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EXHIBIT 10.29
JOINT VENTURE FORMATION AGREEMENT
THIS JOINT VENTURE FORMATION AGREEMENT, entered into as of January 28,
1997 (the "Agreement"), by and among Xxxxxx Corporation, a Maryland corporation
("Xxxxxx"), Chicago Miniature Lamp, Inc., an Oklahoma corporation ("CML"), CML
Fiberoptics, Inc., a Massachusetts corporation, a wholly-owned subsidiary of CML
("CML Fiberoptics"), Electro Fiberoptics Corp., a Massachusetts corporation, a
wholly-owned subsidiary of CML Fiberoptics ("Electro") (CML, CML Fiberoptics and
Electro are sometimes referred to together as the "CML Companies") and Xxxxxx
CML Fiberoptics LLC, a Delaware limited liability company (the "Company").
WITNESSETH:
WHEREAS, pursuant to the terms and conditions hereof, the CML Companies
have formed the Company and intend to have Electro and CML Fiberoptics
contribute to the Company certain assets and properties of Electro for the
purpose of conducting light guide-based fiberoptics products operations, a
business heretofore conducted by Electro and CML Fiberoptics;
WHEREAS, pursuant and subject to the terms and conditions hereof, the
CML Companies intend to contribute the Transferred Assets (as defined below) to
the Company and to have the Company assume only the Assumed Liabilities and only
to the extent specifically set forth herein (as defined below);
WHEREAS, pursuant to the terms and conditions hereof, Electro intends
to sell to Xxxxxx and Xxxxxx intends to purchase from Electro 49% of the Units
(as defined below) as well as an Option (defined below) to acquire an additional
1% of the Units in the Company, and Xxxxxx and Electro intend to enter into a
First Amended and Restated Limited Liability Company Agreement in the form
attached hereto as Exhibit A (the "Limited Liability Company Agreement") to
govern the operations of the Company;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and upon the terms and conditions set forth herein, Xxxxxx and the CML
Companies, intending to be legally bound, agree as follows:
1. TRANSFER OF ASSETS, ASSUMPTION OF LIABILITIES AND EXECUTION OF LIMITED
LIABILITY COMPANY AGREEMENT.
1.1 Transferred Assets. (a) Subject to the terms and conditions set
forth in this Agreement, on the Closing Date (as defined in Section 1.4), the
CML Companies shall contribute, transfer, assign, convey and deliver to the
Company, free and clear of all liens and encumbrances (other than those listed
herein or in a Schedule hereto) and the Company shall, on the Closing Date,
accept and receive from the CML Companies, as applicable:
Except for the Excluded Assets (as hereinafter defined in Section
1.1(b)), all of the assets, properties and business of every kind and
description, wherever located, of Electro or CML Fiberoptics, whether tangible
or intangible, real, personal or mixed, whether or not any of such assets has
any value for accounting purposes, as the same shall exist on the Closing Date,
including specifically (and, as to any asset listed specifically on a Schedule
referred to below, whether or not used exclusively), but without limiting the
generality of the foregoing:
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(1) Contracts. The contracts listed on Schedule 2.16 hereto
and all contracts and agreements entered into by Electro or CML
Fiberoptics prior to the Closing Date (all such contracts collectively,
the "Contracts").
(2) Real Property. All of the owned real property (including
but not limited to owned improvements thereon) listed on Schedule
2.13(a) (the "Real Property"); all of Electro's or CML Fiberoptics'
rights with respect to leased real property (including but not limited
to owned improvements thereon) listed on Schedule 2.13(b) (the "Leased
Real Property"); and the easements, rights of way and other similar
interests owned by Electro or CML Fiberoptics in real property of
third parties.
(3) Equipment. All equipment, furniture and fixtures, tools,
vehicles, leasehold improvements and other items of tangible personal
property owned by Electro or CML Fiberoptics, whether or not reflected
on the books and records of Electro or CML Fiberoptics, including all
rights with respect to leases, conditional sales contracts, franchises
or licenses as set forth on Schedule 2.12(a) (the "Equipment").
(4) Inventories. All inventories of raw materials and
finished and semi-finished products and work-in-process of Electro
or CML Fiberoptics, wherever located, and all related maintenance and
office supplies, whether or not accounted for by Electro or CML
Fiberoptics as inventory (collectively, the "Inventories," together
with the Equipment, the Records, the Know-How and the Claims, each as
herein defined, collectively, the "Personal Property").
(5) Records. All sales and business records, product
specifications, drawings, correspondence, engineering, maintenance,
operating and production records, personnel records, credit records of
customers, except for those portions of such records received from
third parties pursuant to binding confidentiality obligations, and
marketing or other studies, other than accounting and tax records,
which relate to the business of Electro or CML Fiberoptics (the
"Records").
(6) Permits. All permits, approvals and franchises (federal,
state and local) of Electro or CML Fiberoptics related to the business
of Electro or CML Fiberoptics.
(7) Claims. All prepayments, deposits, claims in bankruptcy
and chooses in action, indemnification agreements with and
indemnification rights against third parties, and other claims held by
Electro or CML Fiberoptics (the "Claims"), including but not limited to
those items set forth on Schedule 1.1(a)(7).
(8) Accounts Receivable. All rights in and to all trade and
other accounts receivable arising from the business of Electro or CML
Fiberoptics prior to the date of the Closing (the "Accounts
Receivable"), including those items reflected on Schedule 2.11.
(9) Intellectual Property. The patents, patent applications
and foreign counterparts thereof, common law trademarks, trademark
applications, trademark registrations and foreign counterparts
thereof, and copyright registrations and applications, and
manufacturing processes and documentation relating to the business of
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Electro or CML Fiberoptics, including but not limited to those
listed in Schedule 2.14 (the "Intellectual Property").
(10) Know-How. All inventions, discoveries, trade secrets,
improvements, formulae, practices, processes, methods and know-how,
whether or not patentable, to the extent owned by, or licensed to, or
used in the business of Electro or CML Fiberoptics (the "Know-How"),
(provided, however, that with respect to Know-How which has not been
reduced to tangible form the transfer thereof will be limited to such
rights therein as Electro or CML Fiberoptics may have).
(11) Intangible Assets. All intangible property rights or
claims owned or claimed by Electro or CML Fiberoptics, other than as
listed on Schedule 2.14 or as defined in clause 10 of this definition
(the "Intangible Assets").
All of the assets described in this Section 1.1(a) are referred to herein
collectively as the "Transferred Assets". The Transferred Assets include, but
are not limited to, the assets reflected on the Electro/CML Fiberoptics Balance
Sheet referred to in Section 1.7, below, except to the extent such assets are
part of the Excluded Assets referred to in Section 1.1(b).
(b) Notwithstanding anything to the contrary above provided in this
Section 1.1 or in any other provision of this Agreement or any other agreement
or instrument contemplated hereby, no asset, property or business, or any part
thereof, identified in the list of Excluded Assets attached as Exhibit B hereto
shall be included in any of the Transferred Assets and all such Excluded Assets
are hereby excluded from assignment and assumption pursuant to this Agreement.
(c) "Assumed Liabilities" shall mean, collectively, only the
following obligations, responsibilities and liabilities of Electro or CML
Fiberoptics and only to the extent specifically set forth below and shall
exclude all other obligations, responsibilities and liabilities including, but
not limited to, the Excluded Liabilities as defined in Section 1.1 (d), below:
(1) Contracts; Indebtedness. Subject to the indemnification
obligations of the CML Companies set forth in Article 12 hereof, any
and all obligations, responsibilities and liabilities (including
without limitation obligations to pay money) of Electro or CML
Fiberoptics relating to or arising out of or incurred in connection
with:
(A) future performance under the Contracts assigned
pursuant to Section 1.1(a)(1) hereof, except to the extent
that obligations or liabilities with respect to such
performance are Excluded Liabilities; and
(B) all indebtedness specified in Schedule 1.1(c)(1)
(the "Specified Indebtedness").
(2) General Liabilities. Subject to the indemnification
obligations of the CML Companies set forth in Article 12 hereof, all
obligations, responsibilities and liabilities of Electro or CML
Fiberoptics, other than those described in clause (1) hereof, which
shall be governed pursuant to that clause, relating to or arising out
of or incurred in connection with the conduct of the business of
Electro or CML Fiberoptics, in the ordinary course, prior to and
including the Closing Date, but only to the extent and in the dollar
amounts
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reflected on the Company Balance Sheet (as hereinafter defined)
including but not limited to:
(A) accounts payable and overdrafts outstanding,
trade or other;
(B) accrued salaries, wages and commissions
payable, related payroll taxes, bonuses and accrued vacation
pay with respect to any employee of Electro or CML Fiberoptics
who becomes an employee of the Company on the Closing Date;
(C) ad valorem taxes and assessments;
(D) sales and use taxes, fees and charges; and
(E) real estate, property, occupation, use and
like type taxes, fees and charges;
but excluding any liability for any federal or state or local income
tax based solely on the operations of Electro or CML Fiberoptics
prior to the Closing Date.
(3) Warranty Claims. Warranty claims for products shipped
prior to the Closing Date to the extent that such claims, as a
percentage of products shipped prior to the Closing and measured as
of the end of the of the first twelve full months of the operations of
the Company after the Closing, do not exceed the average annual
warranty claim rate experienced by Electro and CML Fiberoptics in the
two fiscal years of Electro and CML Fiberoptics immediately prior to
the Closing Date.
