STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement"), dated as of May 19,
1999, is made among Molex Incorporated, a Delaware corporation ("Purchaser"),
Lumenon Innovative Lightwave Technology, Inc., a Delaware corporation (the
"Company"), and Lilt Canada Inc., a Canadian company ("Subsidiary").
R E C I T A L S
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1. The Subsidiary has developed and acquired technical knowledge and
valuable expertise in development and design of integrated optical waveguide.
2. Purchaser and the Company have entered into that certain Teaming
Agreement dated as of the date hereof pursuant to which the parties shall
develop jointly products for the DWDM (the "Teaming Agreement"). Capitalized
terms used but not defined herein shall have the meanings set forth in the
Teaming Agreement.
3. Each of the stockholders listed on Schedule 2.5 legally and
beneficially owns the shares of the Company's common stock, $.01 value (the
"Common Stock"), set forth opposite such Stockholder's name on Schedule 2.5
attached hereto under the caption "Number of Shares of Common Stock Owned."
4. The Company desires to sell to Purchaser, and Purchaser desires
to purchase from the Company, 3,000,000 shares of Common Stock ("New Shares")
for the cash purchase price of $1,500,000.
5. In consideration for Purchaser fulfilling its obligations
pursuant to the Teaming Agreement, the Company desires to grant to Purchaser the
right to acquire, and Purchaser desires to receive from the Company the right to
acquire, 5,800,000 shares of Common Stock on the terms set forth in that certain
Services Common Stock Purchase Warrant dated as of the date hereof (the
"Services Common Stock Purchase Warrant").
6. In further consideration for the Purchaser fulfilling its
obligations pursuant to the Teaming Agreement and for entering into this
Agreement, the Company desires to grant to Purchaser the right to purchase up to
an additional 1,667,667 shares of Common Stock on the terms set forth in that
certain Cash Common Stock Purchase Warrant dated as of the date hereof (the
"Cash Common Stock Purchase Warrant").
7. Purchaser's acquisition of the New Shares and Purchaser's
exercise of all the shares of Common Stock issuable under the Services Common
Stock Purchase Warrant will result in Purchaser owning approximately 28.6%
(fully-diluted to include all options and warrants pursuant to which Common
Stock may be issued except the Cash Common Stock Purchase Warrant) of the
outstanding Common Stock as of the date hereof.
AGREEMENTS
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NOW, THEREFORE, in consideration of the recitals (which are deemed
to be a part of this Agreement), mutual covenants, representations, warranties
and agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
PURCHASE AND SALE OF SHARES
Agreement to Purchase and Sell. Subject to the satisfaction of the
closing conditions set forth in Section 1.4A, on the date of the First Closing
(as such term is defined below), the Company shall issue and sell 50% of the New
Shares to Purchaser or its designees and Purchaser or its designees shall
purchase 50% of the New Shares from the Company. Subject to the closing
conditions set forth in Section 1.4B and subject to Section 1.6, on the date of
the Second Closing (as such term is defined below), the Company shall issue and
sell 50% of the New Shares to Purchaser or its designee and Purchaser or its
designee shall purchase 50% of the New Shares from the Company.
Closing. The closings of the transactions contemplated by this
Agreement shall take place at the offices of Xxxxxxxxxxxx Xxxx & Xxxxxxxxx, 0000
Xxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, or such other place as agreed by the
parties. In full consideration for the New Shares, Purchaser will pay to the
Company the Purchase Price as provided in Section 1.3. The first Closing (the
"First Closing") shall occur on June 4, 1999 (or at such later date as agreed by
the parties), and the Purchaser shall purchase 1,500,000 shares of Common Stock
by wire transferring to the Company $750,000. If the second Closing (the "Second
Closing", referred to collectively with the First Closing as the "Closings")
shall occur, it shall take place 9 months after the date of the First Closing,
and the Purchaser shall purchase 1,500,000 shares of Common Stock by wire
transferring to the Company $750,000.
Purchase Price. The total purchase price for the New Shares is
$1,500,000 (the "Purchase Price"). One-half of the Purchase Price is payable at
each of the Closings described above.
Closing Conditions of the Company and the Primary Stockholders.
(a) Conditions of the First Closing. The obligations of the Purchaser to
purchase Common Stock on the date of the First Closing shall be subject to the
satisfaction to the following conditions on or before the date of the First
Closing: (i) the Primary Stockholders, the Subsidiary and the Company shall
deliver or cause to be delivered to Purchaser all of the documents and
instruments set forth on Exhibit 1.4A (including the opinion of counsel to the
Company and the Subsidiary in substantially the form attached hereto as Exhibit
1.4B), the Additional Agreements to which such Person is a party and such other
certificates, agreements and documents as Purchaser or its counsel shall
reasonably request, all in form and substance reasonably satisfactory to
Purchaser and its counsel; (ii) the Nevada Subsidiary (as defined in Section
2.6(c) hereof) shall have been dissolved; (iii) Molex shall have completed its
due diligence and be satisfied in its reasonable discretion with the results of
that due diligence; and (iv) the Company and the Subsidiary shall have exercised
their best efforts in assisting Molex in
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obtaining the agreement of all Stockholders other than the Primary Stockholders
that such stockholders will (A) grant Molex a right of first refusal with
respect to any sales of such Common Stock; and (B) not sell any shares of Common
Stock to any Molex Competitor (as defined in the Stock Restriction Agreement).
(b) The Second Closing. The obligations of the Purchaser to purchase Common
Stock on the date of the Second Closing shall be subject to satisfaction of the
following conditions on or before the date of the Second Closing: the Primary
Stockholders, the Subsidiary and the Company shall deliver or cause to be
delivered all of the documents and instruments set forth on Exhibit 1.4A
including the opinion of counsel to the Company in form and substance reasonably
acceptable to the Purchaser, and other such certificates, agreements and
documents as such Purchaser or its counsel shall reasonably request, all in form
and substance reasonably satisfactory to Purchaser and its counsel.
Section 1.5. Purchaser's Closing Deliveries. Subject to the
conditions set forth in this Agreement, at the First Closing, simultaneous with
the deliveries of the Primary Stockholders, the Company and the Subsidiary
hereunder, Purchaser shall deliver or cause to be delivered to the Company, all
of the documents and instruments set forth on Exhibit 1.5 hereto, the Additional
Agreements to which Purchaser is a party and such other certificates, agreements
and documents as the Company or its counsel shall reasonably request, all in
form and substance reasonably satisfactory to the Company and its counsel.
Section 1.6. Additional Rights of Purchaser. Purchaser's obligations
to purchase shares of Common Stock at the Second Closing shall be contingent
upon Purchaser's reasonable determination that satisfactory progress is being
made by the Company under the Teaming Agreement towards the Company proving out
the DWDM Technology, including but not limited to, satisfactory progress by the
Company towards the production and delivery to Purchaser of the Three Device
Types. In the event that Molex elects not to purchase the shares of Common Stock
which it is permitted to purchase at the Second Closing, the Teaming Agreement
shall terminate and Molex shall forfeit any and all of its rights under the
Teaming Agreement (except to the extent provided in Section 9.4 of the Teaming
Agreement) and shall forfeit its rights to purchase shares of Common Stock under
the Cash Common Stock Purchase Warrant and shall forfeit its right to purchase
Common Stock under the Services Common Stock Purchase Warrant, except to the
extent of the balance in the Special Account as of the date of the Second
Closing.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company and the Subsidiary hereby jointly and severally
represent and warrant to Purchaser as set forth below. Without limiting the
other provisions of this Article II or Article V of this Agreement, the Company
and Purchaser acknowledge that the Company and Subsidiary are making the
representations and warranties as set forth below principally to allocate the
risks of the matters addressed thereby as further provided in the
indemnification provisions of Article V and that there are statements contained
in this Article II with respect to which the Company
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and the Stockholders have no actual knowledge as to their accuracy. The
information disclosed on any Schedule attached hereto shall be deemed to relate
solely to the section of this Article II to which such Schedule relates and
shall not be deemed made for other sections to which such disclosure may apply
unless such disclosure is cross-referenced in the Schedule(s) relating to such
other section(s), and, in each such case, only to the extent that the applicable
information or risk and scope thereof is described.
