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EXHIBIT 10.33
EXECUTION COPY
DATED FEBRUARY 21, 2000
BY AND AMONG
MRV COMMUNICATIONS, INC.
AND
FIBER OPTIC COMMUNICATIONS, INC.
AND
SHAREHOLDERS OF FIBER OPTIC COMMUNICATIONS, INC.
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STOCK PURCHASE AGREEMENT
Relating to the sale and purchase of up to one hundred percent (100%)
of the Ordinary Shares in the capital of
FIBER OPTIC COMMUNICATIONS, INC.
and the sale and purchase of two million four hundred thousand of Ordinary
Shares in the capital of
MRV COMMUNICATIONS, INC.
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XXXXX & XXXXXXXX
15th Floor, Xxxx Xxx Xxxxxx
000 Xxx Xxx Xxxxx Xxxx
Xxxxxx, Xxxxxx
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TABLE OF CONTENTS
SECTION PAGE
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1. Definitions 2
2. The Transaction 2
3. The Closing 4
4. Deliveries at the Closing 5
5. Representations and Warranties of FOCI and Selling Shareholders 5
6. Representations and Warranties of MRV 17
7. Pre-Closing Covenants 18
8. Conditions Precedent to Closing 22
9. Post Closing Covenants 24
10. Indemnification and Escrow 24
11. Termination
12. Transfer Restriction 27
13. Miscellaneous 28
SCHEDULES
1. List of Signing Shareholders and Shareholding
2. List of Subsidiaries of FOCI
3. List of Equity Interests hold by FOCI and its Subsidiaries
4. Financial Statements of FOCI and its Subsidiaries
5. List of Warehouses
6. List of Liabilities
7. List of Material Changes
8. List of Real Properties
9. List of Tangible Personal Property
10. List of Intellectual Properties
11. List of License of any Intellectual Properties
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12. List of Contracts
13. List of Permits
14. List of Non-Renewable Permit
15. List of Encumbrances
16. List of Litigation
17. List of Employee Benefits
18 List of Unemployment Compensation
19. List of Distributors
20. List of Suppliers
21. List of Related Party Transaction
22. List of Directors; Officers; Banks and Powers of Attorney
23. List of Insurance
24. List of Principal Employees
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EXHIBITS
A. Form of Power of Attorney to be issued to Attorneys-in-Fact
B. Form of Power of Attorney to be issued to Closing Agent
C. Form of FOCI's Bring-Down Certificate
D. Form of MRV's Bring-Down Certificate
E. Form of Employment Agreement
F. Form of Escrow Agreement
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered into as of this 21st
day of February, 2000 by and among Fiber Optic Communications, Inc., a
corporation organized and existing under the laws of the Republic of China
("FOCI"), MRV Communications, Inc., a corporation organized and existing under
the laws of Delaware, U.S.A.("MRV"), and each person listed in the schedule of
FOCI shareholders attached hereto as Schedule 1 (individually, a "Signing
Shareholder" and collectively "Signing Shareholders"), represented by their
attorneys-in-fact, Xxxxxx Xx-Xxxxx Xxxx and Xxxxx Song-Xxxx Xxx
("Attorneys-in-Fact") (as evidenced by a Power of Attorney attached hereto as
Exhibit A). MRV, FOCI and Signing Shareholders are referred to herein
individually as the "Party" and collectively as the "Parties".
WHEREAS, Signing Shareholders collectively own sixty one point
eight-seven-nine percent (61.879%) of the issued and outstanding shares of the
capital stock of FOCI ("FOCI Shares"), each of them in the respective amounts
and percentages set forth on Schedule 1;
WHEREAS, MRV is authorized to issue up to two million and four hundred
thousand (2,400,000) new common shares ("MRV Shares") prior to the sale and
transfer of FOCI Shares to MRV contemplated by this Agreement;
WHEREAS, the Parties acknowledge that, once the transactions
contemplated in this Agreement have been consummated, the business of FOCI might
be merged into a newly formed subsidiary wholly owned by MRV ("MRV Subsidiary")
which will also incorporate some of the MRV's existing optical components
business. The ten percent (10%) ownership of MRV shareholding in MRV Subsidiary
is established as equivalent to One Million (1,000,000) shares of MRV common
stock.
WHEREAS, subject to the terms and conditions of this Agreement, (i) MRV
desires to by itself and/or its Subsidiaries or Affiliates purchase up to one
hundred percent (100%) but no less than seventy five percent (75%) of FOCI
Shares from Signing Shareholders and other FOCI shareholders (Signing
Shareholders and other FOCI shareholders selling their FOCI Shares to MRV
(and/or its Subsidiaries/Affiliates) collectively "Selling Shareholders"), and
Signing Shareholders desire to, and will use their best efforts to cause other
Selling Shareholders to sell and transfer their FOCI Shares to MRV (and/or its
Subsidiaries/Affiliates) in return for the consideration set forth herein; and
(ii) Signing Shareholders desire to and will cause other Selling Shareholders to
aggregately purchase up to two million and four hundred thousand (2,400,000) MRV
Shares from MRV, and MRV desires to sell the MRV Shares up to the same amount to
Selling Shareholders in return for the consideration set forth herein.
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WHEREAS, Singing Shareholders and FOCI will use their best efforts to
obtain the consent of other Selling Shareholders to be a Party of this Agreement
and to be bound by the terms and conditions herein.
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows:
1. DEFINITIONS
1.1 Generally. As used in this Agreement, capitalized terms not
otherwise defined shall have the meanings specified in the text hereof or on
Annex 1 hereto (which is incorporated herein by reference), which meanings shall
be applicable to both the singular and plural forms of the term defined.
2. THE TRANSACTION
2.1 At the Closing (as hereinafter defined), upon satisfaction of
the terms and conditions set forth herein:
2.1.1 Purchase and Sale of FOCI Shares
(a) Selling Shareholders shall sell, transfer,
assign and deliver to MRV (and/or its
Subsidiaries/Affiliates) at the Closing (as
hereinafter defined), and MRV (and/or its
Subsidiaries/Affiliates) agrees to purchase and
acquire from Selling Shareholders and pay
therefor at the Closing, all of their respective
FOCI Shares, free and clear of any and all
Encumbrances, consisting of up to one hundred
percent (100%) of the total number of issued and
outstanding FOCI Shares as of the Closing Date,
at and for an aggregate purchase price of Two
Hundred Sixty Three Million Six Hundred Thousand
and Zero Cents United States Dollars (US$
263,600,000.00) for purchasing one hundred
percent (100%) FOCI Shares (equaling US$Three
Dollars & Eighty Two Point One One Cents
(US$3.8211) per share). The foregoing aggregate
purchase price (the "MRV's Payment") shall be
paid by MRV (and/or its subsidiaries/Affiliates)
at the Closing by wire transfer to a single bank
account in Taiwan designated by Selling
Shareholders to MRV (and/or its
subsidiaries/Affiliates) in writing at least
seven (7) Business Days prior to the Closing
(the "Taiwan Account"). Such Taiwan Account
shall be agreed by MRV. The MRV's Payment shall
be divisible among Selling Shareholders pro rata
in accordance with their percentage
shareholdings in FOCI; PROVIDED, HOWEVER, that
the MRV's Payment shall not be released from the
Taiwan Account to Selling Shareholders until the
payment due MRV for the MRV Shares being
purchased by Selling Shareholders (as per
Section 2.1.2 below) shall be fully wired by
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Selling Shareholders via Closing Agent (as
defined and discussed below) on their behalf to
an account designated by MRV to Selling
Shareholders in writing at least seven (7)
Business Days prior to the Closing (the "MRV
Account"). Furthermore, Closing Agent shall not
release the balance of MRV's Payment to
Attorneys-in-Fact for and on behalf of Selling
Shareholders until he pays from such funds (i)
the 0.3% share transfer tax imposed by Taiwan on
the sale of FOCI Shares by Selling Shareholders
("The Taiwan Stock Transfer Tax"); (ii) whatever
costs and fees charged relating to the Taiwan
Account for the wire transfer; and (iii) the
Escrow Fees as described in Section 10.2.3 (c)
below and in the Escrow Agreement (above (i),
(ii), and (iii) collectively referred to as
"Sellers' Costs").
(b) In the event that less than one hundred percent
(100%) but not less seventy five percent (75%)
of FOCI Shares are available for sale, the MRV's
Payment shall be adjusted down by the same
percentage as those shares not available for
sale are as a percentage of the total shares of
outstanding shares on the date of execution of
this Agreement. If less than seventy five
percent (75%) of FOCI Shares are available for
sale to MRV, MRV shall not be obligated to
complete the transactions contemplated in this
Agreement.
2.1.2 Purchase and Sale of MRV Shares
(a) MRV shall issue and sell to Selling
Shareholders, and Selling Shareholders shall
purchase from MRV pro rata in accordance with
their percentage shareholdings in FOCI, the
MRV's Shares, free and clear of any and all
Encumbrances, at and for an aggregate purchase
price of US$ Two Hundred Thirteen Million Six
Hundred Thousand and Zero Cents (US$
213,600,000.00) (equaling US$ eighty nine
(US$89) per share). The foregoing aggregate
purchase price (the "Selling Shareholders'
Payment") shall be paid by Selling Shareholders
via Closing Agent at the Closing by wire
transfer to the MRV Account. The wire transfer
shall be effected immediately upon receipt of
each installment of the MRV's Payment in the
Taiwan Account. In order to secure and assure
the payment to MRV of the Selling Shareholders'
Payment, which shall be made using a portion of
the funds first wired by MRV to the Taiwan
Account, at least five (5) Business Days prior
to the Closing, Selling Shareholders (or
Attorney(s)-in-Fact or FOCI in whose name the
Taiwan Account shall be registered) shall give
the Taiwan Account passbook, chops and a
power-of-attorney in the form attached as
Exhibit B (Power of Attorney-Form B) to the law
firm of Xxxxx & XxXxxxxx, Taipei Office as the
Closing Agent of Selling Shareholders ("Closing
Agent") granting said Closing Agent the
exclusive right to give instructions to the bank
with respect to the Taiwan Account.
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(b) In the event that less than one hundred percent
(100%) but not less than seventy five (75%) of
FOCI Shares are available for sale, the number
of MRV Shares to be sold to Selling Shareholders
and the Selling Shareholders' Payment shall be
adjusted down by the same percentage as those
FOCI Shares not available for sale are as a
percentage of the total FOCI Shares of
outstanding on the date of execution of this
Agreement.
2.1.3 In each of the above transactions, the seller shall be
liable to pay any applicable taxes or duties on the
issuance or sale of its shares of stock to other party.
