1
EXHIBIT 2.11
TAX SHARING AND INDEMNIFICATION AGREEMENT,
dated as of ___________, 2000
by and among
MRV COMMUNICATIONS, INC.
and
LUMINENT, INC.
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TABLE OF CONTENTS
PAGE
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SECTION 1. DEFINITIONS -...................................................2
"AFFILIATED PERSON"................................................2
"ASSOCIATES".......................................................2
"AUDIT"............................................................2
"CODE".............................................................2
"COMBINED GROUP"...................................................2
"COMBINED RETURN"..................................................2
"CONSOLIDATED GROUP"...............................................2
"CONSOLIDATED RETURN"..............................................2
"DECONSOLIDATION"..................................................2
"DECONSOLIDATION DATE".............................................3
"DECONSOLIDATION TAX"..............................................3
"DISTRIBUTION".....................................................3
"ESTIMATED TAX INSTALLMENT DATE"...................................3
"FEDERAL INCOME TAX"...............................................3
"FEDERAL TAX"......................................................3
"FINAL DETERMINATION"..............................................3
"GROSS ASSET VALUE"................................................4
"GROUP"............................................................4
"INCOME TAX".......................................................4
"INTEREST ACCRUAL PERIOD"..........................................4
"IPO"..............................................................4
"LUMINENT AFFILIATE"...............................................4
"LUMINENT BUSINESS"................................................4
"LUMINENT GROUP"...................................................4
"LUMINENT GROUP COMBINED RETURNS"..................................4
"LUMINENT GROUP COMBINED TAX LIABILITY"............................4
"LUMINENT GROUP CONSOLIDATED RETURNS"..............................4
"LUMINENT GROUP FEDERAL INCOME TAXES"..............................4
"LUMINENT GROUP FEDERAL INCOME TAX LIABILITY"......................5
"LUMINENT GROUP NON-FEDERAL COMBINED TAXES"........................5
"LUMINENT GROUP NON-FEDERAL SEPARATE RETURNS"......................5
"LUMINENT GROUP NON-FEDERAL SEPARATE TAXES"........................5
"LUMINENT GROUP NON-FEDERAL SEPARATE TAX LIABILITY"................5
"MRV AFFILIATE"....................................................5
"MRV GROUP"........................................................5
"MASTER SEPARATION AND DISTRIBUTION AGREEMENT".....................5
"NON-FEDERAL COMBINED TAX".........................................5
"NON-FEDERAL SEPARATE TAX".........................................5
"NON-FEDERAL SEPARATE TAX RETURN"..................................5
"NON-FEDERAL TAX"..................................................5
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"PAYMENT PERIOD"...................................................5
"PERSON"...........................................................5
"POST-DECONSOLIDATION PERIOD"......................................6
"PRE-DECONSOLIDATION PERIOD".......................................6
"PRIVILEGE"........................................................6
"PRO FORMA LUMINENT GROUP COMBINED RETURN".........................6
"PRO FORMA LUMINENT GROUP CONSOLIDATED RETURN".....................6
"PRO FORMA LUMINENT GROUP NON-FEDERAL SEPARATE TAX
RETURNS".........................................................6
"RESTRICTED PERIOD"................................................6
"RETAINED BUSINESS"................................................6
"RULING"...........................................................6
"RULING DOCUMENTS".................................................6
"SEPARATE RETURN"..................................................6
"SEPARATION".......................................................6
"SEPARATION DATE"..................................................6
"SEPARATION TAX"...................................................7
"SERVICE"..........................................................7
"STRADDLE PERIOD"..................................................7
"TAX"..............................................................7
"TAX ASSET"........................................................7
"TAX AUTHORITY"....................................................7
"TAX ITEM".........................................................7
"TAX RETURN".......................................................7
"TREASURY REGULATIONS".............................................7
SECTION 2. PREPARATION AND FILING OF TAX RETURNS...........................8
2.1 IN GENERAL......................................................8
2.2 MANNER OF PREPARING AND FILING TAX RETURNS......................8
2.3 AGENT...........................................................9
SECTION 3. PAYMENT OF TAXES TO TAX AUTHORITIES.............................9
3.1 FEDERAL INCOME TAXES............................................9
3.2 NON-FEDERAL COMBINED TAXES......................................9
3.3 NON-FEDERAL SEPARATE TAXES......................................9
3.4 OTHER FEDERAL TAXES.............................................9
SECTION 4. ALLOCATION OF TAXES.............................................9
4.1 AXCELIS LIABILITY FOR FEDERAL INCOME TAXES AND NON-
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FEDERAL COMBINED TAXES.........................................9
4.2 LUMINENT GROUP FEDERAL INCOME TAX LIABILITY...................10
4.3 LUMINENT GROUP COMBINED TAX LIABILITY.........................10
4.4 LUMINENT GROUP NON-FEDERAL SEPARATE TAX LIABILITY.............11
4.5 COOPERATION...................................................11
4.6 TAX SHARING INSTALLMENT PAYMENTS..............................11
4.7 TAX SHARING TRUE UP PAYMENTS..................................12
4.8 REDETERMINATION AMOUNTS.......................................12
4.9 PAYMENT OF TAXES FOR POST-DECONSOLIDATION PERIODS.............13
SECTION 5. TAX ATTRIBUTES................................................13
5.1 ALLOCATION OF TAX ITEMS.......................................13
5.2 POST DECONSOLIDATION..........................................13
SECTION 6. ADDITIONAL OBLIGATIONS........................................14
6.1 PROVISION OF INFORMATION AND MUTUAL COOPERATION...............14
6.2 INDEMNIFICATION...............................................15
6.3 TAX CONSEQUENCES OF PAYMENTS..................................16
6.4 INTEREST......................................................16
6.5 OUTSIDE FEES..................................................16
6.6 CARRYBACKS....................................................16
SECTION 7. AUDITS........................................................16
7.1 IN GENERAL....................................................16
7.2 NOTICE........................................................17
7.3 FAILURE TO NOTIFY.............................................17
7.4 REMEDIES......................................................17
SECTION 8. IPO...........................................................17
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8.1 IPO RELATED ITEMS.............................................17
8.2 TAX REPORTING OF IPO RELATED ITEMS............................18
8.3 AUDITS RELATING TO SEPARATION.................................18
8.4 PROVISION OF INFORMATION AND MUTUAL COOPERATION...............18
8.5 PRESS RELEASES................................................18
SECTION 9. DISTRIBUTION..................................................19
9.1 DISTRIBUTION RELATED ITEMS....................................19
9.2 INFORMATION FOR SHAREHOLDERS..................................22
9.3 ALLOCATION OF TAX ASSETS......................................22
SECTION 10. STOCK OPTIONS.................................................22
10.1 STOCK OPTION ADJUSTMENTS......................................22
10.2 TAX DEDUCTIONS................................................23
10.3 REPORTING AND INDEMNIFICATION.................................23
10.4 NOTICES, WITHHOLDING..........................................23
SECTION 11. MISCELLANEOUS.................................................24
11.1 EFFECTIVENESS.................................................24
11.2 NOTICES.......................................................24
11.3 CHANGES IN LAW................................................25
11.4 SUCCESSORS AND ASSIGNS........................................25
11.5 AUTHORIZATION, ETC............................................25
11.6 COMPLETE AGREEMENT............................................25
11.7 INTERPRETATION................................................25
11.8 GOVERNING LAW.................................................25
11.9 COUNTERPARTS..................................................25
11.10 LEGAL ENFORCEABILITY..........................................25
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11.11 NO THIRD PARTY BENEFICIARIES..................................26
11.12 JURISDICTION; FORUM...........................................26
11.13 AMENDMENT AND MODIFICATION....................................26
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TAX SHARING AND INDEMNIFICATION AGREEMENT
TAX SHARING AND INDEMNIFICATION AGREEMENT (this "Agreement"), dated as of
___________, 2000, by and among MRV Communications, Inc. ("MRV"), a Delaware
corporation, and Luminent, Inc. ("Luminent"), a Delaware corporation and wholly
owned subsidiary of MRV.
RECITALS
WHEREAS, MRV is the common parent corporation of an affiliated group of
corporations within the meaning of Section 1504(a) of the Code (as defined
herein) and of consolidated, combined, unitary and other similar groups as
defined under similar laws of other jurisdictions, and Luminent and certain
Luminent Affiliates (as defined herein) are members of such groups;
WHEREAS, the groups of which MRV is the common parent and Luminent and the
Luminent Affiliates are members file or intend to file Consolidated Returns,
Combined Returns and Separate Returns (as defined herein);
WHEREAS, in addition to its other businesses, MRV has been engaged through
Luminent and its various subsidiaries and divisions in the Luminent Business (as
defined herein);
WHEREAS, the Boards of Directors of MRV and Luminent have each determined
that it would be appropriate and desirable for MRV to contribute and transfer to
Luminent, and for Luminent to receive and assume, directly or indirectly, the
assets and liabilities (including contingent liabilities) of MRV and its
Subsidiaries associated with the Luminent Business to the extent not contributed
and transferred to Luminent prior to the date hereof (the "Separation");
WHEREAS, MRV and Luminent currently contemplate that, following the
Separation, Luminent will make an initial public offering ("IPO") of an amount
of its common stock pursuant to a registration statement on Form S-1 under the
Securities Act of 1933, as amended that will reduce MRV's ownership interest in
Luminent to not less than 80.1% of the outstanding common stock of Luminent;
WHEREAS, MRV currently plans to complete the Distribution (as defined
herein) approximately six months following the IPO; and
WHEREAS, it is appropriate and desirable to set forth the principles and
responsibilities of the parties to this Agreement regarding the allocation of
Taxes (as defined herein) and other related liabilities and adjustments with
respect to Taxes, Audits (as defined herein) and other related Tax matters.