Section 2.1. Organization and Authority. Each of the Company and the
Subsidiary is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization, with all
requisite power and authority to own, lease and operate its properties and to
carry on its business as now being conducted. The Company is not insolvent
within the meaning of Section 1-201(23) of the Uniform Commercial Code and the
Subsidiary is not insolvent within the meaning of any applicable bankruptcy or
insolvency law. No order has been made or petition presented or resolution
adopted which relates to the winding-up or the liquidation of the Company or the
Subsidiary or for an administration order in respect of the Company or the
Subsidiary, nor has any administrative receiver, receiver or receiver and
manager been appointed by any Governmental Authority or other Person with
respect to all or part of the assets of the Company or the Subsidiary, and no
power to make any such appointment has arisen. The Company has delivered to
Purchaser complete and correct copies of the Articles of Incorporation and
Bylaws (or comparable organizational documents) presently in effect for the
Company and the Subsidiary, and neither the Company nor the Subsidiary is in
default under or in violation of any provision of such documents. The Company
does not have any subsidiaries or investments, direct or indirect, in any Person
other than the Subsidiary.
Section 2.2. Qualification. Each of the Company and the Subsidiary
is qualified or licensed to do business and is in good standing in each
jurisdiction in which the ownership or leasing of property by it or the conduct
of its business requires such licensing or qualification. Schedule 2.2 contains
a list, for the Company and the Subsidiary, of all jurisdictions in which the
Company or the Subsidiary (as applicable) is qualified or licensed to do
business.
Section 2.3. Authorization. Each of the Company and the Subsidiary
has full corporate power and authority to enter into, execute and deliver this
Agreement and the Additional Agreements to which it is a party and to perform
and observe fully its obligations hereunder and thereunder and to perform the
transactions contemplated hereby and thereby. The Company's and the Subsidiary's
respective Boards of Directors have taken all action required by law, the
Company's and the Subsidiary's respective Articles of Incorporation and Bylaws,
or otherwise to authorize the execution, delivery and performance of this
Agreement and the Additional Agreements to which such Person is a party and the
consummation by the Company and the Subsidiary of the transactions contemplated
hereby and thereby. This Agreement and the Additional Agreements to which such
Person is a party have been duly and validly executed and delivered by the
Company and the Subsidiary. Subject to the effect of applicable bankruptcy and
other similar laws affecting the rights of creditors generally and the effect of
rules of law governing specific performance, injunctive relief and other
equitable remedies, and, assuming due authorization, execution and delivery by
Purchaser, this Agreement and the Additional Agreements to which such Person is
a party constitute valid and binding legal obligations of the Company and the
Subsidiary, enforceable against the Company and the Subsidiary in accordance
with their terms.
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Section 2.4. No Violation. Neither the execution, delivery or
performance of this Agreement or the Additional Agreements nor the consummation
of the transactions contemplated hereby or thereby will (a) violate, conflict
with or result in any breach of any provision of the Articles of Incorporation
or Bylaws (or comparable organizational documents) of the Company or the
Subsidiary, (b) violate, conflict with or result in a violation or breach of, or
constitute a default (with or without due notice or lapse of time or both)
under, or permit the termination of, or require any notice under, or require the
consent of any other party to, or result in the acceleration of, or entitle any
party to accelerate (whether as a result of a change in control of the Company,
the Subsidiary or otherwise) any obligation or agreement, or result in the loss
of any benefit or the imposition of any fee or penalty, or give rise to the
creation of any Lien upon any of the respective properties or assets of the
Company or the Subsidiary, in each case under any of the terms, conditions or
provisions of any debt, note, bond, mortgage, indenture, deed of trust, license,
lease, permit, agreement or other instrument or obligation to which the Company,
the Subsidiary or any of the Stockholders is a party or by which they or any of
their respective properties or assets may be bound or affected or (c) violate
any Rules (including the securities laws of the United States, the Commonwealth
of Canada, and any state or province) of any Governmental Authority applicable
to the Company, the Subsidiary, any of the Stockholders or any of their
respective properties, assets or operations.
Section 2.5. Capitalization of the Company. The authorized capital
stock of the Company consists solely of 100,000,000 shares of Common Stock and
1,000,000 shares of Preferred Stock. As of the date hereof, there are issued and
outstanding 18,715,000 shares of Common Stock owned of record and beneficially
by the Persons and in the amounts specified on Schedule 2.5 attached hereto,
free and clear of all Liens. As of the date hereof, no shares of Preferred Stock
are issued and outstanding. As of the date hereof, there are no shares of Common
Stock, and no shares of Preferred Stock, held by the Company as treasury stock.
All of the issued and outstanding shares of Common Stock are validly issued,
fully paid, non-assessable and are without, and were not issued in violation of,
any preemptive rights. Except as set forth on Schedule 2.5, there are no
options, warrants, calls, subscriptions, conversion or other rights, agreements
or commitments to acquire from the Company or any Stockholder any shares of
capital stock of the Company, or any other securities convertible into,
exchangeable for or evidencing the right to subscribe for any shares of capital
stock of the Company, or any other security of the Company. There are no
outstanding or authorized stock appreciation, phantom stock or similar rights
with respect to the Company. There are no voting agreements, voting trust
agreements, proxies or stockholder or similar agreements relating to the capital
stock of the Company. All of the issued and outstanding shares of Common Stock
were issued either (i) in compliance with any applicable registration, filing or
registration requirements under the Securities Act of 1933, as amended (the
"Securities Act"), and applicable state blue sky laws or (ii) pursuant to valid
exemptions from any such otherwise applicable registration, filing or
qualification requirements. The Company is not subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any
shares of its capital stock. Upon delivery and payment for the New Shares as
herein provided, such New Shares shall be duly authorized, validly issued, fully
paid and non-assessable and will not be issued in violation of applicable
preemptive rights.
Section 2.6. Ownership of Subsidiary's Capital Stock.
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(a) All of the issued and outstanding shares of capital stock of the Subsidiary
are owned of record and beneficially by the Company, have been duly authorized
and are validly issued, fully paid and non-assessable, are without, and were not
issued in violation of, any preemptive rights, were not issued in violation of
applicable securities laws of the United States, the Commonwealth of Canada, or
any state or province and are owned free and clear of all Liens.
(b) All voting rights in the Subsidiary are vested exclusively in the
Subsidiary's capital stock. Except as provided in Schedule 2.10, there are no
options, warrants, calls, subscriptions, conversion or other rights, agreements
or commitments to acquire from the Company or the Subsidiary shares of capital
stock of the Subsidiary, any securities convertible into, exchangeable for or
evidencing the right to subscribe for any shares of such capital stock or any
other security of the Subsidiary. There are no outstanding or authorized stock
appreciation, phantom stock or similar rights with respect to the Subsidiary.
There are no voting agreements, voting trust agreements, proxies or stockholder
or similar agreements relating to the capital stock of the Subsidiary. The
Subsidiary is not subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of its capital stock.
Section 2.7. Consents and Approvals. No filing or registration with,
no notice to and no permit, authorization, consent or approval of, any third
party or any Governmental Authority is necessary for the consummation by the
Company and the Subsidiary of the transactions contemplated by this Agreement or
the Additional Agreements or to enable the Company and the Subsidiary to
continue to conduct their business after the Closings in a manner which is
consistent with that in which it is presently conducted.
Section 2.8. Books and Records. The books and records of the Company
and the Subsidiary are, and have been, maintained in the usual, regular,
ordinary and appropriate manner by the Company and the Subsidiary in accordance
with the Rules, and all of the transactions of such Persons are properly
reflected therein.
Section 2.9. Reserved.
Section 2.10. Absence of Undisclosed Liabilities. Except as set
forth on Schedule 2.10, there are no Liabilities, commitments or obligations of
the Company or the Subsidiary of any kind whatsoever, there is no valid basis
for the assertion of any such Liabilities, commitments or obligations, and no
existing condition, situation or set of circumstances which is reasonably likely
to result in such a Liability, commitment or obligation, other than Liabilities,
commitments and obligations incurred in the ordinary course of business, none of
which results from, arises out of, relates to, is in the nature of, or was
caused by any breach of contract, breach of warranty, tort, infringement or
violation of law or relates to indebtedness for borrowed money or inter-company
debt or debt owed to Affiliates and such additional Liabilities, commitments and
obligations are not, in the aggregate, material.
