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EXHIBIT 10.19
EXECUTION COPY
DATED
April 23, 2000
BY AND AMONG
MRV COMMUNICATIONS, INC.
AND
SUBSIDIARIES/AFFILIATES OF MRV
(in the case that MRV's subsidiaries/affiliates purchase OIC's shares)
AND
OPTRONICS INTERNATIONAL CORPORATION
AND
SHAREHOLDERS OF OPTRONICS INTERNATIONAL CORPORATION
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STOCK PURCHASE AGREEMENT
Relating to the sale and purchase of up to one hundred percent (100%) of the
Ordinary Shares in the capital of
OPTRONICS INTERNATIONAL CORPORATION
and the sale and purchase of One Million Seven Hundred Thousand
Common Shares in the capital of
MRV COMMUNICATIONS, INC.
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XXXXX & XXXXXXXX
15th Floor, Xxxx Xxx Xxxxxx
000 Xxx Xxx Xxxxx Xxxx
Xxxxxx, Xxxxxx
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TABLE OF CONTENTS
SECTION PAGE
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1. Definitions..............................................................2
2. The Transaction..........................................................2
3. The Closing..............................................................4
4. Deliveries at the Closing................................................4
5. Representations and Warranties of OIC and Selling Shareholders...........5
6. Representations and Warranties of MRV...................................17
7. Pre-Closing Covenants...................................................19
8. Conditions Precedent to Closing.........................................22
9. Post Closing Covenants..................................................24
10. Indemnification and Escrow..............................................25
11. Termination.............................................................28
12. Transfer Restriction....................................................28
13. Miscellaneous...........................................................28
SCHEDULES
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1. List of Signing Shareholders and Shareholding
2. List of Subsidiaries of OIC
3. List of Equity Interests hold by OIC and its Subsidiaries
4. Financial Statements of OIC and its Subsidiaries
5. List of Warehouses
6. List of Liabilities
7. List of Material Changes
8. List of Real Properties
9. List of Tangible Personal Property
10. List of Intellectual Properties
11. List of License of any Intellectual Properties
12. List of Contracts
13. List of Permits
14. List of Non-Renewable Permit
15. List of Encumbrances
16. List of Litigation
17. List of Employee Benefits
18 List of Unemployment Compensation
19. List of Distributors
20. List of Suppliers
21. List of Related Party Transaction
22. List of Directors; Officers; Banks and Powers of Attorney
23. List of Insurance
24. List of Principal Employees
25. List of Current Competing Investments of Selling Shareholders
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EXHIBITS
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A. Form of Power of Attorney to be issued to Attorneys-in-Fact
B. Form of Power of Attorney to be issued to Closing Agent
C. Form of OIC's Bring-Down Certificate
D. Form of MRV's Bring-Down Certificate
E. Form of Employment Agreement
F. Form of Escrow Agreement
G. Letter of Consent for Principal Employees
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered into as of this 23rd
day of April, 2000 by and among Optronics International Corporation., a
corporation organized and existing under the laws of the Republic of China
("OIC") with its principal executive office located at Xx. 00, Xxxx Xxxxxx XX
Xxxx, Xxxxxxx-Xxxxx Industrial Park, Xxxx Xxx, Taiwan, ROC, MRV Communications,
Inc., a corporation organized and existing under the laws of Delaware, U.S.A.
with its principal executive office located at 00000 Xxxxxxxx Xx., Xxxxxxxxxx,
XX 00000 U.S.A.("MRV"), and each person listed in the schedule of OIC
shareholders attached hereto as Schedule 1 (individually, a "Signing
Shareholder" and collectively the "Signing Shareholders"), represented by their
attorneys-in-fact, Xx. X. X. Xxxxx ("Attorneys-in-Fact") (as evidenced by a
Power of Attorney attached hereto as Exhibit A). MRV, OIC and the Signing
Shareholders are referred to herein individually as the "Party" and collectively
as the "Parties".
WHEREAS, the Signing Shareholders collectively own approximately sixty
percent (60%) of the issued and outstanding shares of the capital stock of OIC
(the "OIC Shares"), each of them in the respective amounts and percentages set
forth on Schedule 1;
WHEREAS, MRV is authorized to issue up to One Million Seven Hundred
Thousand (1,700,000) new common shares ("MRV Shares") prior to the sale and
transfer of OIC Shares to MRV contemplated by this Agreement;
WHEREAS, subject to the terms and conditions of this Agreement, (i) MRV
desires to by itself and/or its Subsidiaries or Affiliates purchase up to one
hundred percent (100%) but no less than seventy five percent (75%) of OIC Shares
from the Signing Shareholders and other OIC shareholders (the Signing
Shareholders and other OIC shareholders selling their OIC Shares to MRV (and/or
its Subsidiaries/Affiliates) collectively the "Selling Shareholders"), and the
Signing Shareholders desire to, and will use their best efforts to cause other
Selling Shareholders to sell and transfer their OIC Shares to MRV (and/or its
Subsidiaries/Affiliates) in return for the consideration set forth herein; and
(ii) the Signing Shareholders desire to and will cause other Selling
Shareholders to aggregately purchase certain MRV Shares from MRV, and MRV
desires to sell the MRV Shares up to the same amount to Selling Shareholders in
return for the consideration set forth herein.
WHEREAS, the Signing Shareholders and OIC will use their best efforts to
obtain the consent of other Selling Shareholders to be a Party of this Agreement
and to be bound by the terms and conditions 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:
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1. DEFINITIONS
1.1 Generally. As used in this Agreement, capitalized terms not otherwise
defined shall have the meanings specified in the text hereof or on Annex
1 hereto (which is incorporated herein by reference), which meanings
shall be applicable to both the singular and plural forms of the term
defined.
2. THE TRANSACTION
2.1 At the Closing (as hereinafter defined), upon satisfaction of the terms
and conditions set forth herein:
2.1.1 Purchase and Sale of OIC Shares
(a) The Selling Shareholders shall sell, transfer, assign and deliver
to MRV (and/or its Subsidiaries/Affiliates) at the Closing, and
MRV (and/or its Subsidiaries/Affiliates) agrees to purchase and
acquire from the Selling Shareholders and pay therefor at the
Closing, all of their respective OIC Shares, free and clear of
any and all Encumbrances, consisting of up to one hundred percent
(100%) of the total number of issued and outstanding OIC Shares
as of the Closing Date, at and for an aggregate purchase price of
Xxx Xxxxxxx xxx Xxxxxx Xxxxxxx Xxxxxx Xxxxxx Dollars (US$
120,000,000.00) for purchasing one hundred percent (100%) OIC
Shares (equaling Three United States Dollars (US$3.00) per
share). The foregoing aggregate purchase price (the "MRV's
Payment") shall be paid by MRV (and/or its
Subsidiaries/Affiliates) at the Closing by wire transfer to a
single bank account in Taiwan designated by the Selling
Shareholders to MRV (and/or its Subsidiaries/Affiliates) in
writing at least seven (7) Business Days prior to the Closing
(the "Taiwan Account"). Such Taiwan Account shall be agreed by
MRV. MRV's Payment shall be divisible among the Selling
Shareholders pro rata in accordance with their percentage
shareholdings in OIC; PROVIDED, HOWEVER, that MRV's Payment shall
not be released from the Taiwan Account to the Selling
Shareholders and shall be used as the payment due MRV for the MRV
Shares being purchased by the Selling Shareholders (as per
Section 2.1.2 below) and fully wired by the Selling Shareholders
via the Closing Agent (as hereinafter defined and discussed) on
their behalf to an account designated by MRV to the Selling
Shareholders in writing at least seven (7) Business Days prior to
the Closing (the "MRV Account"). Furthermore, the Selling
Shareholders shall be liable for (i) the 0.3% share transfer tax
imposed by Taiwan on the sale of OIC Shares by the Selling
Shareholders ("The Taiwan Stock Transfer Tax"); (ii) whatever
costs and fees charged relating to the Taiwan Account for the
wire transfer; and (iii) the Escrow Fees as described in Section
10.2.3 (c) below and in the Escrow Agreement (above (i), (ii),
and (iii) collectively referred to as the "Sellers' Costs").
(b) In the event that less than one hundred percent (100%) but not
less than seventy five percent (75%) of OIC Shares are available
for sale, MRV's Payment shall be adjusted down by the same
percentage as those shares not
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available for sale are as a percentage of the total shares of
outstanding shares on the date of execution of this Agreement. If
less than seventy five percent (75%) of OIC Shares are available
for sale to MRV, MRV shall not be obligated to complete the
transactions contemplated in this Agreement.
2.1.2 Purchase and Sale of MRV Shares
(a) MRV shall issue and sell to the Selling Shareholders, and the
Selling Shareholders shall purchase from MRV pro rata in
accordance with their percentage shareholdings in OIC, the MRV
Shares, free and clear of any and all Encumbrances, at and for an
aggregate purchase price of Xxx Xxxxxxx xxx Xxxxxx Xxxxxxx Xxxxxx
Xxxxxx Dollars (US$120,000,000.00), equaling Seventy United
States Dollars and Fifty-Eight point Eight United States Cents
(US$70.588) per share. The foregoing aggregate purchase price
(the "Selling Shareholders' Payment") shall be paid by the
Selling Shareholders via the Closing Agent at the Closing by wire
transfer to the MRV Account. The wire transfer shall be effected
immediately upon receipt of each installment of the MRV's Payment
in the Taiwan Account. In order to secure and assure the payment
to MRV of the Selling Shareholders' Payment, which shall be made
using a portion of the funds first wired by MRV to the Taiwan
Account, at least five (5) Business Days prior to the Closing,
the Selling Shareholders (or Attorney(s)-in-Fact or OIC in whose
name the Taiwan Account shall be registered) shall give the
Taiwan Account passbook, chops and a power-of-attorney in the
form attached as Exhibit B (Power of Attorney-Form B) to the law
firm of Xxxxx & XxXxxxxx, Taipei Office represented by Xxxxx Xxxx
as the Closing Agent of the Selling Shareholders (the "Closing
Agent") granting said Closing Agent the exclusive right to give
instructions to the bank with respect to the Taiwan Account.