NOW, THEREFORE, in consideration of the premises or promises and the mutual
covenants contained herein and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
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SECTION 1. DEFINITIONS - Capitalized terms not otherwise defined herein shall
have the meanings ascribed to such terms in the Master Separation and
Distribution Agreement (as defined herein). As used in this Agreement,
capitalized terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined).
"AFFILIATED PERSON" has the meaning ascribed to such term in the Investment
Company Act of 1940, as amended, and the rules and regulations promulgated
thereunder.
"ASSOCIATES" has the meaning ascribed to such term in the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder.
"AUDIT" includes any audit, assessment of Taxes, other examination by any Tax
Authority, proceeding, or appeal of such a proceeding relating to Taxes, whether
administrative or judicial (including without limitation any determination with
respect to a claim for refund).
"BENEFICIAL OWNERSHIP" has the meaning ascribed to such term in the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.
"CODE" means the United States Internal Revenue Code of 1986, as amended, or any
successor statute.
"COMBINED GROUP" means a group of corporations or other entities that files a
Combined Return or a corporation or other entity that files a Combined Return
described in clause (ii) or clause (iii) of the definition of "Combined Return."
"COMBINED RETURN" means any Tax Return with respect to Non-Federal Taxes (i)
filed on a consolidated, combined (including nexus combination, worldwide
combination, domestic combination, line of business combination or any other
form of combination) or unitary basis wherein Luminent or one or more Luminent
Affiliates join in the filing of such Tax Return (for any taxable period or
portion thereof) with MRV or one or more MRV Affiliates, (ii) filed on a
separate basis that includes Tax Items relating to, or arising from, both the
Luminent Business and the Retained Business, or (iii) pursuant to which Tax
Items or Tax Assets of (A) MRV (or any MRV Affiliate) are included on a separate
Tax Return of Luminent (or any Luminent Affiliate) or (B) Luminent (or any
Luminent Affiliate) are included on a separate Tax Return of MRV (or any MRV
Affiliate).
"CONSOLIDATED GROUP" means an affiliated group of corporations within the
meaning of Section 1504(a) of the Code that files a Consolidated Return.
"CONSOLIDATED RETURN" means any Tax Return with respect to Federal Income Taxes
filed on a consolidated basis wherein Luminent or one or more Luminent
Affiliates join in the filing of such Tax Return (for any taxable period or
portion thereof) with MRV or one or more MRV Affiliates.
"DECONSOLIDATION" means with respect to each Tax Return (i) any event pursuant
to which Luminent ceases to be a subsidiary corporation includible in the
Consolidated Return, (ii) any event pursuant to which neither Luminent nor any
Luminent Affiliate continues to be included in
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a Combined Return which includes MRV and/or a MRV Affiliate, (iii) any event
(including as a result of transactions contemplated by the Separation) pursuant
to which Tax Items relating to, or arising from, both the Luminent Business and
the Retained Business are no longer included on a Combined Return described in
clause (ii) of the definition of Combined Return or (iv) any event pursuant to
which a Tax Return described in clause (iii) of the definition of Combined
Return no longer includes Tax Items or Tax Assets of both MRV (or any MRV
Affiliate) and Luminent (or any Luminent Affiliate).
"DECONSOLIDATION DATE" means the day on which a Deconsolidation occurs.
"DECONSOLIDATION TAX" means any Tax, resulting from a Deconsolidation, taken
into account under Section 1.1502-13 or Section 1.1502-19 or any predecessor
provision of the Treasury Regulations (or any similar provision under
Non-Federal Tax law).
"DISTRIBUTION" means any distribution (or exchange) by MRV or any MRV Affiliate,
with respect to its stock, of the stock of Luminent (or any successor
corporation or corporation which owns stock of Luminent) in a transaction
intended to qualify under Section 355 of the Code.
"ESTIMATED TAX INSTALLMENT DATE" means, in the case of Federal Income Tax, the
installment due dates prescribed in Section 6655(c) of the Code (presently April
15, June 15, September 15 and December 15) together with due date for applying
for an extension of time to file a return prescribed in Section 6072 of the Code
or such other dates as may be prescribed by relevant provisions by statute or
regulation with respect to other Federal and Non-Federal Taxes.
"FEDERAL INCOME TAX" means any Tax imposed under Subtitle A of the Code or any
other provision of United States federal Income Tax law (including the Taxes
imposed by Sections 11, 55, 59A, and 1201(a) of the Code), and any interest,
additions to Tax or penalties applicable or related thereto.
"FEDERAL TAX" means any Tax imposed under the Code or otherwise under United
States federal Tax law.
"FINAL DETERMINATION" means the final resolution of any Tax (or other matter)
for a taxable period, including related interest or penalties, that, under
applicable law, is not subject to further appeal, review or modification through
proceedings or otherwise, including (1) by the expiration of a statute of
limitations or a period for the filing of claims for refunds, amending Tax
Returns, appealing from adverse determinations, or recovering any refund
(including by offset), (2) by a decision, judgment, decree, or other order by a
court of competent jurisdiction, which has become final and unappealable, (3) by
a closing agreement or an accepted offer in compromise under Section 7121 or
7122 of the Code, or comparable agreements under laws of other jurisdictions,
(4) by execution of an Internal Revenue Service Form 870 or 870AD, or by a
comparable form under the laws of other jurisdictions (excluding, however, with
respect to a particular Tax Item for a particular taxable period any such form
that reserves (whether by its terms or by operation of law) the right of the
taxpayer to file a claim for refund and/or the right of the Tax Authority to
assert a further deficiency with respect to such Tax Item for such period), or
(5) by any allowance of a refund or credit, but only after the expiration of all
periods during which such refund or credit may be recovered (including by way of
offset).
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"GROSS ASSET VALUE" means, when used with respect to a specified Person, the
fair market value of such Person's assets unencumbered by any liabilities.
"GROUP" means either the MRV Group or the Luminent Group, as the context
provides.
"INCOME TAX" means (a) any Tax based upon, measured by, or calculated with
respect to (1) net income or profits (including, without limitation, any capital
gains Tax, minimum Tax and any Tax on items of Tax preference, but not including
sales, use, real or personal property, gross or net receipts, transfer or
similar Taxes) or (2) multiple bases if one or more of the bases upon which such
Tax may be based, measured by, or calculated with respect to, is described in
clause (1) above, or (b) any United States state or local franchise Tax.
"INTEREST ACCRUAL PERIOD" has the meaning set forth in Section 6.4 of this
Agreement.
"IPO" has the meaning set forth in the Recitals.
"LUMINENT AFFILIATE" means any corporation or other entity in which Luminent
owns at least fifty percent (50%) of the total combined voting power (at any
time after the completion of the Separation).
"LUMINENT BUSINESS" has the meaning set forth in the Master Separation and
Distribution Agreement.
"LUMINENT GROUP" means the affiliated group of corporations as defined in
Section 1504(a) of the Code, or similar group of entities as defined under
corresponding provisions of the laws of other jurisdictions following the
completion of the Separation, of which Luminent would be the common parent if it
were not a subsidiary of MRV, and any corporation or other entity which would be
a member of such group for the relevant taxable period or portion thereof.
"LUMINENT GROUP COMBINED RETURNS" means, any tax return with respect to
Non-Federal Taxes filed on a consolidated, combined (including nexus
combination, worldwide combination, domestic combination, line of business
combination or any other form of combination) or unitary basis wherein Luminent
and one or more Luminent Affiliates join in the filing of such Tax Return.
"LUMINENT GROUP COMBINED TAX LIABILITY" means, with respect to any taxable
period, the Luminent Group's liability for Non-Federal Combined Taxes as
determined under Section 4.3 of this Agreement.
"LUMINENT GROUP CONSOLIDATED RETURNS" means, any Tax Return with respect to
Federal Income Taxes filed on a consolidated basis wherein Luminent and one or
more Luminent Affiliates join in the filing of such Tax Return (for any taxable
period or portion thereof).
"LUMINENT GROUP FEDERAL INCOME TAXES" means, means any Tax imposed under
Subtitle A of the Code or any other provision of United States federal Income
Tax law (including the Taxes imposed by Sections 11, 55, 59A, and 1201(a) of the
Code), and any interest, additions to Tax or penalties applicable or related
thereto that are assessed against Luminent or any Luminent Affiliate.
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"LUMINENT GROUP FEDERAL INCOME TAX LIABILITY" means, with respect to any taxable
period, the Luminent Group's liability for Federal Income Taxes as determined
under Section 4.2 of this Agreement.
"LUMINENT GROUP NON-FEDERAL COMBINED TAXES" means, any Non-Federal Tax with
respect to which a Combined Return is filed by the Luminent Group.
"LUMINENT GROUP NON-FEDERAL SEPARATE RETURNS" means, any tax return filed with
respect to Non-Federal Separate Taxes by Luminent or any member of the Luminent
Group.
"LUMINENT GROUP NON-FEDERAL SEPARATE TAXES" means, any Non-Federal Tax other
than a Non-Federal Combined Tax assessed again Luminent or any member of the
Luminent Group.
"LUMINENT GROUP NON-FEDERAL SEPARATE TAX LIABILITY" means, with respect to any
taxable period, the Luminent Group's liability for Non-Federal Separate Taxes as
determined under Section 4.4 of this Agreement.
"MRV AFFILIATE" means any corporation or other entity in which MRV owns more
than fifty percent (50%) of the total combined voting power (at any time after
the completion of the Separation), other than Luminent or any Luminent
Affiliate.
"MRV GROUP" means the affiliated group of corporations as defined in Section
1504(a) of the Code, or similar group of entities as defined under corresponding
provisions of the laws of other jurisdictions, of which MRV is the common
parent, and any corporation or other entity which is a member of such group for
the relevant taxable period or portion thereof, but excluding any member of the
Luminent Group.
"MASTER SEPARATION AND DISTRIBUTION AGREEMENT" means the Master Separation and
Distribution Agreement, dated as of ____________, 2000 by and between MRV and
Luminent.