Thus, Selling Shareholders shall be liable for the
payment of the Taiwan Stock Transfer Tax, which shall be
deducted and paid from the Taiwan Account, as discussed
above. MRV shall be liable for the payment of the taxes
or duties (if any) on the issuance and sales of the MRV
Shares to Selling Shareholders, which shall be paid by
MRV within the period of time required by the laws of
the State of Delaware.
2.2 In order to prevent any doubts, the balance of MRV's Payment
payable to Selling Shareholders who owns one hundred percent
(100%) of FOCI Shares after their paying of the purchase price
of the MRV's Shares will amount to US$ fifty million (US$
50,000,000) ("Balance MRV's Payment"). However, such Balance
MRV's Payment shall be subject to Sellers' Costs and foreign
exchange impacts and shall be pro rata adjusted down in the
event that less than one hundred percent (100%) of FOCI Shares
are available for sale to MRV. Selling Shareholders understand
and agree to bear any risk or loss resulted from the daily
exchange rates and the difference of the rates between buying
and selling United States dollars.
2.3 Notwithstanding the transaction mechanism described in Sections
2.1.1 and 2.1.2, MRV shall have the option to carry out a direct
shares swap if MRV's verification with the Taiwan authorities
reveals that such direct shares swap is feasible prior to the
Closing.
2.4 The Parties agree that upon the successful completion of
transfer of Balance of MRV's Payment to Attorneys-in-Fact in
accordance with the provisions of this Agreement, the Closing
Agent will thereupon be deemed to have been released from any
and all obligation arising hereunder or from the Agreement. The
Parties further agree any of them will not hold the Closing
Agent liable or responsible for any act it may do or omit to do
in the exercise of reasonable care, as prudent administrator, in
good faith, and in compliance with this Agreement. The Parties
and Closing Agent agree that Closing Agent will keep the Parties
informed of the status and the progress of the Closing matters
handled by the Closing Agent.
2.5 Selling Shareholders agree that, upon the occurrence of any of
the following events, the Escrowed Shares as defined in 10.2.3
hereof shall be exchanged
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for ten percent (10%) of MRV's shareholding in MRV Subsidiary as
defined in the Escrow Agreement ("Exchanged Shares") within two
years after the Closing ("Escrow Period"):
(i) MRV Subsidiary conducts an initial public offering on
NASDAQ or any other stock exchange or over-the-counter
market in the United States;
(ii) A sale of one hundred percent (100%) of the shares of
MRV Subsidiary to any third party buyer other than an
affiliate to MRV ("Third Party Buyer").
Upon the occurrence of the condition (ii) mentioned above,
Selling Shareholders agree to authorize Escrow Agent to exchange
their MRV Shares for ten percent (10%) of the MRV's shareholding
in MRV's Subsidiary before the expiration of two-year escrow
period.
3. THE CLOSING
3.1 The closing of the transactions contemplated by this Agreement
(the "Closing") shall take place at the office of Xxxxx &
XxXxxxxx, Taipei office and be held over a five (5) day or
longer period (given the necessity of effecting international
wire transfers and considering the time differences involved),
commencing on the later to occur of (a) March 27, 2000, and (b)
five (5) Business Days after all conditions to the closing of
the transactions contemplated by this Agreement have been
satisfied or waived (the fourth or the last day of Closing being
the "Closing Date"), but in any case not later than April 30,
2000("Target Day") (unless the Parties shall agree upon a
different date or location).
4. DELIVERIES AT THE CLOSING
4.1 Deliveries by Selling Shareholders
At the Closing, the Selling Shareholders will deliver or cause
to be delivered to MRV:
(i) stock certificates evidencing FOCI Shares, and duly executed
stock transfer documentation transferring thereof to MRV
(including its nominees) and/or its Subsidiaries/Affiliates;
(ii) Selling Shareholders' Payment, (iii) FOCI's Bring-Down
Certificate (as defined and discussed below and substantially in
the form attached as Exhibit C); (iv) written consents and the
powers of attorney from the other Selling Shareholders as
described in Section 7.10 and (iv) such other instruments,
certificates or documents as MRV may reasonably request.
4.2 Deliveries by MRV
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At the Closing Date, MRV will deliver or cause to be delivered
to Selling Shareholders (i) stock certificates evidencing MRV
Shares; (ii) MRV's Payment; and (iii) MRV's Bring-Down
Certificate (as defined and discussed below and substantially in
the form attached as Exhibit D)
5. REPRESENTATIONS AND WARRANTIES OF FOCI AND SELLING SHAREHOLDERS
FOCI and Signing Shareholders hereby and will cause other Selling Shareholders,
jointly and severally, represent, warrant and covenant to MRV as follows at the
date hereof and again as of the Closing Date as follows:
5.1 Power, Authority and Ownership
5.1.1 Selling Shareholders have an absolute and unrestricted right,
power and authority to execute and deliver this Agreement and
the Powers of Attorney and to perform their obligations
hereunder with respect to their respective FOCI Shares. The
Attorneys-in-Fact have been duly authorized by each of the
Signing Shareholders and shall obtain the authorization from the
other Selling Shareholders before Closing to execute, deliver
and perform this Agreement and the transactions contemplated
herein for and on behalf of Selling Shareholders by valid Powers
of Attorney duly executed by Selling Shareholders. This
Agreement has been duly executed and delivered by the
Attorneys-in-Fact for and on behalf of Selling Shareholders and,
assuming due authorization, execution and delivery by MRV and
FOCI, constitutes the legal, valid and binding obligation of
Selling Shareholders enforceable against Selling Shareholders in
accordance with its terms.
5.1.2 Selling Shareholders own their respective FOCI Shares of record
and beneficially, free and clear of any Encumbrances or
restrictions. [Provided that certain FOCI Shares will be
immediately eliminated from such Encumbrances within twenty days
after the execution of this Agreement.] Selling Shareholders
have good title to their respective Shares and at the Closing,
Selling Shareholders shall deliver to MRV good title to their
respective Shares free and clear of all Encumbrances, security
interests, restrictions, and all other claims, rights and
interests of third parties.
5.1.3 FOCI has full corporate power and authority, including all
necessary approvals of its directors and shareholders, to
execute and deliver this Agreement and to perform its
obligations hereunder and to consummate the transactions
contemplated hereby.
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5.2 Organization and Capitalization
5.2.1 Each of FOCI and its Subsidiaries as set forth on
Schedule 2 is a corporation duly organized, validly
existing, and in good standing under the laws of their
respective jurisdictions of their incorporation and has
full corporate power and authority to conduct business
and is in good standing under the laws of each
jurisdiction where such qualification is required. Each
of FOCI and its Subsidiaries has full corporate power
and authority and all material licenses, permits, and
authorizations necessary to carry on the business in
which it is now being engaged and to own and use the
properties owned and used by it. Except as set forth in
Schedule 3 or in the Financial Statements, neither FOCI
nor its Subsidiaries hold any shares of the capital
stock or other equity interests of or investment in any
other Person (other than bank accounts). FOCI has
delivered to MRV correct and complete copies of the
charter and bylaws of FOCI and each of its Subsidiaries
(as amended to date). FOCI and each of its Subsidiaries
is not in default under or in violation of any provision
of its charter or bylaws.
5.2.2 The authorized capital stock of FOCI consists of one
hundred and ten million (110,000,000) shares of common
stock with a par value of NT$10 per share, of which
sixty-eight million nine hundred eighty four thousand
and four hundred (68,984,400) shares are issued and
outstanding. All issued shares have been duly
authorized, validly issued and are fully paid and
non-assessable, with no preemptive rights. There are no
outstanding obligations, options, warrants, preemptive
rights or other agreements or commitments to which FOCI
or any of the Selling Shareholders is a party, or by
which FOCI or any of the Selling Shareholders is
otherwise bound, providing for the issuance of any
additional shares or for the repurchase of shares of
FOCI's capital stock. No shares of the capital stock of
FOCI are reserved for future issuance provided that only
sixty-eight million nine hundred eighty four thousand
(68,984,000) shares out of one hundred and ten million
(110,000,000) shares are outstanding and issued.
5.2.3 The Signing Shareholders listed in Schedule 1 own
sixty-one point eight-seven-nine percent (61.879%) of
the issued and outstanding shares of capital stock of
FOCI. All of the information set out in Schedule 1 is
true, correct and complete.
5.3 Financial Condition
5.3.1 FOCI has delivered or will deliver to MRV consolidated
financial statements of FOCI and its Subsidiaries, which
are collectively attached hereto as Schedule 4
consisting of (i) audited balance sheets and statements
of income for the fiscal years ended
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December, 1997 through 1999, (the "Financial
Statements", the latest audited balance sheet being the
"Audited" Balance Sheet"), and (ii) unaudited balance
sheet and statements of income for the fiscal period
ended February 29, 2000 (the "Latest Financial
Statements", said balance sheet being the "Latest
Balance Sheet"). The Financial Statements and the Latest
Financial Statements (including the notes thereto) have
been prepared in accordance with US GAAP applied on a
consistent basis throughout the periods covered thereby
and shall bear an unqualified opinion from the auditors.
Except as explained in the notes thereto, the Audited
Financial Statements and Latest Financial Statements
fairly present the financial condition, assets,
liabilities, equity and results of operations of FOCI
and each of its Subsidiaries as of their respective
dates and periods, are and will be correct and complete
in all material respects, and have been and will be
prepared in accordance with generally accepted
accounting principles applied on a consistent basis
throughout the periods involved.
FOCI has obtained or will obtain a written consent by
the Closing from the auditor ("Auditor Consent") to
include their opinion on the Financial Statements in
order to comply with MRV's necessary filing with the
Securities Exchange Commission (the "SEC") of the United
States.
5.3.2 The inventories of each of FOCI and its Subsidiaries are
not obsolete or damaged, are fit for their particular
use, and are not defective, such that they are of a
quantity and quality usable or saleable in the ordinary
course of the business of FOCI and its Subsidiaries for
the amounts reflected on the Latest Balance Sheet,
exclusive of any reserve allocable thereto, subject only
to changes in the Ordinary Course of Business. All
inventories reflected on the Latest Financial Statements
are stated at not more than the lower of cost or fair
market value thereof, with adjustments for obsolete,
damaged or otherwise not readily marketable items. Set
forth on Schedule 5 hereto is a complete list of the
addresses of all warehouses or other facilities in which
inventories of each of FOCI and its Subsidiaries are
located as of the date hereof.
5.3.3 The accounts receivable of each of FOCI and its
Subsidiaries are valid receivables, collectible to the
extent of the excess thereof over any reserves set forth
on the Latest Balance Sheet, and are subject to no
defenses, counterclaims or set-offs.