(d) Excluded Liabilities. Without in any manner affecting the
limitations on the obligations of Electro or CML Fiberoptics to be assumed by
the Company contained herein, but rather to identify more particularly certain
obligations of Electro or CML Fiberoptics which are not to be assumed by the
Company on the Closing Date, it is agreed that the Company shall not assume, nor
be liable for, and Electro and CML Fiberoptics expressly agree to remain liable
for, all of their obligations not being assumed by the Company hereunder,
including, without limitation, the following described liabilities, obligations,
contracts and commitments of CML Fiberoptics and/or Electro as of the Closing
Date (hereinafter sometimes collectively referred to as the "Excluded
Obligations"):
(1) all accounts, loans and notes payable and all other
current and long-term liabilities of CML Fiberoptics and/or Electro,
except for those liabilities described in Section 1.1(c), and
nothing in this Agreement shall be deemed to require the Company to
pay or perform any such liabilities other than as specifically
provided in Section 1.1(c);
(2) all liabilities relating or pertaining to any "Employee
Welfare Benefit Plan" or "Employee Pension Plan" as such terms are
defined by Section 3(1) and 3(2), respectively, of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), whether
or not any of such plans are funded, and whether or not any of such
plans are qualified under Section 401(a) of the Internal Revenue code
of 1986, as amended (the "Code"), including but not limited to any
liability to the Pension Benefit Guaranty Corporation (the "PBGC"), in
each case arising out of or relating to the CML
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Companies' maintenance of any of such plans with respect to employees
of Electro or CML Fiberoptics up to the Closing Date or other employee
benefits provided by the CML Companies up to the Closing Date, except
for those liabilities accrued and reflected on the Company Balance
Sheet;
(3) all liabilities or claims for personal injury or other
similar or dissimilar damage to person, property or business, to the
extent such liabilities or claims are based upon or arise from
occurrences or transactions on or prior to the Closing Date, whether or
not such occurrences or transactions relate or pertain to any way to
CML Fiberoptics or Electro, any predecessor thereof, and whether or not
the Company has received notice of such claims prior to the Closing
Date;
(4) except for such warranty claims as are assumed under
Section 1.1(c)(3), all liabilities relating or pertaining to the sale
or sales of goods shipped on or prior to the Closing Date, including,
without limitation, any failure or alleged failure of such goods to
conform to customer or product specifications or warranties applicable
to such goods by contract or under law or any failure to provide
adequate warnings or instructions for such goods, whether or not such
claims relate or pertain in any way to CML Fiberoptics or Electro any
predecessor thereof, and whether or not the Company has received notice
of such claims prior to the Closing date;
(5) all liabilities relating to or arising from (i) the use
of each of two parcels of real estate, one currently owned by Electro,
and located at 00 Xxxxxxxx Xxxxxx, in Marlborough, Massachusetts (the
"Marlborough Site"), and the other formerly occupied by Electro, and
located at 00 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxxx (the
"Northborough Site") (sometimes jointly referred to as the "Sites") by
CML Fiberoptics and/or Electro, or by the predecessor owner or operator
of the Sites; or (ii) the violation by CML Fiberoptics or Electro of
any Environmental Law (as defined in Section 2.28) or the handling of
any Hazardous Materials or Petroleum Products (as defined in Section
2.28), (together, the "Environmental Claims"), whether or not the
Company has received notice of such Environmental Claims prior to the
Closing Date; provided that this clause (5) shall not be deemed to
exclude liabilities arising from the use of the Marlborough Site by the
Company after the Closing Date or Environmental Claims related to
activities of the Company after the Closing Date other than the
Company's continuing Non-Compliance, if any, as described on Schedule
2.28(a);
(6) all liabilities or obligations to employees, if any, of
Electro or CML Fiberoptics, who are offered employment by the Company
and elect not to become employees of the Company on the Closing Date,
including obligations, if any, for the severance pay, accrued vacation
pay or other benefits of or for such employees; and
(7) all other liabilities, obligations, contracts and
commitments (whether known or unknown, contingent or fixed), whether
arising out of the ownership and operation of the business of CML
Fiberoptics or Electro, on or prior to the Closing Date, to the extent
not expressly agreed to be assumed by the Company, under this
Agreement, including but not limited to liabilities with respect to:
(A) Plans (as defined in Section 2.17),
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(B) CML Taxes (as defined in Section 2.22),
(C) failure to have Permits (as defined in
Section 2.23), or
(D) Actions (as defined in Section 2.24).
The Company shall assume the Assumed Liabilities and shall, subject to
the specific exceptions set forth in this Section 1.1(d), be responsible for
claims, liabilities and obligations arising from the conduct of the Company's
business after the Closing Date, which claims, liabilities and obligations shall
also constitute Assumed Liabilities.
(e) Transfer Agreement. The transfers referred to in Section 1.1
hereof from the CML Companies to the Company and the assumptions referred to in
Section 1.1 hereof by the Company will be effected pursuant to a Transfer
Agreement, in substantially the form of Exhibit C, dated as of the Closing
Date and executed by each of the CML Companies and the Company.
(f) All of the contributions, conveyances, sales, transfers and
assignments (the "Formation Transfers") and all of the acceptances,
assumptions, undertakings, indemnifications and agreements to hold harmless
(the "Formation Assumptions") referred to in this Section 1.1
(collectively, the "Formation Transactions") shall be effected on the
Closing Date. All Formation Transactions shall be undertaken subject to the
terms and conditions, and on the basis of the representations, warranties and
covenants, set forth herein and in the Transfer Agreement.
(g) Instruments of Conveyance and Assumption. In addition to the
Transfer Agreement, Electro and CML Fiberoptics (and, if necessary, CML) shall
execute and deliver, and record (when appropriate or upon the request of either
the Company or Xxxxxx), any and all instruments or other documents of transfer,
conveyance and assignment as may be reasonably necessary or advisable to effect
or evidence the Formation Transfers, as and to the extent contemplated hereby
and by the Transfer Agreement, including, without limitation, any Closing
Documents. In addition to the Transfer Agreement, the Company shall execute and
deliver, and record (when appropriate or upon the request of either the Company
or Xxxxxx), any and all instruments or other documents of assumption and
acceptance as may be reasonably necessary or advisable to effect the Formation
Assumptions, as and to the extent contemplated hereby and by the Transfer
Agreement, including, without limitation, any Closing Documents.
(h) On the Closing Date, the Company shall offer employment to all
employees of Electro and/or CML Fiberoptics who are employed by Electro and/or
CML Fiberoptics on that date and are listed on Schedule 2.17(a) hereto. Electro,
CML Fiberoptics and the Company shall not discourage or prevent any such
employee from becoming an employee of the Company on and after the Closing Date.
1.2 Units Sold and Acquired; Option Granted. (a) Subject to the terms
and conditions set forth in this Agreement, at the Closing (as defined in
Section 1.4), Electro will sell, transfer and deliver to Xxxxxx or a designee of
Xxxxxx, and Xxxxxx or such designee will purchase, acquire and accept from
Electro an aggregate of 49,000 Units (as defined in the Limited Liability
Company Agreement), which shall constitute forty-nine percent (49%) of the
issued and outstanding equity interest in the Company, free and clear of any
liens, mortgages, claims, charges, security interests or other encumbrances,
restrictions or limitations of any nature
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whatsoever, whether or not recorded, except such as are set forth in the
Limited Liability Company Agreement.
(b) Pursuant to the provisions of the Limited Liability Company
Agreement, Electro shall grant to Xxxxxx the right and option to purchase from
Electro 1,000 Units (or such other number of Units that shall constitute a 1%
interest as a member in the Company at the time of exercise, the "Option
Units"), free and clear of any liens, mortgages, claims, charges, security
interests or other encumbrances, restrictions or limitations of any nature
whatsoever, whether or not recorded, except such as are set forth in the Limited
Liability Company Agreement, at an option price of $100.00 (the "Option"). The
Option may be exercised by Xxxxxx by delivering to Electro a written notice
stating that Xxxxxx is exercising the Option, together with a check in the
amount of $100.00 payable to the order of Electro, and sending a copy of such
notice to the Company. The Option Units shall be deemed to have been transferred
and assigned by Electro to Xxxxxx upon the Company's receipt of notice of
Xxxxxx'x exercise of the Option without further action by any party.
1.3 Consideration. The aggregate purchase price (the "Purchase
Price") to be paid to Electro for the Units and the Option, as described in
Section 1.2, by Xxxxxx shall be One Million Three Hundred Thousand and
No/100 Dollars ($1,300,000.00). The Purchase Price shall be subject to
adjustment as provided in Section 1.8, below.
1.4 The Closing Date and Place. The transfer and delivery of the
Transferred Assets by Electro and CML Fiberoptics and the delivery of the
Purchase Price by Xxxxxx (the "Closing") shall take place at the offices of
Xxxxxxxxxxx & Xxxxxxxx LLP, Xxx Xxxxxxxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000, within five (5) business days after the conditions to Closing, as
hereinafter set forth, have been satisfied, or at such other time and place as
the parties may agree to in writing (the "Closing Date").
1.5 Payment of Purchase Price. The Purchase Price shall be paid by
Xxxxxx at the Closing by wire transfer to an account or accounts of Electro
specified to Xxxxxx in writing on or before the Closing Date.