"NON-FEDERAL COMBINED TAX" means any Non-Federal Tax with respect to which a
Combined Return is filed.
"NON-FEDERAL SEPARATE TAX" means any Non-Federal Tax other than a Non-Federal
Combined Tax.
"NON-FEDERAL SEPARATE TAX RETURN" means any Tax Return filed with respect to
Non-Federal Separate Taxes.
"NON-FEDERAL TAX" means any Tax other than a Federal Tax.
"PAYMENT PERIOD" has the meaning set forth in Section 6.4 of this Agreement.
"PERSON" means any natural person, corporation, limited liability company,
business trust, joint venture, association, company, partnership or government,
or any agency or political subdivision thereof.
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"POST-DECONSOLIDATION PERIOD" means any taxable period with respect to a
Consolidated Return or Combined Return, as the case may be, beginning after a
Deconsolidation Date.
"PRE-DECONSOLIDATION PERIOD" means any taxable period with respect to a
Consolidated Return or Combined Return, as the case may be, beginning and ending
on or before a Deconsolidation Date.
"PRIVILEGE" means any privilege that may be asserted under applicable law
including, any privilege arising under or relating to the attorney-client
relationship (including the attorney-client and work product privileges), the
accountant-client privilege, and any privilege relating to internal evaluation
processes.
"PRO FORMA LUMINENT GROUP COMBINED RETURN" means a pro forma Non-Federal
Combined Tax return or other schedule prepared pursuant to Section 4.3 of this
Agreement.
"PRO FORMA LUMINENT GROUP CONSOLIDATED RETURN" means a pro forma consolidated
Federal Income Tax return or other schedule prepared pursuant to Section 4.2 of
this Agreement.
"PRO FORMA LUMINENT GROUP NON-FEDERAL SEPARATE TAX RETURNS" means a pro forma
Non-Federal Separate Tax return or other schedule prepared pursuant to Section
4.4 of this Agreement.
"RESTRICTED PERIOD" means the two-year period following the date the
Distribution occurs.
"RETAINED BUSINESS" means all lines of business retained by MRV following any
Deconsolidation.
"RULING" means (a) the initial private letter ruling, if any, issued by the
Service in connection with the Distribution (and any related transactions) or
(b) any similar ruling issued by any Tax Authority other than the Service in
connection with the Distribution (and any related transactions).
"RULING DOCUMENTS" means (a) the request for the Ruling submitted to the
Service, together with the appendices and exhibits thereto and any supplemental
filings or other materials subsequently submitted to the Service, in connection
with the Distribution (and any related transactions) or (b) any similar filings
submitted to any other Tax Authority in connection with the Distribution (and
any related transactions).
"SEPARATE RETURN" means any Tax Return with respect to Non-Federal Separate
Taxes filed by MRV, Luminent, or any of their respective affiliates.
"SEPARATION" has the meaning set forth in the Recitals.
"SEPARATION DATE" has the meaning set forth in the Master Separation and
Distribution Agreement.
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"SEPARATION TAX" means any Tax (net of any current benefit arising from any Tax
Asset) resulting from the Separation imposed upon MRV or any MRV Affiliate or
Luminent or any Luminent Affiliate; provided that, such term shall not refer to
the collateral Tax effects of the Separation (including, without limitation,
relating to the tax basis of assets comprising the Luminent Business or the
amount, if any, of Tax Assets or earnings and profits of Luminent or any
Luminent Affiliate following the Separation).
"SERVICE" means the Internal Revenue Service or any successor agency or
authority.
"STRADDLE PERIOD" means any taxable period with respect to a Consolidated
Return, Combined Return or Separate Return, as the case may be, beginning on or
before the Deconsolidation Date and ending after the Deconsolidation Date.
"TAX" means any charges, fees, levies, imposts, duties, or other assessments of
a similar nature, including income, alternative or add-on minimum, gross
receipts, profits, lease, service, service use, wage, wage withholding,
employment, workers compensation, business occupation, occupation, premiums,
environmental, estimated, excise, employment, sales, use, transfer, license,
payroll, franchise, severance, stamp, occupation, windfall profits, withholding,
social security, unemployment, disability, ad valorem, highway use, commercial
rent, capital stock, paid up capital, recording, registration, property, real
property gains, value added, business license, custom duties, or other tax or
governmental fee of any kind whatsoever, imposed or required to be withheld by
any Tax Authority including any interest, additions to tax, or penalties
applicable or related thereto.
"TAX ASSET" means any Tax Item that could reduce a Tax, including a net
operating loss, net capital loss, investment tax credit, foreign tax credit,
charitable deduction or credit related to alternative minimum tax or any other
Tax credit.
"TAX AUTHORITY" means a U. S. or foreign governmental authority or any
subdivision, agency, commission or authority thereof or any quasi-governmental
or private body having jurisdiction over the assessment, determination,
collection or imposition of any Tax (including, without limitation, the
Service).
"TAX ITEM" means any item of income, gain, loss, deduction or credit, or other
attribute that may have the effect of increasing or decreasing any Tax.
"TAX RETURN" means any return, report, certificate, form or similar statement or
document (including, any related or supporting information or schedule attached
thereto and any information return, amended tax return, claim for refund or
declaration of estimated tax) required to be supplied to, or filed with, a Tax
Authority in connection with the determination, assessment or collection of any
Tax or the administration of any laws, regulations or administrative
requirements relating to any Tax.
"TREASURY REGULATIONS" means the final, temporary and proposed income tax
regulations promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
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SECTION 2. PREPARATION AND FILING OF TAX RETURNS
2.1 IN GENERAL. (a) For any Pre-Deconsolidation Period, MRV shall have the sole
and exclusive responsibility for the preparation and filing of: (1) all
Consolidated Returns, (2) all Combined Returns and (3) all Separate Returns.
(b) For the Straddle Period, MRV shall have the sole and exclusive
responsibility for the preparation and filing of: (1) all Consolidated Returns,
(2) all Combined Returns and (3) all Separate Returns.
(c) For all Post-Deconsolidation Periods, Luminent shall have the sole
and exclusive responsibility for the preparation and filing of: (1) all Luminent
Group Consolidated Returns, (2) all Luminent Group Combined Returns, and (3) all
Luminent Group Non-Federal Separate Returns.
2.2 MANNER OF PREPARING AND FILING TAX RETURNS. (a) All Tax Returns filed after
the date of this Agreement by MRV or any MRV Affiliate, shall be (1) prepared in
a manner that is consistent with (i) Sections 5.1 and 9.3 of this Agreement and
(ii) any Ruling Documents or Ruling, and (2) filed on a timely basis (taking
into account applicable extensions) by MRV.
(b) MRV shall have the exclusive right, in its sole discretion, with
respect to any Tax Return relating to the Pre-Deconsolidation and Straddle
Periods to determine (1) the manner in which such Tax Return shall be prepared
and filed, including the elections, methods of accounting, positions,
conventions and principles of taxation to be used and the manner in which any
Tax Item shall be reported, (2) whether any extensions may be requested, (3) the
elections that will be made by MRV, any MRV Affiliate, Luminent, and any
Luminent Affiliate on such Tax Return, (4) whether any amended Tax Returns shall
be filed, (5) whether any claims for refund shall be made, (6) whether any
refunds shall be paid by way of refund or credited against any liability for the
related Tax, and (7) whether to retain outside firms to prepare or review such
Tax Return. MRV agrees to provide Luminent with a copy of each such Tax Return
prior to the due date for the filing of any such Tax Return (giving effect to
applicable extensions) for such taxable years sufficiently in advance of such
date to allow Luminent the opportunity to review and comment on any such Tax
Return.
(c)(1) Luminent shall be responsible for providing financial,
transactional, legal and other information in a timely manner as necessary for
the preparation of the returns described in Sections 2.1(a) and (b) of this
Agreement. Information shall be requested and submitted by way of annual tax
workpaper packages (due no later than March 31, for the preceding tax year ended
December 31), sales and use tax reports (submitted as required to meet reporting
deadlines in accordance with the continuation of the current process), other
miscellaneous information requests and other supporting documentation. Such
information shall be submitted within 30 days of written request in accordance
with MRV's normal information request practices and due dates.
(2) For a period of one year beginning on the Deconsolidation Date,
Luminent may elect to have MRV prepare the returns described in Section 2.1(c)
of this Agreement. If
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Luminent so elects then it shall provide written notice to MRV as provided in
Section 11.2. MRV shall prepare such returns in accordance with the terms and
conditions contained in the Transitional Services Agreement, dated as of
__________, 2000 by and between MRV and Luminent, for services rendered pursuant
to this Section 2.2(c)(2).
2.3 AGENT. Subject to the other applicable provisions of this Agreement,
Luminent hereby irrevocably designates, and agrees to cause each Luminent
Affiliate to so designate, MRV as its sole and exclusive agent and
attorney-in-fact to take such action (including execution of documents) as MRV,
in its sole discretion, may deem appropriate in any and all matters (including
Audits) relating to any Tax Return described in Sections 2.1(a) and (b) of this
Agreement.
SECTION 3. PAYMENT OF TAXES TO TAX AUTHORITIES
3.1 FEDERAL INCOME TAXES. MRV shall pay (or cause to be paid) to the Service all
Federal Income Taxes with respect to any Consolidated Return due and payable for
all Pre-Deconsolidation Periods and Straddle Periods. Luminent shall pay (or
cause to be paid) to the Service all Luminent Group Federal Income Taxes due and
payable for all Post-Deconsolidation Periods.
3.2 NON-FEDERAL COMBINED TAXES. MRV shall pay (or cause to be paid) to the
appropriate Tax Authorities all Non-Federal Combined Taxes with respect to any
Combined Return due and payable for all Pre-Deconsolidation Periods and Straddle
Periods. Luminent shall pay (or cause to be paid) to the appropriate Tax
Authorities all Luminent Group Non-Federal Combined Taxes with respect to any
Combined Return due and payable for Post-Deconsolidation Periods.