5.4 Absence of Undisclosed Liabilities. Each of FOCI and its
Subsidiaries has no liabilities or obligations (whether
absolute, accrued, contingent or otherwise and whether due or to
become due, including liabilities for taxes and interest and
penalties thereon) except (i) the liabilities set forth on the
Latest Balance Sheet and (ii) the liabilities and obligations
set forth in Schedule 6 hereto.
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5.5 Tax Returns
5.5.1 Each of FOCI and its Subsidiaries has filed with the
appropriate governmental agencies all required tax
returns, is not in default with respect to any such
filing, is not delinquent in payment of any taxes shown
to be due on any such tax return or claimed to be due by
any taxing authority, and has paid or made on the Latest
Balance Sheet adequate provision or reserves for all
taxes (including but not limited to, all income,
withholding, corporate, excise, and value added taxes,
real and personal property taxes, occupation taxes,
social security taxes, and interest and penalties)
payable by it, or attributable to all periods ending on
or prior to the date of the Latest Balance Sheet. Each
of FOCI and its Subsidiaries has not given any waiver or
extension of any period of limitation governing the time
of assessment or collection of any tax. No deficiency in
any tax payment is claimed by any tax authority for any
taxable years of FOCI and its Subsidiaries. There are no
tax audits currently pending with respect to FOCI and
its Subsidiaries. To the best knowledge of any Selling
Shareholders and FOCI, there is no basis for assessment
of any deficiency in any income taxes or any other taxes
or governmental charges against each of FOCI and its
Subsidiaries.
5.5.2 Neither FOCI nor its Subsidiaries is a party to, and is
not bound by, any tax indemnification agreement, tax
sharing agreement or tax allocation agreement with any
other person, firm, corporation or other entity, and
neither FOCI nor its Subsidiaries is responsible for any
tax obligation or liability of any such other person,
firm, corporation or other entity.
5.5.3 Neither FOCI nor any of its Subsidiaries has, or has at
any time had, a taxable presence or permanent
establishment in any country other than the Republic of
China or each jurisdiction where it is incorporated,
under the Applicable Laws of such country or under any
Income Tax Treaty between that country and the Republic
of China.
5.6 Absence of Certain Changes. Except as disclosed in Schedule 7
attached hereto, since the date of the Latest Balance Sheet,
there has not been:
(a) any material adverse change in the financial condition,
assets, liabilities, equity, operations, business or
prospects of FOCI and or any of its Subsidiaries;
(b) any obligation or liability incurred by FOCI or any of
its Subsidiaries other than obligations and liabilities
incurred in the Ordinary Course of Business;
(c) any damage, destruction or loss, whether or not covered
by insurance,
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materially or adversely affecting any material asset of
FOCI and its Subsidiaries;
(d) any Encumbrance placed on , or any claim, right or
interest of any third party of any nature whatsoever
asserted against, any material asset of FOCI and its
Subsidiaries;
(e) any purchase or sale or other disposition, or any
agreement or other arrangement for the purchase or sale
or other disposition, of any material asset of FOCI and
its Subsidiaries;
(f) any material change in the compensation or benefits
payable or to become payable by FOCI or its Subsidiaries
to any of its employees or agents or any new bonus
payment or arrangement or employee benefit made to or
with any of them;
(g) any material change with respect to the management or
supervisory personnel of FOCI or any of its
Subsidiaries;
(h) any dividend declared or paid or any other stockholder
payment or distribution with respect to the FOCI Shares
or a purchase or redemption of any of the securities of
FOCI or any of its Subsidiaries or the execution of any
agreement or commitment to do so; or
(i) any other event or condition of any character that may
materially and adversely affect the financial condition
, assets, liabilities, equity, operations, business or
prospects of FOCI or any of its Subsidiaries.
5.7 Real Property. Schedule 8 sets forth a complete list of all real
property owned or leased by either FOCI or its Subsidiaries.
Each of FOCI and its Subsidiaries has valid legal rights to, or
in the case of leased property, has valid leasehold interests,
in all real properties. FOCI or any of its Subsidiaries has
valid and outstanding leasehold interests in all real property
that it leases from others and the improvements situated
thereon, all of which are listed and identified on the Schedule
8 hereto. All such real estate and improvements (including all
buildings, or portions thereof, and all fixtures) are in good
repair and operating condition, normal wear and tear and
required maintenance (which has heretofore been regularly
performed) excepted, are suitable and fit for the purposes for
which they are currently being used, and are sufficient to
conduct the business of FOCI or any of its Subsidiaries as it is
presently conducted. True , correct and complete copies of all
leases, evidence of FOCI interest in the real property, and all
other instruments of title, or those of any of FOCI's
Subsidiaries and FOCI's interest therein, with respect to all
real property, leaseholds or other interests owned or held by
FOCI or any of its Subsidiaries have been delivered to MRV. The
use and occupation of such real property and the improvements
thereon by FOCI or any of its Subsidiaries comply in all
material respects with Applicable Law including zoning
regulations and building codes.
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5.8 Tangible Personal Property. FOCI and any of its Subsidiaries has
good and marketable title to all of the tangible personal
property which it owns, as reflected on the Latest Balance Sheet
and Schedule 9 hereto (except as sold or otherwise disposed of
or acquired in the Ordinary Course of Business or otherwise
consistent with this Agreement). All machinery, equipment,
furniture and fixtures, and computer hardware and software used
by FOCI or any of its Subsidiaries are in good operating
condition and repair, normal wear and tear and required
maintenance (which has heretofore been regularly performed)
excepted, are suitable and fit for the purposes for which they
are currently being used.
5.9 Intellectual Properties. Schedule 10 hereto lists all of the
Intellectual Properties, specifying in each case whether such
Intellectual Properties rights are owned or used under license,
as well as specifying whether FOCI or any of its Subsidiaries
act as licensor of any such Intellectual Properties Rights. All
license agreements and all other instruments relating to
licenses of any Intellectual Property Rights are described in
Schedule 11, and true and complete copies thereof have been
provided to MRV. None of the Intellectual Properties have been
held or stipulated to be invalid in any litigation which has
been concluded and the validity of none of the Intellectual
Properties has been questioned in any litigation currently
pending or, to the best knowledge of any Selling Shareholders
and FOCI, threatened. FOCI and any of its Subsidiaries owns or
possesses the Intellectual Properties necessary to manufacture
and sell its products, and, to the best knowledge of any Selling
Shareholders and/or FOCI, such manufacture and sale does not
infringe any rights of any other Person. FOCI or any of its
Subsidiaries, has not received any notice of conflict thereof
with the asserted rights of any other Person, firm, corporation
or other entity, and FOCI or any of its Subsidiaries has the
right to bring an action for any infringement of any of the
Intellectual Properties.
5.10 Contracts. There is no Contract:
(a) extending for a period of time longer than 12 months;
(b) involving expenditures or receipts by FOCI or any of its
Subsidiaries in excess of US$ 1.0 million
(US$1,000,000);
(c) relating to the borrowing of money or guarantying any
obligation for borrowed money or otherwise, other than
endorsements for collection;
(d) with any insider or any affiliate;
(e) prohibiting or substantially restricting FOCI or any of
its Subsidiaries from freely engaging in business in any
part of the world;
(f) with a sales agent or representative, dealer, or
distributor; or
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(g) any other contract, commitment or lease outside of the
usual and Ordinary Course of Business, except such
Contracts listed in Schedule 12 attached hereto.
5.11 Permits. FOCI and any of its Subsidiaries holds all of the
Permits required by Applicable Law to own any and all of its
assets, and to operate its business as that business is now
conducted. Schedule 13 hereto contains a true and complete list
of all such Permits. Except as specified on Schedule 14, all
Permits are renewable in the Ordinary Course of Business and
will remain in full force and effect following the Closing
pursuant to this Agreement.
5.12 Compliance with Applicable Law and Permits. FOCI and any of its
Subsidiaries are conducting, and has conducted, the business in
compliance with all Applicable Laws and Permits, and has
received no notice that it is in breach of any such Applicable
Law or Permit. FOCI or any of its Subsidiaries have not
processed, stored, disposed, transported, handled, emitted,
discharged, or released any Waste Material, whether on or off
the real estate. Neither of Selling Shareholders has any
knowledge or information or reason to believe that any Waste
Material, tanks, containers, cylinders, drums or cans were
buried on the real estate by FOCI or any of its Subsidiaries or
any other party during or preceding FOCI or any of its
Subsidiaries ownership or leasing of any real estate. FOCI and
any of its Subsidiaries have delivered to MRV copies of all
internal or external environmental audit reports prepared by or
for FOCI or any of its Subsidiaries.
5.13 No Conflict. Neither the entering into nor the delivery of this
Agreement nor the performance of the transactions contemplated
therein by Selling Shareholders and FOCI will result in the
violation of:
(a) any of the provisions of the Articles of Incorporation,
By-Laws and other constitutional documents of FOCI;
(b) any Contract to which FOCI or any Selling Shareholders,
including FOCI, is a party; or
(c) any Applicable Law or Permit.
Except for satisfaction of any conditions specified in
this Agreement, neither the Selling Shareholders nor
FOCI are required to give prior notice to, or obtain any
consent, approval or authorization of, or make any
declaration or filing with, any governmental authority,
or any other person, firm, corporation or other entity
in connection with the execution or delivery of this
Agreement or the consummation of the transactions
contemplated hereby.
5.14 No Encumbrances. Except as set forth in Schedules 15 hereto,
FOCI and each
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of its Subsidiaries have good title to all of its assets which
they owns, free and clear of all Encumbrances or any other
claims, rights or interests of any other Person, firm,
corporation or other entity of any nature whatsoever.
5.15 No Defaults. FOCI and any of its Subsidiaries has performed, or
has taken all actions reasonably necessary to enable it to
perform when due, all material obligations under all Contracts
and Permits, all of which are in full force and effect, and
there has not occurred any material default or other event which
with the lapse of time or giving of notice or both may become a
material default under any such Contract or Permit.
5.16 Litigation. Except as set forth on Schedule 16 hereto, there are
no claims, actions, suits or proceedings pending or, to the best
knowledge of FOCI and each of its Subsidiaries, threatened by or
against FOCI and each of its Subsidiaries or affecting it in any
court or before any governmental or administrative authority.
FOCI or any of its Subsidiaries is subject to no decree,
judgment, order or notice of any kind which enjoins or restrains
it from taking any action of any kind whatsoever.