Section 2.11. Absence of Certain Changes. The Company and the
Subsidiary have conducted their respective businesses only in the ordinary and
usual course and there has been no adverse change in or effect on the assets,
properties, business, operations, prospects, customer, supplier or employee
relations, operating results or condition (financial or otherwise) of the
Company and the Subsidiary taken as a whole or in the ability of the Company or
the Subsidiary to perform this
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Agreement, the Additional Agreements and the transactions contemplated hereby
and thereby (an "Adverse Effect"). There is no event, condition, circumstance
or, to the Knowledge of the Company or the Subsidiary, prospective development
which may or threatens to have an Adverse Effect.
Section 2.12. Litigation. Except as set forth on Schedule 2.10
attached hereto, which contains a list and summary description of all pending
and, to the Knowledge of the Company or the Subsidiary, threatened Claims, there
are no Claims pending or, to the Knowledge of the Company or the Subsidiary,
threatened before any Governmental Authority or before any arbitrator of any
nature, brought by or against the Company, the Subsidiary, or any of their
respective officers, directors, employees or agents involving, affecting or
relating to the business, assets, operations or securities of the Company or the
Subsidiary, or the transactions contemplated by this Agreement or the Additional
Agreements, nor is there any basis for any such Claim. None of the Company or
the Subsidiary or any of their respective businesses, assets or properties is
subject to any order, writ, judgment, award, injunction or decree of any
Governmental Authority or arbitrator. No present or former employee of the
Company or the Subsidiary has made or is entitled to assert any Claim against
the Company or the Subsidiary by virtue of any patent or latent
employment-related health defect.
Section 2.13. Liens and Encumbrances. The Company and the Subsidiary
hold and own full, unconditional, good and marketable title to all of the assets
used in their respective businesses, in each case free and clear of all Liens
except for Liens on assets leased or licensed by the Company or the Subsidiary,
in which case the Company or the Subsidiary holds a leasehold or licensed
interest free and clear of all other Liens except for the lessor's or licensor's
interest therein. All of the assets of the Company and the Subsidiary are owned
or leased by the Company or the Subsidiary and are in good operating condition
in accordance with industry practice (subject to normal wear and tear).
Section 2.14. Contracts. Each of the contracts, mortgages, notes,
security agreements, trust indentures, arrangements, leases, licenses,
commitments and other agreements and instruments (collectively, "Contracts") to
which the Company or the Subsidiary is a party which relates to or affects the
capital stock, business, assets, properties or operations of the Company or the
Subsidiary or to which the Company or the Subsidiary or their respective
businesses, assets, properties or operations may be bound or subject can be
performed in the ordinary course of business. Each of the Contracts is valid and
binding and in full force and effect and is enforceable against the parties
thereto in accordance with its terms, and there are no existing defaults or
events of default which (whether with or without notice, lapse of time or the
happening or occurrence of any other event) would constitute a default by the
Company or the Subsidiary thereunder. The consummation of the transactions
contemplated hereby, without notice to or consent or approval of any party, will
not constitute a default under or a breach of any provisions of any Contracts
and the Company and the Subsidiary will have and may enjoy and enforce all
rights and benefits under each such Contract. There is no Lien on the Company's
or the Subsidiary's interests under any of the Contracts.
Section 2.15. Employee Benefit Plans.
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(a) The Lumenon Innovative Lightwave Technology, Inc. Stock Option Incentive
Plan (the "Lumenon Stock Option Plan") is the only Plan of the Company, the
Subsidiary or any ERISA Affiliate. Except for the obligations of the Company to
issue shares of Common Stock pursuant to the outstanding options listed on
Schedule 2.5 hereof under the Lumenon Stock Option Plan, none of the Company,
the Subsidiary or any ERISA Affiliate has any Liabilities with respect to any
Plan of the Company, the Subsidiary or any ERISA Affiliate.
Section 2.16. Environmental Matters.
(a) The Company and the Subsidiary are, and at all times have been, in
compliance with all applicable Environmental Laws, which compliance includes the
possession by the Company and the Subsidiary of all permits and other
governmental authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof. The Company and the Subsidiary
have not received any communication (written or oral), whether from a
Governmental Authority, Person, citizens group or otherwise, that alleges that
the Company or the Subsidiary is not or was not in compliance with any
Environmental Law, and there are no circumstances that may prevent or interfere
with such compliance in the future. Schedule 2.16 sets forth all environmental
audits and similar reports with respect to each parcel of Real Estate (as
defined below) and each parcel of real property which the Company or the
Subsidiary previously owned, used, leased or subleased. The Company and the
Subsidiary have provided Purchaser with accurate and complete copies of such
environmental audits and similar reports.
(b) There is no Environmental Claim pending or, to the Knowledge of the Company
or the Subsidiary, threatened against the Company or the Subsidiary or against
any Person whose Liability for any Environmental Claim that the Company or the
Subsidiary has or may have retained or assumed either contractually or by
operation of law.
(c) There are no past or present actions, activities, circumstances, conditions,
events or incidents, including the release, emission, discharge, presence or
disposal of any Materials of Environmental Concern, or exposures of employees or
other Persons to Materials of Environmental Concern that could form the basis of
any Environmental Claim against the Company or the Subsidiary or against any
Person whose Liability for any Environmental Claim the Company or the Subsidiary
has or may have retained or assumed either contractually or by operation of law.
(d) Without in any way limiting the generality of the foregoing, (i) all on-site
and off-site locations where the Company or the Subsidiary has stored or has
disposed or arranged for the disposal of, Materials of Environmental Concern,
are identified in Schedule 2.16, (ii) all underground storage tanks previously
or presently located on property owned or leased by the Company or the
Subsidiary are identified in Schedule 2.16, along with a description of the
capacity and contents of such tanks, any removal or closure activities
associated with such tanks and the compliance of such tanks with underground
storage tank requirements and (iii) except as set forth in Schedule 2.16, there
is no asbestos contained in or forming part of any building, building component,
equipment, structure or office space owned or leased by the Company or the
Subsidiary.
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Section 2.17. Taxes. The Company and the Subsidiary have timely
filed or caused to be filed all U.S. federal, Canadian, state, provincial, local
and foreign Tax and information returns required to be filed by each of them and
have paid or caused to be paid, or have made adequate provision or set up an
adequate accrual or reserve for the payment of, all Taxes required to be paid in
respect of the periods for which returns are due, and have established an
adequate accrual or reserve for the payment of all Taxes payable in respect of
the period, including portions thereof, subsequent to the last of said periods
required to be so accrued or reserved up to and including the date hereof.
Neither the Company nor the Subsidiary is delinquent in the payment of any Tax,
and no deficiencies for any Tax, assessment or governmental charge have been
claimed, proposed, assessed or, to the Knowledge of the Company or any
Stockholder, threatened. There are no Liens on the assets of the Company or any
of its Subsidiaries for unpaid Taxes. No waiver or extension of time to assess
any Taxes has been given or requested. No claim has been made by any taxing
authority in any jurisdiction where the Company or the Subsidiary does not file
Tax Returns that the Company or the Subsidiary is or may be subject to taxation
by that jurisdiction. The Company's and the Subsidiary's Tax Returns have never
been audited by the Internal Revenue Service or comparable state, local or
foreign agencies.
Except for the Affiliated Group of which the Company is the common
parent, neither the Company nor the Subsidiary has been a member of an
Affiliated Group or been included in a combined, consolidated or unitary Tax
Return. Neither the Company nor the Subsidiary is a party to or bound by any Tax
allocation or Tax sharing agreement or has any current or potential obligation
to indemnify any other Person with respect to Taxes. Neither the Company nor the
Subsidiary has been a United States real property holding corporation within the
meaning of Code Section 897(c)(2) during the applicable periods specified in
Code Section 897(c)(1)(a)(ii). Neither the Company nor the Subsidiary is
required to make any adjustments under Section 481(a) of the Code by reason of a
change in accounting method which affects any taxable year ending after the
Closings, or has any application pending to effect such a change of accounting
method. Neither the Company nor the Subsidiary is obligated to make any
payments, or is a party to an agreement or Plan that could make it obligated to
make payments, which will not be deductible under Section 280G of the Code.
Section 2.18. Compliance with Applicable Law.