3.3 NON-FEDERAL SEPARATE TAXES. MRV shall pay (or cause to be paid) to the
appropriate Tax Authorities all Non-Federal Separate Taxes due and payable for
Pre-Deconsolidation Periods and Straddle Periods. Luminent shall pay (or cause
to be paid) to the appropriate Tax Authorities all Luminent Group Non-Federal
Separate Taxes due and payable for Post-Deconsolidation Periods.
3.4 OTHER FEDERAL TAXES. The parties shall each pay (or cause to be paid) to the
appropriate Tax Authorities all of their respective Federal Taxes (excluding
Federal Income Taxes for Pre-Deconsolidation Periods and Straddle Periods which
are governed by Section 3.1 of this Agreement).
SECTION 4. ALLOCATION OF TAXES
4.1 LUMINENT LIABILITY FOR FEDERAL INCOME TAXES AND NON-FEDERAL COMBINED TAXES.
[Within ten (10) days after completion of the IPO, Luminent shall pay to MRV the
cumulative amount of the Luminent Group Federal Income Tax Liability, the
Luminent Group Combined Tax Liability and the Luminent Group Separate Tax
Liability for all Consolidated Returns, Combined Returns and Separate Returns
for all Pre-Deconsolidation Periods, including estimated tax payments.
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4.2 LUMINENT GROUP FEDERAL INCOME TAX LIABILITY. With respect to each
Pre-Deconsolidation Period (including the Straddle Period), the Luminent Group
Federal Income Tax Liability for such taxable period shall be the Luminent
Group's liability for Federal Income Taxes for such taxable period, as
determined on a Pro Forma Luminent Group Consolidated Return prepared:
(i) on a basis consistent with the preparation of the
Consolidated Return for such period, determined by including only Tax Items of
members of the Luminent Group which are included in the Consolidated Return and
by allocating Tax Assets to the Luminent Group to the extent that the Tax Asset
was created by a member of the Luminent Group and such Tax Asset was actually
utilized on the relevant Consolidated Return; and
(ii) applying the highest statutory marginal corporate income Tax
rate in effect for such taxable period (or portion thereof); provided that, in
the event that the federal alternative minimum Tax applies to the Consolidated
Return, the Luminent Group Federal Income Tax Liability shall equal the lesser
of (i) the alternative minimum Tax liability with respect to the Consolidated
Return that would result by including only Tax Items and Tax Assets of members
of the Luminent Group included in the Consolidated Return or (ii) the aggregate
Tax liability payable with respect to such Consolidated Return.
(iii) The principles of Treasury Regulation Section
1.1502-33(d)(3) also shall apply to the allocation set forth in Sections 4.2(i)
and (ii). If the amount of the consolidated federal income tax liability due
under any Consolidated Return is less than the sum of the aggregate separate
return tax liabilities of the Luminent Group and the MRV Group (as computed
pursuant to Sections 4.2(i) and (ii) above) due to losses or tax credits of one
Group (including losses or tax credits carried over from prior years), the
decrease in tax liability resulting therefrom shall be allocated 100 percent to
that Group. A Group thus may have a "negative" income tax liability as a result
of such an allocation (a "Loss Group"). If a Loss Group exists, the other Group
shall pay to the Loss Group in a timely manner an amount equal to such
"negative" income tax liability. In other words, if Tax attributes (e.g., losses
or tax credits) of one Group are utilized by the other Group to reduce taxable
income or Tax, as the case may be, the Group utilizing such Tax attributes shall
pay to the other Group, with respect to losses, an amount equal to such
reduction in taxable income resulting from the utilization of such losses
multiplied by the top marginal federal corporate income Tax rate actually used
by the Group utilizing the losses in calculating its deemed Tax liability (prior
to the application of Tax credits against such liability) under Sections 4.2(i)
and (ii) for the taxable period during which such losses are utilized and, with
respect to Tax credits, an amount equal to the actual amount by which the deemed
Tax liability calculated pursuant to Sections 4.2(i) and (ii) is reduced by such
Tax credits for the taxable period during which such Tax credits are utilized.
4.3 LUMINENT GROUP COMBINED TAX LIABILITY. With respect to any
Pre-Deconsolidation Period, the Luminent Group Combined Tax Liability shall be
the sum for such taxable period of the Luminent Group's liability for each
Non-Federal Combined Tax, as determined on Pro Forma Luminent Group Combined
Returns prepared in a manner consistent with the principles and procedures set
forth in Sections 4.2(i) and (ii) hereof. The Pro Forma Luminent Group Combined
Returns relating to Tax Returns described in clauses (ii) and (iii) of the
definition of "Combined Return" shall be prepared by including only Tax Items
and Tax
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Assets relating to or arising from the Luminent Business. The principles of
Section 4.2(iii) shall also apply to this section 4.3.
4.4 LUMINENT GROUP NON-FEDERAL SEPARATE TAX LIABILITY. With respect to any
Pre-Deconsolidation Period, the Luminent Group Non-Federal Separate Tax
Liability shall be the sum for such taxable period of the Luminent Group's
liability for each Non-Federal Separate Tax, as determined on Pro Forma Luminent
Group Non-Federal Separate Returns prepared in a manner consistent with the
principles and procedures set forth in Section 4.2 hereof. The Pro Forma
Luminent Group Non-Federal Separate Returns shall be prepared by including only
Tax Items and Tax Assets relating to or arising from the Luminent Business.
4.5 COOPERATION. (a) MRV and Luminent agree to cooperate in good faith in
connection with the preparation of such pro forma tax returns and agree to make
reasonably available any documents, information or employees in connection
therewith. However, with respect to any Pre-Deconsolidation Period, MRV shall
have the sole and exclusive responsibility for the preparation of any Pro Forma
Luminent Group Consolidated Returns, Pro Forma Luminent Group Combined Returns
and Pro Forma Luminent Group Non-Federal Separate Returns and MRV shall have the
exclusive right, in its sole discretion, to determine the proper application of
the requirements set forth in Section 4.2 hereof.
(b) The Pro Forma Luminent Group Consolidated Returns, Pro Forma
Luminent Group Combined Returns and Pro Forma Luminent Group Non-Federal
Separate Returns, workpapers and other supporting documentation shall be
completed no later than thirty (30) business days prior to the date on which the
related Consolidated Return, Combined Return or Separate Return, as the case may
be, is filed with the appropriate Tax Authority.
4.6 TAX SHARING INSTALLMENT PAYMENTS. (a) FEDERAL INCOME TAXES. Not later than
two (2) business days prior to each Estimated Tax Installment Date with respect
to any Pre-Deconsolidation Period, the parties shall, consistent with MRV's
current period annualization election and past practice, determine under the
principles of Section 6655 of the Code the estimated amount of the related
installment of the Luminent Group Federal Income Tax Liability. Luminent shall
pay to MRV the amount thus determined on or before such Estimated Tax
Installment Date. The parties acknowledge and agree that, for purposes of this
Section 4.6(a), Luminent has paid to MRV no amounts as of the date hereof, with
respect to the taxable period beginning January 1, 2000.
(b) NON-FEDERAL COMBINED TAXES. MRV shall, in connection with any
installment payment (payable with respect to any Combined Return prepared and
filed by MRV) with respect to Non-Federal Combined Taxes for any
Pre-Deconsolidation Period, consistent with MRV's current period annualization
elections and past practice, determine the estimated amount of the related
installment of the Luminent Group Combined Tax Liability. From time to time, MRV
may provide Luminent with a written statement setting forth amounts owed by
Luminent in connection with any installment payments with respect to Non-Federal
Combined Taxes made by MRV for the immediately preceding month and any other
month for which a statement has not previously been provided by MRV. Luminent
shall pay the amounts set forth on any statement upon receipt of such statement.
The parties acknowledge and agree
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that, for purposes of this Section 4.6(b), Luminent has paid no amounts to MRV
with respect to the taxable period beginning January 1, 2000.
(c) NON-FEDERAL SEPARATE TAXES. MRV shall, in connection with any
installment payment (payable with respect to any Separate Return prepared and
filed by MRV) with respect to Non-Federal Separate Taxes for any
Pre-Deconsolidation Period, consistent with MRV's current period annualization
elections and past practice, determine the estimated amount of the related
installment of the Luminent Group Non-Federal Separate Tax Liability. From time
to time, MRV may provide Luminent with a written statement setting forth amounts
owed by Luminent in connection with any installment payments with respect to
Non-Federal Separate Taxes made by MRV for the immediately preceding month and
any other month for which a statement has not previously been provided by MRV.
Luminent shall pay the amounts set forth on any statement upon receipt of such
statement. The parties acknowledge and agree that, for purposes of this Section
4.6(c), Luminent has paid no amounts to MRV with respect to the taxable period
beginning January 1, 2000.
4.7 TAX SHARING TRUE UP PAYMENTS. (a) FEDERAL INCOME TAXES. Not later than
thirty (30) business days following the completion of any Pro Forma Luminent
Group Consolidated Return, Luminent shall pay to MRV, or MRV shall pay to
Luminent, as appropriate, an amount equal to the difference, if any, between the
Luminent Group Federal Income Tax Liability for the Pre-Deconsolidation Period
and the aggregate amount paid by Luminent with respect to such period under
Section 4.6(a) of this Agreement.
(b) NON-FEDERAL COMBINED TAXES. Not later than thirty (30) business
days following the completion of any Pro Forma Luminent Group Combined Return,
Luminent shall pay to MRV, or MRV shall pay to Luminent, as appropriate, an
amount equal to the difference, if any, between the Luminent Group Combined Tax
Liability for the Pre-Deconsolidation Period and the amounts paid by Luminent
with respect to such period under Section 4.6(b) of this Agreement.