1.6 Execution of Limited Liability Company Agreement. At the
Closing, Xxxxxx and Electro shall execute and deliver the Limited Liability
Company Agreement in the form attached hereto as Exhibit A.
1.7 Preparation of Final Closing Statements. Within thirty (30) days
after the Closing, CML shall have prepared a balance sheet of Electro and CML
Fiberoptics as at the Closing, certified by independent certified public
accountants selected by Electro and CML Fiberoptics, in accordance with
generally accepted accounting principals ("GAAP") consistently applied for
Electro and CML Fiberoptics so as to fairly present as at the Closing Date the
financial condition of Electro and CML Fiberoptics (the "Electro/CML Fiberoptics
Balance Sheet"). Based upon the Electro/CML Fiberoptics Balance Sheet (using the
book values contained therein) and the Formation Transactions, and giving effect
to the adjustment described in Section 1.9, below, CML shall prepare an opening
balance sheet for the Company in accordance with GAAP (the "Company Balance
Sheet"). Xxxxxx'x independent accountants, Price Waterhouse ("PW"), shall review
the Electro/CML Fiberoptics Balance Sheet and the Company Balance Sheet within
thirty (30) days after such Balance Sheets have been prepared. Any
dispute regarding the Electro/CML
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Fiberoptics Balance Sheet or the Company Balance Sheet shall be subject to
resolution in accordance with Section 1.10 hereof.
1.8 Purchase Price Adjustment. In the event that the Net Worth of the
Company (as defined below) reflected on the Company Balance Sheet (before giving
effect to the adjustment described in Section 1.9, below) as established by the
parties pursuant to Section 1.7 is less than $300,000, and such difference is
greater than $25,000, the Purchase Price shall be reduced by the amount of such
difference and, if Xxxxxx has already paid the Purchase Price, Electro shall pay
Xxxxxx such amount, or if Xxxxxx has not already paid the Purchase Price, Xxxxxx
shall pay the Purchase Price as so reduced. For these purposes, the "Net Worth"
of the Company shall mean the total Transferred Assets less the total Assumed
Liabilities. Any purchase price adjustment made pursuant to this Section 1.8
shall not be counted toward the $75,000 thresholds described in Section 12.1.
1.9 Post-Closing Contributions and Balance Sheet Adjustments.
(a) Immediately following the Closing, Electro shall contribute
$300,000 in cash to the Company as paid-in capital.
(b) CML agrees that any indebtedness of Electro or CML Fiberoptics to
CML, as assumed by the Company, shall not bear interest while such indebtedness
remains outstanding, and that CML shall not demand any payment of principal of
such indebtedness until such time as the Company shall have consented, by vote
of two-thirds of the interests of the Members of the Company, to make a payment
of principal, and then only to the extent that the Company so consents. CML
acknowledges that at no time shall the Members of the Company be under any
obligation to consent to the repayment of such indebtedness.
1.10 Dispute Resolution. In the event that Xxxxxx objects to the
Electro/CML Fiberoptics Balance Sheet in writing to CML within forty-five (45)
days of the receipt of such Electro/CML Fiberoptics Balance Sheet, Xxxxxx and
CML shall attempt to resolve any such objection within ten (10) business days of
Xxxxxx'x objections. If Xxxxxx and CML are unable to resolve the matter within
such ten (10) business day period, they shall, within the next ten (10) business
days after the end of such period, jointly appoint an independent public
accounting firm of nationally recognized standing which has not been involved in
any audit of, or the rendering of accounting or other advice to, either Xxxxxx
or CML or any of their subsidiaries, within a one-year period prior to the date
of such appointment, to resolve the dispute and make any adjustment to the
figures. This accounting firm shall complete the resolution of the dispute and
make appropriate adjustments to the figures within a ten (10) business day
period. The fees of this public accounting firm shall be divided and paid
equally by CML and Xxxxxx. Such a firm's resolution of the dispute and its
adjustments shall be conclusive and binding upon the parties. The public
accounting firm shall provide written notice of such resolution to Xxxxxx and
CML. The date of such notice shall be deemed to be the date of final resolution
of the dispute.
2. REPRESENTATIONS AND WARRANTIES OF CML, CML FIBEROPTICS AND
ELECTRO.
CML, CML Fiberoptics and Electro represent and warrant to Xxxxxx as set
forth below:
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2.1 Organization of CML Fiberoptics; Authority. CML Fiberoptics is a
corporation duly organized, validly existing and in good standing under the laws
of the Commonwealth of Massachusetts and has full power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted. Each of this Agreement and the Transfer Agreement has been duly
authorized, executed and delivered by CML Fiberoptics, and CML Fiberoptics has
the corporate power, authority and legal capacity to enter into and perform the
obligations to be performed by it under this Agreement and to consummate the
transactions contemplated of it hereby. This Agreement and the Transfer
Agreement constitute valid and binding obligations of CML Fiberoptics,
enforceable in accordance with their respective terms, except as enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium,
and other laws affecting the enforcement of creditors' rights and subject to
equitable principles.
2.2 RESERVED.
2.3 Electro; Authority. Electro is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Massachusetts and has full power and authority to own, lease and operate its
properties and to carry on its business as now being and as heretofore
conducted. Each of this Agreement, the Limited Liability Company Agreement and
the Transfer Agreement has been duly authorized, executed and delivered by
Electro, and Electro has the corporate power, authority and legal capacity to
enter into and perform the obligations to be performed by it under this
Agreement and to consummate the transactions contemplated of it hereby. This
Agreement, the Limited Liability Company Agreement and the Transfer Agreement
constitute valid and binding obligations of Electro, enforceable in accordance
with their respective terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, and other laws affecting the
enforcement of creditors' rights and subject to equitable principles.
2.4 RESERVED.
2.5 CML; Authority. CML is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation.
Each of this Agreement and the Transfer Agreement has been duly authorized,
executed and delivered by CML, and CML has the corporate power, authority and
legal capacity to enter into and perform the obligations to be performed by
it under this Agreement and to consummate the transactions contemplated
of it hereby. This Agreement and the Transfer Agreement constitute valid and
binding obligations of CML, enforceable in accordance with their
respective terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, and other laws affecting
the enforcement of creditors' rights and subject to equitable principles.
2.6 No Consent. Except as set forth in Schedule 2.6, no consent of
any party to this Agreement or any third party and no consent, license,
approval or authorization of, or exemption by, or registration or
declaration or filing with, any governmental authority, bureau or agency
(collectively, "Consents") is required in connection with the execution,
delivery, validity or enforceability of this Agreement with respect to CML,
CML Fiberoptics or Electro or the consummation by CML, CML Fiberoptics or
Electro of the transactions contemplated of it hereby, except wherein the
failure to obtain any such consent would not have a material adverse affect
on the results of operations on a consolidated basis or the consolidated
financial position of
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CML Fiberoptics (as a stand-alone company with its sole subsidiary,
Electro) (a "Material Adverse Effect").
2.7 RESERVED.
2.8 No Breach. Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will: (a) violate any
provision of the Articles or Organization or By-laws of CML Fiberoptics or
Electro or of the charter documents or by-laws of CML; (b) violate, conflict
with or result in the breach or termination of, or otherwise give any other
contracting party the right to terminate, or constitute (or with notice or lapse
of time, or both, would constitute) a default under the terms of any contract,
mortgage, lease, bond, indenture, agreement, franchise or other instrument or
obligation, whether written or oral to which CML Fiberoptics or Electro or CML
is a party (collectively, "Obligations"), which, individually or in the
aggregate, would have a Material Adverse Effect; (c) result in the creation of
any material Lien upon the assets of CML Fiberoptics or Electro or CML pursuant
to the terms of any Obligation; or (d) violate any state or federal judgment,
order, writ, sentence, injunction, decree or award of any court, arbitrator,
administrative agency or governmental or regulatory body to which CML
Fiberoptics or Electro or CML is a party (collectively, "Orders"), any
applicable statute, law or regulation of any jurisdiction or any Permit (as
defined in Section 2.23), which violations would, in the aggregate, have a
Material Adverse Effect.
2.9 Financial Statements. CML has delivered to Xxxxxx true copies of
certain CML Fiberoptics' and Electro's balance sheets and income statements and
other financial information of CML Fiberoptics and Electro, certified by CML
Fiberoptics' Chief Financial Officer, for the period ended November 30, 1996
(the "Fiscal Year Financial Statements"), which Fiscal Year Financial Statements
are incorporated herein as Schedule 2.9. The Fiscal Year Financial Statements,
while unaudited, are prepared in accordance with GAAP consistently applied so as
to fairly present for the period ended November 30, 1996 (such ending date being
hereinafter sometimes referred to as the "Fiscal Year Balance Sheet Date") the
financial condition and results of operations of CML Fiberoptics and Electro.
Except as set forth on Schedule 2.9, the statements of income and cash flow
included in the Fiscal Year Financial Statements do not contain any items of
special or nonrecurring revenue or income or any other income not earned in the
ordinary course of business, except as expressly specified therein.