(a) Each of the licenses, permits, franchises, authorizations, registrations and
approvals (the "Licenses") issued or granted to the Company or the Subsidiary by
any Governmental Authority has been duly obtained, is valid and in full force
and effect and is not subject to any pending or, to the Knowledge of the Company
or the Subsidiary, threatened administrative or judicial proceeding to revoke,
cancel or declare such License invalid in any respect. No default or breach
exists with respect to any of the Licenses and no event or condition exists
which but for the lapse of time or notice or both would constitute a default or
breach with respect to any of the Licenses. Consummation of the transactions
contemplated hereby will not affect the validity of any License or give rise to
any administrative or judicial proceeding which may modify, revoke, cancel or
declare such License invalid in any respect. Each of the Company and the
Subsidiary holds, and at all times has held, all Licenses necessary for the
lawful conduct of its business under and pursuant to, and the business of each
of the Company and the Subsidiary is not being and has not been conducted in
violation of, any Rule of any Governmental Authority applicable to the Company,
the Subsidiary or any of their respective properties, assets or operations.
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(b) The Company and the Subsidiary have complied with the Rules, and neither the
Company nor the Subsidiary has received any notification of any asserted present
or past failure by the Company or the Subsidiary to comply with the Rules.
Neither the Company, the Subsidiary nor any of their respective directors,
officers, agents or employees nor has any distributor, licensee or any other
Person acting on behalf of the Company or the Subsidiary (i) made any unlawful
political contributions, (ii) made any payment or provided services which were
not legal to make or provide or which the Company or the Subsidiary or any
directors, such officers, employees or other Persons should have Known were not
legal for the payee or the recipient of such services to receive, (iii) received
any payments, services or gratuities which were not legal to receive or which
the Company or the Subsidiary or such Persons should have Known were not legal
for the payor or the provider to make or provide, (iv) had any transactions or
payments which are not recorded in its accounting books and records or disclosed
in its financial statements, (v) has had any off-book bank or cash accounts or
"slush funds", (vi) made any payments to governmental officials in their
individual capacities for the purpose of affecting their action or the action of
the government they represent to obtain special concessions, or (vii) made
illegal payments to obtain or retain business.
Section 2.19. Brokers' Fees and Commissions. Neither the Company,
the Subsidiary or any Stockholder nor any of their respective directors,
officers, employees or agents has employed any investment banker, broker, finder
or intermediary in connection with the transactions contemplated hereby.
Section 2.20. Proprietary Rights. Except as set forth on Schedule
2.20 hereto, the Company or the Subsidiary owns, on an exclusive basis free and
clear of all Liens, or has the exclusive right to use, all of its Proprietary
Rights without any limitations or restrictions of any kind and without Known
conflict or asserted conflict with intellectual property rights of others, and
such Proprietary Rights constitute all the Proprietary Rights that are used in
or necessary for the conduct of the Company and the Subsidiary's businesses as
presently being conducted and as contemplated to be conducted in the foreseeable
future. Except as set forth on Schedule 2.20 hereto, neither the Company nor the
Subsidiary pays to or receives any royalty from anyone under any of the
Proprietary Rights or has licensed anyone to use any of them. Except as set
forth on Schedule 2.20 hereto, neither the Company nor the Subsidiary is a party
to any license or agreement relating to any Know-how and the Company and the
Subsidiary owns or is legally entitled to exploit its Know-how without
restrictions and free of any claim or claim of infringement. All rights of the
Company and the Subsidiary in and to the Proprietary Rights will be unaffected
by the transactions contemplated by this Agreement. Neither the Company nor the
Subsidiary has given or received any notice of any pending conflict with, or
infringement of, the rights of others with respect to any Proprietary Rights or
with respect to any license of Proprietary Rights under which the Company or the
Subsidiary is licensor or licensee or with respect to the trade dress or
packaging of any products bearing the Trademarks set forth on Schedule 2.20. No
Claim is pending, or, to the Knowledge of the Company or the Subsidiary,
threatened, which involves Proprietary Rights and there are no interference,
opposition or cancellation proceedings or infringement suits pending, or to the
Knowledge of the Company or the Subsidiary, threatened with respect to any
Proprietary Rights. Neither the Company nor the Subsidiary is subject to any
judgment, order, writ, injunction or decree of any Governmental Authority which
restricts or impairs the use of any such Proprietary Rights. Except as set forth
on Schedule 2.20 hereto, neither the Company nor the Subsidiary has entered into
or is a party to
-10-
any contract which restricts or impairs the use of any such Proprietary Rights.
No Proprietary Rights owned, used or under development by the Company or the
Subsidiary, and no services or products sold by the Company or the Subsidiary,
conflict with or infringe upon any proprietary rights of any third party. To the
Knowledge of the Company or the Subsidiary, there exists no basis which would
render invalid the Proprietary Rights. Neither the Company nor the Subsidiary
has entered into any consent, indemnification, forbearance to xxx or settlement
agreement with respect to Proprietary Rights and, no Claims have been asserted
by any Person with respect to the validity of, or the Company's or the
Subsidiary's ownership of or right to use, the Proprietary Rights and there is
no basis for any such Claim. The Proprietary Rights are valid and enforceable
and no application, patent or registration relating thereto has lapsed, expired
or been abandoned or canceled or is the subject of cancellation or other
adversarial proceeding, and all pending applications are in good standing. Each
of the Company and the Subsidiary is the owner of record of all copyrights,
trademarks, service marks, logos, slogans, and trade names for which
registrations have been issued to the Company or the Subsidiary by the United
States Patent and Trademark Office, the Patent Office, Trade-Xxxx Office,
Copyright Office or other body administered by the Canadian Intellectual
Property Office or any similar office of a foreign country. Each of the Company
and the Subsidiary has complied with its respective contractual obligations
relating to the protection of the Proprietary Rights used pursuant to licenses.
The Company and the Subsidiary have taken all commercially reasonable steps
necessary to maintain their respective rights in the Proprietary Rights. To the
Knowledge of the Company or the Subsidiary, no Person is infringing on or
violating the Proprietary Rights owned or used by the Company or the Subsidiary.
The Company and the Subsidiary have never operated under any name other than
Lumenon Innovative Lightwave Technology, Inc., WWV Development, Inc. or Lumenon
Innovative Lightwave Technology Lilt, Inc.
Section 2.21. Labor Matters.
(a) The Company has no present or former employees. The Subsidiary has no
present or former employees in the United States. Schedule 2.21 sets our truly
and correctly the names of all employees of the Subsidiary, their annual salary
or remuneration, seniority, vacation entitlement and benefits (including any
bonus, RRSP contribution, general expense or travel expense account and date of
hire by the Subsidiary, together with an indication of whether any of such
persons benefit from a written contract. True and complete copies of any such
contracts, or in the case of verbal commitments, written summaries of the terms
thereof have been provided to Purchaser. All reports and returns filed with any
regulatory agency within the past five (5) years in respect of any of the
foregoing, have also been made available to Purchaser. No present or former
employee or independent contractor performing services for the Subsidiary has a
Claim pending or, to the Knowledge of the Company or the Subsidiary, has
threatened to make a Claim of any kind against the Company or the Subsidiary
(under any Rule of any Governmental Authority or otherwise). There are no
administrative charges, arbitration or mediation proceedings or court complaints
pending or, to the Knowledge of the Company or the Subsidiary, threatened
against the Company or the Subsidiary before the U.S. Equal Employment
Opportunity Commission, the Quebec Labour Standards Commission, the Quebec Human
Rights Commission or any other state, provincial or federal board, tribunal
commission of Governmental Authority or any court or agency or any other entity
concerning alleged employment discrimination, contract violation or any other
matters relating to the employment of labor. There is no unfair labor practice
charge or complaint pending or, to the Knowledge of the
-11-
Company or the Subsidiary, threatened against the Company or the Subsidiary
before the National Labor Relations Board, the Quebec labour commission, the
Quebec labour court or any other state, provincial or federal board, tribunal or
other Governmental Authority having jurisdiction in labour matters or any
similar body.
(b) The Subsidiary is and has been in compliance with all applicable Rules
relating to the employment of labor, including employment and employment
practices, terms and conditions of employment, wages and hours, equal
opportunity, occupational health and safety, severance, termination or
discharge, the trade unions, collective bargaining and the payment of employee
welfare and retirement and other taxes, immigration and training, including
without limitation the Worker Adjustment Retraining and Notification Act and the
Immigration Reform and Control Act of 1986, each as amended, and are not engaged
in any unfair labor practice or any violation of any other law, rule or
regulation concerning employment or retention of independent contractors.