5.17 Employee and Labor Matters. To the best knowledge of any Selling
Shareholders and FOCI, none of the key employees, and no group
of employees of FOCI or any of its Subsidiaries, plans to
terminate his, her or their employment with FOCI or any of its
Subsidiaries. FOCI and each of its Subsidiaries is not a party
to any collective bargaining or union agreement. FOCI and each
of its Subsidiaries is in compliance in all material respects
with all Applicable Law respecting employment and employment
practices, terms and conditions of employment, and wages and
hours. Since its incorporation, FOCI or any of its Subsidiaries
has experienced no significant union organization attempts and
no material work stoppage due to any labor disagreement with
respect to its business. There is no unfair labor practice
charge or complaint against FOCI or any of its Subsidiaries
pending or, to the best knowledge of any Selling Shareholders
and FOCI, threatened, in any court or before any governmental or
administrative authority. There is no labor strike, request for
representation, slowdown or stoppage actually pending or
threatened against or affecting FOCI or any of its Subsidiaries.
5.18 Employee Benefits.
5.18.1 FOCI and each of its Subsidiaries have no employment,
consulting, agency, commission, retirement, severance
pay, non-competition, profit-sharing, deferred
compensation or pension agreements or plans, or related
practice, whether written or oral, formal or informal,
other than as identified on Schedule 17 hereto (true,
correct and complete copies of which have been delivered
to MRV, including reasonably detailed summaries of any
unwritten plans, arrangements or practices). All
obligations of FOCI and each of its Subsidiaries,
whether arising by operation of law, by contract or by
past custom, for payments by it with respect to
unemployment
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compensation benefits, pension and retirement benefits,
social security benefits, or other benefits for
employees of FOCI and any of its Subsidiaries, including
but not limited to, those set forth on Schedule 19, in
respect of periods prior to the Closing have been paid
in full, or adequate provision therefor has been made in
the Latest Balance Sheet.
5.18.2 Upon termination by FOCI or any of its Subsidiaries of
the employment of any employee, FOCI or any of its
Subsidiaries shall not incur any liability for any
severance or termination pay or other similar payment
except as required by law expressly provided in the
agreements or plans set forth on, or otherwise disclosed
in Schedule 18.
5.18.3 FOCI or any of its Subsidiaries does not maintain,
contribute to or have any liability under any funded or
unfunded, medical, health or life insurance plan or
arrangement for present or future retirees or present or
future terminated employees except group insurance and
as required by the Labor Insurance Act and the National
Health Insurance Act.
5.19 Sufficient Assets. The assets identified in this Agreement or on
the Latest Balance Sheet constitute all of the tangible and
intangible rights and assets necessary for the conduct of, or
used or held by FOCI and each of its Subsidiaries in connection
with, its business and operations as they are presently being
conducted.
5.20 Customers, Distributors and Suppliers. Schedule 19 hereto
contains a true, correct and complete list of all distributors,
representatives and agents of FOCI and any of its Subsidiaries
and a description of the terms of their relationships with FOCI
or with any of its Subsidiaries and a true, correct and complete
list of all other persons to whom FOCI and each of its
Subsidiaries sold goods or services in the twelve months ended
as of the date of this Agreement and by whom FOCI or any of its
Subsidiaries has been paid or who have committed to pay Seller
NT$160,000 or more since the beginning of said period. Schedule
20 contains a true, correct and complete list of all persons who
provided goods or services to FOCI or any of its Subsidiaries in
the twelve months ended as of the date of this Agreement to
which the Selling Shareholder has paid or is committed to pay
NT$160,000 or more since the beginning of said period. The
relations of FOCI and each of its Subsidiaries with the
foregoing persons are good, and there are no disputes between
FOCI or any of its Subsidiaries and any of such persons pending
or, to the best knowledge of any Seller and FOCI or any of its
Subsidiaries , threatened. True, correct and complete copies of
all contracts with all of the foregoing persons have been
delivered to MRV and are in full force and effect in accordance
with their terms, and there are no defaults or allegations or
claims of default thereunder.
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5.21 Related Party Transactions. Except as set forth in Schedule 21
hereto or as contemplated by this Agreement, no Selling
Shareholder and no officer, or director of FOCI or any of its
Subsidiaries has any interest in any of the assets used or held
by FOCI in the conduct of its business or operations or is a
party to any contract with FOCI or any of its Subsidiaries or
affecting the business or operations of FOCI or any of its
Subsidiaries.
5.22 Directors; Officers; Banks; and Powers of Attorney. Schedule 22
hereto is a true and complete list showing: (a) the names of all
of directors and officers of FOCI and each of its Subsidiaries;
(b) the name of each bank in which FOCI and each of its
Subsidiaries has an account or safety deposit box, and the names
of all persons authorized to draw thereon or to have access
thereto; and (c) the names of all persons holding powers of
attorney from FOCI and each of its Subsidiaries together with a
summary statement of the terms thereof.
5.23 Insurance. Schedule 23 hereto sets forth all existing insurance
policies held by FOCI and each of its Subsidiaries relating to
its business. Each such policy is in full force and effect, is
with responsible insurance carriers and is in an amount and
scope customary for persons engaged in businesses and having
assets similar to those of FOCI and each of its Subsidiaries.
All claims arising under such policies and all premiums that are
due and payable thereunder have been paid in full.
5.24 Disclosure. No representation or warranty by the Selling
Shareholders and/or FOCI in this Agreement, and no certificate
or statement furnished or to be furnished to MRV pursuant to
this Agreement or in connection with the transactions
contemplated hereby, contains or shall contain any untrue
statement of material fact, or omits or shall omit to state a
material fact necessary in order to make the statements
contained herein and therein not misleading. There is no fact
known to a Selling Shareholder or FOCI which materially
adversely affects, or in the future may (so far as can now be
reasonably foreseen) materially adversely affect, FOCI or any of
its Subsidiaries, its financial condition its business or its
prospects which has not been set forth in this Agreement or
other information or material provided in writing by FOCI to
MRV.
5.25 Representations and Warranties Regarding Acquisition of MRV
Shares. Each of the Selling Shareholders represents and warrants
to MRV as follows:
5.25.1 Disclosure; Access to Information. Each of the Selling
Shareholders has received or will receive prior to the
Closing all documents, records, books and other
information pertaining to such Selling Shareholder's
investment in MRV that have been requested by such
Selling Shareholder, including the opportunity to ask
questions and receive answers. MRV is subject to the
periodic reporting requirements of the United States
Securities Exchange Act of 1934 (the "Exchange Act"),
and each of the Selling
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Shareholders has reviewed or received copies of any such
reports filed by MRV with the SEC under the Exchange Act
that have been requested by such Selling Shareholder.
5.25.2 Manner of Sale. At no time were any of the Selling
Shareholders presented with or solicited by or through
any leaflet, public promotional meeting, television
advertisement or any other form of general solicitation
or advertising.
5.25.3 Registration or Exemption Requirements. Each of the
Selling Shareholders further acknowledges and
understands that the MRV Shares may not be transferred,
resold or otherwise disposed of in the United States
except in a transaction registered under the United
States Securities Act of 1933 (the "Securities Act") and
any applicable state securities laws, or unless an
exemption from such registration is available.
5.25.4 No Legal, Tax or Investment Advice. Each of the Selling
Shareholders understands that nothing in this Agreement
or any other materials presented to the Selling
Shareholders in connection with the purchase of MRV
Shares constitutes legal, tax or investment advice. The
Selling Shareholders have relied on, and have consulted
with, such legal, tax and investment advisors as they,
in their sole discretion, have deemed necessary or
appropriate in connection with their purchase of the MRV
Shares.
5.25.5 No Registration, Review or Approval. Each Selling
Shareholder acknowledges and understands that the
offering and sale of MRV Shares pursuant to this
Agreement has not been reviewed or approved by the SEC
or by any state or other securities commission,
authority or agency, and is not registered under the
Securities Act or under the securities or "blue sky"
laws, rules or regulations of any state. Each Selling
Shareholder acknowledges, understands and agrees that
the MRV Shares are being offered and sold hereunder
pursuant to an offshore offering exemption to the
registration provisions of the Securities Act pursuant
to Regulation S promulgated under such Act. Each Selling
Shareholder understand that MRV is relying upon the
truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of such
Selling Shareholder set forth herein in order to
determine the applicability of such exemptions and the
suitability of each Selling Shareholder to acquire the
MRV Shares.
5.25.6 Investment Intent. Without limiting its ability to
resell the MRV Shares pursuant to an effective
registration statement, or an exemption from such
registration, each Selling Shareholder is acquiring the
MRV Shares solely for its own account and not with a
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view to the distribution, assignment or resale to
others. Each Selling Shareholder understands and agrees
that it may bear the economic risk of its investment in
the MRV Shares for an indefinite period of time.
5.25.7 Offering Outside the United States. Each Selling
Shareholder is not a "U.S. Person" as defined in
Regulation S (as the same may be amended from time to
time) promulgated under the Securities Act. At the time
the buy order for this transaction was originated, each
Selling Shareholder was outside the United States and no
offer to purchase the MRV Shares was made in the United
States. Each Selling Shareholder agrees not to reoffer
or sell the MRV Shares, or to cause any transferee
permitted hereunder to reoffer or sell the MRV Shares,
within the United States, or for the account or benefit
of a U.S. person, (i) as part of the distribution of the
MRV Shares at any time, or (ii) otherwise, only in a
transaction meeting the requirements of Regulation S
under the Securities Act, including without limitation,
where the offer (i) is not made to a person in the
United States and either (A) at the time the buy order
is originated, the Buyer is outside the United States or
MRV and any person acting on its behalf reasonably
believe that the buyer is outside the United States, or
(B) the transaction is executed in, on or through the
facilities of a designated offshore securities market
and neither the seller nor any person acting on its
behalf knows that the transaction has been pre-arranged
with a buyer in the United States, and (ii) no direct
selling efforts shall be made in the United States by
the buyer, an affiliate or any person acting on their
behalf, or in a transaction registered under the
Securities Act or pursuant to an exemption from such
registration.
5.25.8 Regulation S Offering Transfer Restrictions. The
transaction restrictions in connection with this
offshore offer and sale restrict each Selling
Shareholder from offering and selling to U.S. Persons,
or for the account or benefit of a U.S. Person, for a
period of time (the "Distribution Compliance Period").
The Distribution Compliance Period for the MRV Shares is
one (1) year from the Closing.