(b) In the event that less than one hundred percent (100%) but not
less than seventy five (75%) of OIC Shares are available for
sale, the number of MRV Shares to be sold to the Selling
Shareholders and the Selling Shareholders' Payment shall be
adjusted down by the same percentage as those OIC Shares not
available for sale are as a percentage of the total OIC Shares of
outstanding on the date of execution of this Agreement. The
Selling Shareholders shall advise MRV of the actual number of OIC
Shares being sold within one month of the execution of this
Agreement.
2.1.3 The definite purchaser(s) of OIC Shares and their respective
purchasing volume of shares in OIC, and recipient(s) of the
Selling Shareholders' Payment shall be determined and advised by
MRV in writing to OIC and the Attorney-in-Fact at least Five (5)
Business Days prior to the Closing. In each of the above
transactions, the seller shall be liable to pay any applicable
taxes or duties on the issuance or sale of its shares of stock to
other party. Thus, the Selling Shareholders shall be liable for
the payment of the Taiwan Stock Transfer Tax, which shall be
deducted and paid from the Taiwan Account, as discussed above.
MRV shall be liable for the payment of the taxes or duties (if
any) on the issuance and sales of the MRV Shares to the Selling
Shareholders, which shall be paid by MRV within the
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period of time required by the laws of the State of Delaware.
2.1.4 The Principal Employees listed in Schedule 24 shall be granted by
MRV the options to purchase the common stock of MRV. Such options
shall have an intrinsic value of Twenty Million United States
Dollars (US$20,000,000), based on the difference between the
exercise price and the fair market value of MRV common stock
valued at the same price as the closing price of the MRV common
stock as reported on Nasdaq immediately prior to the signing of
this Agreement. Such options shall vest and become exercisable in
equal installments at the rate of 1.667% per month commencing on
the last day of the first full month after the date of this
Agreement and shall be issued in exchange for equivalent options
such employees hold in OIC, if any. The exercise price referred
to in this Article 2.1.4 shall be between Six United States
Dollars (US$6) and Ten United States Dollars (US$10).
2.2 Notwithstanding the transaction mechanism described in Sections 2.1.1
and 2.1.2, MRV shall have the option to carry out a direct shares swap
if MRV's verification with the Taiwan authorities reveals that such
direct shares swap is feasible prior to the Closing.
2.3 The Parties agree that upon the successful completion of transfer of the
Selling Shareholders' Payment to the MRV's Account in accordance with
the provisions of this Agreement, the Closing Agent will thereupon be
deemed to have been released from any and all obligation arising
hereunder or from the Agreement. The Parties further agree any of them
will not hold the Closing Agent liable or responsible for any act it may
do or omit to do in the exercise of reasonable care, as prudent
administrator, in good faith, and in compliance with this Agreement. The
Parties and the Closing Agent agree that the Closing Agent will keep the
Parties informed of the status and the progress of the Closing matters
handled by the Closing Agent.
3. THE CLOSING
3.1 The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the office of Xxxxx & XxXxxxxx, Taipei
office and be held over a five (5) day or longer period (given the
necessity of effecting international wire transfers and considering the
time differences involved), commencing on the later to occur of (a)
________, 2000, and (b) five (5) Business Days after all conditions to
the closing of the transactions contemplated by this Agreement have been
satisfied or waived (the fourth or the last day of the Closing being the
"Closing Date"), but in any case not later than _______, 2000 (the
"Target Day") (unless the Parties shall agree upon a different date or
location).
4. DELIVERIES AT THE CLOSING
4.1 Deliveries by the Selling Shareholders
At the Closing, the Selling Shareholders shall deliver or cause to be
delivered to
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MRV:
(i) stock certificates evidencing OIC Shares, and duly executed stock
transfer documentation transferring thereof to MRV (including its
nominees) and/or its Subsidiaries/Affiliates; (ii) the Selling
Shareholders' Payment, (iii) OIC's Bring-Down Certificate (as defined
and discussed below and substantially in the form attached as Exhibit
C); (iv) written consents and the powers of attorney from the other
Selling Shareholders as described in Section 7.10 and (iv) such other
instruments, certificates or documents as MRV may reasonably request.
4.2 Deliveries by MRV
At the Closing Date, MRV shall deliver or cause to be delivered to the
Selling Shareholders (i) stock certificates evidencing MRV Shares; (ii)
MRV's Bring-Down Certificate (as defined and discussed below and
substantially in the form attached as Exhibit D); and (iii) such other
instruments, certificates or documents as the Selling Shareholders may
reasonably request.
5. REPRESENTATIONS AND WARRANTIES OF OIC AND THE SELLING SHAREHOLDERS
OIC and each of the Signing Shareholders hereby and shall cause other Selling
Shareholders to represent, warrant and covenant to MRV as follows at the date
hereof and again as of the Closing Date as follows:
5.1 Power, Authority and Ownership
5.1.1 The Selling Shareholders have the absolute and unrestricted
right, power and authority to execute and deliver this Agreement
and the Powers of Attorney and to perform their obligations
hereunder with respect to their respective OIC Shares. The
Attorneys-in-Fact have been duly authorized by each of the
Signing Shareholders and shall obtain the authorization from the
other Selling Shareholders before the Closing to execute, deliver
and perform this Agreement and the transactions contemplated
herein for and on behalf of Selling Shareholders by valid Powers
of Attorney duly executed by the Selling Shareholders. This
Agreement has been duly executed and delivered by the
Attorneys-in-Fact for and on behalf of the Selling Shareholders
and, assuming due authorization, execution and delivery by MRV
and OIC, constitutes the legal, valid and binding obligation of
the Selling Shareholders enforceable against the Selling
Shareholders in accordance with its terms.
5.1.2 The Selling Shareholders own their respective OIC Shares of
record and beneficially, free and clear of any Encumbrances or
restrictions. Provided that any Encumbrances over certain OIC
Shares will be eliminated within twenty days after the execution
of this Agreement. The Selling Shareholders have good title to
their respective Shares and at the Closing, the Selling
Shareholders shall deliver to MRV good title to their respective
Shares free and clear of all Encumbrances, security interests,
restrictions, and all other claims, rights and interests of third
parties.
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5.1.3 OIC and the Selling Shareholders jointly and severally represent
and warrant that OIC has full corporate power and authority,
including all necessary approvals of its directors and
shareholders, to execute and deliver this Agreement and to
perform its obligations hereunder and to consummate the
transactions contemplated hereby.
5.2 Organization and Capitalization
Each of OIC and the Selling Shareholders jointly and severally represent
and warrant that:
5.2.1 Each of OIC and its Subsidiaries as set forth on Schedule 2 is a
corporation duly organized, validly existing, and in good
standing under the laws of their respective jurisdictions of
their incorporation and has full corporate power and authority to
conduct business and is in good standing under the laws of each
jurisdiction where such qualification is required. Each of OIC
and its Subsidiaries has full corporate power and authority and
all material licenses, permits, and authorizations necessary to
carry on the business in which it is now being engaged and to own
and use the properties owned and used by it. Except as set forth
in Schedule 3 or in the Financial Statements, neither OIC nor its
Subsidiaries hold any shares of the capital stock or other equity
interests of or investment in any other Person (other than bank
accounts). OIC has delivered to MRV correct and complete copies
of the charter and bylaws of OIC and each of its Subsidiaries (as
amended to date). OIC and each of its Subsidiaries is not in
default under or in violation of any provision of its charter or
bylaws.
5.2.2 The authorized capital stock of OIC consists of Forty-Five
Million (45,000,000) shares of common stock with a par value of
NT$10 per share, of which Forty Million (40,000,000) shares are
issued and outstanding. All issued shares have been duly
authorized, validly issued and are fully paid and non-assessable,
with [no] preemptive rights. There are no outstanding
obligations, options, warrants, preemptive rights or other
agreements or commitments to which OIC or any of the Selling
Shareholders is a party, or by which OIC or any of the Selling
Shareholders is otherwise bound, providing for the issuance of
any additional shares or for the repurchase of shares of OIC's
capital stock. No shares of the capital stock of OIC are reserved
for future issuance provided that only Forty Million (40,000,000)
shares out of Forty-Five Million (45,000,000) shares are
outstanding and issued.
5.2.3 The Signing Shareholders listed in Schedule 1 own approximately
Sixty percent (60%) of the issued and outstanding shares of
capital stock of OIC. All of the information set out in Schedule
1 is true, correct and complete.
5.3 Financial Condition
Each of OIC and the Selling Shareholders jointly and severally represent
and warrant that:
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5.3.1 OIC has delivered or shall deliver to MRV within Seven (7)
Business Days prior to Closing consolidated financial statements
of OIC and its Subsidiaries, which are collectively attached
hereto as Schedule 4 consisting of (i) audited balance sheets and
statements of income for the fiscal years ended December 31, 1997
through 1999, (the "Financial Statements", the latest audited
balance sheet being the "Audited" Balance Sheet"), and (ii)
unaudited balance sheet and statements of income for the fiscal
period ended March 31, 2000 (the "Latest Financial Statements",
said balance sheet being the "Latest Balance Sheet"). The
Financial Statements and the Latest Financial Statements
(including the notes thereto) have been prepared in accordance
with US GAAP applied on a consistent basis throughout the periods
covered thereby and shall bear an unqualified opinion from the
auditors. Except as explained in the notes thereto, the Audited
Financial Statements and Latest Financial Statements fairly
present the financial condition, assets, liabilities, equity and
results of operations of OIC and each of its Subsidiaries as of
their respective dates and periods, are and will be correct and
complete in all material respects, and have been and will be
prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods
involved.
OIC has obtained or will obtain a written consent by the Closing
from the auditor (the "Auditor Consent") to include their opinion
on the Financial Statements in order to comply with MRV's
necessary filing with the SEC.
5.3.2 The inventories of each of OIC and its Subsidiaries are not
obsolete or damaged, are fit for their particular use, and are
not defective, such that they are of a quantity and quality
usable or saleable in the ordinary course of the business of OIC
and its Subsidiaries for the amounts reflected on the Latest
Balance Sheet, exclusive of any reserve allocable thereto,
subject only to changes in the Ordinary Course of Business. All
inventories reflected on the Latest Financial Statements are
stated at not more than the lower of cost or fair market value
thereof, with adjustments for obsolete, damaged or otherwise not
readily marketable items. Set forth on Schedule 5 hereto is a
complete list of the addresses of all warehouses or other
facilities in which inventories of each of OIC and its
Subsidiaries are located as of the date hereof.
