
Liability" means any Optical Access Liability to the extent that (a) it is
covered under the terms of MRV's Insurance Policies in effect prior to the
Separation Date, and (b) Optical Access is not a named insured under, or
otherwise entitled to the benefits of, such Insurance Policies.
Section 4.16 IPO Date. "IPO Date" means the date on which Optical Access effects
its initial public offering of common stock. Scheduled to occur on or before
December 31, 2000.
Section 4.17 IPO Liabilities. "IPO Liabilities" means any Liabilities relating
to, arising out of or resulting from any untrue statement or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, with respect to all information contained in the IPO
Registration Statement or any preliminary, final or supplemental prospectus
forming a part of an IPO Registration Statement.
Section 4.18 IPO Registration Statement. "IPO Registration Statement" means the
Form S-1, registration number 333-_____, filed with the SEC registering the
shares of common stock of Optical Access to be issued in the initial public
offering, together with all amendments thereto.
Section 4.19 Liabilities. "Liabilities" has the meaning set forth in Section
4.17 of the Assignment Agreement.
Section 4.20 Non-US Plan. "Non-US Plan" means the plan of reorganization
described in Exhibit K of the Separation Agreement.
Section 4.21 Optical Access Business. "Optical Access Business" means the
business and operations of Optical Access, as described in the IPO Registration
Statement and except as otherwise expressly provided herein, any terminated,
divested or discontinued businesses or operations that at the time of
termination, divestiture or discontinuation primarily related to the Optical
Access Business as then conducted.
13
18
Section 4.22 Optical Access Contracts. "Optical Access Contracts" has the
meaning set forth in Section 4.23 of the Assignment Agreement.
Section 4.23 Optical Access Covered Parties. "Optical Access Covered Parties"
shall have the meaning set forth in Section 2.1(a) of this Agreement.
Section 4.24 Optical Access Facilities. "Optical Access Facilities" means all of
those facilities to be transferred, licensed or sublet to Optical Access on the
Separation Date as set forth on Schedules 1 and 2 to the Real Estate Matters
Agreement.
Section 4.25 Optical Access Group. "Optical Access Group" means Optical Access,
each Subsidiary and Affiliated Company of Optical Access immediately after the
Separation Date or that is contemplated to be a Subsidiary or Affiliated Company
of Optical Access pursuant to the Non-US Plan and each Person that becomes a
Subsidiary or Affiliate Company of Optical Access after the Separation Date.
Section 4.26 Optical Access Indemnitees. "Optical Access Indemnitees" means
Optical Access, each member of the Optical Access Group and each of their
respective directors, officers and employees.
Section 4.27 Optical Access Liabilities. "Optical Access Liabilities" has the
meaning set forth in Section 1.4 of the Assignment Agreement.
Section 4.28 MRV Business. "MRV Business" means any business of MRV other than
the Optical Access Business.
Section 4.29 MRV Facilities. "MRV Facilities" means all of the real property and
improvements thereon owned or occupied at any time on or before the Separation
Date by any member of the MRV Group, whether for the MRV Business or the Optical
Access Business, excluding the Optical Access Facilities.
Section 4.30 MRV Group. "MRV Group" means MRV, each Subsidiary and Affiliated
Company of MRV (other than any member of the Optical Access Group) immediately
after the Separation Date, after giving effect to the Non-US Plan and each
Person that becomes a Subsidiary or Affiliate Company of MRV after the
Separation Date.
Section 4.31 MRV Indemnitees. "MRV Indemnitees" means MRV, each member of the
MRV Group and each of their respective directors, officers and employees.
Section 4.32 Person. "Person" means an individual, a partnership, a corporation,
a limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
Section 4.33 Pre-Separation Third Party Site Liabilities. "Pre-Separation Third
Party Site Liabilities" means any and all Environmental Actions arising out of
Hazardous Materials found on, under or about any landfill any waste, storage,
transfer or recycling site and resulting from or arising out of Hazardous
Materials stored, treated, recycled disposed or otherwise handled at such site
prior to the Separation Date (whether for the operation of the Optical Access
Business or for the operation of any past or presently (as of the date hereof)
existing MRV Business as operated on or before the Separation Date).
14
19
Section 4.34 Release. "Release" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment, including, without limitation,
the movement of Hazardous Materials through ambient air, soil, surface water,
groundwater, wetlands, land or subsurface strata.
Section 4.35 Separation. "Separation" means the transfer and contribution from
MRV to Optical Access, and Optical Access's receipt and assumption of, directly
or indirectly, substantially all of the Assets and Liabilities currently
associated with the Optical Access Business and the stock, investments or
similar interests currently held by MRV in subsidiaries and other entities that
conduct such business.
Section 4.36 Separation Agreement. "Separation Agreement" means the Master
Separation Agreement dated as of September 29, 2000, of which this is an Exhibit
thereto.
Section 4.37 Separation Date. "Separation Date" means the effective date and
time of each transfer of property, assumption of liability, license,
undertaking, or agreement in connection with the Separation, which shall be
12:01 a.m., Pacific Time, October 31, 2000, or such date as may be fixed by the
Board of Directors of MRV.
Section 4.38 Shared Percentage. "Shared Percentage" means the percent of
liability each party shall be allocated, as the case may be. The Shared
Percentage shall be agreed upon by the parties on a case by case basis. Any
dispute arising over the determination of the Shared Percentage shall be
resolved pursuant to Section 3.3.
Section 4.39 Subsidiary. "Subsidiary" of any Person means a corporation or other
organization whether incorporated or unincorporated of which at least a majority
of the securities or interests having by the terms thereof ordinary voting power
to elect at least a majority of the board of directors or others performing
similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such Person or by any one or more
of its Subsidiaries, or by such Person and one or more of its Subsidiaries;
provided, however, that no Person that is not directly or indirectly
wholly-owned by any other Person shall be a Subsidiary of such other Person
unless such other Person controls, or has the right, power or ability to
control, that Person.
Section 4.40 Tax Sharing Agreement. "Tax Sharing Agreement" means the Tax
Sharing Agreement, attached as Exhibit F to the Separation Agreement.
Section 4.41 Taxes. "Taxes" has the meaning set forth in the Tax Sharing
Agreement.
Section 4.42 Third Party Claim. "Third Party Claim" has the meaning set forth in
Section 1.6(a) of this Agreement.
[SIGNATURES ON FOLLOWING PAGE]
15
20
IN WITNESS WHEREOF, each of the parties has caused this Indemnification and
Insurance Matters Agreement to be executed on its behalf by its officers
thereunto duly authorized on the day and year first above written.
MRV COMMUNICATIONS, INC.
By:
--------------------------------------
▇▇▇▇ ▇▇▇▇▇, Chief Executive Officer
OPTICAL ACCESS, INC.
By:
-------------------------------------
▇▇▇ ▇▇▇▇▇▇, Chief Executive Officer
16
21
SCHEDULE 1.1(a)
CLAIMS NOT RELEASED BY OPTICAL ACCESS
Any liabilities that relate to, arise out of or result from the complaint
captioned ▇▇▇▇▇▇ v. Jolt, Ltd. as further described in the IPO Registration
Statement.
17
22
SCHEDULE 1.1(b)
CLAIMS NOT RELEASED BY MRV
None.
18