5.25.9 Legend. A legend substantially in the following form
will be placed on any certificates or other documents
evidencing the MRV Shares so as to restrict the resale,
pledge, hypothecation or other transfer thereof in
accordance with the provisions hereof and the provisions
of Regulation S promulgated under the Securities Act:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(TOGETHER WITH THE REGULATIONS PROMULGATED THEREUNDER,
THE "SECURITIES ACT"), AND
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MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED
OR HYPOTHECATED WITHIN THE UNITED STATES (AS THAT TERM
IS DEFINED IN REGULATION S PROMULGATED UNDER THE
SECURITIES ACT) OR TO A U.S. PERSON (AS THAT TERM IS
DEFINED IN REGULATION S) IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FILED UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAWS, UNLESS AN EXEMPTION
FROM SUCH REGISTRATION IS AVAILABLE. HEDGING
TRANSACTIONS INVOLVING THESE SECURITIES MAY NOT BE
CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT."
5.25.10 Permitted Offers and Sales. Offers and sales of MRV
Shares prior to the expiration of the Distribution
Compliance Period (or the effective date of the
Registration Statement) may be made (only if otherwise
so permitted by this Agreement) pursuant to the
following conditions:
(a) The purchaser of the MRV Shares, other than a
distributor, certifies that it is not a U.S.
Person and is not acquiring the MRV Shares for
the account or benefit of any U.S. Person or is
a U.S. Person who purchased the MRV Shares in a
transaction that did not require registration
under the Securities Act;
(b) The Purchaser of the MRV Shares agrees to sell
such securities only in accordance with
Regulation S as promulgated under the Securities
Act, pursuant to registration under the
Securities Act, or pursuant to an available
exemption from registration; and agrees not to
engage in hedging transactions with regard to
such MRV Shares unless in compliance with the
Securities Act; and
(c) The MRV Shares contain a legend, substantially
in the form of Section 5.25.9 herein, to the
effect that transfer of the MRV Shares is
prohibited except in accordance with Regulation
S, pursuant to registration under the Securities
Act, or pursuant to an available exemption from
registration; and that hedging transactions
involving those MRV Shares may not be conducted
unless in compliance with the Securities Act.
5.25.11 No Hedging. Selling Shareholders agree not to engage in
hedging transactions with respect to the MRV Shares
prior to the expiration of the Distribution Compliance
Period. For offers and sales of the MRV Shares prior to
the expiration of the Distribution Compliance Period,
such offering materials must state that hedging
transactions involving those securities may not be
conducted unless in compliance with the Securities Act
and Regulation S promulgated thereunder.
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5.26 Brokers' Fees. Selling Shareholders shall be responsible to pay
any fees or commissions to any broker or finder, with respect to
the transactions contemplated by this Agreement for which the
Selling Shareholders could be liable or obligated. MRV and the
Escrow Agent shall not be responsible whatsoever with respect to
such fees or commission.
5.27 FTC Approval. FOCI and Selling Shareholders warrant and
represent that FOCI's revenues and market share ratio do not
reach or exceed the amount on percentage provided in the Fair
Trade law as required to obtain the combination approval from
the Fair Trade Commission (the "FTC Approval") of the Republic
of China in order to complete the transactions contemplated in
this Agreement.
6. REPRESENTATIONS AND WARRANTIES OF MRV
MRV represents and warrants to that the statements contained in this Section 6
are correct and complete as of the date of this Agreement.
6.1 Organization of MRV. MRV is a corporation duly organized,
validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
6.2 Authorization of Transaction. MRV has full authority (including
full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder. This
Agreement constitutes the valid and legally binding obligation
of MRV, enforceable in accordance with its terms and conditions.
MRV need not give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any government or
governmental agency in order to consummate the transactions
contemplated by this Agreement other than the filings required
by the Xxxx-Xxxxx-Xxxxxx Act.
6.3 Brokers' Fees. MRV has no Liability or obligation to pay any
fees or commissions to any broker or finder with respect to the
transactions contemplated by this Agreement for which MRV could
become liable or obligated.
6.4 No Conflicts. Neither the execution and delivery of this
Agreement nor the consummation by MRV of the transactions
contemplated hereby will (i) violate any of the provisions of
the by-law of MRV, (ii) violate any provision of Applicable Law,
rule or regulation which violation would prevent MRV from being
able to consummate the transactions contemplated by this
Agreement, or (iii) conflict with or result in a breach of ,
require consent under, give rise to a right of termination of,
or accelerate the performance required by the terms of any
judgement, court order or consent decree, or any agreement,
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indenture, mortgage or instrument to which MRV is a party or to
which either of its property is subject, or constitute a default
thereunder.
6.5 Capitalization; Validity of Securities. As of the date hereof
and as of the Closing Date, all issued and outstanding ordinary
shares of MRV are and will be duly authorized, validly issued,
fully paid and non-assessable. The MRV Shares when issued and
paid for in accordance with the terms and conditions of this
Agreement, will be validly authorized, legally issued, fully
paid and non-assessable, and the delivery to the Selling
Shareholders pursuant to this Agreement shall vest in them good
and marketable title thereto, free of any Encumbrances, except
for restrictions on transfers set forth herein or imposed by law
and except for any Encumbrance created by the Selling
Shareholders themselves.
6.6 Reporting Company. MRV is a reporting company under Section 12
of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") required to file periodic reports pursuant to
Section 13 or 15 of the Exchange Act and has timely filed all
such periodic reports with the SEC during the past 12 months.
6.7 Approvals. No consent, approval, order, or authorization of, or
registration, qualification, designation, declaration, or filing
with, any governmental authority is required on the part of MRV
in connection with the execution and delivery of this Agreement,
the offer, issuance, sale, and delivery of the MRV Shares, or
the other transactions to be consummated at the Closing, as
contemplated by this Agreement, except such filings as shall
have been made prior to and shall be effective on and as of the
Closing (except for filings required under the Xxxx-Xxxxx-Xxxxxx
Act or the United States securities laws or regulations or the
regulations of the NASDAQ Stock Market or the Applicable Laws).
Based on the representations made by the Selling Shareholders in
Section 5 of this Agreement, the offer and sale of the MRV
Shares to Selling Shareholders will be in compliance with
applicable U.S. Federal and state securities laws.
6.8 Compliance. MRV is, in all material respects, in compliance with
all laws, regulations, and orders applicable to its present
business and has all permits and licenses required thereby where
the failure to so be in compliance or to have such permits or
licenses would be reasonable likely to materially adversely
affect, the business, prospects, condition (financial or
otherwise), affairs, or operations of MRV and its subsidiaries
taken as a whole.
6.9 Disclosure. MRV has received, or will receive prior to the
Closing, all documents, records, books or other information of
FOCI required to be filed with the Securities and Futures
Commission ("SFC") in the ROC in the year of 1999.
7. PRE-CLOSING COVENANTS.
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The Parties agree as follows with respect to the period between the execution of
this Agreement and the Closing:
7.1 General. Each of the Parties will use its best efforts to take
all action and to do all things necessary, proper, or advisable
in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not
waiver, of the closing conditions set forth in Section 8 below).
7.2 Approvals, Notices and Consents. Each of the Parties will shall
use their best efforts to satisfy all Conditions Precedent to
the Closing and will give any necessary notices to third
parties, and will use its best efforts to obtain any necessary
third party consents, that MRV reasonably may request in
connection with the matters referred to in Section 5 above. Each
of the Parties will (and will cause to) give any notices to,
make any filings with, and use its best efforts to obtain any
authorizations, consents, and all necessary Approvals. Without
limiting the generality of the foregoing, Selling Shareholders
shall report the transfer of the FOCI Shares to the Securities
and Futures Commission of the ROC (the "SFC").
7.3 Operation of Business. FOCI and each of its Subsidiaries will
not engage in any practice or take any action outside the
Ordinary Course of Business of or which results in a material
adverse change in the business, financial condition, operations
or results of operations of, except for actions to which MRV has
given its prior consent.
7.4 Preservation of Business. FOCI and each of its Subsidiaries will
keep its business and properties substantially intact, including
its present operations, physical facilities, working conditions,
and relationships with lessors, licensors, suppliers, customers,
and employees.
7.5 Reserved Matters. Between the date hereof and Closing, Selling
Shareholders shall cause the managing team (directors,
supervisors and Principal Employees of FOCI) to procure that
FOCI and each of its Subsidiaries shall not without the prior
consent in writing of MRV:
(a) enter into any transaction or incur any obligation or
liability (absolute or contingent), except for current
liabilities incurred, and contracts and transactions
entered into, in the ordinary course of business;
(b) dispose of or acquire any assets or properties or cancel
any debts or claims, except in each case in the ordinary
course of business;
(c) increase any benefits to employees under pension,
insurance or other employee benefit programs or enter
into any deferred compensation agreement
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with any of its directors, officers or employees except
for increase in compensation for employees and
probationary employees for which FOCI or any of its
Subsidiaries is contractually bound to give;
(d) enter into an agreement to do any of the things
described in Section 5.10;
(e) cease to pay its creditors in the Ordinary Course of
Business;
(f) repay any loan capital in whole or in part (other than
indebtedness to its bankers) or become bound or liable
to be called upon to repay prematurely any loan capital
or borrowed moneys;
(g) declare any dividend or pass any resolutions or do
anything in the conduct or management of the affairs of
either FOCI or any of its Subsidiaries which would be
likely materially to reduce the value of the business;
(h) suffer any material adverse change in its financial
condition, assets, business, properties, liabilities,
earnings, operations, affairs or prospects;
(i) waive or release any right of a material or substantial
value howsoever arising;
(j) incur any capital expenditure or make any capital
commitment of an amount in excess of US$1.0 million
(US$1,000,000) or dispose of any fixed assets having a
value of more than US$1.0 million (US$1,000,000) in
aggregate;
(k) make any purchase or sale or introduce any method of
management or operation in respect of the business
except in a manner consistent with proper prior
practice;
(l) discharge or satisfy any lien or encumbrance or any
other obligation or liability (absolute or contingent)
other than liabilities in the ordinary course of
business;
(m) pass any resolution the result of which would be its
winding up, liquidation or receivership, or make any
composition or arrangement with creditors;
(n) carry on any business other that the business or
otherwise change the nature or geographical area of its
business;
(o) enter into any partnership or joint venture arrangement
or set up any subsidiary or associated company;
(p) create any fixed or floating charge, lien (other than a
lien arising by operation of law) or other encumbrance
over the whole or any part of its undertaking, property
or assets;
(q) undertake anything which would require accounting
treatment by way of provision, reserve or extraordinary
item;
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(r) make, amend or terminate any contract, loan, guarantee
or other arrangement with any Selling Shareholders or
any of their respective Affiliates;
(s) make, amend or terminate any long-term, unusual or
onerous contract (long-term meaning a contract under
which the obligations of any party thereto may remain
outstanding for more that twelve (12) months) or take
any action which could, as a consequence of any action
taken by another party, result in any of the same.