2.10 No Material Adverse Change. Since the Fiscal Year Balance
Sheet Date, there has been no (a) material adverse change in the assets,
business, operations, condition (financial or otherwise) of CML Fiberoptics and
Electro taken as a whole or (b) any actual or, to the knowledge of CML,
threatened damage, loss, conversion, termination, cancellation, default or
other action by governmental authority, or other occurrence, which has had or
hereafter may reasonably be expected to have a Material Adverse Effect. Except
as set forth in Schedule 2.10 or in connection with the transactions
contemplated by this Agreement, since the Fiscal Year Balance Sheet Date each of
CML Fiberoptics and Electro has been operated only in the ordinary and usual
course of business.
2.11 Accounts and Notes Receivable. All accounts and notes receivable
of CML Fiberoptics and Electro as of the date of and reflected in the Fiscal
Year Financial Statements, and all accounts and notes receivable included in the
Transferred Assets, arose in the ordinary and usual course of business of CML
Fiberoptics or Electro, as the case may be, represent valid obligations due to
CML Fiberoptics or Electro, as the case may be, from unaffiliated parties, and
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are collectible in the aggregate record amounts thereof in accordance with their
respective terms in the ordinary and usual course of business of CML Fiberoptics
or Electro, as the case may be, except to the extent of the reserve therefor on
the Fiscal Year Financial Statements. Set forth on Schedule 2.11 is a
description of the amount of the accounts receivable of Electro and/or CML
Fiberoptics included in the Transferred Assets as of a recent date.
2.12 Equipment, Inventory and Other Tangible Property. Each of Electro
and CML Fiberoptics has good and marketable title to each item of equipment,
inventory, machinery, vehicle, working stock, structure, fixture or other
tangible personal property that Electro or CML Fiberoptics owns as reflected on
its books and records (including those described in the Fiscal Year Financial
Statements or acquired after the date thereof, other than inventories or other
personal property sold or otherwise disposed of in the ordinary and usual course
of business subsequent to the date thereof), free and clear of all Liens; and
Electro or CML Fiberoptics has good and marketable title to each such item that
is included in the Transferred Assets. All Inventories included in the
Transferred Assets are in good condition, salable at prices no less than cost.
All tangible personal property used in the business of Electro and/or CML
Fiberoptics, and all leases, conditional sale contracts, franchises or licenses
material to the operation of Electro or CML Fiberoptics and pursuant to which
Electro or CML Fiberoptics may hold or use any tangible personal properties are
set forth in Schedule 2.12(a). All such leases and other aforementioned
contracts are valid and effective, and there is not under any of such
instruments any existing default or event of default or event which, with notice
or lapse of time or both, would constitute a default by Electro or CML
Fiberoptics or, to the knowledge of CML, by other parties to such leases or
contracts, which event or default would have a Material Adverse Effect. The
material tangible personal properties of Electro and CML Fiberoptics are in good
operating condition and repair, ordinary wear and tear excepted. The tangible
personal properties of Electro and CML Fiberoptics conform to all applicable
federal, state and local laws, regulations and ordinances, including, without
limitation, all environmental, zoning, building and health and safety laws,
regulations and ordinances (collectively, "Governmental Regulations"), except
where the nonconformity would not have a Material Adverse Effect.
2.13 Real Estate. Neither Electro nor CML Fiberoptics owns any real
property except as set forth in Schedule 2.13(a). Except as set forth
in Schedule 2.13(a) or as disclosed of record, each of Electro and CML
Fiberoptics is the sole owner of the real property owned by it and has good,
clear record and marketable title to all such real property, provided,
however, there are no valid Liens of record for borrowed money or which would
have a Material Adverse Effect. Electro and/or CML Fiberoptics shall convey
to the Company good, clear record and marketable title to all Real Property
included in the Transferred Assets, free of all Liens for borrowed money or
which would have a Material Adverse Effect. There are no options held by
Electro or CML Fiberoptics or contractual obligations on either of their
parts to purchase or acquire (including by way of lease) any interest in
real property. Neither Electro nor CML Fiberoptics has obligated itself to
any party in any manner whatsoever to sell any of such real property to any
party. Schedule 2.13(b) lists all leases, subleases or other agreements
under which Electro or CML Fiberoptics is lessee or lessor of any real
property. There is not under any of such instruments any existing or claimed
default, event of default or event which, with notice or lapse of time or
both, would constitute an event of default by Electro or CML Fiberoptics,
or, to the knowledge of CML, by other parties to such instruments, which event
or default would have a Material Adverse Effect. No Real Property is in
violation of any laws, regulations or ordinances, including without limitation,
building, safety, fire code, zoning or historical commission laws, including
handicapped access regulations except where the violation would not have a
Material Adverse Effect. To the
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knowledge of CML, there is no structural or other material defect in the
Property or any part thereof or improvement thereon. No condemnation,
assessment or other material proceeding or charge affecting the Real Property
or any portion thereof exists. Neither CML, CML Fiberoptics nor Electro has
heretofore received any notice, and has no knowledge, that any such
material proceeding or charge is pending or contemplated.
2.14 Trademarks, Patents, and Other Rights.
(a) Schedule 2.14 attached hereto is a true, complete and accurate list
of all Intellectual Property owned, licensed or used by or registered in the
name of Electro, CML Fiberoptics or other persons which apply to the business of
Electro and/or CML Fiberoptics. Except as listed in Schedule 2.14 attached
hereto: (i) there are no patents, trademarks, tradenames, service marks,
copyright registrations or applications or manufacturing processes and
documentation owned, licensed or used by or registered in the name of the CML,
CML Fiberoptics, Electro or other persons, which apply to the business of
Electro and/or CML Fiberoptics; (ii) Electro or CML Fiberoptics owns or has the
exclusive right to use, free and clear of any payment or encumbrance, such
Intellectual Property as is necessary to operate the business of Electro and/or
CML Fiberoptics as now being operated and, to the knowledge of CML, is not
infringing upon or in conflict with the asserted rights of others in such
patents, trademarks, tradenames, service marks, copyrights or manufacturing
processes and, to the knowledge of CML, neither Electro nor CML Fiberoptics is
making unauthorized use of any confidential information or trade secrets of any
other person; and (iii) there are no claims or demands of any other person, firm
or corporation pertaining to any of the Intellectual Property or similar
property rights and no proceedings have been instituted which challenge any of
the rights of the Electro or CML Fiberoptics in respect thereto. Electro and/or
CML Fiberoptics have the right to use, free and clear of claims or rights of
others, all customer lists, designs, manufacturing or other processes and
documentation therefore, computer software, systems, data compilations, research
results and other information required for or incident to the products and
business of Electro and/or CML Fiberoptics as presently conducted or
contemplated.
(b) All licenses or other agreements under which Electro or CML
Fiberoptics has granted rights to others in Intellectual Property owned or
licensed by Electro or CML Fiberoptics are listed in Schedule 2.14. All of said
licenses or other agreements are in full force and effect, there is no material
default thereunder by Electro or CML Fiberoptics or, to the knowledge of CML, by
any other party thereto. True and complete copies of all such licenses or other
agreements, and any amendments thereto, have been provided to Xxxxxx.
2.15 Proprietary Information of Third Parties. No third party has
claimed or to the knowledge of CML has any reason to claim that any person
employed by or affiliated with CML Fiberoptics or Electro has: (a) violated any
of the terms or conditions of his or her employment, non-competition, or
non-disclosure agreement with such third party; (b) disclosed to Electro or CML
Fiberoptics or utilized any trade secret or proprietary information or
documentation of such third party; or (c) interfered in the employment
relationship between such third party and any of its current or former
employees.
2.16 Contracts and Other Agreements. Schedule 2.16 sets forth all of
the following agreements, whether or not in writing, to which CML Fiberoptics or
Electro is a party or by or to which it or its assets or properties are bound or
subject: (a) agreements with any current or former officer, director, employee,
consultant, agent or other representative of CML Fiberoptics
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or Electro; (b) agreements for the sale of any of CML Fiberoptics' or
Electro's assets, tangible or intangible, other than in the ordinary
course of business, or for the granting to any person of any
preferential rights to purchase any of CML Fiberoptics' or any of the
Electro's assets; (c) Shareholders Agreements; (d) agreements material to
the conduct of the operations of CML Fiberoptics or Electro under which CML
Fiberoptics or Electro agrees to indemnify any party, or to share tax liability
with any party; (e) all Obligations not entered into in the ordinary course
of business calling for aggregate payments in any one fiscal year of more
than $50,000 in any one case (or $50,000 in the aggregate, in the case of any
related series of agreements), unless they can be canceled without liability,
premium or penalty on not more than thirty days' notice; (f) any contract
entered into in the ordinary course of business which calls for aggregate
payments in any one fiscal year in excess of $50,000 or having a duration of
more than one year; (g) agreements containing covenants of CML Fiberoptics or
Electro not to compete in any line of business or with any individual,
corporation, partnership, joint venture, trust or unincorporated
organization or a government or agency or political subdivision thereof
(hereinafter, any of such entities or individuals, a "Person") in any
geographical area, or covenants of any other Person not to compete with
CML Fiberoptics or Electro in any line of business or in any geographical
area; (h) agreements relating to the acquisition by CML Fiberoptics or
Electro of any operating business or the capital stock of any other Person
or entity, under which CML Fiberoptics or Electro has any ongoing or
unsatisfied liability or obligation; (i) options for the purchase of any
material asset, tangible or intangible; (j) Obligations for the borrowing
or lending of money; or (k) any other Obligations, whether or not made in the
ordinary course of business, that are material to the conduct of the business
of CML Fiberoptics or Electro (other than those contracts or agreements
reflected on other Schedules hereto). Schedule 2.16 also sets forth all of
the agreements to which CML or any of its affiliates (other than CML
Fiberoptics and Electro) is a party relating to the business of CML Fiberoptics
or Electro (the "Affiliated Contracts"). There have been delivered or made
available to Xxxxxx true and complete copies of all of the written
agreements set forth in Schedule 2.16 or in any other Schedules hereto. All
such contracts or commitments material to the results of operation on a
consolidated basis or the consolidated financial position of CML
Fiberoptics and Electro and described in clauses (a) through (k) above, as
well as the Affiliated Contracts, are valid, subsisting, in full force and
effect and binding upon CML Fiberoptics or Electro, or upon CML or its
affiliates, as the case may be, and, to the knowledge of CML, on the other
parties thereto in accordance with their terms, except as enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium
and other laws affecting the enforcement of creditors' rights generally and
subject to equitable principles, or where the failure of such agreements, in
the aggregate, to be in full force and effect and binding and enforceable
would not have a Material Adverse Effect. Except as set forth on Schedule 2.16,
neither CML Fiberoptics nor Electro is in default under any such contract or
commitment, nor, to the knowledge of CML, is any other party to such contract
or commitment in default thereunder, nor does any condition exist that, with
notice or lapse of time or both, would constitute a default thereunder, which
default would have a Material Adverse Effect.