(c) NON-FEDERAL SEPARATE TAXES. Not later than thirty (30) business
days following the completion of any Pro Forma Luminent Group Separate Return,
Luminent shall pay to MRV, or MRV shall pay to Luminent, as appropriate, an
amount equal to the difference, if any, between the Luminent Group Separate Tax
Liability for the Pre-Deconsolidation Period and the amounts paid by Luminent
with respect to such period under Section 4.6(c) of this Agreement.
4.8 REDETERMINATION AMOUNTS. For any Pre-Deconsolidation Period or Straddle
Period, in the event of a redetermination of any Tax Item of any member of a
Consolidated Group or Combined Group as a result of a Final Determination, the
filing of a Tax refund claim or the filing of an amended Tax Return pursuant to
which Taxes are paid to a Tax Authority or a refund of Taxes is received from a
Tax Authority, MRV shall prepare, in accordance with the principles and
procedures set forth in this Section 4, revised Pro Forma Luminent Group
Consolidated Returns, revised Pro Forma Luminent Group Combined Returns and/or
revised Pro Forma Luminent Group Non-Federal Separate Returns, as appropriate,
to reflect the redetermination of such Tax Item as a result of such Final
Determination, filing of a Tax refund claim or filing of an amended Tax Return.
Following the preparation of such revised pro forma
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tax returns, Luminent's payment obligations under Sections 4.2, 4.3 and 4.4
hereof shall be redetermined to reflect Luminent's Tax liability pursuant to the
revised Pro Forma Luminent Group Consolidated Returns, revised Pro Forma
Luminent Group Combined Returns and/or revised Pro Forma Luminent Group
Non-Federal Separate Returns prepared pursuant to this Section 4.8. Luminent
shall pay to MRV the amount by which the Tax liability reflected on the revised
Pro Forma Luminent Group Consolidated Returns, revised Pro Forma Luminent Group
Combined Returns and/or revised Pro Forma Luminent Group Non-Federal Separate
Returns exceeds the Tax liability reflected on the original Pro Forma Luminent
Group Consolidated Returns, original Pro Forma Luminent Group Combined Returns
and/or original Pro Forma Luminent Group Non-Federal Separate Returns, and MRV
shall pay to Luminent the amount by which the Tax liability reflected on the
original Pro Forma Luminent Group Consolidated Returns, original Pro Forma
Luminent Group Combined Returns and/or original Pro Forma Luminent Group
Non-Federal Separate Returns exceeds the Tax liability reflected on the revised
Pro Forma Luminent Group Consolidated Returns, revised Pro Forma Luminent Group
Combined Returns and or revised Pro Forma Luminent Group Non-Federal Separate
Returns.
4.9 PAYMENT OF TAXES FOR POST-DECONSOLIDATION PERIODS. Except as otherwise
provided in this Agreement, MRV shall pay or cause to be paid all Taxes and
shall be entitled to receive and retain all refunds of Taxes with respect to Tax
Returns relating to Post-Deconsolidation Periods for which MRV has filing
responsibility, including under this Agreement. Except as otherwise provided in
this Agreement, Luminent shall pay or cause to be paid all Taxes and shall be
entitled to receive and retain all refunds of Taxes with respect to Tax Returns
relating to Post-Deconsolidation Periods for which Luminent has filing
responsibility, including under this Agreement.
SECTION 5. TAX ATTRIBUTES
5.1 ALLOCATION OF TAX ITEMS. (a) IN GENERAL. All Tax computations for (i) any
Pre-Deconsolidation Period ending on a Deconsolidation Date, (ii) the
immediately following taxable period of Luminent or any Luminent Affiliate and
(iii) any Straddle Period, shall be made pursuant to the principles of Section
1.1502-76(b) of the Treasury Regulations or of a corresponding provision under
the laws of other jurisdictions and, to the extent possible, in a manner
consistent with the principles set forth in Section 4.2(a) of this Agreement.
(b) REATTRIBUTION. In the event of a Deconsolidation, MRV may, at its
option, elect to reattribute to itself certain Tax Items of the Luminent Group
pursuant to Section 1.1502-20(g) of the Treasury Regulations. If MRV makes such
election, Luminent shall comply with the requirements of Section 1.1502-20(g)(5)
of the Treasury Regulations.
5.2 POST DECONSOLIDATION. To the extent permitted by applicable law, following
any Deconsolidation, the relevant Tax Assets with respect to the Consolidated
Group or Combined Group, as the case may be, shall be allocated to the
corporation or entity that created or generated the Tax Asset.
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SECTION 6. ADDITIONAL OBLIGATIONS
6.1 PROVISION OF INFORMATION AND MUTUAL COOPERATION. (a) MRV and Luminent shall,
and shall cause their respective affiliates to, (1) furnish to the other in a
timely manner such information, documents and other materials as the other may
reasonably request for purposes of (i) preparing any Tax Return (or pro forma
Tax Return prepared in accordance with Section 4 hereof) or portion thereof for
which the other has responsibility for preparing under this Agreement, (ii)
contesting or defending any Audit (including the provision of such information,
documents and other materials as may be requested by any Tax Authority), and
(iii) making any determination or computation necessary or appropriate under
this Agreement, (2) make its employees available to the other to provide
explanations of documents and materials and such other information as the other
may reasonably request in connection with any of the matters described in
subclauses (i), (ii) and (iii) of clause (1) above, (3) reasonably cooperate in
connection with any Audit. For purposes of this Agreement, "timely" shall mean
furnishing such information, documents and other materials or making its
employees available within thirty (30) days of the time a request therefor is
made by the other.
(b) In the event that either MRV or Luminent or their respective
affiliates shall fail for any reason to timely comply with any written request
pursuant to Section 6.1, MRV or Luminent, as the case may be, may, in its sole
discretion, have its employees or agents fulfill such request and charge the
non-complying party for its costs incurred in fulfilling such request at the
highest hourly rate then shown on the Appendix attached hereto but not less than
$5,000 for each such request. For purposes of this Section 6.1(b), each written
request made by any Tax Authority and properly forwarded by one party to the
other for action shall be deemed a separate request.
(c MRV and Luminent shall, and shall cause their respective affiliates
to, retain and provide on reasonable demand books, records, documentation or
other information relating to any Tax Return or Audit, with respect to any
taxable period in which MRV owns, directly or indirectly, 50% or more (by vote
or value) of the outstanding stock of Luminent, until the later of (i) the
expiration of the applicable statute of limitations (after giving effect to any
extension, waiver, or mitigation thereof) and (ii) in the event any claim is
made under this Agreement or by any Tax Authority for which such information is
relevant, until a Final Determination is reached with respect to such claim.
Notwithstanding anything to the contrary included in this Agreement, the parties
will comply in all respects with the requirements of any applicable record
retention agreement with the Service or other Tax Authority.
(d) Notwithstanding any other provision of this Agreement, no member
of the MRV Group shall be required to provide Luminent or any Luminent Affiliate
access to or copies of (1) any Tax information that relates exclusively to any
member of the MRV Group, (2) any Tax information as to which any member of the
MRV Group is entitled to assert the protection of any Privilege, or (3) any Tax
information as to which any member of the MRV Group is subject to an obligation
to maintain the confidentiality of such information. MRV shall use reasonable
efforts to separate any such information from any other information to which
Luminent is entitled to access or to which Luminent is entitled to copy under
this Agreement, to the extent consistent with preserving its rights under this
Section 6.1(d).
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(e) Notwithstanding any other provision of this Agreement, with
respect to Tax information that relates to any taxable period in which Luminent
is no longer included in the Consolidated Group of which MRV is the common
parent and no Combined Return is filed, no member of the Luminent Group shall be
required to provide MRV or any MRV Affiliate access to or copies of (1) any Tax
information as to which any member of the Luminent Group is entitled to assert
the protection of any Privilege or (2) any Tax information as to which any
member of the Luminent Group is subject to an obligation to maintain the
confidentiality of such information. Luminent shall use reasonable efforts to
separate any such information from any other information to which MRV is
entitled to access or to which MRV is entitled to copy under this Agreement, to
the extent consistent with preserving its rights under this Section 6.1(e).
(f) The parties agree to give the other party reasonable written
notice prior to destroying or discarding any records pertaining to the
Pre-Deconsolidation Period or Straddle Period records, and if the other party so
requests, the party shall allow the other party to take possession of such tax
records. Tax records shall include, inter alia, journal vouchers, cash vouchers,
general ledgers, material contracts, authorizations for expenditures, and copies
of returns.
6.2 INDEMNIFICATION. (a) GENERAL. MRV shall be liable for (and indemnify
Luminent and each Luminent Affiliate against) Taxes of the MRV Group and its
Affiliates (including the Luminent Group) not specifically allocated to Luminent
and the Luminent Affiliates under this Agreement, and Luminent shall be liable
for and indemnify the MRV Group against Taxes which are specifically allocated
to Luminent and the Luminent Affiliates under this Agreement.
(b) FAILURE TO PAY. MRV and each MRV Affiliate shall jointly and
severally indemnify and hold Luminent and each Luminent Affiliate harmless from
and against any Tax that is attributable to, or results from the failure of MRV
or any MRV Affiliate to make any payment required to be made by them under this
Agreement, including without limitation any Tax for all Pre-Deconsolidation
Periods (other than any Tax described in the succeeding sentence). Luminent and
each Luminent Affiliate shall jointly and severally indemnify and hold MRV and
each MRV Affiliate harmless from and against any Tax that is attributable to, or
results from, the failure of Luminent or any Luminent Affiliate to make any
payment required to be made under this Agreement.
(c) INACCURATE OR INCOMPLETE INFORMATION. MRV and each MRV Affiliate
shall jointly and severally indemnify Luminent and hold Luminent and each
Luminent Affiliate harmless from and against any Tax or loss attributable to the
negligence of MRV or any MRV Affiliate in supplying Luminent or any Luminent
Affiliate with inaccurate or incomplete information, in connection with the
preparation of any Tax Return or any Audit. Luminent and each Luminent Affiliate
shall jointly and severally indemnify and hold MRV and each MRV Affiliate
harmless from and against any Tax or loss attributable to the negligence of
Luminent or any Luminent Affiliate in supplying MRV or any MRV Affiliate with
inaccurate or incomplete information, in connection with the preparation of any
Tax Return or any Audit.