5.3.3 The accounts receivable of each of OIC and its Subsidiaries are
valid receivables, collectible to the extent of the excess
thereof over any reserves set forth on the Latest Balance Sheet,
and are subject to no defenses, counterclaims or set-offs.
5.4 Absence of Undisclosed Liabilities. Each of OIC and the Selling
Shareholders jointly and severally represent and warrant that each of
OIC and its Subsidiaries has no liabilities or obligations (whether
absolute, accrued, contingent or otherwise and whether due or to become
due, including liabilities for taxes and interest and penalties thereon)
except (i) the liabilities set forth on the Latest Balance Sheet and
(ii) the liabilities and obligations set forth in Schedule 6 hereto.
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5.5 Tax Returns
Each of OIC and the Selling Shareholders jointly and severally represent
and warrant that
5.5.1 Each of OIC and its Subsidiaries has filed with the appropriate
governmental agencies all required tax returns, is not in default
with respect to any such filing, is not delinquent in payment of
any taxes shown to be due on any such tax return or claimed to be
due by any taxing authority, and has paid or made on the Latest
Balance Sheet adequate provision or reserves for all taxes
(including but not limited to, all income, withholding,
corporate, excise, and value added taxes, real and personal
property taxes, occupation taxes, social security taxes, and
interest and penalties) payable by it, or attributable to all
periods ending on or prior to the date of the Latest Balance
Sheet. Each of OIC and its Subsidiaries has not given any waiver
or extension of any period of limitation governing the time of
assessment or collection of any tax. No deficiency in any tax
payment is claimed by any tax authority for any taxable years of
OIC and its Subsidiaries. There are no tax audits currently
pending with respect to OIC and its Subsidiaries. To the best
knowledge of any of the Selling Shareholders and OIC, there is no
basis for assessment of any deficiency in any income taxes or any
other taxes or governmental charges against each of OIC and its
Subsidiaries.
5.5.2 Neither OIC nor its Subsidiaries is a party to, and is not bound
by, any tax indemnification agreement, tax sharing agreement or
tax allocation agreement with any other person, firm, corporation
or other entity, and neither OIC nor its Subsidiaries is
responsible for any tax obligation or liability of any such other
person, firm, corporation or other entity.
5.5.3 Neither OIC nor any of its Subsidiaries has, or has at any time
had, a taxable presence or permanent establishment in any country
other than the Republic of China or each jurisdiction where it is
incorporated, under the Applicable Laws of such country or under
any Income Tax Treaty between that country and the Republic of
China.
5.6 Absence of Certain Changes. Each of OIC and the Selling Shareholders
jointly and severally represent and warrant that except as disclosed in
Schedule 7 attached hereto, since the date of the Latest Balance Sheet,
there has not been:
(a) any material adverse change in the financial condition, assets,
liabilities, equity, operations, business or prospects of OIC and
or any of its Subsidiaries;
(b) any obligation or liability incurred by OIC or any of its
Subsidiaries other than obligations and liabilities incurred in
the Ordinary Course of Business;
(c) any damage, destruction or loss, whether or not covered by
insurance, materially or adversely affecting any material asset
of OIC and its Subsidiaries;
(d) any Encumbrance placed on, or any claim, right or interest of
any third party
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of any nature whatsoever asserted against, any material asset of
OIC and its Subsidiaries;
(e) any purchase or sale or other disposition, or any agreement or
other arrangement for the purchase or sale or other disposition,
of any material asset of OIC and its Subsidiaries;
(f) any material change in the compensation or benefits payable or to
become payable by OIC or its Subsidiaries to any of its employees
or agents or any new bonus payment or arrangement or employee
benefit made to or with any of them;
(g) any material change with respect to the management or supervisory
personnel of OIC or any of its Subsidiaries;
(h) any dividend declared or paid or any other stockholder payment or
distribution with respect to the OIC Shares or a purchase or
redemption of any of the securities of OIC or any of its
Subsidiaries or the execution of any agreement or commitment to
do so; or
(i) any other event or condition of any character that may materially
and adversely affect the financial condition , assets,
liabilities, equity, operations, business or prospects of OIC or
any of its Subsidiaries.
5.7 Real Property. Each of OIC and the Selling Shareholders jointly and
severally represent and warrant that Schedule 8 sets forth a complete
list of all real property owned or leased by either OIC or its
Subsidiaries. Each of OIC and its Subsidiaries has valid legal rights
to, or in the case of leased property, has valid leasehold interests, in
all real properties. OIC or any of its Subsidiaries has valid and
outstanding leasehold interests in all real property that it leases from
others and the improvements situated thereon, all of which are listed
and identified on the Schedule 8 hereto. All such real estate and
improvements (including all buildings, or portions thereof, and all
fixtures) are in good repair and operating condition, normal wear and
tear and required maintenance (which has heretofore been regularly
performed) excepted, are suitable and fit for the purposes for which
they are currently being used, and are sufficient to conduct the
business of OIC or any of its Subsidiaries as it is presently conducted.
True , correct and complete copies of all leases, evidence of OIC
interest in the real property, and all other instruments of title, or
those of any of OIC's Subsidiaries and OIC's interest therein, with
respect to all real property, leaseholds or other interests owned or
held by OIC or any of its Subsidiaries have been delivered to MRV. The
use and occupation of such real property and the improvements thereon by
OIC or any of its Subsidiaries comply in all material respects with
Applicable Law including zoning regulations and building codes.
5.8 Tangible Personal Property. Each of OIC and the Selling Shareholders
jointly and severally represent and warrant that OIC and any of its
Subsidiaries has good and marketable title to all of the tangible
personal property which it owns, as reflected on the Latest Balance
Sheet and Schedule 9 hereto (except as sold or otherwise disposed of or
acquired in the Ordinary Course of Business or otherwise consistent with
this Agreement). All machinery, equipment, furniture and fixtures, and
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computer hardware and software used by OIC or any of its Subsidiaries
are in good operating condition and repair, normal wear and tear and
required maintenance (which has heretofore been regularly performed)
excepted, are suitable and fit for the purposes for which they are
currently being used.
5.9 Intellectual Properties. Each of OIC and the Selling Shareholders
jointly and severally represent and warrant that Schedule 10 hereto
lists all of the Intellectual Properties, specifying in each case
whether such Intellectual Properties rights are owned or used under
license, as well as specifying whether OIC or any of its Subsidiaries
act as licensor of any such Intellectual Properties Rights. All license
agreements and all other instruments relating to licenses of any
Intellectual Property Rights are described in Schedule 11, and true and
complete copies thereof have been provided to MRV. None of the
Intellectual Properties have been held or stipulated to be invalid in
any litigation which has been concluded and the validity of none of the
Intellectual Properties has been questioned in any litigation currently
pending or, to the best knowledge of any Selling Shareholders and OIC,
threatened. OIC and any of its Subsidiaries owns or possesses the
Intellectual Properties necessary to manufacture and sell its products,
and, to the best knowledge of any Selling Shareholders and/or OIC, such
manufacture and sale does not infringe any rights of any other Person.
OIC or any of its Subsidiaries, has not received any notice of conflict
thereof with the asserted rights of any other Person, firm, corporation
or other entity, and OIC or any of its Subsidiaries has the right to
bring an action for any infringement of any of the Intellectual
Properties.
5.10 Contracts. Each of OIC and the Selling Shareholders jointly and
severally represent and warrant that there is no Contract:
(a) extending for a period of time longer than 12 months;
(b) involving expenditures or receipts by OIC or any of its
Subsidiaries in excess of US$1.0 million (US$1,000,000);
(c) relating to the borrowing of money or guarantying any obligation
for borrowed money or otherwise, other than endorsements for
collection;
(d) with any insider or any affiliate;
(e) prohibiting or substantially restricting OIC or any of its
Subsidiaries from freely engaging in business in any part of the
world;
(f) with a sales agent or representative, dealer, or distributor; or
(g) any other contract, commitment or lease outside of the usual and
Ordinary Course of Business,
except such Contracts listed in Schedule 12 attached hereto.
5.11 Permits. Each of OIC and the Selling Shareholders jointly and severally
represent and warrant that OIC and any of its Subsidiaries holds all of
the Permits required by Applicable Law to own any and all of its assets,
and to operate its business as that
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business is now conducted. Schedule 13 hereto contains a true and
complete list of all such Permits. Except as specified on Schedule 14,
all Permits are renewable in the Ordinary Course of Business and will
remain in full force and effect following the Closing pursuant to this
Agreement.
5.12 Compliance with Applicable Law and Permits. Each of OIC and the Selling
Shareholders jointly and severally represent and warrant that OIC and
any of its Subsidiaries are conducting, and has conducted, the business
in compliance with all Applicable Laws and Permits, and has received no
notice that it is in breach of any such Applicable Law or Permit. OIC or
any of its Subsidiaries have not processed, stored, disposed,
transported, handled, emitted, discharged, or released any Waste
Material, whether on or off the real estate. Neither of Selling
Shareholders has any knowledge or information or reason to believe that
any Waste Material, tanks, containers, cylinders, drums or cans were
buried on the real estate by OIC or any of its Subsidiaries or any other
party during or preceding OIC or any of its Subsidiaries ownership or
leasing of any real estate. OIC and any of its Subsidiaries have
delivered to MRV copies of all internal or external environmental audit
reports prepared by or for OIC or any of its Subsidiaries.
5.13 No Conflict. Each of OIC and the Selling Shareholders jointly and
severally represent and warrant that neither the entering into nor the
delivery of this Agreement nor the performance of the transactions
contemplated therein by Selling Shareholders and OIC will result in the
violation of:
(a) any of the provisions of the Articles of Incorporation, By-Laws
and other constitutional documents of OIC;
(b) any Contract to which OIC or any Selling Shareholders, including
OIC, is a party; or
(c) any Applicable Law or Permit.
Except for satisfaction of any conditions specified in this Agreement,
neither the Selling Shareholders nor OIC are required to give prior
notice to, or obtain any consent, approval or authorization of, or make
any declaration or filing with, any governmental authority, or any other
person, firm, corporation or other entity in connection with the
execution or delivery of this Agreement or the consummation of the
transactions contemplated hereby.
5.14 No Encumbrances. Each of OIC and the Selling Shareholders jointly and
severally represent and warrant that except as set forth in Schedules 15
hereto, OIC and each of its Subsidiaries have good title to all of its
assets which they owns, free and clear of all Encumbrances or any other
claims, rights or interests of any other Person, firm, corporation or
other entity of any nature whatsoever.