2.17 Labor and Employment Matters.
(a) Employees. Schedule 2.17(a) sets forth a true and complete list of
every officer, director, employee, consultant, representative, salesperson or
agent of Electro and/or CML Fiberoptics as of the date hereof. Such list
contains (a) the name, position, date of hire, and location of the person, (b)
whether such person is represented by a labor organization, the identity of the
labor organization and a description of the bargaining unit in which he or she
is a member, (c) the current hourly rate of compensation, including bonuses and
incentive pay, (d) the
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corporate credit cards issued to such persons and (e) their respective
limits of authority to bind Electro and/or CML Fiberoptics in financial, real
estate, sales, purchase and any other transactions. Except as described in
Schedule 2.17(a) deferred compensation and accrued bonuses of employees
of Electro or CML Fiberoptics existing at the closing Date will be
reasonably consistent with the past compensation practices.
(b) Obligations. Schedule 2.17(b) contains a complete and correct list
and a copy of the most recent available plan document or contract, whichever is
applicable (or summary description if no document is available) of all of the
following which Electro or CML Fiberoptics maintains, contributes to, or
otherwise has any material obligation with respect to its current or former
officers, directors, employees, consultants, representatives, salespersons and
agents:
(i) written employment contracts with officers, directors,
employees, consultants, representatives, salespersons and agents;
(ii) oral contracts or understandings with any employee which
alters the "employee-at-will" relationship or creates express or implied
contractual obligations;
(iii) collective bargaining agreements;
(iv) written incentive and bonus arrangements;
(v) pension and retirement plans;
(vi) profit sharing plans;
(vii) deferred compensation plans;
(viii) multi-employer plans as defined under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA");
(ix) medical, life or health insurance plans;
(x) stock purchase, stock option or similar plans;
(xi) written severance plans or policies and similar plans; and
(xii) any other benefit plans, arrangements, policies or
understandings included within the definition of employee benefit plan
as defined under ERISA Section 3(3) (collectively, items (i) through
(xii) the "Plans").
(c) Compliance with Contractual and Other Legal Obligations. Except as
set forth in Schedule 2.17(c), Electro and CML Fiberoptics have complied in all
material respects with its obligations to provide benefits under the terms of
the items enumerated in Section 2.17(b) above, and is not in material breach or
default under any of the items enumerated in Section 2.17(b) above. Except as
set forth in Schedule 2.17(c), there are no unfair labor practice charges or
complaints, grievances, arbitrations, employment-related litigation or
administrative proceedings pending or, to the knowledge of CML, threatened
involving any employee, applicant for employment, or former employee of Electro
or CML Fiberoptics, or by any labor organization or
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trustee, administrator, fiduciary, participant or beneficiary of any
employee benefit plan against Electro or CML Fiberoptics. Except as set
forth in Schedule 2.17(c), each of Electro and CML Fiberoptics is in
compliance in all material respects with its obligations under all
applicable federal, state and local statutes and ordinances, executive
orders, regulatory law and common law governing their employment practices
including, without limitation, legal obligations relating to compensation,
hours of work, the Federal Fair Labor Standards Act, as amended, Federal
and State child labor laws, occupational safety and health, workers'
compensation, unemployment insurance, equal employment opportunity, labor
relations, COBRA, ERISA and payment of social security and other taxes.
(d) Labor Disputes. Except as set forth on Schedule 2.17(d), during the
past three (3) years, neither Electro nor CML Fiberoptics has suffered or
sustained any labor dispute resulting in any strike, picket, work stoppage or
work slowdown, and no such labor dispute is to the knowledge of CML threatened.
To the knowledge of CML, there are no attempts being made to organize any
employees presently employed by Electro or CML Fiberoptics.
2.18 Employee Benefit Plans. Except as provided on Schedules
2.17(c) and 2.18 with respect to all Plans:
(a) Determination Letter. Each Plan intended to qualify under Section
401(a) of the Internal Revenue Code of 1986, as amended (the "Code") is the
subject of a favorable unrevoked determination letter issued by the Internal
Revenue Service (the "IRS") as to its qualified status under the Code. To the
knowledge of CML, no circumstances have occurred which would adversely affect
the tax qualified status of such Plan.
(b) Contributions. All contributions required by law to have been made
under each Plan (without regard to any waivers granted under Section 412 of the
Code) to any funds or trusts established thereunder or in connection therewith
have been made by CML, CML Fiberoptics or Electro, as the case may be, by the
due date thereof.
(c) Plan Actions. There is no suit, action, dispute, claim, other than
benefit claims in the ordinary course of business, arbitration or legal,
administrative or other proceeding (including any pending IRS determination
requests) or governmental investigation pending, or to the knowledge of CML,
threatened, alleging any breach of the terms of any Plan or of any fiduciary
duties thereunder or violation of any applicable law with respect to any such
Plan, nor, to the knowledge of CML, any basis or grounds therefor.
(d) Plan Maintenance. Each Plan has been maintained, in all material
respects, in accordance with its terms and with all provisions of ERISA
(including rules and regulations thereunder), the Code, and other applicable
law, and none of CML Fiberoptics, Electro or, to the knowledge of CML, any
"party in interest" or "disqualified person" with respect to such Plan has
engaged in a non-exempt "prohibited transaction" within the meaning of Section
4975 of the Code or any transaction described in Section 406 of ERISA involving
the assets of such Plan.
(e) Absence of Certain Plans. None of CML Fiberoptics, Electro nor any
Commonly Controlled Entity of CML Fiberoptics or of Electro maintains,
contributes to or otherwise has any obligation with respect to any
multi-employer plan (as defined in Section 3(37) of ERISA).
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(f) "Parachute" Payments. Except as required by law or as set
forth on Schedule 2.17(b), neither CML Fiberoptics nor Electro has made, or
may be obligated to make, to any current or former employee of CML Fiberoptics
or Electro any payment in the form of wages or other compensation pursuant to
any employment agreement or Plan as a consequence, in whole or in part of this
Agreement or of any change in the ownership or effective control of CML
Fiberoptics or Electro or the business of either.
(g) Documents. With respect to each such Plan, true, correct, and
complete copies of the applicable following documents have been delivered to
Xxxxxx:
(i) Any Plan documents and related trust documents, and
amendments thereto,
(ii) Form 5500, financial statements, and actuarial
reports for the last plan year,
(iii) The most recently issued Internal Revenue Service
determination letter, and
(iv) Summary plan descriptions.
2.19 Insurance. Schedule 2.19 sets forth a list and brief
description (specifying the insurer and the policy number, or covering note
number with respect to binders, setting forth the aggregate limit, if any, of
the insurer's liability thereunder) of current primary policies or binders of
fire, liability, product liability, workers' compensation, vehicular, and other
current primary insurance held by or in force for the benefit of Electro and/or
CML Fiberoptics. Such policies and binders are valid and are in full force and
effect. All premiums due on such policies have been paid or accrued. Neither
Electro nor CML Fiberoptics has borrowed or has assigned any of the proceeds of
any such policies to any other person or entity, other than naming persons or
entities as additional insureds or loss payees. Neither Electro nor CML
Fiberoptics is in default with respect to any provision contained in any such
policy or binder, the effect of which default could impair the ability of
Electro or CML Fiberoptics to avail itself of the coverage provided by such
policy or binder, nor has Electro or CML Fiberoptics failed to give any notice
or present any claim under any such policy or binder in due and timely fashion.
2.20 Accounts Payable. Schedule 2.20 sets forth the amount of all
accounts payable of Electro and CML Fiberoptics as of a recent date.
2.21 Liabilities.
(a) Except as set forth in Schedule 2.21, as of the Fiscal Year
Balance Sheet Date, neither CML Fiberoptics nor Electro had any direct or
indirect indebtedness, liability, claim, loss, damage, deficiency or
obligation, liquidated or unliquidated, secured or unsecured, accrued,
absolute, contingent or otherwise (collectively, "Liabilities"), that were not
fully and adequately reflected in the Fiscal Year Financial Statements, except
Liabilities incurred since the Fiscal Year Balance Sheet Date in the ordinary
course of business and consistent with past practice and that are not required
by GAAP consistently applied to be either included or disclosed in the Fiscal
Year Financial Statements which, in the aggregate, will not have a Material
Adverse Effect .