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6.3 TAX CONSEQUENCES OF PAYMENTS. For all Tax purposes and notwithstanding any
other provision of this Agreement, to the extent permitted by applicable law,
the parties hereto shall treat any payment made pursuant to this Agreement
(other than any payment made in satisfaction of an intercompany obligation) as a
capital contribution or dividend distribution, as the case may be, immediately
prior to the Separation Date and, accordingly, as not includible in the taxable
income of the recipient. If, as a result of a Final Determination, it is
determined that the receipt or accrual of any payment made under this Agreement
is taxable to the recipient, the payor shall pay to the recipient an amount
equal to any increase in the Income Taxes of the recipient as a result of
receiving the payment from the payor (grossed up to take into account such
payment, if applicable).
6.4 INTEREST. Payments pursuant to this Agreement that are not made within the
period prescribed in this Agreement or, if no period is prescribed, within
thirty (30) business days after demand for payment is made (the "Payment
Period") shall bear interest for the period from and including the date
immediately following the last date of the Payment Period through and including
the date of payment (the "Interest Accrual Period") at a per annum rate equal to
the prime rate (as quoted in the Wall Street Journal) in effect on the last day
of such Payment Period, plus 500 basis points. Such interest will be payable at
the same time as the payment to which it relates and shall be calculated on the
basis of a year of 365 days and the actual number of days for which due.
6.5 OUTSIDE FEES. For any Pre-Deconsolidation Period, Luminent and all Luminent
Affiliates will be allocated their proportional share of all outside fees as
determined by MRV. For purposes of this Section 6.5, outside fees will be
allocated to the period to which they relate (as MRV shall in its sole
discretion determine) and not the period in which they may be incurred. Outside
fees include (but are not limited to) accounting, legal and other fees for
preparation and filing of Tax Returns, Tax research, planning, strategy, and
assistance with Tax Audits. The allocated amount will be billed to the Luminent
Group and is due upon receipt.
6.6 CARRYBACKS. Luminent shall make an election under Section 172(b)(3) of the
Code to relinquish the entire carryback period with respect to any net operating
loss attributable to Luminent or any Luminent Affiliate in any taxable period
beginning on or after a Deconsolidation Date that could be carried back to a
taxable year of Luminent or any Luminent Affiliate ending on or before the
Deconsolidation Date. Neither MRV nor any member of the MRV Group shall be
required to pay to Luminent or any Luminent Affiliate any refund or credit of
Taxes that results from the carryback to any taxable period ending on or before
the Deconsolidation Date of any net operating loss, capital loss, or tax credit
attributable to Luminent or any Luminent Affiliate in any taxable period
beginning on or after the Deconsolidation Date.
SECTION 7. AUDITS
7.1 IN GENERAL. (a) MRV shall have the exclusive right, in its sole discretion,
to control, contest, and represent the interests of MRV, any MRV Affiliate,
Luminent or any Luminent Affiliate in any Audit relating to any Tax Return
described in Sections 2.1(a) and (b) of this Agreement and to resolve, settle or
agree to any deficiency, claim or adjustment proposed, asserted or assessed in
connection with or as a result of any such Audit. MRV's rights shall
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extend to any matter pertaining to the management and control of an Audit,
including, without limitation, execution of waivers, choice of forum, scheduling
of conferences and the resolution of any Tax Item.
(b) MRV shall keep Luminent informed of all material developments and
events pertaining to any Audit that relates directly to any Tax Item included in
any Consolidated Return or Combined Return for which Luminent is responsible for
the resulting tax liability. Luminent shall have the right to review at its own
expense any materials that it may reasonably request that pertain to any Audit
that relates directly to any Tax Item included in any Consolidated Return or
Combined Return for which Luminent is responsible for the resulting tax
liability.
(c) Luminent shall have the exclusive right, in its sole discretion,
to control, contest, and represent the interests of Luminent or any Luminent
Affiliate in any Audit relating to any Tax Return described in Section 2.1(c) of
this Agreement and to resolve, settle, or agree to any deficiency, claim or
adjustment proposed, asserted or assessed in connection with or as a result of
any such Audit.
7.2 NOTICE. If MRV or any member of the MRV Group receives written notice of, or
relating to, an Audit from a Tax Authority that asserts, proposes or recommends
a deficiency, claim or adjustment that, if sustained, would result in the
redetermination of a Tax Item of a member of the Luminent Group, MRV shall
promptly provide a copy of such notice to Luminent (but in no event later than
thirty (30) business days following the receipt of such notice). If Luminent or
any member of the Luminent Group receives written notice of, or relating to, an
Audit from a Tax Authority with respect to a Tax Return described in Section
2.1(a) or (b) of this Agreement, Luminent shall promptly provide a copy of such
notice to MRV (but in no event later than thirty (30) business days following
the receipt of such notice).
7.3 FAILURE TO NOTIFY. The failure of MRV or Luminent to notify the other of any
matter relating to a particular Tax for a taxable period or to take any action
specified in this Agreement shall not relieve such other party of any liability
and/or obligation which it may have under this Agreement with respect to such
Tax for such taxable period except to the extent that such other party's rights
hereunder are materially prejudiced by such failure.
7.4 REMEDIES. Luminent agrees that no claim against MRV and no defense to
Luminent' liabilities to MRV under this Agreement shall arise from the
resolution by MRV of any deficiency, claim or adjustment relating to the
redetermination of any Tax Item of MRV or a MRV Affiliate.
SECTION 8. IPO
8.1 IPO RELATED ITEMS. (a) LIABILITY FOR SEPARATION TAXES AND DECONSOLIDATION
TAXES. Only except as provided in Section 8.1(b) hereof, MRV shall be
responsible for the payment of, and shall indemnify and hold Luminent harmless
from and against, any Separation Taxes and Deconsolidation Taxes.
(b) LIABILITY FOR UNDERTAKING CERTAIN ACTIONS. Notwithstanding Section
8.1(a) of this Agreement, Luminent and each member of the Luminent
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Group shall be jointly and severally responsible for, and shall indemnify and
hold MRV harmless from and against, any Separation Taxes that are attributable
to, or result from, (i) any action taken by Luminent or any member of the
Luminent Group that was not contemplated by the parties in connection with the
Separation (including, without limitation, by taking any action not contemplated
in connection with obtaining a ruling from any Tax Authority) or (ii) the
failure by Luminent or any member of the Luminent Group to take any action that
Luminent is responsible for taking under this Agreement, the Master Separation
and Distribution Agreement or any other agreement related to the Separation or
the IPO (including, without limitation, by failing to make an election or enter
into a transaction specifically required in connection with obtaining a ruling
from any Tax Authority). Each of the parties hereto agrees to act in good faith
and without negligence in connection with the Tax reporting of and all other
aspects related to the Tax consequences of the Separation and any
Deconsolidation and shall be responsible for any Taxes or losses arising from
any failure to act in good faith or any negligent act or omission with respect
thereto.
8.2 TAX REPORTING OF IPO RELATED ITEMS. (a) SEPARATION TAXES. Any Tax Return (or
portion thereof) that includes any Tax Item resulting from the Separation shall
be prepared and filed by MRV.
(b) DECONSOLIDATION TAXES. Any Tax Return (or portion thereof) that
includes any Tax Item relating to any Deconsolidation (to the extent resulting
in Deconsolidation Taxes) shall be prepared and filed by MRV.
8.3 AUDITS RELATING TO SEPARATION. Notwithstanding any other provision of this
Agreement, MRV shall have the exclusive right, in its sole discretion, to
control, contest, and represent the interests of MRV, any MRV Affiliate,
Luminent or any member of the Luminent Group in any Audit with respect to Tax
Items related to the Separation or Deconsolidation (to the extent resulting in
Deconsolidation Taxes), and to resolve, settle or agree to any deficiency, claim
or adjustment proposed, asserted or assessed in connection with or as a result
of any such Audit. MRV's rights shall extend to any matter pertaining to the
management and control of an Audit, including execution of waivers, choice of
forum, scheduling of conferences and the resolution of any Tax Item.
8.4 PROVISION OF INFORMATION AND MUTUAL COOPERATION. In addition to the parties'
respective obligations under Section 6.1 and subject to the provisions of
Section 6.1(b) of this Agreement, MRV and Luminent shall, and shall cause their
respective Affiliates to, cooperate with respect to all aspects of the
Separation including, without limitation, by (1) furnishing to the other in a
timely manner such information, documents and other materials as the other may
reasonably request for purposes of (i) preparing any Tax Return that includes
Tax Items relating to or arising from the Separation and (ii) contesting or
defending any Audit with respect to Tax Items relating to or arising from the
Separation and (2) make its employees available to the other to provide
explanations of documents and materials and such other information as the other
may reasonably request in connection with any of the matters described in
subclauses (i) and (ii) of clause (1) above.
8.5 PRESS RELEASES. Notwithstanding any other provision of this Agreement to the
contrary, MRV shall have the exclusive right, in its sole discretion, to review
and approve all
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press releases and other public communications with respect to the subjects to
which this Agreement relates prior to their release. Luminent shall provide all
such press releases or other public communication to MRV no later than one (1)
day prior to their proposed release date at the place and manner specified in
Section 11.2 of this Agreement.
SECTION 9. DISTRIBUTION
9.1 DISTRIBUTION RELATED ITEMS. (a) RESTRICTIONS ON CERTAIN POST-DISTRIBUTION
ACTIONS. Luminent agrees that it will not take or fail to take, or permit any
member of the Luminent Group to take or fail to take, any action where such
action or failure to act would be inconsistent with any material, information,
covenant or representation in the Ruling Documents or the Ruling.