(c) The Subsidiary is not a signatory or party to, or otherwise bound by, a
collective bargaining agreement (or any other agreement with any labor
organization) which covers employees of the Subsidiary, and there is no activity
or proceeding of any labor organization (or representative thereof) to organize
any unorganized employees of the Subsidiary. The Subsidiary has not experienced
any material work stoppage, and there is not pending or threatened against the
Subsidiary any labor dispute, grievance, slowdown, lockout, strike, work
stoppage or other collective labor action in effect, pending or threatened
against or affecting the business of the Company or the Subsidiary. To the
Knowledge of the Company or the Subsidiary, no executive, key employee or group
of employees of the Company or the Subsidiary has any plan to terminate
employment with the Subsidiary.
Section 2.22. Non-Compete Agreements. No oral or written Contract,
license or permit restricts the ability of the Company or the Subsidiary to own,
possess or use its assets or conduct its business or operations in any
geographic area or restricts in any way the full participation of any of the
Stockholders or, to the Knowledge of the Company or the Subsidiary, any
employees of the Subsidiary in the operation of such business.
Section 2.23. Inventory. Neither the Company nor the Subsidiary has
or has had any Inventory. Neither the Company nor the Subsidiary has
manufactured, processed, serviced, distributed, shipped or sold any product or
entered into an agreement for such activities. Neither the Company nor the
Subsidiary has provided or sold any of its services or entered into an agreement
to sell or provide services other than as contemplated by the Teaming Agreement.
Section 2.24. Accounts Receivable. Neither the Company nor the
Subsidiary has or has had any outstanding accounts, notes or receivables.
Section 2.25. Insurance. All binders, policies of insurance, self
insurance programs or fidelity bonds maintained by the Company or the Subsidiary
or in which the Company or the Subsidiary is a named insured are described on
Schedule 2.25 ("Insurance") and have been issued by financially sound insurance
companies under valid and enforceable policies or binders for the benefit of the
Company and the Subsidiary, and all such policies or binders are in full force
and effect. There are and have been no inaccuracies in any application for
Insurance policies, nor
-12-
any failure to pay premiums thereon when due or otherwise comply with the terms
thereof. The Company and the Subsidiary have not received any notice from any of
their insurance carriers that any insurance premiums will be increased in the
future or that any Insurance will not be available to the Company and the
Subsidiary in the future on substantially the same terms as now in effect. There
are no pending or asserted claims against any Insurance as to which any insurer
has denied liability, and there are no claims under any Insurance that have been
disallowed or improperly filed. The Company and the Subsidiary will have no
liability for any healthcare, medical, disability, death benefit or similar
expenses of any director or employee of the Company or the Subsidiary or any
other Person which are the result of injuries or illnesses which occurred prior
to the date of this Agreement (regardless of when such expenses are incurred).
Section 2.26. Real Estate.
(a) Neither the Company nor any Subsidiary owns any real property.
(b) The Company or the Subsidiary, as applicable, has been in peaceable
possession of each parcel of real property leased or subleased by the Company or
the Subsidiary (collectively, the "Real Estate") since the commencement of the
original term of the lease, sublease or other agreement relating to such parcel
of Real Estate (collectively, the "Real Estate Leases"), and has performed all
obligations required to be performed by it to date under the Real Estate Leases.
Neither the Real Estate Leases nor the leasehold interest of the Company or the
Subsidiary with respect to the Real Estate is subject to any Liens; and none of
such Real Estate is subject to any easements, rights of way, licenses, grants,
building or use restrictions, exceptions, reservations, limitations or other
impediments which adversely affect the value of the leasehold interest therein
or which interfere with or impair the present and continued use thereof in the
usual and normal conduct of the business of the Company and the Subsidiary.
Neither the Company, the Subsidiary nor, to the Knowledge of the Company or the
Subsidiary, any other party to the Real Estate Leases is in default under any of
the Real Estate Leases.
(c) No real property other than the Real Estate is used in the business of the
Company and the Subsidiary. No Real Estate is located within a flood or
waterfront erosion hazard area, and the buildings, structures and improvements
situated thereon and appurtenances thereto and are in good condition (subject to
normal wear and tear), and as such will be, when completed, adequate to conduct
the business of the Company and the Subsidiary as the Company and the Subsidiary
intend in conducting their business. Neither the whole nor any portion of any
Real Estate has been condemned, requisitioned or otherwise taken by any public
authority, and no such condemnation, requisition or taking is threatened or
contemplated.
(d) The Real Estate is in compliance with, includes all rights necessary to
assure compliance with, and all buildings, structures, other improvements and
fixtures on such Real Estate and the operations therein conducted conform in all
respects to, all applicable health, fire, water, environmental, safety, zoning,
building, use or similar Rules and all applicable Rules adopted by national and
local associations and boards of insurance underwriters. The zoning of each
parcel of Real Estate permits the existing improvements and the continuation
following consummation of the transactions contemplated hereby of the business
of the Company and the Subsidiary as presently conducted thereon. The Company
and the Subsidiary have all licenses, certificates of occupancy, permits and
authorizations required to operate their businesses and utilize the Real
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Estate. The Company and the Subsidiary have all easements and rights necessary
or appropriate to conduct their operations, including easements for all
utilities, services, roadway, railway and other means of ingress and egress and
each parcel of Real Estate has direct access to public roadways.
Section 2.27. Products and Warranty Liability. Except as set forth
on Schedule 2.27 attached hereto, there is no Claim by or before any
Governmental Authority pending or, to the Knowledge of the Company or the
Subsidiary, threatened against or involving the Company or the Subsidiary
relating to any product alleged to have been processed, manufactured, serviced
or sold by the Company or the Subsidiary and alleged to have been defective, or
improperly processed, manufactured or serviced, nor is there any valid basis for
any such action, proceeding or investigation.
Section 2.28. Transactions with Related Parties. Since the Company's
inception, there have not been nor are there now any transactions between the
Company or the Subsidiary and (i) any director, officer, employee, stockholder
or Affiliate of the Company, or (ii) any relative or spouse (or relative of such
spouse) of any such director, officer, employee, stockholder or Affiliate (such
Persons in (i) and (ii) being referred to herein as a "Related Party" or
collectively as the "Related Parties"). Since the Company's inception, no
Related Party has been a director or officer of, or has had any direct or
indirect interest in, any firm, corporation, association or business enterprise
which during such period has been a supplier, customer, sales agent, licensor,
licensee, lessor or lessee of the Company or the Subsidiary, or has competed
with or been engaged in any business of the kind being conducted by the Company
or the Subsidiary. No Related Party has an interest in or owns, directly or
indirectly, in whole or in part, any tangible or intangible property of the
Company or the Subsidiary, or that the Company or the Subsidiary uses in the
conduct of its business. No Related Party has any cause of action or other claim
whatsoever against or owes any money or other amounts to, nor is any Related
Party owed any money or other amounts by, the Company or the Subsidiary other
than amounts owed for compensation, employee benefits or travel expenses
incurred in the ordinary course of business. No Related Party is a party to any
contract, lease, agreement, arrangement or commitment used in the operations of
the Company or the Subsidiary. The Company and the Subsidiary have not directly
or indirectly (i) created, incurred or assumed any indebtedness for borrowed
money or otherwise created any Liability to any Related Party, or (ii) made any
loans, payments or transfers of Company or Subsidiary assets to any Related
Party other than for salaries paid for services actually performed in amounts in
keeping with the ordinary course of business.
Section 2.29. Customers and Vendors. Neither the Company nor the
Subsidiary has any material vendors or customers.
Section 2.30. Business Plan. The business plan delivered by the
Company to Purchaser (the "Business Plan") was prepared by the Company in good
faith and in a manner consistent with reasonable forecasting practices, and the
Company and the Subsidiary believe that the assumptions upon which the Business
Plan is based are reasonable.