(b) To the knowledge of CML, neither CML Fiberoptics nor Electro
has any liability or obligation in respect of goods, materials or products
manufactured or sold by it and alleged by third parties to be defective,
including, without limitation, all warranty claims, tort claims and claims
seeking special or consequential damages attributable to allegedly defective
goods,
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materials or products supplied by it other than such liabilities or obligations
which, in the aggregate, would not have a Material Adverse Effect.
2.22 Tax Matters.
There are no liens with respect to CML Taxes upon any of the
properties or assets, real, personal or mixed, tangible or intangible of CML
Fiberoptics or Electro, except liens for current Taxes not yet due.
As used in this Agreement, "CML Taxes" is defined to include all
taxes, charges, fees, levies or other assessments imposed by any federal,
state, local or foreign taxing authority on any of the CML Companies,
including, without limitation, income, capital, excise, property, sales,
transfer, employment, payroll, and franchise taxes and such terms shall include
any interest, penalties or additions attributable to or imposed on or with
respect to such assessments, other than the Transfer Taxes for which the
Company takes responsibility pursuant to Section 9.3. As used in this
Agreement, "Xxxxxx Taxes" is defined to include all taxes, charges, fees,
levies or other assessments imposed by any federal, state, local or foreign
taxing authority on Xxxxxx, including, without limitation, income, capital,
excise, property, sales, transfer, employment, payroll, and franchise taxes and
such terms shall include any interest, penalties or additions attributable to
or imposed on or with respect to such assessments, other than the Transfer
Taxes for which the Company takes responsibility pursuant to Section 9.3.
2.23 Compliance with Laws. Neither Electro nor CML Fiberoptics is
in violation of any Orders or of any Governmental Regulations, the violation of
which would, in the aggregate, have a Material Adverse Effect. Except as set
forth on Schedule 2.28(a) attached hereto, Electro and CML Fiberoptics have all
permits, zoning or otherwise, licenses, orders and approvals, exceptions or
waivers, of any federal, state or local governmental or regulatory body, the
failure of which to obtain would have a Material Adverse Effect (collectively,
"Permits"). To the knowledge of CML, all Permits are in full force and effect,
no violations been received by, CML Fiberoptics, Electro or CML in respect of
any Permit, and no proceeding is pending or, to the knowledge of CML,
threatened to revoke or limit any Permit.
2.24 Actions and Proceedings. Except as listed in Schedule 2.24,
there are no suits, actions, claims or legal, administrative or arbitration
proceedings or investigations (collectively, "Actions") (whether or not the
defense thereof or liabilities in respect thereof are covered by policies of
insurance) or governmental or professional inquiries (including, without
limitation, any inquiry as to the qualification of Electro or CML Fiberoptics
to hold or receive any Permit), pending or, to the knowledge of CML, threatened
against, involving or affecting CML Fiberoptics or Electro, the probable
outcome of which, individually or in the aggregate, should have a Material
Adverse Effect.
2.25 Banks. Schedule 2.25 sets forth the name of each bank, trust
company and stock or other broker which has maintained an account, credit line
or safe deposit box or vault for Electro or CML Fiberoptics, or otherwise
maintains relations with Electro or CML Fiberoptics and the names of all
persons authorized to draw on any such account or credit line or to have access
to any such safe deposit box or vault.
2.26 RESERVED.
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2.27 Providers and Customers.
(a) Largest Providers and Customers. Schedule 2.27 sets forth
Electro's and/or CML Fiberoptics' ten largest providers (in dollar volume)
during its most recently completed fiscal year and for the period covered by
the Fiscal Year Financial Statements, and Electro's and/or CML Fiberoptics' ten
largest customers (in dollar volume) during such fiscal year and for the period
covered by the Fiscal Year Financial Statements.
(b) Continuing Relationships. CML has no knowledge that (other
than upon contract completion) any such provider or customer intends to cancel
or otherwise modify its relationship with Electro and/or CML Fiberoptics or to
decrease materially or limit its services, supplies or materials provided to
Electro and/or CML Fiberoptics or its usage or purchase of the services or
products of Electro or CML Fiberoptics. The acquisition of the Transferred
Assets by the Company will not, to the knowledge of CML, have a Material
Adverse Effect on the relationship of Electro or CML Fiberoptics with any such
provider or customer.
2.28 Environmental Liabilities.
(a) Except as set forth on Schedule 2.28(a), neither CML
Fiberoptics nor Electro has used, stored, treated, transported, manufactured,
refined, handled, produced, or disposed of a material amount of any Hazardous
Materials or Petroleum Products, as hereinafter defined, in, under, at, from, or
in any way affecting any of their current or former properties or assets or
property leased by them, or otherwise, in any manner which at the time of the
action in question materially violated any Environmental Law, as defined
hereinafter, governing the use, storage, treatment, transportation, manufacture,
refinement, handling, production, or disposal of Hazardous Materials or
Petroleum Product. Disclosure of any matter on Schedule 2.28(a) shall not
constitute an admission that such matter was material or a violation of law.
(b) Neither of CML Fiberoptics nor Electro has any material
obligations or liabilities, matured or not matured, absolute or contingent,
assessed or unassessed, and no pending claims have been made against them and
no currently outstanding citations or notices including, without limitation,
notice letters, information requests or notices of potential responsibility,
have been issued against any of them, which in the case of any of the foregoing
have been or are imposed by any provision of any Environmental Laws.
(c) Except as disclosed on Schedule 2.28(a), CML Fiberoptics and
Electro have all governmental licenses, permits and other authorizations
required by any and all Environmental Laws necessary to conduct and operate
their business as currently conducted or operated. All such licenses, permits
and other authorizations are in full force and effect and shall be in full
force and effect as of the Closing Date.
(d) Except as disclosed on Schedule 2.28(a), the Property is not
presently utilized and has not in the past been utilized by CML Fiberoptics or
Electro for the generation, storage, handling, transportation or disposal of
any Hazardous Materials and, to the knowledge of CML, the Property has not been
used by prior owners, lessees or operators or others for the generation,
storage, handling, transportation or disposal of any Hazardous Materials.
(e) So long as CML Fiberoptics or Electro has owned the Property,
the Property has not been subject to any release or threatened release of any
Hazardous Materials or Petroleum
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Products and it does not otherwise contain any condition which may result in a
claim, right of action or recovery by any person or entity under any
Environmental Laws, and to the knowledge of CML, prior to CML Fiberoptics' or
Electro's ownership of the Property, the Property had not been subject to any
release or threatened release of any Hazardous Materials or Petroleum Products
and it did not otherwise contain any condition which would result in a claim,
right of action or recovery by any person or entity under any Environmental
Laws.
(f) Except as set forth on Schedule 2.28(a), neither CML
Fiberoptics nor Electro has generated, transported for disposal or treatment,
arranged for transportation for disposal or treatment or disposed of any
Hazardous Materials at any site where there has been a release or threatened
release of Hazardous Materials or in a manner which could create liability to
any party under any Environmental Laws. Except as set forth on Schedule
2.28(a), neither CML, CML Fiberoptics nor Electro has received nor does it have
knowledge of any notice, request for response action, administrative or other
order, judgment, complaint, claim, investigation, request for information or
any other request for relief whatsoever relating to any site where a Hazardous
Material came to be disposed of, placed or located, which was generated,
transported for disposal or treatment or arranged for transportation by CML
Fiberoptics or Electro.
(g) Except as set forth on Schedule 2.28(a), there are no above
ground or underground storage tanks located on the Property.
(h) As used herein, "Environmental Laws" shall mean any and all
federal, state, local, or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, or requirements of any federal, state, municipal,
or other governmental department, commission, board, bureau, agency, or
instrumentality, or other court or arbitrator, regulating, relating to, or
imposing liability or standards of conduct concerning any Hazardous Material or
Petroleum Products or environmental protection, as now in effect, including
without limitation, the Clean Water Act, also known as the Federal Water
Pollution Control Act, 33 U.S.C. Section 1251 et seq., the Clean Air Act, 42
U.S.C. Section 7401 et seq., the Federal Insecticide, Fungicide and Rodenticide
Act, 7 U.S.C. Sections 300F et seq., the Surface Mining Control and Reclamation
Act, 30 U.S.C. Sections 1201 et seq., the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601 et seq., the Superfund
Amendment and Reauthorization Act of 1986, Public Law 99-499, 100 Stat. 1613,
the Emergency Planning and Community Right to Know Act, 42 U.S.C. Section 1101
et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et
seq., and the Toxic Substances Control Act, 25 U.S.C. Section 2601 et seq.,
together, in each case, with any amendment thereto, and the regulations adopted
and publications promulgated thereunder and all substitutions thereof.
(i) As used herein, "Hazardous Materials" shall mean any hazardous
materials, hazardous wastes, infectious medical wastes, hazardous, radioactive
or toxic substances, asbestos, asbestos fibers, friable asbestos, any PCB's,
waste or used oil, or constituents of the foregoing, defined or regulated as
such in or under any Environmental Law.