5.15 No Defaults. Each of OIC and the Selling Shareholders jointly and
severally represent and warrant that OIC and any of its Subsidiaries has
performed, or has taken all actions reasonably necessary to enable it to
perform when due, all material obligations under all Contracts and
Permits, all of which are in full force and effect, and there has not
occurred any material default or other event which with the lapse
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of time or giving of notice or both may become a material default under
any such Contract or Permit.
5.16 Litigation. Each of OIC and the Selling Shareholders jointly and
severally represent and warrant that except as set forth on Schedule 16
hereto, there are no claims, actions, suits or proceedings pending or,
to the best knowledge of OIC and each of its Subsidiaries, threatened by
or against OIC and each of its Subsidiaries or affecting it in any court
or before any governmental or administrative authority. OIC or any of
its Subsidiaries is subject to no decree, judgment, order or notice of
any kind which enjoins or restrains it from taking any action of any
kind whatsoever.
5.17 Employee and Labor Matters. Each of OIC and the Selling Shareholders
jointly and severally represent and warrant that to the best knowledge
of any Selling Shareholders and OIC, none of the key employees, and no
group of employees of OIC or any of its Subsidiaries, plans to terminate
his, her or their employment with OIC or any of its Subsidiaries. OIC
and each of its Subsidiaries is not a party to any collective bargaining
or union agreement. OIC and each of its Subsidiaries is in compliance in
all material respects with all Applicable Law respecting employment and
employment practices, terms and conditions of employment, and wages and
hours. Since its incorporation, OIC or any of its Subsidiaries has
experienced no significant union organization attempts and no material
work stoppage due to any labor disagreement with respect to its
business. There is no unfair labor practice charge or complaint against
OIC or any of its Subsidiaries pending or, to the best knowledge of any
Selling Shareholders and OIC, threatened, in any court or before any
governmental or administrative authority. There is no labor strike,
request for representation, slowdown or stoppage actually pending or to
the best knowledge of OIC and any Selling Shareholders is threatened
against or affecting OIC or any of its Subsidiaries.
5.18 Employee Benefits.
Each of OIC and the Selling Shareholders jointly and severally represent
and warrant that:
5.18.1 OIC and each of its Subsidiaries have no employment, consulting,
agency, commission, retirement, severance pay, non-competition,
profit-sharing, deferred compensation or pension agreements or
plans, or related practice, whether written or oral, formal or
informal, other than as identified on Schedule 17 hereto (true,
correct and complete copies of which have been delivered to MRV,
including reasonably detailed summaries of any unwritten plans,
arrangements or practices). All obligations of OIC and each of
its Subsidiaries, whether arising by operation of law, by
contract or by past custom, for payments by it with respect to
unemployment compensation benefits, pension and retirement
benefits, social security benefits, or other benefits for
employees of OIC and any of its Subsidiaries, including but not
limited to, those set forth on Schedule 19, in respect of periods
prior to the Closing have been paid in full, or adequate
provision therefor has been made in the Latest Balance Sheet.
5.18.2 Upon termination by OIC or any of its Subsidiaries of the
employment of
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any employee, OIC or any of its Subsidiaries shall not incur any
liability for any severance or termination pay or other similar
payment except as required by law expressly provided in the
agreements or plans set forth on, or otherwise disclosed in
Schedule 18.
5.18.3 OIC or any of its Subsidiaries does not maintain, contribute to
or have any liability under any funded or unfunded, medical,
health or life insurance plan or arrangement for present or
future retirees or present or future terminated employees except
group insurance and as required by the Labor Insurance Act and
the National Health Insurance Act.
5.19 Sufficient Assets. Each of OIC and the Selling Shareholders jointly and
severally represent and warrant that the assets identified in this
Agreement or on the Latest Balance Sheet constitute all of the tangible
and intangible rights and assets necessary for the conduct of, or used
or held by OIC and each of its Subsidiaries in connection with, its
business and operations as they are presently being conducted.
5.20 Customers, Distributors and Suppliers. Each of OIC and the Selling
Shareholders jointly and severally represent and warrant that Schedule
19 hereto contains a true, correct and complete list of all
distributors, representatives and agents of OIC and any of its
Subsidiaries and a description of the terms of their relationships with
OIC or with any of its Subsidiaries and a true, correct and complete
list of all other persons to whom OIC and each of its Subsidiaries sold
goods or services in the twelve months ended as of the date of this
Agreement and by whom OIC or any of its Subsidiaries has been paid or
who have committed to pay OIC or any of its Subsidiaries NT$[_______] or
more since the beginning of said period. Schedule 20 contains a true,
correct and complete list of all persons who provided goods or services
to OIC or any of its Subsidiaries in the twelve months ended as of the
date of this Agreement to which the Selling Shareholder has paid or is
committed to pay NT$[________] or more since the beginning of said
period. The relations of OIC and each of its Subsidiaries with the
foregoing persons are good, and there are no disputes between OIC or any
of its Subsidiaries and any of such persons pending or, to the best
knowledge of any Seller and OIC or any of its Subsidiaries , threatened.
True, correct and complete copies of all contracts with all of the
foregoing persons have been delivered to MRV and are in full force and
effect in accordance with their terms, and there are no defaults or
allegations or claims of default thereunder.
5.21 Related Party Transactions. Each of OIC and the Selling Shareholders
jointly and severally represent and warrant that except as set forth in
Schedule 21 hereto or as contemplated by this Agreement, no the Selling
Shareholder and no officer, or director of OIC or any of its
Subsidiaries has any interest in any of the assets used or held by OIC
in the conduct of its business or operations or is a party to any
contract with OIC or any of its Subsidiaries or affecting the business
or operations of OIC or any of its Subsidiaries.
5.22 Directors; Officers; Banks; and Powers of Attorney. Each of OIC and the
Selling Shareholders jointly and severally represent and warrant that
Schedule 22 hereto is a true and complete list showing: (a) the names of
all of directors and officers of OIC and each of its Subsidiaries; (b)
the name of each bank in which OIC and each of its Subsidiaries has an
account or safety deposit box, and the names of all persons
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authorized to draw thereon or to have access thereto; and (c) the names
of all persons holding powers of attorney from OIC and each of its
Subsidiaries together with a summary statement of the terms thereof.
5.23 Insurance. Each of OIC and the Selling Shareholders jointly and
severally represent and warrant that Schedule 23 hereto sets forth all
existing insurance policies held by OIC and each of its Subsidiaries
relating to its business. Each such policy is in full force and effect,
is with responsible insurance carriers and is in an amount and scope
customary for persons engaged in businesses and having assets similar to
those of OIC and each of its Subsidiaries. All claims arising under such
policies and all premiums that are due and payable thereunder have been
paid in full.
5.24 Disclosure. No representation or warranty by the Selling Shareholders
and/or OIC in this Agreement, and no certificate or statement furnished
or to be furnished to MRV pursuant to this Agreement or in connection
with the transactions contemplated hereby, contains or shall contain any
untrue statement of material fact, or omits or shall omit to state a
material fact necessary in order to make the statements contained herein
and therein not misleading. There is no fact known to a Selling
Shareholder or OIC which materially adversely affects, or in the future
may (so far as can now be reasonably foreseen) materially adversely
affect, OIC or any of its Subsidiaries, its financial condition its
business or its prospects which has not been set forth in this Agreement
or other information or material provided in writing by OIC to MRV.
5.25 Representations and Warranties Regarding Acquisition of MRV Shares. Each
of the Selling Shareholders represents and warrants to MRV as follows:
5.25.1 Disclosure; Access to Information. Each of the Selling
Shareholders has received or will receive prior to the Closing
all documents, records, books and other information pertaining to
such Selling Shareholder's investment in MRV that have been
requested by such Selling Shareholder, including the opportunity
to ask questions and receive answers. MRV is subject to the
periodic reporting requirements of the United States Securities
Exchange Act of 1934 (the "Exchange Act"), and each of the
Selling Shareholders has reviewed or received copies of any such
reports filed by MRV with the SEC under the Exchange Act that
have been requested by such Selling Shareholder.
5.25.2 Manner of Sale. At no time were any of the Selling Shareholders
presented with or solicited by or through any leaflet, public
promotional meeting, television advertisement or any other form
of general solicitation or advertising.
5.25.3 Registration or Exemption Requirements. Each of the Selling
Shareholders further acknowledges and understands that the MRV
Shares may not be transferred, resold or otherwise disposed of in
the United States except in a transaction registered under the
United States Securities Act of 1933 (the "Securities Act") and
any applicable state securities laws, or unless an exemption from
such registration is available.
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5.25.4 No Legal, Tax or Investment Advice. Each of the Selling
Shareholders understands that nothing in this Agreement or any
other materials presented to the Selling Shareholders in
connection with the purchase of MRV Shares constitutes legal, tax
or investment advice. The Selling Shareholders have relied on,
and have consulted with, such legal, tax and investment advisors
as they, in their sole discretion, have deemed necessary or
appropriate in connection with their purchase of the MRV Shares.
5.25.5 No Registration, Review or Approval. Each Selling Shareholder
acknowledges and understands that the offering and sale of MRV
Shares pursuant to this Agreement has not been reviewed or
approved by the SEC or by any state or other securities
commission, authority or agency, and is not registered under the
Securities Act or under the securities or "blue sky" laws, rules
or regulations of any state. Each Selling Shareholder
acknowledges, understands and agrees that the MRV Shares are
being offered and sold hereunder pursuant to an offshore offering
exemption to the registration provisions of the Securities Act
pursuant to Regulation S promulgated under such Act. Each Selling
Shareholder understand that MRV is relying upon the truth and
accuracy of the representations, warranties, agreements,
acknowledgments and understandings of such Selling Shareholder
set forth herein in order to determine the applicability of such
exemptions and the suitability of each Selling Shareholder to
acquire the MRV Shares.
5.25.6 Investment Intent. Without limiting its ability to resell the MRV
Shares pursuant to an effective registration statement, or an
exemption from such registration, each Selling Shareholder is
acquiring the MRV Shares solely for its own account and not with
a view to the distribution, assignment or resale to others. Each
Selling Shareholder understands and agrees that it may bear the
economic risk of its investment in the MRV Shares for an
indefinite period of time.