Section 2.31. Year 2000 Compliance. All computer, network or other
data processing hardware, software, systems and technology, and all computer
controlled facility components (defined as software driven technology and
embedded microchip technology, including programmable
-14-
thermostats, HVAC controllers, auxiliary elevator controllers, utility
monitoring and control systems, fire detection and suppression systems, alarms,
security systems, and any other facilities control systems utilizing
microcomputer, minicomputer, or programmable logic controllers) (collectively
the "Computer Systems") owned or used by the Company or the Subsidiary are fully
Year 2000 Compliant (as defined below). The Company and the Subsidiary have not
suffered, and the Company and the Subsidiary reasonably expect that the Company
and the Subsidiary will not at any time hereafter suffer any interruption of, or
interference with, its business operations or activities by reason of the
failure of any Computer Systems owned or used by the Company, the Subsidiary or
any of its suppliers or customers to be Year 2000 Compliant. For such purposes,
"Year 2000 Compliant" means, with respect to any Computer Systems owned or used
by any Person, that such Computer Systems (a) will correctly store, represent,
and process (including sort) all dates (including single and multi-century
formulas and leap year calculations), such that errors will not occur when the
date being used is in the Year 2000, or in a year preceding or following the
Year 2000; and (b) will operate and will not cause or result in an abnormal
termination or ending.
Section 2.32. Securities Exchange Act. Neither the Company nor the
Subsidiary is now or ever has been subject to the Securities Exchange Act of
1934, as amended. The Subsidiary is a "closed company" as this term is defined
in the Securities Act (Quebec), neither the Company nor the Subsidiary is a
"reporting issuer" and neither of them has made a "distribution" of securities
to the public under the Securities Act of Quebec.
Section 2.33. Disclosure. The documents, agreements and other papers
and materials delivered by or on behalf of the Company and the Subsidiary which
are listed on Schedule 2.33 were true, complete and accurate as of the date
delivered and, except as indicated on Schedule 2.33, are true, complete and
accurate as of the date of this Agreement. None of the representations,
warranties or statements of the Company or the Subsidiary contained in this
Agreement, in the Schedules or Exhibits hereto, or in any Additional Agreement
contains any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the representations,
warranties or statements made, in the context in which made, not false or
misleading. There is no fact that the Company or the Subsidiary has not
disclosed to Purchaser in writing that causes an Adverse Effect or could result
in an Adverse Effect. The Company and the Subsidiary acknowledge that the
statements contained in this Section shall not be deemed to limit or qualify any
of the other representations or warranties contained in this Agreement, in the
Schedules or Exhibits hereto or in any agreement or document delivered in
connection herewith.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF PURCHASER
Purchaser hereby represents and warrants to the Company and the
Subsidiary that:
Section 3.1. Organization and Qualification. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware.
-15-
Section 3.2. Authorization. Purchaser has full corporate power and
authority to execute and deliver this Agreement and the Additional Agreements to
which it is a party and to perform and observe fully its obligations hereunder
and thereunder and to consummate the transactions contemplated hereby and
thereby. Purchaser has taken all corporate action required to authorize the
execution, delivery and performance by it of this Agreement and the Additional
Agreements to which it is a party and the consummation by it of the transactions
contemplated hereby and thereby. This Agreement and the Additional Agreements to
which Purchaser is a party have been duly and validly executed and delivered by
Purchaser, and, assuming due authorization, execution and delivery by the
Company, the Subsidiary and the Primary Stockholders, will constitute a valid
and binding obligation of Purchaser, enforceable against Purchaser in accordance
with its terms.
ARTICLE IV
COVENANTS
Section 4.1. Use of Proceeds. The Company shall use the proceeds of
the Purchase Price for general working capital purposes; provided however that
none of the proceeds of the Purchase Price shall be used for Capital
Expenditures.
Section 4.2. Further Assurances. If at any time after the date
hereof any further action is necessary or desirable to carry out the purposes of
this Agreement or the Additional Agreements, including the execution of
additional instruments, each party to this Agreement or the Additional
Agreements, as applicable, shall take all such necessary action.
Section 4.3. Public Announcements. The Company and the Subsidiary
shall submit to the Purchaser all advertising, written sales promotions, press
releases and other publicity matters relating to this Agreement or the
Additional Agreements or any of the transactions contemplated by this Agreement
or the Additional Agreements and shall not publish or use such advertising,
written sales promotion, press releases or other publicity matters without the
prior written consent of the Purchaser which shall not be unreasonably withheld.
Notwithstanding the foregoing sentence, in the event that either the Company or
the Subsidiary is required to issue a press release or make any filing relating
to this Agreement or the Additional Agreements or any of the transactions
contemplated by this Agreement or the Additional Agreements by the laws or
regulations of any Governmental Authority, such party shall (a) give notice and
a copy of the proposed press release or filing to the Purchaser as far in
advance as reasonably possible (but in any event not less than one business day
prior to the publication or filing, as applicable) and (b) make any changes to
such press release reasonably requested by the Purchaser.
ARTICLE V
SURVIVAL AND INDEMNIFICATION
Section 5.1. Survival and Remedies. All representations and
warranties of each of the parties hereto contained in this Agreement or the
Additional Agreements, including all statements contained in any certificate,
schedule, document or other writing delivered pursuant hereto or in connection
with the transactions contemplated hereby, shall be deemed to be representations
and warranties within the meaning of this Section 5.1, and to have been relied
upon by Purchaser or the
-16-
Company and the Subsidiary, as the case may be, and shall survive the Closings
until the date which is two years after the Closing, except in the case of
representations and warranties set forth in Sections 2.1, 2.3, 2.5, 2.6, 2.10,
2.13, 2.15, 2.16, 2.17, 2.18, 2.27, 3.1 and 3.2, as to which claims may be made
at any time (regardless of whether the facts giving rise to such claim are also
the subject of any expired representation or warranty). Notwithstanding anything
to the contrary in the previous sentence, any claim for indemnification relating
to a breach of any such representation or warranty asserted in writing on or
before the expiration of the relevant time period shall survive, and the
representations and warranties referenced in such claim shall survive for
purposes of such claim, until resolved or judicially determined. All of the
covenants and agreements of each of the parties hereto contained in this
Agreement or in any document delivered pursuant to this Agreement shall survive
the Closings, and claims for indemnification relating to a breach of any such
covenant or agreement may be made at any time. In the event of a breach of any
of such representations, warranties, covenants and agreements, the party to whom
such representation, warranty, covenant or agreement has been made shall have
all rights and remedies for such breach available to it under the provisions of
this Agreement, or otherwise, whether of law or in equity, regardless of any
disclosure to, or investigation made by or on behalf of such party on or before
the Closings. The rights and remedies of any party based upon, arising out of or
otherwise in respect of any inaccuracy in or breach of any representation,
warranty, covenant or agreement contained in this Agreement or any Additional
Agreement shall in no way be limited by the fact that the act, omission,
occurrence or other state of facts upon which any claim of any such inaccuracy
or breach is based may also be the subject matter of any other representation,
warranty, covenant or agreement contained in this Agreement or any Additional
Agreement as to which there is no inaccuracy or breach.
Section 5.2. Indemnification of Purchaser. The Company and the
Subsidiary shall jointly and severally indemnify, defend and hold harmless,
Purchaser and its past, present and future directors, officers, employees,
agents, subsidiaries and Affiliates (the "Purchaser Indemnified Parties") for
any and all loss, damage, expense (including court costs, amounts paid in
settlement, judgments, attorneys' fees and other expenses for investigating and
defending), suit, action, claim, deficiency, Liability or obligation related to,
resulting from, caused by or arising from (a) any breach of any representation
or warranty made by the Company or the Subsidiary herein, in the Additional
Agreements or in any other agreement, instrument or document delivered by the
Company and the Subsidiary, or any of their respective Affiliates pursuant
hereto and any and all claims made in good faith based upon facts alleged that,
if true, would have constituted any such inaccuracy or breach, (b) any failure
to perform or breach of any covenant or agreement made by the Company, or the
Subsidiary herein or in the Additional Agreements or in any other agreement,
instrument or document delivered by the Company or any of their respective
Affiliates pursuant hereto and any and all claims made in good faith based upon
facts alleged that, if true, would have constituted any such breach or failure,
(c) any claims made by the Stockholders or other Persons who claim any direct or
indirect, past or present, right in or to any capital stock of or equity
interest in the Company or the Subsidiary relating to the validity, fairness or
enforceability of the terms of the transactions contemplated hereby or by the
Additional Agreements, and (d) the Service Agreement dated December 15, 1997 by
and among LaCorporation du Centre D'Incubation D'Enterprises du Quebec Inc. and
Dr. S. Xxxx Xxxxxx and Dr. Xxxx Xxxx Xxxxxxx, and Newco (collectively, the
"Damages").