(j) As used herein, "Petroleum Products" shall mean gasoline,
diesel fuel, motor oil, heating oil, kerosene, and any other petroleum
products.
2.29 RESERVED.
2.30 Full Disclosure. The representations made by or on behalf of
the CML Companies to Xxxxxx in this Agreement, including the Schedules attached
hereto, taken as a whole do not, to
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the knowledge of CML, contain any untrue statement of a material fact or omit
to state any material fact necessary to make the statements contained therein
not false or misleading which in either case adversely affects the financial
position of Electro and CML Fiberoptics.
2.31 Work-In-Process and Unbilled Contract Work. All
work-in-process and unbilled contract work of Electro and/or CML Fiberoptics as
of the date hereof (including those reflected in the Fiscal Year Financial
Statements) arose in the ordinary and usual course of business of Electro
and/or CML Fiberoptics, represent the value of work performed by Electro and/or
CML Fiberoptics and will be collectible in the aggregate record amounts thereof
in the ordinary and usual course of business of Electro and CML Fiberoptics,
except to the extent of the reserves therefor on the Fiscal Year Financial
Statements.
2.32 Assignment of All Required Assets. Electro is the
owner of all of the assets used in the business as currently conducted by
Electro and CML Fiberoptics. The Transferred Assets include all assets,
property and contracts which are necessary for the Company to use the assets
and conduct the business and operations of Electro and CML Fiberoptics in
substantially the same manner as Electro and CML Fiberoptics are currently
conducting such business and using such assets.
2.33 Definition of Knowledge of CML. For purposes of this
Agreement, the phrase "to the knowledge of CML" or any form thereof shall mean
the best knowledge of Xxxxx Xxxx, Xxxxxx Xxxxxxxxx, Xxxxxx Xxxxxx and Xxxxx
XxxXxxxxx after reasonable investigation.
2.34 Disclosure in Schedules. For purposes of this Agreement, with
respect to any matter that is clearly disclosed in any schedule hereto in such
a way as to make its relevance to the information called for by another Section
of this Agreement readily apparent, such matter shall be deemed to have been
included in the schedule in response to such other Section, notwithstanding the
omission of any appropriate cross-reference thereto.
3.0 REPRESENTATIONS AND WARRANTIES OF XXXXXX.
Xxxxxx represents and warrants to CML that:
3.1 Organization. Xxxxxx is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Maryland.
3.2 Authority. Each of this Agreement and the Limited
Liability Company Agreement has been duly authorized, executed and delivered by
Xxxxxx and Xxxxxx has the right, power, authority and legal capacity to enter
into and perform the obligations to be performed by it under this Agreement
and the Limited Liability Company Agreement and to consummate the transactions
contemplated by each of them hereby and thereby.
3.3 Binding Obligation. This Agreement and all writings
relating hereto signed by Xxxxxx constitute valid and binding obligations of
Xxxxxx enforceable in accordance with their respective terms, except as
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium, and other laws affecting the enforcement of creditors' rights
generally and subject to equitable principles.
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3.4 No Conflicts. Neither the execution, delivery and performance
of this Agreement by Xxxxxx nor the consummation by Xxxxxx of the transactions
contemplated of them hereby will:
(a) violate any provision of the Charter or By-laws of Xxxxxx;
(b) violate, conflict with or result in the breach or termination
of, or otherwise give any other contracting party the right to terminate, or
constitute (or with notice or lapse of time, or both, would constitute) a
default under the terms of any Obligation, which individually or in the
aggregate, would materially adversely affect the results of operations on a
consolidated basis or the consolidated financial position of Xxxxxx;
(c) violate any Order to which Xxxxxx is a party;
(d) constitute a violation by Xxxxxx of any statute, law or
regulation of any jurisdiction which materially adversely affects the results
of operations on a consolidated basis or the consolidated financial position of
Xxxxxx; or
(e) violate any Permit, the violation of which would materially
adversely affect the results of operations on a consolidated basis or the
consolidated financial position of Xxxxxx.
3.5 Litigation and Other Proceedings. There are no Actions
(whether or not the defense thereof or liabilities in respect thereof are
covered by policies of insurance) or governmental or professional inquiries
pending or, to the best knowledge of Xxxxxx, threatened, against Xxxxxx which
question or challenge the validity of this Agreement or the Limited Liability
Company Agreement or any action taken or to be taken by Xxxxxx in connection
with the transactions contemplated of Xxxxxx hereby.
3.6 No Consent. Except as set forth in Schedule 3.6 attached
hereto, to the best knowledge of Xxxxxx, no consent of any other party and no
consent, license, approval or authorization of, or exemption by, or
registration or declaration or filing with, any governmental authority, bureau
or agency is required in connection with the execution, delivery, validity or
enforceability of this Agreement with respect to Xxxxxx or the consummation by
Xxxxxx of the transactions contemplated of them hereby, except wherein the
failure to obtain such consent would not have a material adverse affect on the
ability of Xxxxxx to consummate the transactions hereby contemplated.
4. CML'S COVENANTS AND OBLIGATIONS PRIOR TO CLOSING.
CML covenants that from the date of this Agreement until the Closing,
it shall, and shall cause CML Fiberoptics and Electro to, comply with each of
the following covenants:
4.1 Continuing Disclosure and Access to CML Fiberoptics and
Electro. CML, CML Fiberoptics and Electro shall continue to furnish, or cause
to be furnished, to Xxxxxx and its representatives all data and information
concerning the business, finances and properties of CML Fiberoptics and Electro
that may reasonably be requested by them. CML shall cause CML Fiberoptics and
Electro to afford to the employees and representatives of Xxxxxx and to its
counsel and accountants such access during normal business hours to CML
Fiberoptics' and Electro's personnel, facilities, properties, offices,
equipment, files, agreements and books and records as may be reasonably
necessary in order that Xxxxxx may fully and completely understand the
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business, affairs and operations of CML Fiberoptics and Electro and begin the
audit contemplated by Section 1.7 hereof; and CML shall cause the officers of
CML Fiberoptics and Electro to furnish Xxxxxx with such additional financial
and operating data (including, without limitation, financial projections and
cash flow forecasts) and other information as to CML Fiberoptics' and Electro's
business, operations, prospects and properties as Xxxxxx shall from time to
time reasonably request for such purpose, including, without limitation,
statements to be made to any governmental or regulatory body in connection with
the transactions contemplated by this Agreement. Notwithstanding the foregoing,
such access or the review of such data or information by Xxxxxx or its
representatives shall not, in any respect, release CML from any of their
covenants or obligations under this Agreement nor shall it constitute a waiver
of any of CML's representations or warranties made under this Agreement.
4.2 Continuing Operations. Each of Electro and CML Fiberoptics
shall carry on its business and activities diligently and substantially in such
manner as they are being conducted on the date hereof, and shall not make or
institute any unusual or novel methods of design, development, manufacture,
purchase, sale, lease management, accounting, or operation that will vary
materially from those methods used by it as of the date of this Agreement;
provided, however, that CML Fiberoptics and Electro shall forthwith take such
actions as are necessary to cure any Non-Compliance as described or set forth
on Schedule 2.28(b) hereto, to the reasonable satisfaction of Xxxxxx.
4.3 Asset Maintenance. Each of Electro and CML Fiberoptics shall
maintain all of its personal property and assets or replacements thereof in
accordance with its current practices.
4.4 Books and Records. Each of CML Fiberoptics and Electro shall
maintain its books and records in accordance with GAAP consistent with the
manner in which it is currently applied.
4.5 Comply with Law. Each of CML Fiberoptics and Electro shall
comply in all material respects with all applicable laws and regulations to
which it is subject.
4.6 Notification of Claim. Each of CML Fiberoptics and Electro
shall promptly notify Xxxxxx of any material litigation pending or threatened
against CML Fiberoptics or Electro or any material damage to, or destruction
of, any assets of Electro or CML Fiberoptics.
4.7 Preservation of Key Relationships. Each of Electro and CML
Fiberoptics shall use all reasonable efforts, without making any commitments on
behalf of Xxxxxx, to preserve its business organization intact, to keep
available its officers and employees and to preserve its current relationships
with suppliers, customers and others having business relationships with Electro
and/or CML Fiberoptics.
4.8 Continuing Insurance. Each of Electro and CML Fiberoptics
shall continue its existing insurance policies, subject to variations in
amounts required by the ordinary operations of its business and shall make
arrangements to provide the Company with the same or substantially similar
insurance coverage as of the Closing Date. No borrowing shall be made against
any policy for such insurance and no assignment shall be made of any of the
proceeds of such policy to any other person or entity. None of CML, CML
Fiberoptics or Electro shall take (or fail to take) any action that would
enable the insurers under such policies to avoid liabilities for claims arising
out of occurrences prior to the Closing Date.
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4.9 Obtain Consents. On or before the Closing Date, CML, CML
Fiberoptics and Electro shall use all reasonable efforts to obtain the written
consent of the persons and entities described in any Schedule to this Agreement
as being required in order to effect the transactions contemplated hereby and
shall furnish to Xxxxxx executed copies of such consents. Xxxxxx shall
endeavor to assist CML in obtaining such consents, including executing and
delivering any documents and instruments that may be reasonably required;
provided, however, that Xxxxxx shall not be obligated under this Section 4.9 to
execute any guarantee, assumption of liability, or other document or instrument
requiring Xxxxxx to assume obligations not contemplated by this Agreement or
the Limited Liability Company Agreement. CML shall, and shall cause CML
Fiberoptics and Electro to, use all reasonable efforts to obtain all
governmental approvals and consents necessary for, or required by the
consummation of, the transactions contemplated hereby to be performed by it.