7.6 Full Access. FOCI and each of its Subsidiaries will permit
representatives of MRV to have full access on a confidential
basis at all reasonable times, and in a manner so as not to
interfere with the normal business operations of, to all
premises, properties, personnel, books, records (including Tax
records), contracts, and documents of or pertaining to;
7.7 Notice of Developments. FOCI and each of its Subsidiaries will
give prompt written notice to MRV of any material adverse
development causing a breach of any of the representations and
warranties in Section 5 above. Each Party will give prompt
written notice to the others of any material adverse development
causing a breach of any of its own representations and
warranties in Sections 5 and 6 above.
7.8 Exclusivity. FOCI and each of its Subsidiaries will not solicit,
initiate, or encourage the submission of any proposal or offer
from any other Person relating to the acquisition of any capital
stock or other voting securities, or any substantial portion of
the assets, of (including any acquisition structured as a
merger, consolidation or share exchange).
7.9 Supervisor. FOCI and Selling Shareholders agree that they will
fully cooperate with MRV to have one of the existing supervisor
of FOCI being replaced by a person designated by MRV ("Nominee
Supervisor") for purpose of conducting the special shareholders
meeting to elect the new directors and supervisors and to
conduct other necessary corporate actions after the Closing. MRV
agrees that it shall cause Nominee Supervisor to resign from its
position in the event that the Closing is not completed prior to
Target Date or any other date as agreed by the Parties.
7.10 FOCI and Selling Shareholders agree to confirm to MRV in writing
three (3) Business Days prior to the Closing the definite list
of the name and number of shares of Selling Shareholders and
shall have all the Selling Shareholders agree to be a Party of
this Agreement and bear the same obligations and liabilities as
the Signing Shareholders under this Agreement and Escrow
Agreement and issue a Power of Attorney in the form attached as
Exhibit A to authorize the Attorneys-in-Fact to sign this
Agreement and perform their obligations hereunder on their
behalf in connection with their respective FOCI Shares.
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7.11 The Parties shall each use their best efforts to procure the
fulfillment of the conditions set forth in Section 8 hereof on
or before the Closing, and in particular, shall furnish such
information, supply such documents, and do all such acts and
things as may be required to enable such conditions to be
fulfill.
7.12 Selling Shareholders and FOCI shall cause any personal or
corporate guarantors who provide Guaranties on the indebtness or
other obligations of FOCI or any of its Subsidiaries to
continually provide guaranties over the same after the execution
of this Agreement in accordance with the current terms thereof.
7.13 At least five (5) Business Days prior to the Closing, Selling
Shareholders (or Attorney(s)-in-Fact or FOCI in whose name the
Taiwan Account shall be registered) shall give the Taiwan
Account passbook, chops and the Power-of-Attorney-Form B to
Closing Agent.
7.14 The Selling Shareholders shall sign through their duly
authorized representative (i) an Escrow Agreement with the
Escrow Agent as described in Section 10.2.3; and (ii) any other
documents required in this Agreement or in the Escrow Agreement.
7.15 The Selling Shareholders (or Attorney(s)-in-Fact or FOCI in
whose name the Taiwan Account shall be registered) shall, prior
to five (5) Business Days prior to the Closing, give the Taiwan
Account passbook, chops and a Power of Attorney-Form B to the
law firm of Xxxxx & XxXxxxxx, Taipei Office as the Closing Agent
of Selling Shareholders ("Closing Agent") granting said Closing
Agent the exclusive right to give instructions to the bank with
respect to the Taiwan Account.
7.16 Within twenty (20) days after the execution of this Agreement,
FOCI and Selling Shareholders shall be responsible to implement
and provide a list of Principal Employees (as defined and
discussed below) which shall include the key employees in the
technical team of FOCI and each of its Subsidiaries. Such list
shall be incorporated into this Agreement as Schedule 24. FOCI
and Signing Shareholders shall be responsible to implement and
provide any other necessary information to be contained in the
Schedules relating to the warranties and representations
described in Section 5 of this Agreement.
7.17 MRV shall provide the Attorneys-in-Fact copies of its most
recent public filings with the SEC (including MRV's most recent
available financial statements) within two weeks of the
execution of this Agreement.
8. CONDITIONS PRECEDENT TO CLOSING
8.1 Conditions to Obligation of MRV. The obligation of MRV to
consummate the
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transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
8.1.1 FOCI and Selling Shareholders shall have complied with
all of their respective agreements and covenants
contained herein to be performed at or prior to the
Closing, and all their representations and warranties
contained herein shall be true and accurate on and as of
the Closing Date with the same effect as though made on
and as of the Closing Date, except that representations
and warranties that were made as of a specified date
shall continue on the Closing Date to have been true as
of the specified date, and MRV shall have received a
certificate of Selling Shareholders and FOCI, dated as
of the Closing Date, substantially in the form of
Exhibit C certifying as to the fulfillment of the
condition set forth in this Section 8.1.1 (the "FOCI's
Bring-Down Certificate").
8.1.2 MRV shall have received the written agreement (in the
form attached as Exhibit E) of the "Principal Employees"
of FOCI and each of its Subsidiaries to continue in the
employment of said companies for a period of at least
two (2) years after the Closing Date on mutually agreed
upon salary and benefit terms (including the stock
option plan) and on such other terms as MRV normally
requires of its employees. In any event, their salary
and other cash benefits shall be no more than those of
the year of 1999. For this purpose, the following
individuals are deemed to be "Principal Employees" of
FOCI and its Subsidiaries: Xxxxx Xxx, Xxxxxxx Xxxx,
Xxxxx Ho, Xxxxxx Xxx and any other Principal Employees
whose names are shown in Schedule 24.
8.1.3 No statute, rule or regulation, or order of any court or
administrative agency shall be in effect which restrains
or prohibits from consummating the transaction
contemplated hereby.
8.1.4 No material action, suit or proceeding before any court
or any governmental body or authority against Selling
Shareholders, either FOCI or its Subsidiaries, or
pertaining to the transactions contemplated by this
Agreement or their consummation, shall have been
instituted on or before the Closing Date.
8.1.5 The Approvals and all necessary agreements and consents
of any third parties for which FOCI is required to
obtain shall have been obtained, and true and complete
copies thereof delivered to MRV.
8.1.6 Each Encumbrance or obligation to create any
Encumbrance, if any, on FOCI Shares shall have been
terminated and released prior to the Closing Date, and
Selling Shareholders shall have provided evidence, in
form and substance satisfactory to MRV, of such
termination and release.
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8.1.7 During the Closing, there shall not have occurred any
event or condition materially and adversely affecting
the assets or the financial condition, results of
operations or business prospects of FOCI or any of its
Subsidiaries from those reflected in the Financial
Statements, except as disclosed in this Agreement or the
Schedules hereto.
8.1.8 Selling Shareholders and FOCI shall have delivered to
MRV at the Closing each agreement, instrument,
certificate and document required by this Agreement and
the Financial Statements, the Latest Financial
Statements, and the Auditor Consent as required by
Section 5.3.1 of this Agreement, and Selling
Shareholders' Payment shall be received by MRV during
the Closing.
8.1.9 FOCI Shares available for sale to MRV in accordance with
the terms of this Agreement shall be not less than
seventy-five percent (75%).
8.1.10 All final due diligence results on FOCI and its
Subsidiaries are satisfactory to MRV.
MRV may waive any condition specified in this Section 8.1 if it
executes a writing so stating at or prior to the Closing.
8.2 Conditions to Obligation of Selling Shareholders. The obligation
of Selling Shareholders to consummate the transactions to be
performed by it in connection with the Closing is subject to
satisfaction of the following conditions:
8.2.1 MRV shall have complied with all of its agreements and
covenants contained herein to be performed at or prior
to the Closing, and all their representations and
warranties contained herein shall be true and accurate
on and as of the Closing Date with the same effect as
though made on and as of the Closing Date, except that
representations and warranties that were made as of a
specified date shall continue on the Closing Date to
have been true as of the specified date and Selling
Shareholders shall have received a certificate dated as
of the Closing Date, substantially in the form of
Exhibit D certifying as to the fulfillment of the
condition set forth in this Section (the "MRV's
Bring-Down Certificate").
8.2.2 No statute, rule or regulation, or order of any court or
administrative agency shall be in effect which restrains
or prohibits the Parties from consummating the
transaction contemplated hereby.
8.2.3 The Approvals and all necessary agreements and consents
of any third parties shall have been obtained and true
and complete copies thereof delivered to Selling
Shareholders.
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8.2.4 MRV's Payment shall, via Closing Agent, be made to
Attorneys-in-Fact for and on behalf of Selling
Shareholders during the Closing.
Selling Shareholders may waive any condition specified in this
Section 8.2 if it executes a writing so stating at or prior to
the Closing.
9. POST CLOSING COVENANTS
9.1 FOCI and Selling Shareholders agree that they will fully
cooperate with MRV to convene all necessary corporate actions
including but not limited to holding the shareholders meetings
and the directors meetings to elect the new directors and
Supervisors and to amend the article of incorporation, if
necessary.
9.2 FOCI and Selling Shareholders agree that they will fully
cooperate with MRV to manage the operation and business
conducted by FOCI and each of its Subsidiaries.
9.3 FOCI and Selling Shareholders agree that they will fully
cooperate with MRV and use their best efforts to obtain further
additional consents from the auditors on the Financial
Statements to include auditor's reports in other filing to be
made by MRV with the SEC as necessary from time to time.
10. INDEMNIFICATION AND ESCROW
10.1 Survival of Representations and Warranties
All of the representations and warranties contained in Sections
5 and 6 above, shall survive the Closing hereunder (even if MRV
knew or had reason to know of any misrepresentation or breach of
warranty at the time of Closing) and continue in full force and
effect for a period of two (2) years thereafter (subject to any
applicable statutes of limitations). Provided however, FOCI's
liabilities concerning the said representations and warranties
may be waived under the discretion of MRV without releasing the
liabilities of Signing Shareholders.
10.2 Indemnification Provisions
10.2.1 MRV shall indemnify defend and hold harmless the Selling
Shareholders against any and all losses that any of them
may suffer, sustain or become subject to as a result of
any breach by MRV of its warranties, representations,
agreements or covenants set forth in this Agreement.
10.2.2 In the event that FOCI or any of Selling Shareholders
breaches any
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of their covenants in Sections 7 and 9 above or any of
its representations and warranties in Section 5, above
or any other obligations set forth in this Agreement,
and, if there is an applicable survival period pursuant
to Section 10.1 above, provided that MRV makes a written
claim for indemnification against the Selling
Shareholders and/or FOCI, then the Selling Shareholders
and FOCI agree to jointly and severally indemnify MRV
from and against the entirety of any Adverse
Consequences MRV may suffer through and after the date
of the claim for indemnification (including any Adverse
Consequences MRV may suffer after the end of any
applicable survival period) resulting from, arising out
of, relating to, in the nature of, or caused by the
breach.