5.25.7 Offering Outside the United States. Each Selling Shareholder is
not a "U.S. Person" as defined in Regulation S (as the same may
be amended from time to time) promulgated under the Securities
Act. At the time the buy order for this transaction was
originated, each Selling Shareholder was outside the United
States and no offer to purchase the MRV Shares was made in the
United States. Each Selling Shareholder agrees not to reoffer or
sell the MRV Shares, or to cause any transferee permitted
hereunder to reoffer or sell the MRV Shares, within the United
States, or for the account or benefit of a U.S. person, (i) as
part of the distribution of the MRV Shares at any time, or (ii)
otherwise, only in a transaction meeting the requirements of
Regulation S under the Securities Act, including without
limitation, where the offer (i) is not made to a person in the
United States and either (A) at the time the buy order is
originated, the Buyer is outside the United States or MRV and any
person acting on its behalf reasonably believe that the buyer is
outside the United States, or (B) the transaction is executed in,
on or through the facilities of a designated offshore securities
market and neither the seller nor any person acting on its behalf
knows that
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the transaction has been pre-arranged with a buyer in the United
States, and (ii) no direct selling efforts shall be made in the
United States by the buyer, an affiliate or any person acting on
their behalf, or in a transaction registered under the Securities
Act or pursuant to an exemption from such registration.
5.25.8 Regulation S Offering Transfer Restrictions. The transaction
restrictions in connection with this offshore offer and sale
restrict each Selling Shareholder from offering and selling to
U.S. Persons, or for the account or benefit of a U.S. Person, for
a period of time (the "Distribution Compliance Period"). The
Distribution Compliance Period for the MRV Shares is one (1) year
from the Closing.
5.25.9 Legend. A legend substantially in the following form will be
placed on any certificates or other documents evidencing the MRV
Shares so as to restrict the resale, pledge, hypothecation or
other transfer thereof in accordance with the provisions hereof
and the provisions of Regulation S promulgated under the
Securities Act:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (TOGETHER
WITH THE REGULATIONS PROMULGATED THEREUNDER, THE "SECURITIES
ACT"), AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED,
PLEDGED OR HYPOTHECATED WITHIN THE UNITED STATES (AS THAT TERM IS
DEFINED IN REGULATION S PROMULGATED UNDER THE SECURITIES ACT) OR
TO A U.S. PERSON (AS THAT TERM IS DEFINED IN REGULATION S) IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER SAID
ACT AND ANY APPLICABLE STATE SECURITIES LAWS, UNLESS AN EXEMPTION
FROM SUCH REGISTRATION IS AVAILABLE. HEDGING TRANSACTIONS
INVOLVING THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN
COMPLIANCE WITH THE SECURITIES ACT."
5.25.10 Permitted Offers and Sales. Offers and sales of MRV Shares prior
to the expiration of the Distribution Compliance Period (or the
effective date of the Registration Statement) may be made (only
if otherwise so permitted by this Agreement) pursuant to the
following conditions:
(a) The purchaser of the MRV Shares, other than a distributor,
certifies that it is not a U.S. Person and is not
acquiring the MRV Shares for the account or benefit of any
U.S. Person or is a U.S. Person who purchased the MRV
Shares in a transaction that did not require registration
under the Securities Act;
(b) The Purchaser of the MRV Shares agrees to sell such
securities only in accordance with Regulation S as
promulgated under the Securities Act, pursuant to
registration under the Securities Act, or pursuant to an
available exemption from registration; and agrees not to
engage in
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hedging transactions with regard to such MRV Shares unless
in compliance with the Securities Act; and
(c) The MRV Shares contain a legend, substantially in the form
of Section 5.25.9 herein, to the effect that transfer of
the MRV Shares is prohibited except in accordance with
Regulation S, pursuant to registration under the
Securities Act, or pursuant to an available exemption from
registration; and that hedging transactions involving
those MRV Shares may not be conducted unless in compliance
with the Securities Act.
5.25.11 No Hedging. Selling Shareholders agree not to engage in hedging
transactions with respect to the MRV Shares prior to the
expiration of the Distribution Compliance Period. For offers and
sales of the MRV Shares prior to the expiration of the
Distribution Compliance Period, such offering materials must
state that hedging transactions involving those securities may
not be conducted unless in compliance with the Securities Act and
Regulation S promulgated thereunder.
5.26 Brokers' Fees. Selling Shareholders shall be responsible to pay
any fees or commissions to any broker or finder, with respect to
the transactions contemplated by this Agreement for which the
Selling Shareholders could be liable or obligated. MRV and the
Escrow Agent shall not be responsible whatsoever with respect to
such fees or commission.
5.27 FTC Approval. OIC and Selling Shareholders warrant and represent
that OIC's revenues and market share ratio do not reach or exceed
the amount on percentage provided in the Fair Trade law as
required to obtain the combination approval from the Fair Trade
Commission (the "FTC Approval") of the Republic of China in order
to complete the transactions contemplated in this Agreement.
6. REPRESENTATIONS AND WARRANTIES OF MRV
MRV represents and warrants to OIC and the Selling Shareholders that the
statements contained in this Section 6 are correct and complete as of the date
of this Agreement and as of the Closing.
6.1 Organization of MRV. MRV is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation.
6.2 Authorization of Transaction. MRV has full 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 MRV, enforceable in accordance
with its terms and conditions. MRV 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 filings
required by the Xxxx-Xxxxx-Xxxxxx Act.
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6.3 Brokers' Fees. MRV has no Liability or obligation to pay any fees or
commissions to any broker or finder with respect to the transactions
contemplated by this Agreement for which MRV could become liable or
obligated.
6.4 No Conflicts. Neither the execution and delivery of this Agreement nor
the consummation by MRV of the transactions contemplated hereby will (i)
violate any of the provisions of the by-law of MRV, (ii) violate any
provision of Applicable Law, rule or regulation which violation would
prevent MRV from being able to consummate the transactions contemplated
by this Agreement, or (iii) conflict with or result in a breach of ,
require consent under, give rise to a right of termination of, or
accelerate the performance required by the terms of any judgement, court
order or consent decree, or any agreement, indenture, mortgage or
instrument to which MRV is a party or to which either of its property is
subject, or constitute a default thereunder.
6.5 Capitalization; Validity of Securities. As of the date hereof and as of
the Closing Date, all issued and outstanding ordinary shares of MRV are
and will be duly authorized, validly issued, fully paid and
non-assessable. The MRV Shares when issued and paid for in accordance
with the terms and conditions of this Agreement, will be validly
authorized, legally issued, fully paid and non-assessable, and the
delivery to the Selling Shareholders pursuant to this Agreement shall
vest in them good and marketable title thereto, free of any
Encumbrances, except for restrictions on transfers set forth herein or
imposed by law and except for any Encumbrance created by the Selling
Shareholders themselves.
6.6 Reporting Company. MRV is a reporting company under Section 12 of the
Exchange Act required to file periodic reports pursuant to Section 13 or
15 of the Exchange Act and has timely filed all such periodic reports
with the SEC during the past 12 months.
6.7 Approvals. No consent, approval, order, or authorization of, or
registration, qualification, designation, declaration, or filing with,
any governmental authority is required on the part of MRV in connection
with the execution and delivery of this Agreement, the offer, issuance,
sale, and delivery of the MRV Shares, or the other transactions to be
consummated at the Closing, as contemplated by this Agreement, except
such filings as shall have been made prior to and shall be effective on
and as of the Closing (except for filings required under the
Xxxx-Xxxxx-Xxxxxx Act or the United States securities laws or
regulations or the regulations of the NASDAQ Stock Market or the
Applicable Laws). Based on the representations made by the Selling
Shareholders in Section 5 of this Agreement, the offer and sale of the
MRV Shares to Selling Shareholders will be in compliance with applicable
U.S. Federal and state securities laws.
6.8 Compliance. MRV is, in all material respects, in compliance with all
laws, regulations, and orders applicable to its present business and has
all permits and licenses required thereby where the failure to so be in
compliance or to have such permits or licenses would be reasonable
likely to materially adversely affect, the business, prospects,
condition (financial or otherwise), affairs, or operations of MRV and
its subsidiaries taken as a whole.
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6.9 Disclosure. MRV has received, or will receive prior to the Closing, all
documents, records, books or other information of OIC required to be
filed with the Securities and Futures Commission (the "SFC") in the ROC
in the year of 1999.
7. PRE-CLOSING COVENANTS.
The Parties agree as follows with respect to the period between the execution of
this Agreement and the Closing:
7.1 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 8 below).
7.2 Approvals, Notices and Consents. Each of the Parties will shall use
their best efforts to satisfy all Conditions Precedent to the Closing
and will give any necessary notices to third parties, and will use its
best efforts to obtain any necessary third party consents, that MRV
reasonably may request in connection with the matters referred to in
Section 5 above. Each of the Parties will (and will cause to) give any
notices to, make any filings with, and use its best efforts to obtain
any authorizations, consents, and all necessary Approvals. Without
limiting the generality of the foregoing, the Selling Shareholders shall
report the transfer of the OIC Shares to the SFC.
7.3 Operation of Business. OIC and each of its Subsidiaries will not engage
in any practice or take any action outside the Ordinary Course of
Business of or which results in a material adverse change in the
business, financial condition, operations or results of operations of,
except for actions to which MRV has given its prior consent.
7.4 Preservation of Business. OIC and each of its Subsidiaries will keep its
business and properties substantially intact, including its present
operations, physical facilities, working conditions, and relationships
with lessors, licensors, suppliers, customers, and employees.