-17-
Section 5.3. Indemnification by Purchaser. Purchaser shall
indemnify, defend and hold harmless each of the Company and its past, present
and future directors, officers, employees, agents, subsidiaries and Affiliates
(the "Seller Indemnified Parties") for any and all loss, damage, expense
(including court costs, amounts paid in settlement, judgments, attorneys' fees
and other expenses for investigating and defending), suit, action, claim,
deficiency, liability or obligation related to, caused by or arising from any
inaccuracy or breach of any representation or warranty, any failure to perform
or breach of any covenant or agreement made by the Purchaser herein or in any
other agreement, instrument or document delivered by Purchaser pursuant hereto,
and any and all claims made in good faith based upon facts alleged that, if
true, would have constituted any such misrepresentation, breach or failure.
Section 5.4. Treatment of Indemnification Payments. Amounts paid to
an Indemnified Party as indemnification hereunder shall be treated as
adjustments to the Purchase Price, as applicable. If any Tax authority asserts
that an indemnification payment is not such an adjustment, the Indemnifying
Party shall indemnify the Indemnified Party for any Tax imposed upon the
Indemnified Party in connection with its receipt of such indemnification
payment, including any Tax imposed on any payment pursuant to this Section 5.4.
Section 5.5. Rights of Recoupment and Set-Off. Each Purchaser
Indemnified Party shall have the right, but not the obligation, to recoup and
set off any Damages resulting from any claims of any Purchaser Indemnified Party
for indemnification hereunder against any and all amounts due or to become due
to the Company or any of their Affiliates from Purchaser or any Affiliate of
Purchaser under this Agreement or any Additional Agreement. The Company and the
Subsidiary expressly agree that the Purchaser Indemnified Parties shall be
entitled, but are not required, to aggregate their debts to and claims against
the Company and the Subsidiary and their Affiliates pursuant to this Agreement
and the Additional Agreements for purposes of recoupment and set off, regardless
to which of them the debt is owed or against whom the claim is. The parties
acknowledge and agree that the rights of recoupment and set off set forth in
this Section 5.5 are a condition to Purchaser agreeing to enter into and perform
this Agreement and the Additional Agreements and that the rights of the Company,
the Subsidiary, the Primary Stockholders and their Affiliates under this
Agreement or the Additional Agreements are subject to such rights.
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.1. Amendment and Modification. This Agreement may be
amended only pursuant to a written instrument signed on behalf of the Company
and the Purchaser.
Section 6.2. Waiver of Compliance; Consents. Any failure of
Purchaser, on the one hand or the Company or Subsidiary, on the other hand, to
comply with any obligation, covenant, agreement or condition contained herein
may be waived by the Purchaser, the Company or the Subsidiary, respectively, but
such waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any other failure. No waiver of any provision of this Agreement
shall be binding unless executed in writing by the party to be bound thereby.
The failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such
-19-
provision, nor in any way to affect the validity of this Agreement or any part
hereof or the right of any party to enforce any such provision.
Section 6.3. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
Section 6.4. Expenses and Obligations. All costs and expenses
incurred in connection with the consummation of the transactions contemplated by
this Agreement by Purchaser shall be paid by Purchaser, all costs and expenses
incurred in connection with the consummation of the transactions contemplated by
this Agreement by the Company shall be paid by the Company and all costs and
expenses incurred in connection with the consummation of the transactions
contemplated by this Agreement by the Subsidiary shall be paid by the
Subsidiary.
Section 6.5. Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and, nothing in this
Agreement except as set forth in Article V hereof, express or implied, is
intended to confer upon any other Person any rights or remedies of any nature
whatsoever under or by reason of this Agreement.
Section 6.6. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given upon the earlier of delivery
thereof if by hand or upon receipt if sent by mail (registered or certified
mail, postage prepaid, return receipt requested) or on the second next business
day after deposit if sent by a recognized overnight delivery service or upon
transmission if sent by telecopy or facsimile transmission (with request of
assurance of receipt in a manner customary for communication of such type) as
follows:
(s) If to Purchaser to:
Molex Incorporated
0000 Xxxxxxxxxx Xxxxx
Xxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxx, Corporate Secretary and General Counsel
Xxxxxx Xxx, Vice President, New Ventures & Acquisitions
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
8000 Sears Tower
000 X. Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxx, Esq.
Telecopy: (000) 000-0000
(t) if to the Company or the Subsidiary, to:
Lumenon Innovative Lightwave Technology, Inc.
0000 Xxxx Xxxxxx
-00-
Xxxxxx, Xxxxxx X0X 0X0, Xxxxxx
Attn: Xxxx Xxxxxx
Telecopy: (000) 000-0000
with a copy to:
De Grandepre Chaurette Xxxxxxxx
2000 XxXxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, Xxxxxx X0X 0X0, Xxxxxx
Attn: Xxxxxx Xxxxxxx
Telecopy: (000) 000-0000
Sectopm 6.7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
the conflicts-of-laws rules thereof.
Section 6.8. Jurisdiction and Venue. Each party hereto hereby agrees
that any proceeding relating to this Agreement or any of the Additional
Agreements shall be brought exclusively in a state court of Illinois or a
federal court located in Illinois. Each party hereto hereby consents to personal
jurisdiction in any such action brought in any such Illinois or federal court,
consents to service of process by registered mail made upon such party and such
party's agent and waives any objection to venue in any such Illinois or federal
court and any claim that any such Illinois or federal court is an inconvenient
forum.
Section 6.10. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
Section 6.11. Headings. The article and section headings contained
in this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not affect in any way the meaning or
interpretation of this Agreement.
Certain Definitions. For purposes of this Agreement, the term:
(a) "Additional Agreements" shall mean (i) the Teaming Agreement, (ii) the
Services Common Stock Purchase Warrant in substantially the form attached hereto
as Exhibit 6.11(ii), (iii) the Cash Common Stock Purchase Warrant in
substantially the form attached hereto as Exhibit 6.11(iii), (iv) a Stock
Restriction Agreement among the Company, Purchaser and certain Stockholders in
substantially the form attached hereto as Exhibit 6.11(iv), (v) a Registration
Rights Agreement among the Company, Purchaser and certain Stockholders in
substantially the form attached hereto as Exhibit 6.11(v) and (vi) all other
agreements and documents accompanying the foregoing;
(b) "Affiliate" shall mean (i) a Person that directly or indirectly, through one
or more intermediaries, controls, is controlled by, or is under common control
with, another Person and (ii) any parent, spouse, lineal descendant or adopted
child of a Person specified in clause (i), any spouse or adopted child of any
such descendant or any child of such spouse, the executors, administrators,
conservators or personal representatives of any Person referred to in this
clause
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(ii) and any Person which, directly or indirectly, is owned or controlled by one
or more of the Persons referred to in this clause (ii);
(c) "Affiliated Group" means any affiliated group as defined in Section 1504 of
the Code (or any analogous combined, consolidated or unitary group under state,
local or foreign income Tax law) of which the Company or any of its Affiliates
is or has been a member;
(d) "Capital Expenditures" shall mean with respect to any Person, for any
period, the aggregate of all expenditures, whether paid in cash or accrued as
liabilities during that period and including that portion of Capital Leases that
is capitalized on the balance sheet of such Person during such period that, in
conformity with GAAP, are required to be included in or reflected by the
property, plant or equipment or similar fixed asset accounts reflected in the
combined and consolidated balance sheet of such Person (including equipment
which is purchased simultaneously with the trade-in of existing equipment owned
by such Person to the extent of the gross amount of such purchase price less the
book value of the equipment being traded in at such time), but excluding
expenditures made in connection with the replacement or restoration of assets,
to the extent reimbursed or financed from insurance proceeds paid on account of
the loss of or damage to the assets being replaced or restored, or from awards
of compensation arising from the taking by condemnation of eminent domain of
such assets being replaced;
(e) "Capital Lease" shall mean, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of such Person;
(f) "Claims" shall mean all pending and threatened claims, actions, causes of
action, demands, orders, notices, suits, grievances, proceedings, disputes,
arbitrations, inquiries and investigations;
(g) "Environmental Claim" shall mean any Claim (written or oral) by any Person
or any Governmental Authority alleging potential Liability or obligations
(including potential Liability or obligations for or requirement to incur
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties) arising
out of, based on or resulting from (i) the presence, release or threatened