The Parties agree that the maximum indemnification of
liabilities of each Selling Shareholder shall not exceed
the total consideration he is entitled to receive from
this transaction.
10.2.3 Escrow. The Parties agree to the following:
(a) the representations, warranties, covenants and
obligations of Selling Shareholders shall be
secured by placing one million of the MRV Shares
owned by Selling Shareholders in escrow
("Escrowed Shares") under an Escrow Agreement in
the form attached hereto as Exhibit F (the
"Escrow Agreement"). In the event that payment
is required to MRV as a result of invocation of
the indemnification clauses of this Agreement,
the Escrowed Shares shall be taken from the
escrow account and delivered to MRV pro rata to
the shareholding of Selling Shareholders in MRV
Shares or as shall otherwise be agreed among the
Selling Shareholders.
Notwithstanding the above, in the event that
less than 100% of FOCI Shares sold and delivered
to MRV, the number of Escrowed Shares shall be
adjusted down by the same percentage as those
FOCI Shares not available for sale are as a
percentage of the total FOCI Shares of
outstanding on the date of execution of this
Agreement.
(b) The Parties shall appoint the firm of Xxxxx &
XxXxxxxx, Taipei office, with Xxxxx X. Xxxx as
its representative, as escrow agent ("Escrow
Agent") to proceed pursuant to the Escrow
Agreement.
(c) The relevant escrow fees ("Escrow Fees") as
described in the Escrow Agreement shall be borne
at the sole cost of Selling Shareholders and
shall be deducted from the MRV's payments
payable to Selling Shareholders.
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10.4 Matters Involving Third Parties
10.4.1 If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a
"Third Party Claim") which may give rise to a claim for
indemnification against any other Party (the
"Indemnifying Party") under this Section 10, then the
Indemnified Party shall promptly notify each
Indemnifying Party thereof in writing; provided,
however, that no delay on the part of the Indemnified
Party in notifying any Indemnifying Party shall relieve
the Indemnifying Party from any obligation hereunder
unless (and then solely to the extent) the Indemnifying
Party thereby is prejudiced.
10.4.2 Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with
counsel of its choice reasonably satisfactory to the
Indemnified Party so long as (A) the Indemnifying Party
notifies the Indemnified Party in writing within fifteen
(15) days after the Indemnified Party has given notice
of the Third Party Claim that the Indemnifying Party
will indemnify the Indemnified Party from and against
the entirety of any Adverse Consequences the Indemnified
Party may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the Third
Party Claim, (B) the Indemnifying Party provides the
Indemnified Party with evidence reasonably acceptable to
the Indemnified Party that the Indemnifying Party will
have the financial resources to defend against the Third
Party Claim and fulfill its indemnification obligations
hereunder, (C) the Third Party Claim involves only money
damages and does not seek an injunction or other
equitable relief, (D) settlement of, or an adverse
judgment with respect to, the Third Party Claim is not,
in the good faith judgment of the Indemnified Party,
likely to establish a precedential custom or practice
materially adverse to the continuing business interests
of the Indemnified Party, and (E) the Indemnifying Party
conducts the defense of the Third Party Claim actively
and diligently.
10.4.3 So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with
Section 10.4.2 above, (A) the Indemnified Party may
retain separate co-counsel at its sole cost and expense
and participate in the defense of the Third Party Claim,
(B) the Indemnified Party will not consent to the entry
of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior
written consent of the Indemnifying Party, and (C) the
Indemnifying Party will not consent to the entry of any
judgment or enter into any settlement with respect to
the Third Party Claim without the prior written consent
of the
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Indemnified Party.
10.3.4 In the event any of the conditions in Section 10.4.2
above is or becomes unsatisfied, however, (A) the
Indemnified Party may defend against, and consent to the
entry of any judgment or enter into any settlement with
respect to, the Third Party Claim in any manner it
reasonably may deem appropriate (and the Indemnified
Party need not consult with, or obtain any consent from,
any Indemnifying Party in connection therewith), (B) the
Indemnifying Parties will reimburse the Indemnified
Party promptly and periodically for the costs of
defending against the Third Party Claim (including
reasonable attorneys' fees and expenses), and (C) the
Indemnifying Parties will remain responsible for any
Adverse Consequences the Indemnified Party may suffer
resulting from, arising out of, relating to, in the
nature of, or caused by the Third Party Claim to the
fullest extent provided in this Section 10.
11. TERMINATION.
11.1 Termination of Agreement. Certain of the Parties may terminate
this Agreement as provided below:
11.1.1 The Parties may terminate this Agreement by mutual
written consent at any time prior to the Closing; and
11.1.2 Either party to this Agreement may terminate this
Agreement by giving written notice to the other party if
the Closing shall not have occurred on or before Target
Day, except that the right to terminate this Agreement
pursuant to this Section 11 shall not be available to
(A) FOCI or the members of Selling Shareholders if the
failure to consummate the Closing on or before such date
was caused by or resulted from the failure of any member
of Selling Shareholders or FOCI to fulfill any of its
obligations under this Agreement or (B) MRV if the
failure to consummate the Closing on or before such date
was caused by or resulted from MRV's failure to fulfill
any of its obligations under this Agreement.
11.2 Effect of Termination. If any Party terminates this Agreement
pursuant to Section 11.1 above, all further obligations of the
Parties hereto shall become null and void and no party shall
have any liability to any other party, unless the basis for such
termination was the failure by such party to fulfill its
covenants and agreements set forth herein. In the event that the
Closing is not completed, either Party will destroy or return to
the other Party the Confidential Information of the other Party.
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12. TRANSFER RESTRICTION
Each of the Selling Shareholders agree that the Selling Shareholders shall not
sell the MRV Shares in a group at one time more than 100,000 shares. Such
grouped sales shall be further restricted to a total of one hundred thousand
(100,000) shares in any given month. This restriction does not apply if a
Selling Shareholder is selling the MRV Shares alone and not in concert in any
way with any other Selling Shareholders.
13. MISCELLANEOUS
13.1 Press Releases and Public Announcements
No Party shall issue any press release or make any public
announcement relating to the subject matter of this Agreement
prior to the Closing without the prior written approval of MRV
and; provided, however, that any Party may make any public
disclosure it believes in good faith is required by Applicable
Law or any listing or trading requirement concerning its
publicly-traded securities (in which case the disclosing Party
will notify the other Parties of such disclosure forty-eight
(48) hours prior to making the disclosure).
13.2 No Third-Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties
and their respective successors and permitted assigns.
13.3 Notices
All notices and other communications required or permitted under
this Agreement shall be in writing and shall be sent by
facsimile transmission to the other parties at the fax number
set forth below for MRV (in the case of a notice to be sent to
MRV) or for FOCI (in the case of notices to be sent to FOCI or
the Selling Shareholders prior to the Closing -- after the
Closing they shall designate a representative and provide a fax
number for this purpose), with a copy sent by first class mail
or express courier to said parties at the address provided to
the other parties, or to such other fax number and/or address as
a party may hereinafter designate by notice to the other. Notice
shall be effective on the date it is sent by facsimile
transmission if the facsimile transmission report confirms
receipt by the receiving fax.
- To FOCI
Attention: Xxxxxx Xx-Xxxxx Xxxx
Fax: (000-0) 000-0000
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- To MRV
Attention: Xxxxxx Xxxxxx
Fax: (0-000) 000-0000
- To Selling Shareholders
Attention: Xxxxxx Xx-Xxxxx Xxxx
Xxxxx Song-Xxxx Xxx
Fax: (000-0) 000-0000
(000-0) 000-0000
13.4 Headings
The headings contained in this Agreement (including but not
limited to the titles of the Schedules and Exhibits hereto) have
been inserted for convenience of reference only, and neither
such headings nor the placement of any term hereof under any
particular heading shall in any way restrict or modify any of
the terms or provisions hereof. Terms used in the singular shall
be read in the plural, and vice versa, and terms used in the
masculine gender shall be read in the feminine or neuter gender
when the context so requires.
13.5 Schedules, Exhibits and Annexes
All Schedules, Exhibits and Annexes attached to this Agreement
constitute an integral part of this Agreement as if fully
rewritten herein.
13.6 Entire Agreement
This Agreement (including the documents referred to herein)
constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or
representations by or among the Parties, written or oral, to the
extent they related in any way to the subject matter hereof.
13.7 Succession and Assignment
This Agreement shall be binding upon and inure to the benefit of
the Parties named herein and their respective successors and
permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without
the prior written approval of MRV and; provided, however, that
MRV may (i) assign any or all of its rights and interests
hereunder to one or more of its Affiliates and (ii) designate
one or more of its Affiliates to perform its obligations
hereunder (in any or all of which cases MRV nonetheless shall
remain responsible for the performance of all of its obligations
hereunder).
13.8 Counterparts
This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original but all of which together
will constitute one and
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the same instrument.
13.9 GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF TAIWAN, THE REPUBLIC OF CHINA WITHOUT GIVING
EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE
(WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION)
THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION
OTHER THAN TAIWAN, THE REPUBLIC OF CHINA.
13.10 Amendments and Waivers
No amendment of any provision of this Agreement shall be valid
unless the same shall be in writing and signed by the Parties.
No waiver by any Party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or
not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of
any prior or subsequent such occurrence.
13.11 Severability
Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the
offending term or provision in any other situation or in any
other jurisdiction.
13.12 Cost and expenses
Except this Agreement provides otherwise, each of the Parties
shall bear its own costs and expenses (including but not
limiting to legal fees and expenses) incurred in connection with
this Agreement and the transactions contemplated hereby.
13.13 Construction
The Parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement
shall be construed as if drafted jointly by the Parties and no
presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal,
state, local, or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder,
unless the context requires otherwise. The word "including"
shall mean including without limitation. The Parties intend that
each representation, warranty, and covenant contained herein
shall have independent
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significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact
that there exists another representation, warranty, or covenant
relating to the same subject matter (regardless of the relative
levels of specificity) which the Party has not breached shall
not detract from or mitigate the fact that the Party is in
breach of the first representation, warranty, or covenant.
13.14 Specific Performance
Each of the Parties acknowledges and agrees that the other
Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance
with their specific terms or otherwise are breached.
Accordingly, each of the Parties agrees that, the other Parties
shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof
in any action instituted in any court of Taiwan, the Republic of
China or any other state thereof having jurisdiction over the
Parties and the matter, in addition to any other remedy to which
they may be entitled, at law or in equity.