7.5 Reserved Matters
Between the date hereof and Closing, the Selling Shareholders shall
cause the managing team (directors, supervisors and Principal Employees
of OIC) to procure that OIC and each of its Subsidiaries shall not
without the prior consent in writing of MRV:
(a) enter into any transaction or incur any obligation or liability
(absolute or contingent), except for current liabilities
incurred, and contracts and transactions entered into, in the
Ordinary Course of Business;
(b) dispose of or acquire any assets or properties or cancel any
debts or claims, except in each case in the Ordinary Course of
Business;
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(c) increase any benefits to employees under pension, insurance or
other employee benefit programs or enter into any deferred
compensation agreement with any of its directors, officers or
employees except for increase in compensation for employees and
probationary employees for which OIC or any of its Subsidiaries
is contractually bound to give;
(d) enter into an agreement to do any of the things described in
Section 5.10;
(e) cease to pay its creditors in the Ordinary Course of Business;
(f) repay any loan capital in whole or in part (other than
indebtedness to its bankers) or become bound or liable to be
called upon to repay prematurely any loan capital or borrowed
moneys;
(g) declare any dividend or pass any resolutions or do anything in
the conduct or management of the affairs of either OIC or any of
its Subsidiaries which would be likely materially to reduce the
value of the business;
(h) suffer any material adverse change in its financial condition,
assets, business, properties, liabilities, earnings, operations,
affairs or prospects;
(i) waive or release any right of a material or substantial value
howsoever arising;
(j) incur any capital expenditure or make any capital commitment of
an amount in excess of US$1.0 million (US$1,000,000) or dispose
of any fixed assets having a value of more than US$1.0 million
(US$1,000,000) in aggregate;
(k) make any purchase or sale or introduce any method of management
or operation in respect of the business except in a manner
consistent with proper prior practice;
(l) discharge or satisfy any lien or encumbrance or any other
obligation or liability (absolute or contingent) other than
liabilities in the Ordinary Course of Business;
(m) pass any resolution the result of which would be its winding up,
liquidation or receivership, or make any composition or
arrangement with creditors;
(n) carry on any business other that the business or otherwise change
the nature or geographical area of its business;
(o) enter into any partnership or joint venture arrangement or set up
any subsidiary or associated company;
(p) create any fixed or floating charge, lien (other than a lien
arising by operation of law) or other encumbrance over the whole
or any part of its undertaking, property or assets;
(q) undertake anything which would require accounting treatment by
way of provision, reserve or extraordinary item;
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(r) make, amend or terminate any contract, loan, guarantee or other
arrangement with any Selling Shareholders or any of their
respective Affiliates;
(s) make, amend or terminate any long-term, unusual or onerous
contract (long-term meaning a contract under which the
obligations of any party thereto may remain outstanding for more
that twelve (12) months) or take any action which could, as a
consequence of any action taken by another party, result in any
of the same.
7.6 Full Access. OIC and each of its Subsidiaries will permit
representatives of MRV to have full access on a confidential basis at
all reasonable times, and in a manner so as not to interfere with the
normal business operations of, to all premises, properties, personnel,
books, records (including Tax records), contracts, and documents of or
pertaining to;
7.7 Notice of Developments. OIC and each of its Subsidiaries will give
prompt written notice to MRV of any material adverse development causing
a breach of any of the representations and warranties in Section 5
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 Sections 5 and 6 above.
7.8 Exclusivity. OIC and each of its Subsidiaries will not 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
(including any acquisition structured as a merger, consolidation or
share exchange).
7.9 Supervisor. OIC and Selling Shareholders agree that they will fully
cooperate with MRV to have one of the existing supervisor of OIC being
replaced by a person designated by MRV ("Nominee Supervisor") for
purpose of conducting the special shareholders meeting to elect the new
directors and supervisors and to conduct other necessary corporate
actions after the Closing. MRV agrees that it shall cause Nominee
Supervisor to resign from its position in the event that the Closing is
not completed prior to Target Date or any other date as agreed by the
Parties.
7.10 OIC and Selling Shareholders agree to confirm to MRV within one month of
execution of this Agreement the definite list of the name and number of
shares of Selling Shareholders and shall have all the Selling
Shareholders agree to be a Party of this Agreement and bear the same
obligations and liabilities as the Signing Shareholders under this
Agreement and Escrow Agreement and issue a Power of Attorney in the form
attached as Exhibit A to authorize the Attorneys-in-Fact to sign this
Agreement and perform their obligations hereunder on their behalf in
connection with their respective OIC Shares.
7.11 The Parties shall each use their best efforts to procure the fulfillment
of the conditions set forth in Section 8 hereof on or before the
Closing, and in particular, shall furnish such information, supply such
documents, and do all such acts and things as may be required to enable
such conditions to be fulfilled.
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7.12 The Selling Shareholders and OIC shall cause any personal or corporate
guarantors who provide Guaranties on the indebtedness or other
obligations of OIC or any of its Subsidiaries to continually provide
guaranties over the same after the execution of this Agreement in
accordance with the current terms thereof.
7.13 At least five (5) Business Days prior to the Closing, the Selling
Shareholders (or Attorney(s)-in-Fact or OIC in whose name the Taiwan
Account shall be registered) shall give the Taiwan Account passbook,
chops and the Power-of-Attorney-Form B to Closing Agent.
7.14 The Selling Shareholders shall sign through their duly authorized
representative (i) an Escrow Agreement with the Escrow Agent as
described in Section 10.2.3; and (ii) any other documents required in
this Agreement or in the Escrow Agreement.
7.15 The Selling Shareholders (or Attorney(s)-in-Fact or OIC in whose name
the Taiwan Account shall be registered) shall, at least five (5)
Business Days prior to the Closing, give the Taiwan Account passbook,
chops and a Power of Attorney-Form B to the law firm of Xxxxx &
XxXxxxxx, Taipei Office as the Closing Agent of Selling Shareholders
(the "Closing Agent") granting said Closing Agent the exclusive right to
give instructions to the bank with respect to the Taiwan Account.
7.16 Within twenty (20) days after the execution of this Agreement, OIC and
the Selling Shareholders shall be responsible to implement and provide a
list of Principal Employees (as defined and discussed below) which shall
include the key employees in the technical team of OIC and each of its
Subsidiaries. Such list shall be incorporated into this Agreement as
Schedule 24. OIC and the Signing Shareholders shall be responsible to
implement and provide any other necessary information to be contained in
the Schedules relating to the warranties and representations described
in Section 5 of this Agreement.
7.17 MRV shall provide the Attorneys-in-Fact copies of its most recent public
filings with the SEC (including MRV's most recent available financial
statements) within two weeks of the execution of this Agreement.
8. CONDITIONS PRECEDENT TO CLOSING
8.1 Conditions to Obligation of MRV. The obligation of MRV to consummate the
transactions to be performed by it in connection with the Closing is
subject to satisfaction of the following conditions:
8.1.1 OIC and the Selling Shareholders shall have complied with all of
their respective agreements and covenants contained herein to be
performed at or prior to the Closing, and all their
representations and warranties contained herein shall be true and
accurate on and as of the Closing Date with the same effect as
though made on and as of the Closing Date, except that
representations and warranties that were made as of a specified
date shall continue on the Closing Date to have been true as of
the specified date, and MRV shall have received a certificate of
the Selling Shareholders and OIC, dated as of the Closing Date,
substantially in the form of Exhibit C
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certifying as to the fulfillment of the condition set forth in
this Section 8.1.1 (the "OIC's Bring-Down Certificate").
8.1.2 MRV shall have received the written agreement (in the form
attached as Exhibit E) of the "Principal Employees" of OIC and
each of its Subsidiaries to continue in the employment of said
companies for a period of at least two (2) years after the
Closing Date on mutually agreed upon salary and benefit terms
(including the stock option plan) and on such other terms as MRV
normally requires of its employees. In any event, their salary
and other cash benefits shall be no more than those of the year
of 1999. For this purpose, the following individuals are deemed
to be "Principal Employees" of OIC and its Subsidiaries:
Xx. X.X. Xxxxx, Xxxxxxx Xx, Dr. Zuon-Min Chuang, Xxx Xxxx-Xxxx,
and any other Principal Employees whose names are shown in
Schedule 24.
8.1.3 No statute, rule or regulation, or order of any court or
administrative agency shall be in effect which restrains or
prohibits from consummating the transaction contemplated hereby.
8.1.4 No material action, suit or proceeding before any court or any
governmental body or authority against the Selling Shareholders,
either OIC or its Subsidiaries, or pertaining to the transactions
contemplated by this Agreement or their consummation, shall have
been instituted on or before the Closing Date.
8.1.5 The Approvals and all necessary agreements and consents of any
third parties which OIC is required to obtain, shall have been
obtained, and true and complete copies thereof delivered to MRV.
8.1.6 Each Encumbrance or obligation to create any Encumbrance, if any,
on OIC Shares shall have been terminated and released prior to
the Closing Date, and the Selling Shareholders shall have
provided evidence, in form and substance satisfactory to MRV, of
such termination and release.
8.1.7 During the Closing, there shall not have occurred any event or
condition materially and adversely affecting the assets or the
financial condition, results of operations or business prospects
of OIC or any of its Subsidiaries from those reflected in the
Financial Statements, except as disclosed in this Agreement or
the Schedules hereto.
8.1.8 The Selling Shareholders and OIC shall have delivered to MRV at
the Closing each agreement, instrument, certificate and document
required by this Agreement and the Financial Statements, the
Latest Financial Statements, and the Auditor Consent as required
by Section 5.3.1 of this Agreement, and Selling Shareholders'
Payment shall be received by MRV during the Closing.
8.1.9 OIC Shares available for sale to MRV in accordance with the terms
of this Agreement shall be not less than seventy-five percent
(75%).
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8.1.10 All final due diligence results on OIC and its Subsidiaries are
satisfactory to MRV.
MRV may waive any condition specified in this Section 8.1 if it executes
a writing so stating at or prior to the Closing.
8.2 Conditions to Obligation of the Selling Shareholders. The obligation of
the Selling Shareholders to consummate the transactions to be performed
by it in connection with the Closing is subject to satisfaction of the
following conditions:
8.2.1 MRV and its Subsidiaries shall have complied with all of its
agreements and covenants contained herein to be performed at or
prior to the Closing, and all their representations and
warranties contained herein shall be true and accurate on and as
of the Closing Date with the same effect as though made on and as
of the Closing Date, except that representations and warranties
that were made as of a specified date shall continue on the
Closing Date to have been true as of the specified date and
Selling Shareholders shall have received a certificate dated as
of the Closing Date, substantially in the form of Exhibit D
certifying as to the fulfillment of the condition set forth in
this Section (the "MRV's Bring-Down Certificate").
8.2.2 No statute, rule or regulation, or order of any court or
administrative agency shall be in effect which restrains or
prohibits the Parties from consummating the transaction
contemplated hereby.
8.2.3 The Approvals and all necessary agreements and consents of any
third parties shall have been obtained and true and complete
copies thereof delivered to Selling Shareholders
8.2.4 MRV's Payment shall, via Closing Agent, be made to
Attorneys-in-Fact for and on behalf of Selling Shareholders
during the Closing.