(b) CERTAIN LUMINENT ACTIONS FOLLOWING DISTRIBUTION. (1) COVENANTS.
Without limiting the generality of Section 9.1(a), Luminent and each member of
the Luminent Group jointly and severally covenant and agree with MRV that during
the Restricted Period:
(i) Luminent and the members of the Luminent Group will continue
to engage in their business, and will continue to maintain a substantial portion
of their respective assets and business operations, as they existed immediately
prior to the Distribution; provided that the foregoing shall not be deemed to
prohibit Luminent and the members of the Luminent Group from entering into or
acquiring other businesses or operations or from disposing of or shutting down
segments of such businesses so long as Luminent and the members of the Luminent
Group continue to engage in such businesses and continue to so maintain such
substantial portion of their assets and business operations;
(ii) Luminent will continue to manage and to own (A) directly,
assets which represent at least 50% of the Gross Asset Value which Luminent
managed and owned directly immediately after the Distribution, and (B) directly
or indirectly, through one or more entities, assets which represent at least 50%
of the Gross Asset Value which Luminent owned indirectly through one or more
entities immediately after the Distribution;
(iii) Except as provided in Section 9.1(b)(3), neither Luminent
nor any member of the Luminent Group nor any of its or their respective
directors, officers or other representatives (acting in their capacity as
directors, officers, or representatives) will undertake, authorize, approve,
recommend, permit, facilitate, or enter into any contract, or consummate any
transaction with respect to:
(a) the issuance of Luminent common stock (including
options, warrants, rights or securities exercisable for, or convertible into,
Luminent common stock) in a single transaction or in a series of related or
unrelated transactions (including the IPO) which represents (treating any such
options, warrants, rights, or securities as exercised or converted) 40% or more
of the outstanding shares of Luminent common stock;
(b) the issuance of any class or series of capital stock or
any other instrument (other than Luminent common stock and options, warrants,
rights or securities exercisable for, or convertible into, Luminent common
stock) that would
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constitute equity for federal tax purposes (such classes or series of capital
stock and other instruments being referred to herein as "Disqualified Luminent
Stock");
(c) the issuance of any options, rights, warrants,
securities or similar arrangements exercisable for, or convertible into,
Disqualified Luminent Stock;
(d) any redemptions, repurchases or other acquisitions of
capital stock or other equity interests in Luminent;
(e) the dissolution, merger, or complete or partial
liquidation of Luminent or any announcement of such action; and/or
(f) any other action that may result in the Distribution
being characterized as a distribution to which section 355(e) applies.
(2) In addition to the other representations, warranties, covenants
and agreements set forth in this Agreement, Luminent and each member of the
Luminent Group will take, or refrain from taking, as the case may be, such
actions as MRV may request to ensure that the Distribution qualifies for the
tax-free treatment stated in the Ruling, including, without limitation, such
actions as MRV determines may be necessary or advisable to preserve the validity
of the Ruling. Without limiting the generality of the foregoing and subject to
the provisions of Section 6.1(b), Luminent and the Luminent Group shall
cooperate with MRV if MRV, in its sole discretion, determines to obtain
additional or supplemental rulings pertaining to whether any actual or proposed
change in facts and circumstances affects the tax-free status of the
Distribution. The MRV Group shall bear responsibility for all expenses
associated with any such additional or supplemental rulings, except that
expenses associated with any additional or supplemental rulings based on a
proposed action or omission by Luminent or a member of the Luminent Group will
be borne solely by Luminent.
(3) Following the Deconsolidation Date and during the Restricted
Period, neither Luminent nor any member of the Luminent Group shall take any
action or engage in conduct otherwise prohibited by Section 9.1(b) unless prior
to such action or conduct, as the case may be, Luminent receives express written
consent from MRV which consent will be granted, if at all, in the sole
discretion of MRV.
(c) LIABILITY OF LUMINENT FOR CERTAIN TRANSACTIONS. (1)
LUMINENT INDEMNITY. If Luminent, or another member (or former member) of the
Luminent Group (collectively, the "Indemnifying Parties") takes or fails to take
any action whether or not prohibited or required by Section 9.1 or violates a
representation or covenant in Section 9.1 or in the Ruling Documents, and the
Distribution fails to or otherwise does not qualify for the tax treatment stated
in the Ruling as a result of such action, failure to take action, or violation,
then the Indemnifying Parties shall jointly and severally defend, indemnify and
hold harmless (the "Indemnified Party") against any liability for such Taxes
which the Indemnified Party may assume or otherwise incur and any and all Taxes
or other liabilities directly or indirectly imposed upon or incurred by the
Indemnified Party as a result of such failure or lack of qualification,
including, without limitation, any liability of the Indemnified Party arising
from Taxes imposed on shareholders of MRV whether or not any shareholder or
shareholders of MRV
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or Luminent, or the Service or other taxing authority, successfully seeks
recourse against the Indemnified Party on account of any such failure.
(2) TENDER OFFER OR PURCHASE OFFER. Notwithstanding anything to
the contrary set forth in this Agreement, if, during the Restricted Period, any
Person or group of Affiliated Persons or Associates acquires Beneficial
Ownership of Luminent common stock (or any other class of outstanding Luminent
stock) or commences a tender or other purchase offer for the capital stock of
Luminent or initiates any other form of transaction to acquire directly or
indirectly Luminent capital stock, upon consummation of which such Person or
Group of Affiliated Persons or Associates would acquire Beneficial Ownership of
Luminent common stock (or any other class of outstanding Luminent stock or
equity) and as a result thereof the Distribution fails to or otherwise does not
qualify for the tax treatment stated in the Ruling then the Indemnifying Parties
shall defend, indemnify and hold harmless the Indemnified Party against any
liability for Taxes which the Indemnified Party may assume or otherwise incur
and any and all Taxes or other liabilities directly or indirectly imposed upon
or incurred by any Indemnified Party and/or its shareholders as a result of such
failure.
(3) EFFECT OF EXPRESS WRITTEN CONSENT OF MRV. The Indemnified
Party shall be defended, indemnified and held harmless under Section 9.1(c)(1)
without regard to the fact that the Indemnifying Party may have received the
express written consent of MRV as contemplated by Section 9.1. The Indemnified
Party shall be defended, indemnified and held harmless under Section 9.1(c)(2)
whether or not the acquisition of Beneficial Ownership results from a
transaction that is not prohibited under Section 9.1.
(4) AMOUNT OF INDEMNITY. The amount indemnified against under
Sections 9.1(c)(1)-(3) ("Indemnified Liability") for a Tax based on or
determined with reference to income shall be deemed to be the sum of (x) for
each applicable taxing jurisdiction, an amount determined by multiplying (i) the
taxing jurisdiction's highest marginal corporate income tax rate for the taxable
period in which the Distribution occurs, times (ii) the gain or income of the
Indemnified Party which is subject to such Tax, plus (y) an amount determined by
multiplying (i) an assumed marginal income tax rate of 45%, times (ii) the total
amount of gain or income asserted as allocable to or imposed on the shareholders
of MRV and/or Luminent by the Service or any other Tax Authority. In the case of
other Indemnified Liabilities, the amount of the Indemnified Liability shall be
equal to the amount so owed. In addition, the amount of any Indemnified
Liability shall be increased by any interest, costs, legal and professional
fees, additions, expenses and penalties incurred by the Indemnified Party. All
amounts payable under this Section 9.1(c)(4) shall, to the extent that such
amounts constitute taxable income, be grossed-up, based on the tax rate referred
to in clause (x)(i) of the first sentence of this Section 9.1(c)(4).
(d) LIABILITY FOR BREACH OF REPRESENTATION. Luminent shall,
and shall cause each member of the Luminent Group to, comply with each
representation and statement concerning Luminent and the Luminent Group made in
the Ruling Documents and in the materials submitted to the Service in
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connection with the Ruling Documents, including, without limitation, statements
relating to actions regarding the IPO and the use of IPO proceeds by the
Luminent Group. Luminent has reviewed the materials submitted to the Service in
connection with the Ruling Documents and represents to MRV that these materials,
including without limitation, any statements and representations concerning
Luminent, its business operations, capital structure and/or organization, are
complete and accurate. During the Restricted Period, neither Luminent nor any
member of the Luminent Group shall take any action, refrain from taking any
action or enter into any transaction or series of transactions or agree to take
any action, refrain from taking any action or enter into any transaction or
series of transactions that could jeopardize the tax-free status of the
Distribution, including any action, inaction or transaction that would be
inconsistent with any representation or statement made to the Service in
connection with the Ruling Documents, unless prior thereto Luminent obtains the
express written consent of MRV which consent will be granted, if at all, in the
sole discretion of MRV. Luminent hereby represents and warrants to MRV that
Luminent has no intention to undertake or allow to be undertaken any of the
transactions set forth in Section 9.1(d)(1)(iii), nor does Luminent or any
member of the Luminent Group have any intention to cease to engage in the active
conduct of its trade or business (within the meaning of Section 355(b)(2) of the
Code).
9.2 INFORMATION FOR SHAREHOLDERS. MRV shall provide each shareholder that
receives stock of Luminent pursuant to the Distribution with the information
necessary for such shareholder to comply with the requirements of Section 355 of
the Code and the Treasury regulations thereunder with respect to statements that
such shareholders must file with their United States federal income Tax Returns
demonstrating the applicability of Section 355 of the Code to the Distribution.
9.3 ALLOCATION OF TAX ASSETS. In connection with the Distribution, Tax Assets
shall be allocated among MRV, each MRV Affiliate, Luminent and each Luminent
Affiliate in accordance with applicable law. The parties hereby agree that in
the absence of controlling legal authority, Tax Assets shall be allocated to the
entity that created or generated the Tax Asset.