13.15 Submission to Jurisdiction
Any dispute relating to the validity, performance, construction
or interpretation of this Agreement that cannot be resolved
amicably among the Parties shall be submitted to the
non-exclusive jurisdiction of any state or federal court sitting
in Delaware, Massachusetts or California, U.S.A. and in Taiwan,
R.O.C. in any action or proceeding arising out of or relating to
this Agreement and agrees that all claims in respect of the
action or proceeding may be heard and determined in any such
court. Each Party further agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any
other court. Each of the Parties waives any defense of
inconvenient forum to the maintenance of any action or
proceeding so brought and waives any bond, surety, or other
security that might be required of any other Party with respect
thereto. Any Party may make service on any other Party by
sending or delivering a copy of the process to the Party to be
served at the address and in the manner provided for the giving
of notices in Section 13.3 above. Nothing in this Section 13.15,
however, shall affect the right of any Party to serve legal
process in any other manner permitted by law or at equity. Each
Party agrees that a final judgment in any action or proceeding
so brought shall be conclusive and may be enforced by suit on
the judgment or in any other manner provided by law or at
equity.
13.16 Attorney's Fees
In the event that a party to this Agreement commences any legal
action under this Agreement to enforce any of its rights
hereunder, or to recover damages for any breach or default by
the other party or parties hereto of any of its (their)
obligations hereunder, the prevailing party in any such legal
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action shall be entitled to recover from the other party all of
its costs and expenses incurred in connection with such legal
action, including reasonable attorneys' fees,
13.17 Confidential Information
FOCI and each of Selling Shareholders and MRV shall:-
(a) not use or disclose to any person Confidential
Information; and
(b) use all reasonable endeavours to prevent the use or
disclosure of Confidential Information by any person.
This Section 13.17 does not apply to:-
(a) disclosure of Confidential Information to or at the
written request of MRV;
(b) use or disclosure of Confidential Information required
to be disclosed by law, regulation or any revenue
authority;
(c) disclosure of Confidential Information to professional
advisers for the purpose of advising MRV; or
(d) Confidential Information which is in the public domain
other than as a consequence of a breach of this Section
13.17.
13.18 Non-Competition
13.18.1 The Selling Shareholders hereby jointly and severally
undertake (except as otherwise agreed in writing with
MRV) not to, either solely or jointly with any other
Person (either on their own account or as the agent of
any other Person):-
(a) for a period of two (2) years from Closing carry
on or be engaged or concerned or (except as the
holder of shares in a listed company which
confer not more than two per cent. of the votes
which can generally be cast at a general meeting
of the company), interested, or hold more than
five percent of the shares directly or
indirectly in a business which competes with the
type of business carried on by FOCI or its
Subsidiaries at Closing in the world;
(b) for a period of two (2) years from the Closing
solicit or accept the custom of any person in
respect of goods or services competitive with
those manufactured or supplied by FOCI during
the period of 12 months prior to Closing, such
person having been a customer of FOCI in respect
of such goods or services
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during such period;
(c) for a period of two (2) years from the Closing
induce, solicit or endeavour to entice to leave
the service or employment of any employee of
FOCI or its Subsidiaries, likely (in the opinion
of MRV) to be:-
(i) in possession of confidential
information relating to; or
(ii) able to influence the customer
relationships or connections of FOCI or
its Subsidiaries; or
(iii) use any trade or domain name or e-mail
address used by FOCI at any time during
the two (2) years immediately preceding
the date of this agreement or any other
name intended or likely to be confused
with any such trade or domain name or
e-mail address.
13.18.2 Selling Shareholders shall cause the Principal Employees
undertake, not to, within two years after the
termination of their employment with FOCI or its
Subsidiaries either solely or jointly with other Person
(either on their own account or as the agent of any
other Person) conduct any behaviors provided in Section
13.18.1.
13.18.3 Selling Shareholders agree that the undertakings
contained in this Section 13.18 are reasonable and are
entered into for the purpose of protecting the goodwill
of the business of FOCI and its Subsidiaries and that
accordingly the benefit of the undertakings may be
assigned by MRV and its successors in title without the
consent of the Selling Shareholders.
13.18.4 Each undertaking contained in this Section 13.18.3 is
and shall be construed as separate and severable and if
one or more of the undertakings is held to be against
the public interest or unlawful or in any way an
unreasonable restraint of trade or unenforceable in
whole or in part for any reason the remaining
undertakings or parts thereof, as appropriate, shall
continue to bind Selling Shareholders.
13.18.5 If any undertaking contained in this Section 13.18 shall
be held to be void but would be valid if deleted in part
or reduced in application, such undertaking shall apply
with such deletion or modification as may be necessary
to make it valid and enforceable. Without prejudice to
the generality of the foregoing, such period (as the
same may previously have been reduced by virtue of this
Section 13.18.4) shall take effect as if reduced by six
months until the resulting period shall be valid and
enforceable.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date first above written.
MRV COMMUNICATIONS, INC.
---------------------------------------
By:
Title:
FIBER OPTIC COMMUNICATIONS, INC.
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By:
Title:
SIGNING SHAREHOLDERS
---------------------------------------
Represented by: Xxxxxx Xx-Xxxxx Xxxx
---------------------------------------
Represented by: Xxxxx Song-Xxxx Xxx
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ANNEX 1
DEFINITIONS
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.
"Affiliate" means in relation to any Party, any company, other commercial entity
or person which directly or indirectly controls, or is controlled by, under
common control with, any Party or any of the Parties' directors, supervisors or
management personnel.
"Approvals" means (i) the approval granted by the Hsinchu Science-based
Industrial Park Administration of the acquisition by MRV of FOCI Shares
contemplated by this Agreement so that, after the Closing, FOCI shall be deemed
to be a foreign invested company with foreign investment approval (an "FIA
company"), (ii) the approval required under Xxxx-Xxxxx-Xxxxxx Act, and (iii) any
other governmental or regulatory approvals of the transactions contemplated
hereunder which may be required by Applicable Law (if any).
"Applicable Law" shall include all laws, ordinances, rules, regulations,
administrative or judicial orders, injunctions, notices, approvals or judgment
of any federal, national, state, provincial or local government or governmental
department, agency, or instrumentality.
"Business Day" means any day on which banks in both New York and Taiwan are open
for business.
"Closing" has the meaning set forth in Section 3.
"Closing Date" has the meaning set forth in Section 3.
"Closing Agent" shall have the meaning set forth in Section 2.1.1 (a).
"Confidential Information" means any information concerning the transactions
contemplated in this Agreement and is not already generally available to the
public.
"Contract" means any agreement, contract, obligation, promise, or understanding
(whether written or oral and whether express or implied) that is legally binding
on either FOCI or any of its Subsidiaries.
"Encumbrance" means any security interest, lien, claim, option, warrant,
easement, limitation, restriction, royalty, charge, pledge, preemptive or other
right, restraint on alienation, voting trust or arrangement, proxy, shareholders
agreement, mortgage or other encumbrance.
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"Escrow Agent" shall have the meaning set out in Section 10.2.3.
"Escrow Agreement" means an Escrow Agreement to be signed by and among MRV,
Escrow Agent and Signing Shareholders in connection with Escrowed Shares on the
same date of this Agreement.
"Escrowed Shares" shall have the meaning as defined in Section 10.2.3.
"Financial Statements" has the meaning set forth in Section 5.3.1.
"Guaranties" means any guaranty or other surety provided by a Person Company in
respect of any indebtedness or other obligation.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
"Indemnified Party" has the meaning set forth in Section 10.3.1 below.
"Indemnifying Party" has the meaning set forth in Section 10.3.1 below.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (f) all computer software (including data and
related documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"Knowledge" means actual knowledge after reasonable investigation.
"Latest Balance Sheet" shall name the meaning set out in Section 5.3.1.
"Latest Financial Statements" shall have the meaning set out in Section 5.3.1.
"Loss" shall mean any liability, loss, damage, claim, cost, deficiency,
delegation, or expense (including any penalty and any reasonably legal fees and
costs) incurred by
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a party.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"New Taiwan Dollars" or "NT$" shall mean the lawful currency of the Republic of
China.
"Ordinary Course of Business" means the ordinary course of business consistent
with past custom and practice (including with respect to quantity and
frequency).
"Party" has the meaning set forth in the preface above.
"Permit" means all governmental licenses, registrations, authorizations,
permits, and approvals, and all applications therefor.
"Person" means an individual, a partnership, a corporation, an association, a
joint stock company, a trust, a joint venture, an unincorporated organization,
or a governmental entity (or any department, agency, or political subdivision
thereof).
"Power of Attorney" means a Power of Attorney in the form of Exhibit A attached
hereto, duly executed by each Selling Shareholder in favor of the
Attorneys-in-Fact, by which each Selling Shareholder appoints and authorizes the
Attorneys-in-Fact, jointly and severally, to execute for and on behalf of the
Selling Shareholder this Agreement, and any and all other documents in
connection with the performance by Selling Shareholder of its/his/her
obligations hereunder, and to take all actions necessary or appropriate for the
performance of the transaction contemplated herein for and on behalf of the
Selling Shareholder.
"Subsidiary", as it relates to any Person, means a corporation or other type of
entity of which such Person owns (or has the right to acquire either by contract
or exercise of outstanding options, warrants or other convertible instruments)
50% or more of the capital stock or equity interest.
"Target Day" shall have the meaning set out in Section 3.1.
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Section 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
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"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section 10.3.1.
"US GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"U.S. Person" means: (i) any natural person resident in the United States, (ii)
any partnership or corporation organized or incorporated under the laws of the
United States, (iii) any estate of which any executor or administrator is a U.S.
Person, (iv) any trust of which any trustee is a U.S. Person, (v) any agency or
branch of a foreign entity located in the United States, (vi) any
non-discretionary account or similar account (other than an estate or trust)
held by a dealer or other fiduciary for the benefit or account of a U.S. Person,
(vii) any discretionary account or similar account (other than an estate or
trust) held by a dealer or other fiduciary organized, incorporated, or, if an
individual resident, in the United States, or (viii) any partnership or
corporation, if organized under the laws of any foreign jurisdiction and formed
by any U.S. Person principally, for the purpose of investing in securities and
registered under the Securities Act, unless it is organized or incorporated and
owned by accredited Selling Shareholders (as defined in Rule 501(a) under the
Securities Act who are not natural persons, estates or trusts.
"Waste Material" shall mean any pollutant, contaminant, hazardous or toxic
material or other material produced, discharged or emitted by FOCI or any of its
Subsidiaries other than products intended to be sold in the Ordinary Course of
Business.
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