Selling Shareholders may waive any condition specified in this Section
8.2 if it executes a writing so stating at or prior to the Closing.
9. POST CLOSING COVENANTS
9.1 OIC and the Selling Shareholders agree that they will fully cooperate
with MRV to convene all necessary corporate actions including but not
limited to holding the shareholders meetings and the directors meetings
to elect the new directors and Supervisors and to amend the article of
incorporation, if necessary.
9.2 OIC and the Selling Shareholders agree that they will fully cooperate
with MRV for a period of one year from the Closing Date to manage the
operation and business conducted by OIC and each of its Subsidiaries.
9.3 OIC and Selling Shareholders agree that they will fully cooperate with
MRV and use their best efforts to obtain further additional consents
from the auditors on the Financial Statements to include auditor's
reports in other filing to be made by MRV
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with the SEC as necessary from time to time.
9.4 MRV agrees to file a registration statement with the U.S. Securities and
Exchange Commission (the "SEC") within appropriate days as reasonably
determined by MRV following the Closing to register the MRV Shares to be
issued to the Selling Shareholders under the transaction hereunder and
exercise its best efforts to obtain as soon as practicable an effective
registration statement aimed to release the Selling Shareholders from
the resale restriction imposed by the Regulation S under the Securities
Act of 1933, as amended. Provided however, MRV does not guarantee the
successful registration and the time period required to obtain such
successful registration.
10. INDEMNIFICATION AND ESCROW
10.1 Survival of Representations and Warranties
All of the representations and warranties contained in Sections 5 and 6
above, shall survive the Closing hereunder (even if MRV 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 (2) years thereafter (subject to any applicable statutes of
limitations). Provided however, OIC's liabilities concerning the said
representations and warranties may be waived under the discretion of MRV
without releasing the liabilities of the Signing Shareholders.
10.2 Indemnification Provisions
10.2.1 MRV shall indemnify, defend and hold harmless the Selling
Shareholders against any and all losses that any of them may
suffer, sustain or become subject to as a result of any breach by
MRV of its warranties, representations, agreements or covenants
set forth in this Agreement.
10.2.2 In the event that OIC or any of the Selling Shareholders breaches
any of their covenants in Sections 7 and 9 above or any of its
representations and warranties in Section 5 above or any other
obligations set forth in this Agreement other than those
contained in Section 13.18 for which the relevant Party shall be
responsible, and, if there is an applicable survival period
pursuant to Section 10.1 above, provided that MRV makes a written
claim for indemnification against the Selling Shareholders and/or
OIC, then the Selling Shareholders (or, in the case of Section
13.18, the relevant responsible Party only), and OIC agree to
jointly and severally indemnify MRV from and against the entirety
of any Adverse Consequences MRV may suffer through and after the
date of the claim for indemnification (including any Adverse
Consequences MRV 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.
The Parties agree that the maximum indemnification of liabilities
of each Selling Shareholder shall not exceed the total
consideration he is entitled to receive from this transaction.
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10.2.3 Escrow. The Parties agree the following:
(a) the representations, warranties, covenants and obligations
of the Selling Shareholders shall be secured by placing
Six Hundred and Eighty Thousand (680,000) MRV Shares owned
by the Selling Shareholders in escrow (the "Escrowed
Shares") for two years under an Escrow Agreement in the
form attached hereto as Exhibit F (the "Escrow
Agreement"). In the event that payment is required to MRV
as a result of invocation of the indemnification clauses
of this Agreement, the Escrowed Shares shall be taken from
the escrow account and delivered to MRV pro rata to the
shareholding of the Selling Shareholders in MRV Shares or
as shall otherwise be agreed among the Selling
Shareholders.
Notwithstanding the above, in the event that less than
100% of OIC Shares sold and delivered to MRV, the number
of Escrowed Shares shall be adjusted down by the same
percentage as those OIC Shares not available for sale are
as a percentage of the total OIC Shares of outstanding on
the date of execution of this Agreement.
(b) The Parties shall appoint the firm of Xxxxx & XxXxxxxx,
Taipei office, with Xxxxx X. Xxxx as its representative,
as escrow agent (the "Escrow Agent") to proceed pursuant
to the Escrow Agreement.
(c) The relevant escrow fees ("Escrow Fees") as described in
the Escrow Agreement shall be shared equally between the
Selling Shareholders and MRV. The Selling Shareholder's
half has been deducted from the MRV Shares being
transferred to the Selling Shareholders, and therefore MRV
shall pay the entire Escrow Fee to the Escrow Agent on or
before Closing.
(d) Except for the Escrow Shares belonging to Principal
Employees the Parties agree that one-third (1/3) of the
Escrowed Shares, or the Escrowed Shares remaining after
any call down exercised by MRV under this Article 10,
shall be released by the Escrow Agent to the Selling
Shareholders on the date which is one calendar year
following the Closing date. The remainder of the Escrow
Shares remaining at the end of the escrow period shall be
released on the date that is two calendar years after the
Closing Date.
10.3 Matters Involving Third Parties
10.3.1 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 10, 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
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then solely to the extent) the Indemnifying Party thereby is
prejudiced.
10.3.2 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 fifteen (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 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.
10.3.3 So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 10.3.2 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.
10.3.4 In the event any of the conditions in Section 10.3.2 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 10.
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11. TERMINATION.
11.1 Termination of Agreement. Certain of the Parties may terminate this
Agreement as provided below:
11.1.1 The Parties may terminate this Agreement by mutual written
consent at any time prior to the Closing; and
11.1.2 Either party to this Agreement may terminate this Agreement by
giving written notice to the other party if the Closing shall not
have occurred on or before Target Day, except that the right to
terminate this Agreement pursuant to this Section 11 shall not be
available to (A) OIC or the members of the Selling Shareholders
if the failure to consummate the Closing on or before such date
was caused by or resulted from the failure of any member of
Selling Shareholders or OIC to fulfill any of its obligations
under this Agreement or (B) MRV if the failure to consummate the
Closing on or before such date was caused by or resulted from
MRV's failure to fulfill any of its obligations under this
Agreement.
11.2 Effect of Termination. If any Party terminates this Agreement pursuant
to Section 11.1 above, all further obligations of the Parties hereto
shall become null and void and no party shall have any liability to any
other party, unless the basis for such termination was the failure by
such party to fulfill its covenants and agreements set forth herein. In
the event that the Closing is not completed, either Party will destroy
or return to the other Party the Confidential Information of the other
Party.
12. TRANSFER RESTRICTION
Each of the Selling Shareholders agree that the Selling Shareholders shall not
sell the MRV Shares in a group at one time more than one hundred thousand
(100,000) shares. Such grouped sales shall be further restricted to a total of
one hundred thousand (100,000) shares in any given month. This restriction does
not apply if a Selling Shareholder is selling the MRV Shares alone and not in
concert in any way with any other Selling Shareholders.
13. MISCELLANEOUS
13.1 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 other Party and ; 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
forty-eight (48) hours prior to making the disclosure).
13.2 No Third-Party Beneficiaries. This Agreement shall not confer any rights
or
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remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
13.3 Notices
All notices and other communications required or permitted under this
Agreement shall be in writing and shall be sent by facsimile
transmission to the other parties at the fax number set forth below for
MRV (in the case of a notice to be sent to MRV) or for OIC (in the case
of notices to be sent to OIC or the Selling Shareholders prior to the
Closing--after the Closing they shall designate a representative and
provide a fax number for this purpose), with a copy sent by first class
mail or express courier to said parties at the address provided to the
other parties, or to such other fax number and/or address as a party may
hereinafter designate by notice to the other. Notice shall be effective
on the date it is sent by facsimile transmission if the facsimile
transmission report confirms receipt by the receiving fax.
- To OIC
Attention: Xx. X.X. Xxxxx
Fax: 000-0-0000000
- To MRV
Attention: Xxxxxx Xxxxxx
Fax: (0-000) 000-0000
- To Selling Shareholders
Attention: Xx. X.X. Xxxxx
Fax: 000-0-0000000
13.4 Headings
The headings contained in this Agreement (including but not limited to
the titles of the Schedules and Exhibits hereto) have been inserted for
convenience of reference only, and neither such headings nor the
placement of any term hereof under any particular heading shall in any
way restrict or modify any of the terms or provisions hereof. Terms used
in the singular shall be read in the plural, and vice versa, and terms
used in the masculine gender shall be read in the feminine or neuter
gender when the context so requires.
13.5 Schedules, Exhibits and Annexes
All Schedules, Exhibits and Annexes attached to this Agreement
constitute an integral part of this Agreement as if fully rewritten
herein.
13.6 Entire Agreement
This Agreement (including the documents referred to herein) constitutes
the entire agreement among the Parties and supersedes any prior
understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they related in any way to the subject
matter hereof.
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13.7 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 other Party and; provided, however, that MRV 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 MRV nonetheless
shall remain responsible for the performance of all of its obligations
hereunder).
13.8 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.
13.9 GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF TAIWAN, THE REPUBLIC OF CHINA.
13.10 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 Parties. 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.
13.11 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.
13.12 Cost and expenses
Except this Agreement provides otherwise, each of the Parties shall bear
its own costs and expenses (including but not limiting to legal fees and
expenses) incurred in connection with this Agreement and the
transactions contemplated hereby.
13.13 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
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presumption or burden of proof shall arise favoring or disfavoring any
Party by virtue of the authorship of any of the provisions of this
Agreement. Any reference to any federal, state, local, 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.
13.14 Specific Performance
Each of the Parties acknowledges and agrees that 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,
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 Taiwan, the Republic of China or any
other state thereof having jurisdiction over the Parties and the matter,
in addition to any other remedy to which they may be entitled, at law or
in equity.
13.15 Submission to Jurisdiction
Any dispute relating to the validity, performance, construction or
interpretation of this Agreement that cannot be resolved amicably among
the Parties shall be submitted to the jurisdiction of the Taipei
District Court 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 13.3 above. Nothing
in this Section 13.15, 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.
13.16 Attorney's Fees
In the event that a party to this Agreement commences any legal action
under this Agreement to enforce any of its rights hereunder, or to
recover damages for any breach or default by the other party or parties
hereto of any of its (their) obligations
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hereunder, the prevailing party in any such legal action shall be
entitled to recover from the other party all of its costs and expenses
incurred in connection with such legal action, including reasonable
attorneys' fees,
13.17 Confidential Information
OIC and each of Selling Shareholders and MRV shall:-
(a) not use or disclose to any person Confidential Information; and
(b) use all reasonable endeavours to prevent the use or disclosure of
Confidential Information by any person.