release into the environment, of any Materials of Environmental Concern at any
location, whether or not owned or operated by the Company or the Subsidiary, or
(ii) circumstances forming the basis of any violation, potential violation or
alleged violation, or Liability, potential Liability or alleged Liability, under
any Environmental Law;
(h) "Environmental Laws" shall mean all Rules and permit conditions relating to
pollution or protection of human health or the environment (including ambient
air, indoor air, surface water, ground water, land surface or subsurface
strata), including Rules relating to emissions, discharges, releases or
threatened releases of Materials of Environmental Concern, or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern;
(i) "ERISA Affiliate" shall mean any corporation or other Person which is a
member of the same controlled group (within the meaning of Section 414(b) of the
Code) of corporations or
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other Persons as the Company or the Subsidiary, or which is under common control
(within the meaning of Section 414(c) of the Code) with the Company or the
Subsidiary, or any corporation or other Person which is a member of an
affiliated service group (within the meaning of Section 414(m) of the Code) with
the Company or the Subsidiary, or any corporation or other Person which is
required to be aggregated with the Company or the Subsidiary pursuant to Section
414(o) of the Code or the regulations promulgated under Sections 414(b), (c),
(m) or (o) of the Code;
(j) "Governmental Authority" shall mean any court (whether of the federal
government of the United States or of the Commonwealth of Canada, or any state
or province or any local or foreign court or otherwise), any arbitration or
other alternative dispute mechanism, any government or governmental department,
agency, board, commission, bureau or instrumentality of the United States, the
Commonwealth of Canada, any state or province, any local or foreign entity and
any other regulatory authority;
(k) "Knowledge" (or any form of such term, such as "Knows" or "Known") as used
in this Agreement with respect to a party's awareness of the presence or absence
of a fact, event or condition shall mean (i) the actual knowledge of such Person
after due inquiry, and in the case of any Person other than an individual, any
director, officer, shareholder (beneficial or of record), managing director,
partner, trustee or similar individual of such Person plus (ii) the knowledge
that should be obtained by a party conducting itself reasonably and with sound
discretion in the management of its own affairs;
(l) "Know-how" shall mean laboratory journals, specialized knowledge (including
product knowledge and use and application knowledge), trade secrets, formulae,
product formulations, recipes, processes, product designs, specifications,
quality control, procedures, manufacturing, engineering and other drawings,
computer data bases and software, technology, other intangibles, technical
information, safety information, engineering data and design and engineering
specifications, research records, market surveys and all promotional literature,
customer and supplier lists and similar data;
(m) "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;
(n) "Liens" shall mean all title defects, charges, claims, restrictions, liens,
pledges, security interests, hypotheces, privileges, priorities, mortgages,
tenancies and other possessory interests, conditional sale or other title
retention agreements, assessments, easements, rights of way, covenants,
restrictions, rights of first refusal, encroachments and other burdens, options,
restrictions or encumbrances of any kind;
(o) "Materials of Environmental Concern" shall mean chemicals or other
substances subject to regulation pursuant to Environmental Laws, including
pollutants, contaminants, wastes, by products, toxic substances, radionuclides,
polychlorinated biphenyls, asbestos, petroleum (including crude oil or any
fraction thereof) and petroleum products;
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(p) "Patents" shall mean patents (including all reissues, reexaminations,
divisions, continuations, continuations in part and extensions thereof), utility
models, patent applications and patent disclosures docketed;
(q) "Person" shall mean an individual, corporation, limited liability company,
partnership, joint venture, association, trust, unincorporated organization or,
as applicable, any other entity;
(r) "Plan" shall mean each bonus, pension, retirement, savings, stock option,
stock purchase, stock bonus, benefit, welfare, profit sharing, retirement,
disability, vacation, severance, hospitalization, insurance, incentive, deferred
compensation and other similar fringe or employee benefit plans, funds, programs
or arrangements, all employment contracts or executive compensation agreements,
and all collective bargaining agreements whether written or oral and whether
formal or informal and each other "employee benefit plan" (within the meaning of
Section 3(3) of ERISA);
(s) "Primary Stockholders" means Najafi Holding, Inc. and Andrewma Holding,
Inc.;
(t) "Proprietary Rights" shall mean (i) Patents, (ii) Trademarks, (iii) Trade
Names, (iv) Know-how, (v) rights in trade dress and packaging and (vi) shop
rights, copyrights, inventions, trade secrets, service marks and all other
intellectual property rights, in each case whether registered or not and in each
case wherever such rights exist throughout the world, and including the right to
recover for any past infringement;
(u) "Rules" shall mean any statute, law, code, ordinance, rule, regulation,
judgment, writ, decree, injunction, order, concession, grant, franchise, permit
or license or other governmental or regulatory authorization or approval of the
United States, the Commonwealth of Canada, any state or province, or any local
or foreign entity applicable to the Company, the Subsidiary or any of the
Stockholders or any of their respective assets, properties or operations or any
Plan;
(v) "Tax" or "Taxes" shall mean any United States federal, Canadian, state,
province, local or foreign income, gross receipts, franchise, estimated,
alternative minimum, add-on minimum, sales, use, transfer, real property gains,
registration, value added, excise, natural resources, severance, stamp,
occupation, premium, windfall profit, customs, duties, real property, personal
property, capital stock, social security, unemployment, disability, payroll,
license, employee or other withholding, or other tax, of any kind whatsoever,
including any interest, penalties or additions to tax or additional amounts in
respect of the foregoing; the foregoing shall include any transferee or
secondary liability for a Tax and any liability assumed by agreement or arising
as a result of being (or ceasing to be) a member of any Affiliated Group (or
being included (or required to be included) in any Tax Return relating thereto);
(w) "Tax Return" shall mean any return, declaration, report, claim for refund,
information return or other document (including any related or supporting
schedule, statement or information) filed or required to be filed in connection
with the determination, assessment or collection of any Tax of any party or the
administration of any laws, regulations or administrative requirements relating
to any Tax;
(x) "Stockholder" shall mean any Person owning Common Stock;
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(y) "Trademarks" shall mean trademarks, service marks, brand marks,
registrations thereof, pending applications for registration thereof, and such
unregistered rights which are used in the business of the Company or the
Subsidiary; and
(z) "Trade Names" shall mean (i) trade names and other identifying names, (ii)
brand names, and (iii) logos and all other names and slogans used in the
business of the Company or the Subsidiary.
Sectoin 6.12. Entire Agreement. This Agreement (including all
Exhibits and Schedules attached hereto and incorporated by reference herein) and
the documents and instruments referred to herein, and the other agreements
included in or contemplated by the exhibits hereto (the "Other Agreements")
embody the entire agreement and understanding of the parties hereto with respect
to the subject matter contained herein or therein. This Agreement (including all
Exhibits and Schedules attached hereto and incorporated by reference herein) and
the Other Agreements supersede all prior agreements and understandings between
the parties with respect to such subject matter.
Section 6.13. Assignment. This Agreement shall not be assigned by
operation of law or otherwise, except that it may be assigned by Purchaser to
one or more of its Affiliates who agree in writing to be bound by the provisions
hereof; provided, that Purchaser remains obligated under this Agreement. Subject
to the foregoing, this Agreement will be binding upon and inure to the benefit
of and be enforceable by the parties and their respective successors and
permitted assigns.
Secton 6.14. No Strict Construction. The language used in this
Agreement shall be deemed to be the language chosen by the parties hereto to
express their mutual intent, and no rule of strict construction shall be applied
against any Person.
Section 6.15. WAIVERS OF TRIAL BY JURY. EACH OF THE COMPANY, THE
STOCKHOLDERS AND PURCHASER HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
ANY OF THE ADDITIONAL AGREEMENTS, AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed as of the day and year first above written.
LUMENON INNOVATIVE LIGHTWAVE LILT CANADA INC.
INC.
By: /S/ S. Xxxx Xxxxxx
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Name: S. Xxxx Xxxxxx
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Title: President
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MOLEX INCORPORATED
By: /s/ Xxxxxx X. Xxx
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Name: Xxxxxx X. Xxx
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Title: V.P. New Ventures & Acquisitions
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