SECTION 10. STOCK OPTIONS
10.1 STOCK OPTION ADJUSTMENTS. Pursuant to the terms of the Employee Matters
Agreement, concurrently with the Distribution MRV will adjust certain options to
acquire its stock (the "MRV Common Stock Options") and Controlled will grant
options to acquire its stock (the "Luminent Common Stock Options") to employees
of both MRV and Luminent as follows:
(i) except as described in Subsection (v) below, the terms,
conditions and/or price of MRV Common Stock Options held by employees of the MRV
Group at the time of the Distribution will be adjusted in a manner that
preserves 80% of the intrinsic value of such options held by MRV employees
immediately prior to the Distribution;
(ii) the terms conditions and/or price of the of the MRV Common
Stock Options of employees of the Luminent Group at the time of the Distribution
will be adjusted in a manner that preserves 20% of the intrinsic value of such
options held by MRV employees immediately prior to the Distribution;
(iii) except as described in Subsection (v) below, Luminent shall
grant to employees of the MRV Group who hold MRV Common Stock Options a number
of options to
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purchase Luminent Common Stock that will replace 20% of the intrinsic value of
the MRV Common Stock Options held by such employees immediately prior to the
Distribution; and
(iv) Luminent shall grant to employees of the Luminent Group who
hold MRV Common Stock Options a number of options to purchase Luminent Common
Stock that will replace 80% of the intrinsic value of the MRV Common Stock
Options held by such employees immediately prior to the Distribution; and
(v) MRV Common Stock Options granted after September 8, 2000 and
MRV Common Stock Options held by persons other than employees of the Luminent
Tax Group at the time of the Distribution will remain MRV Common Stock Options.
10.2 TAX DEDUCTIONS. Notwithstanding anything to the contrary in this Agreement,
unless the IRS issues a contrary private letter ruling to MRV or Luminent, or
MRV and Luminent otherwise agree in writing, (i) the MRV Group (and not the
Luminent Group) shall claim the post-Distribution Date Tax deductions in respect
of MRV Common Stock Options exercised by optionees who are either MRV employees
or Luminent employees at the date of exercise (the "MRV Option Deductions") and
(ii) the Luminent Group (and not the MRV Group) shall claim any
post-Distribution Date Tax deductions in respect of all Luminent Common Stock
Options (as that term is defined in the Employee Matters Agreement) exercised by
optionees who are either MRV employees or Luminent employees or former employees
of Luminent at the date of exercise (the "Luminent Option Deductions").
10.3 REPORTING AND INDEMNIFICATION. With respect to the MRV Option Deductions
and the Luminent Option Deductions, (i) the MRV Group shall be entitled to the
MRV Option Deductions and the Luminent Group shall be entitled to the Luminent
Option Deductions, (ii) the Tax Returns of the MRV Group and the Luminent Group
shall reflect the entitlement of MRV to the MRV Option Deductions and the
entitlement of Luminent to the Luminent Option Deductions, (iii) to the extent
any MRV Option Deductions are disallowed to MRV because a Taxing Authority
determines that the Luminent Group should have claimed the deductions, the
Luminent Group shall claim such Tax deductions (by an amended Tax Return or
otherwise) and shall pay to MRV the amount of any Tax refund or credit arising
in respect of such Tax deduction within ten days after such Tax refund or credit
is Actually Realized by the Luminent Group, (iv) to the extent any Luminent
Option Deductions are disallowed to Luminent because a Taxing Authority
determines that the MRV Group should have claimed the deductions, the MRV Group
shall claim such Tax deductions (by an amended Tax Return or otherwise) and
shall pay to Luminent the amount of any Tax refund or credit arising in respect
of such Tax deduction within ten days after such Tax refund or credit is
Actually Realized by the MRV Group.
10.4 NOTICES, WITHHOLDING. (a) MRV shall promptly notify Luminent of any
post-Distribution Date event giving rise to income to any Luminent Group
employees and former employees in connection with the MRV Common Stock Options
and, if required by law, Luminent shall withhold applicable Taxes and satisfy
applicable Tax reporting obligations in connection therewith. MRV shall within
ten days of demand thereof reimburse Luminent for all reasonable out-of-pocket
expenses incurred in connection with the MRV Common Stock Options, including
with respect to incremental Tax reporting obligations and any incremental
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employment Tax obligations; provided that Luminent shall use reasonable efforts
to collect any such amounts required to be paid by Luminent Group employees and
former employees from such Luminent Group employees and former employees.
(b) Luminent shall promptly notify MRV of any post-Distribution Date
event giving rise to income to any non-Luminent Group Employees and former
employees in connection with the MRV Common Stock Options and/or Luminent Common
Stock Options and, if required by law, MRV shall withhold applicable Taxes and
satisfy applicable Tax reporting obligations in connection therewith. MRV shall
within ten days of demand thereof reimburse Luminent for all reasonable
out-of-pocket expenses incurred in connection with the MRV Common Stock Options
and/or Luminent Common Stock Options, including with respect to incremental Tax
reporting obligations and any incremental employment Tax obligations; provided
that MRV shall use reasonable efforts to collect any such amounts required to be
paid by non-Luminent Group Employees and Former Employees from such non-Luminent
Group Employees and Former Employees.
SECTION 11. MISCELLANEOUS
11.1 EFFECTIVENESS. This Agreement shall become effective on the Separation
Date.
11.2 NOTICES. All notices, requests, demands and other communications under this
Agreement shall be in writing and, unless otherwise provided herein, shall be
deemed to have been duly given (i) on the date of service if served personally
on the party to whom notice is given, (ii) on the day of transmission if sent
via facsimile transmission to the facsimile number given below; provided,
telephonic confirmation of receipt is obtained promptly after completion of
transmission, (iii) on the business day after delivery to an overnight courier
service or the Express mail service maintained by the United States Postal
Service; provided, receipt of delivery has been confirmed, or (iv) on the fifth
day after mailing; provided, receipt of delivery is confirmed, if mailed to the
party to whom notice is to be given, by first class mail, registered or
certified, postage prepaid, properly addressed and return-receipt requested, to
the party as follows:
If to MRV or any MRV Affiliate, to:
MRV Communications, Inc.
-------------------------
-------------------------
Facsimile:
---------------
Attention:
---------------
If to Luminent or any Luminent Affiliate to:
Luminent, Inc.
-------------------------
-------------------------
Facsimile:
---------------
Attention:
---------------
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Any party may change its address or fax number by giving the other party written
notice of its new address or fax number in the manner set forth above.
11.3 CHANGES IN LAW. Any reference to a provision of the Code or a law of
another jurisdiction shall include a reference to any applicable successor
provision or law.
11.4 SUCCESSORS AND ASSIGNS. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by either
party without the prior written consent of the other party.
11.5 AUTHORIZATION, ETC. Each of the parties hereto hereby represents and
warrants that it has the power and authority to execute, deliver and perform
this Agreement, that this Agreement has been duly authorized by all necessary
corporate action on the part of such party, that this Agreement constitutes a
legal, valid and binding obligation of each such party and that the execution,
delivery and performance of this Agreement by such party does not contravene or
conflict with any provision of law or of its charter or bylaws or any agreement,
instrument or order binding on such party.
11.6 COMPLETE AGREEMENT. This Agreement shall constitute the entire agreement
between MRV or any MRV Affiliate and Luminent or any Luminent Affiliate with
respect to the subject matter hereof and shall supersede all previous
negotiations, commitments and writings with respect to such subject matter.
Unless the context indicates otherwise, any reference to Luminent in this
Agreement shall refer to Luminent and the Luminent Affiliates and any reference
to MRV in this Agreement shall refer to MRV and the MRV Affiliates.
11.7 INTERPRETATION. The Section headings contained in this Agreement are solely
for the purpose of reference, are not part of the agreement of the parties and
shall not in any way affect the meaning or interpretation of this Agreement.
Whenever any words are used herein in the masculine gender, they shall be
construed as though they were also used in the feminine gender in all cases
where they would so apply.
11.8 GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of California (regardless of
the laws that might otherwise govern under applicable principles of conflicts
law) as to all matters, including, without limitation, matters of validity,
construction, effect, performance and remedies.
11.9 COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
11.10 LEGAL ENFORCEABILITY. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
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11.11 NO THIRD PARTY BENEFICIARIES. This Agreement is solely for the benefit of
MRV, the MRV Affiliates, Luminent and the Luminent Affiliates, and is not
intended to confer upon any other person any rights or remedies hereunder.
11.12 JURISDICTION; FORUM. (a) By the execution and delivery of this Agreement,
MRV and Luminent submit and agree to cause the MRV Affiliates and Luminent
Affiliates, respectively, to submit to the personal jurisdiction of any state or
federal court in the State of California in any suit or proceeding arising out
of or relating to this Agreement.
(b) To the extent that MRV, Luminent, any MRV Affiliate or any
Luminent Affiliate has or hereafter may acquire any immunity from jurisdiction
of any California court or from any legal process (whether through service or
notice, attachment prior to judgment, attachment in aid of execution, execution
or otherwise) with respect to itself or its property, MRV or Luminent, as the
case may be, hereby irrevocably waives, and agrees to cause the MRV Affiliates
and the Luminent Affiliates, respectively, to waive such immunity in respect of
its obligations with respect to this Agreement.
(c) The parties hereto agree that an appropriate and convenient,
non-exclusive forum for any disputes between any of the parties hereto or the
MRV Affiliates and the Luminent Affiliates arising out of this Agreement shall
be in any state or federal court in the State of California.
11.13 AMENDMENT AND MODIFICATION. This Agreement may be amended, modified or
supplemented only by written agreement of the parties.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by a duly authorized officer as of the date first
above written.
MRV CORPORATION
on behalf of itself and its affiliates
By
--------------------------------------------
Name:
Title:
By
--------------------------------------------
Name:
Title:
LUMINENT, INC.
on behalf of itself and its affiliates
By
--------------------------------------------
Name:
Title:
By
--------------------------------------------
Name:
Title:
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