This Section 13.17 does not apply to:-
(a) use or disclosure of Confidential Information required to be
disclosed by law, regulation or any revenue authority;
(b) disclosure of Confidential Information to professional advisers
for the purpose of advising MRV or Selling Shareholders; or
(c) Confidential Information which is in the public domain other than
as a consequence of a breach of this Section 13.17.
13.18 Non-Competition
13.18.1 The Selling Shareholders hereby undertake (except as otherwise
agreed in writing with MRV) not to, either solely or jointly with
any other Person (either on their own account or as the agent of
any other Person) for a period of one (1) year from Closing carry
on or be engaged or concerned or (except as the holder of shares
in a listed company which confer not more than twelve percent of
the votes which can generally be cast at a general meeting of the
company), interested, or, for legal entity members of the Selling
Shareholders, hold more than twelve percent of the shares
(natural person members of the Selling Shareholders may not hold
any such shares) directly or indirectly in a business which
competes with the type of business carried on by OIC or its
Subsidiaries at Closing in the world. This restriction shall not
apply to any currently held investments of the Selling
Shareholders set out in Schedule 25 hereto.
Each of the Selling Shareholders hereby undertakes not to, either
solely or jointly with any other Person (either on their own
account or as the agent of any other Person):
(a) for a period of one (1) year from the Closing solicit or
accept the custom of any person in respect of goods or
services competitive with those manufactured or supplied
by OIC during the period of 12 months prior to Closing,
such person having been a customer of OIC in respect of
such goods or services during such period;
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(b) for a period of two (2) years from the Closing induce,
solicit or endeavour to entice to leave the service or
employment of any employee of OIC or its Subsidiaries,
likely (in the opinion of MRV) to be:-
(i) in possession of Confidential Information; or
(ii) able to influence the customer relationships or
connections of OIC or its Subsidiaries; or
(iii) use any trade or domain name or e-mail address used
by OIC at any time during the two (2) years
immediately preceding the date of this agreement or
any other name intended or likely to be confused
with any such trade or domain name or e-mail
address.
13.18.2 Selling Shareholders shall use their best efforts to cause the
Principal Employees to undertake, not to, within two years after
the termination of their employment with OIC or its Subsidiaries
either solely or jointly with other Person (either on their own
account or as the agent of any other Person) conduct any
behaviors provided in Section 13.18.1. In the case that any
Principal Employee breaches any obligations contained in the
Principal Employee's Letter of Consent (Exhibit G), the Escrowed
Shares belonging to such breaching Principal Employee and the
unexercised stock options of the breaching Principal Employee
referred to in Article 2.1.4 shall be forfeited and shall be
redistributed among non-breaching Principal Employees by MRV on a
pro rata basis or other methods deemed appropriate by MRV.
13.18.3 Selling Shareholders agree that the undertakings contained in
this Section 13.18 are reasonable and are entered into for the
purpose of protecting the goodwill of the business of OIC and its
Subsidiaries and that accordingly the benefit of the undertakings
may be assigned by MRV and its successors in title without the
consent of the Selling Shareholders.
13.18.4 Each undertaking contained in this Section 13.18.3 is and shall
be construed as separate and severable and if one or more of the
undertakings is held to be against the public interest or
unlawful or in any way an unreasonable restraint of trade or
unenforceable in whole or in part for any reason the remaining
undertakings or parts thereof, as appropriate, shall continue to
bind Selling Shareholders.
13.18.5 If any undertaking contained in this Section 13.18 shall be held
to be void but would be valid if deleted in part or reduced in
application, such undertaking shall apply with such deletion or
modification as may be necessary to make it valid and
enforceable. Without prejudice to the generality of the
foregoing, such period (as the same may previously have been
reduced by virtue of this Section 13.18.4) shall take effect as
if reduced by six months until the resulting period shall be
valid and enforceable.
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13.19 Both Parties shall promptly determine the appropriate Closing Date and
the appropriate measures to deal with the share split which may be
approved by the shareholders meeting of MRV to be held in May 2000.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date first above written.
MRV COMMUNICATIONS, INC.
/s/ Xxxxxx Xxxxxx
--------------------------------
By: Xxxxxx Xxxxxx
Title: Vice President & CFO
OPTRONICS INTERNATIONAL CORPORATION
/s/ Xx. X.X. Xxxxx
--------------------------------
By: Xx. X.X. Xxxxx
Title: President
SIGNING SHAREHOLDERS
/s/ Xx. X.X. Xxxxx
--------------------------------
Represented by: Xx. X.X. Xxxxx
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ANNEX 1
DEFINITIONS
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings, hearings,
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" means in relation to any Party, any company, other commercial entity
or person which directly or indirectly controls, or is controlled by, under
common control with, any Party or any of the Parties' directors, supervisors or
management personnel.
"APPROVALS" means (i) the approval granted by the Hsinchu Science-based
Industrial Park Administration of the acquisition by MRV of OIC Shares
contemplated by this Agreement so that, after the Closing, OIC shall be deemed
to be a foreign invested company with foreign investment approval (an "FIA
company"), (ii) the approval required under Xxxx-Xxxxx-Xxxxxx Act, and (iii) any
other governmental or regulatory approvals of the transactions contemplated
hereunder which may be required by Applicable Law (if any).
"APPLICABLE LAW" shall include all laws, ordinances, rules, regulations,
administrative or judicial orders, injunctions, notices, approvals or judgment
of any federal, national, state, provincial or local government or governmental
department, agency, or instrumentality.
"BUSINESS DAY" means any day on which banks in both New York and Taiwan are open
for business.
"CLOSING" has the meaning set forth in Section 3.
"CLOSING DATE" has the meaning set forth in Section 3.
"CLOSING AGENT" shall have the meaning set forth in Section 2.1.1 (a).
"CONFIDENTIAL INFORMATION" means any information concerning the transactions
contemplated in this Agreement and is not already generally available to the
public.
"CONTRACT" means any agreement, contract, obligation, promise, or understanding
(whether written or oral and whether express or implied) that is legally binding
on either OIC or any of its Subsidiaries.
"ENCUMBRANCE" means any security interest, lien, claim, option, warrant,
easement, limitation, restriction, royalty, charge, pledge, preemptive or other
right, restraint on alienation, voting trust or arrangement, proxy, shareholders
agreement, mortgage or other encumbrance.
"ESCROW AGENT" shall have the meaning set out in Section 10.2.3.
"ESCROW AGREEMENT" means an Escrow Agreement to be signed by and among MRV,
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Escrow Agent and Signing Shareholders in connection with Escrowed Shares on the
same date of this Agreement.
"ESCROWED SHARES" shall have the meaning as defined in Section 10.2.3.
"FINANCIAL STATEMENTS" has the meaning set forth in Section 5.3.1.
"GUARANTIES" means any guaranty or other surety provided by a Person Company in
respect of any indebtedness or other obligation.
"XXXX-XXXXX-XXXXXX ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
"INDEMNIFIED PARTY" has the meaning set forth in Section 10.3.1 below.
"INDEMNIFYING PARTY" has the meaning set forth in Section 10.3.1 below.
"INTELLECTUAL PROPERTY" means (a) all inventions (whether patentable or
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.
"LATEST BALANCE SHEET" shall name the meaning set out in Section 5.3.1.
"LATEST FINANCIAL STATEMENTS" shall have the meaning set out in Section 5.3.1.
"LOSS" shall mean any liability, loss, damage, claim, cost, deficiency,
delegation, or expense (including any penalty and any reasonably legal fees and
costs) incurred by a party.
"LIABILITY" means any liability (whether known or unknown, whether asserted 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.
"NEW TAIWAN DOLLARS" or "NT$" shall mean the lawful currency of the Republic of
China.
"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.
"PERMIT" means all governmental licenses, registrations, authorizations,
permits, and approvals, and all applications therefor.
"PERSON" means an individual, a partnership, a corporation, an association, a
joint stock company, a trust, a joint venture, an unincorporated organization,
or a governmental entity (or any department, agency, or political subdivision
thereof).
"POWER OF ATTORNEY" means a Power of Attorney in the form of Exhibit A attached
hereto, duly executed by each Selling Shareholder in favor of the
Attorneys-in-Fact, by which each Selling Shareholder appoints and authorizes the
Attorneys-in-Fact, jointly and severally, to execute for and on behalf of the
Selling Shareholder this Agreement, and any and all other documents in
connection with the performance by Selling Shareholder of its/his/her
obligations hereunder, and to take all actions necessary or appropriate for the
performance of the transaction contemplated herein for and on behalf of the
Selling Shareholder.
"SUBSIDIARY", as it relates to any Person, means a corporation or other type of
entity of which such Person owns (or has the right to acquire either by contract
or exercise of outstanding options, warrants or other convertible instruments)
50% or more of the capital stock or equity interest.
"TARGET DAY" shall have the meaning set out in Section 3.1.
"TAX" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Section 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.
"TAX RETURN" means any return, declaration, report, claim for refund, or
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 10.3.1.
"US GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"U.S. PERSON" means: (i) any natural person resident in the United States, (ii)
any partnership or corporation organized or incorporated under the laws of the
United States, (iii) any estate of which any executor or administrator is a U.S.
Person, (iv) any trust of which any trustee is a U.S. Person, (v) any agency or
branch of a foreign entity located in the United States, (vi) any
non-discretionary account or similar account (other than an estate or trust)
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held by a dealer or other fiduciary for the benefit or account of a U.S. Person,
(vii) any discretionary account or similar account (other than an estate or
trust) held by a dealer or other fiduciary organized, incorporated, or, if an
individual resident, in the United States, or (viii) any partnership or
corporation, if organized under the laws of any foreign jurisdiction and formed
by any U.S. Person principally, for the purpose of investing in securities and
registered under the Securities Act, unless it is organized or incorporated and
owned by accredited Selling Shareholders (as defined in Rule 501(a) under the
Securities Act who are not natural persons, estates or trusts.
"WASTE MATERIAL" shall mean any pollutant, contaminant, hazardous or toxic
material or other material produced, discharged or emitted by OIC or any of its
Subsidiaries other than products intended to be sold in the Ordinary Course of
Business.
4