4.10 Plans. CML, CML Fiberoptics and Electro shall make
arrangements to amend their Plans (as defined in Section 2.17) to permit the
Company to participate as an employer under such Plans and to permit the
employees of Electro and CML Fiberoptics who become employees of the Company to
continue to participate in such Plans.
4.11 Closing Representations and Warranties. CML, CML Fiberoptics
and Electro shall use all reasonable efforts to ensure that the representations
and warranties of CML, CML Fiberoptics and Electro set forth in this Agreement
shall also be true and correct on and as of the Closing Date as if made on and
as of such date, except for representations and warranties which speak as to a
particular date, which representations and warranties shall remain true and
correct in all material respects as of such date.
4.12 Negative Covenants. Electro and CML Fiberoptics shall not,
during the period from the execution of this Agreement to the Closing Date,
take any of the following actions without the prior written approval of Xxxxxx:
(a) Entering into any commitment for an investment in property,
plant or equipment which involves aggregate payments by Electro or CML
Fiberoptics in excess of $100,000;
(b) Entering into any agreement to sell or otherwise dispose of
any property, plant or equipment which, when originally acquired by Electro or
CML Fiberoptics, had an acquisition cost in excess of $100,000;
(c) Taking any action concerning salaries and benefits of existing
employees of Electro or CML Fiberoptics where the salary of such employee
exceeds $50,000 and the proposed increase or decrease in such salary and
benefits exceeds 15% of the employee's then current compensation package;
(d) RESERVED.
(e) Taking any action with respect to any incentive compensation
or bonus to any employee of Electro or CML Fiberoptics except for any such
compensation or bonus scheme awarded to any employee which does not extend
beyond November 30, 1996;
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(f) Entering into any employment agreements not terminable at will
(to the extent that the doctrine of employment at will still exists under
applicable law);
(g) Agreeing to or permitting the existence of any lien, mortgage,
claim, charge, security interest or other encumbrance on any of Electro's or
CML Fiberoptics' assets other than those existing on the date hereof (whether
tangible or intangible);
(h) Making any commitment with respect to any obligation or
liability for borrowed money other than with respect to trade payables in the
ordinary course of business;
(i) Amending its Articles of Organization or By-laws or the terms
of any outstanding security;
(j) Issuing any of its capital stock or making any change in its
issued and outstanding capital stock or issuing any warrant, option or other
right to purchase shares of its capital stock or any security convertible into
its capital stock or redeeming, purchasing or otherwise acquiring any shares of
its capital stock;
(k) Declaring any dividend or making any payment or distribution
with respect to its capital stock;
(l) Making any material change with respect to the nature or
operation of its business;
(m) Making any changes in its accounting methods, principles or
practices; or
(n) Terminating the employment of any employee of the Electro or
CML Fiberoptics with a title of general manager, vice president or president of
Electro or CML Fiberoptics, or any employee who the CML Companies would
consider to be a key employee of Electro or CML Fiberoptics.
4.13 Cure Any Non-compliance. CML, CML Fiberoptics and Electro
shall use their reasonable best efforts cure any failure on the part of any of
them to comply with the provisions of this Agreement.
4.14 Establishment of the Company. Electro shall cause the Company
to be formed by filing a Certificate of Formation, in form and substance
acceptable to Xxxxxx, with the office of the Secretary of State of the State of
Delaware.
4.15 Continued Employment. The CML Companies not take any action
to reassign Xxxxxx Xxxxxx to another position with any of the CML Companies,
for a period of at least nine (9) months following the Closing Date.
5. XXXXXX'X COVENANTS AND OBLIGATIONS PRIOR TO CLOSING.
5.1 On or before the Closing Date, Xxxxxx shall use all reasonable
efforts to obtain the written consent of the persons and entities required in
order for Xxxxxx to effect the transactions contemplated hereby and shall
furnish to CML executed copies of such consents. CML shall, and shall cause
CML Fiberoptics and Electro to, endeavor to assist Xxxxxx in obtaining such
consents,
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including executing and delivering any documents and instruments that may be
reasonably required; provided, however, that neither CML, CML Fiberoptics nor
Electro shall be obligated under this Article 5 to execute any guarantee,
assumption of liability, or other document or instrument requiring CML, CML
Fiberoptics or Electro to assume obligations not contemplated by this
Agreement, other than by the Limited Liability Company Agreement and the
Transfer Agreement.
5.2 Notification of Claim. Xxxxxx shall promptly notify CML of
any material litigation pending or threatened against Xxxxxx that would impair
Xxxxxx'x ability to perform its obligations under this Agreement or seeks to
enjoin Xxxxxx from consummating the transactions hereby contemplated.
5.3 Obtain Consents. On or before the Closing Date, Xxxxxx shall
use all reasonable efforts to obtain the written consent of the persons and
entities described in any Schedule to this Agreement as being required in order
to effect the transactions contemplated hereby and shall furnish to CML
executed copies of such consents. CML shall endeavor to assist Xxxxxx in
obtaining such consents, including executing and delivering any documents and
instruments that may be reasonably required; provided, however, that CML shall
not be obligated under this Section 5.3 to execute any guarantee, assumption of
liability, or other document or instrument requiring CML to assume obligations
not contemplated by this Agreement or the Limited Liability Company Agreement.
Xxxxxx shall use all reasonable efforts to obtain all governmental approvals
and consents necessary for, or required by the consummation of, the
transactions contemplated hereby to be performed by it.
5.4 Closing Representations and Warranties. Xxxxxx shall use all
reasonable efforts to ensure that the representations and warranties of Xxxxxx
set forth in this Agreement shall also be true and correct on and as of the
Closing Date as if made on and as of such date, except for representations and
warranties which speak as to a particular date, which representations and
warranties shall remain true and correct in all material respects as of such
date.
6. CONDITIONS PRECEDENT TO XXXXXX'X PERFORMANCE.
Xxxxxx'x obligations under this Agreement are subject to the
satisfaction, at or before the Closing of all the conditions set out below in
this Section 6, which conditions CML, CML Fiberoptics and Electro shall use all
reasonable efforts to satisfy. Xxxxxx may waive any or all of these conditions
(except as otherwise required by law) in whole or in part without prior notice.
6.1 Representations and Warranties at Closing. All
representations and warranties by CML, CML Fiberoptics or Electro in this
Agreement, the Limited Liability Company Agreement or the Transfer Agreement
shall continue to be true and correct in all material respects on and as of the
Closing Date, except for representations and warranties which speak as to a
particular date, which representations and warranties shall remain true and
correct in all material respects as of such date.
6.2 Compliance of CML. CML shall have, or shall have caused CML
Fiberoptics and Electro to have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by
this Agreement or any other agreement contemplated hereby to be performed or
complied with by any of them on or before the Closing Date, including
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but not limited to taking such actions as are necessary to cure any
Non-Compliance as described or set forth on Schedule 2.28(b) hereto, to the
reasonable satisfaction of Xxxxxx.
6.3 No Adverse Changes. During the period from November 30, 1996
to the Closing Date there shall not have been any material adverse change in
the business, financial condition or the results of operations of Electro or
CML Fiberoptics, and neither Electro nor CML Fiberoptics shall have sustained
any material loss or damage to its assets, whether or not insured, that affects
its ability to conduct a material part of its business.
6.4 CML's Closing Certificate. Xxxxxx shall have received a
certificate from CML in the form attached hereto as Exhibit D signed by an
appropriate officer of CML, dated the Closing Date.
6.5 Opinion of CML's Counsel. Xxxxxx shall have received from
Xxxxxxx, Xxxx & Xxxxx LLP, counsel for CML, an opinion dated the Closing Date
in the form of Exhibit E.
6.6 No Litigation. No Action has been instituted or threatened
which seeks to enjoin the consummation of the transactions as contemplated by
this Agreement or seeks substantial damages as a result of the consummation of
the transactions contemplated by this Agreement.
6.7 Assignments and Consents. All necessary agreements,
assignments and consents to the transfer of the Transferred Assets to the
Company and to the consummation by Electro of the sale of the Units and the
grant of the Option pursuant to this Agreement shall have been obtained by the
CML Companies and delivered to Xxxxxx prior to the Closing.
6.8 Certificates of Good Standing; Certified Charter and By-Laws.
Xxxxxx shall have received certificates of good standing for CML, CML
Fiberoptics and Electro, as of a date not more than ten (10) days before the
Closing Date from the Secretaries of State of each jurisdiction identified in
Schedule 2.1, copies of the Certificate of Incorporation or Articles of
Organization, as amended, of each of CML, CML Fiberoptics and Electro,
certified by the Oklahoma or Massachusetts Secretary of State, and copies of
the by-laws of each of CML, CML Fiberoptics and Electro, certified by the
Secretary of CML, CML Fiberoptics and Electro, as the case may be. Xxxxxx
shall have received certificates of good standing for CML Fiberoptics or
Electro, as of a date not more than ten (10) days before the Closing Date, from
its jurisdiction of incorporation and from the Secretary of State of each
jurisdiction identified for CML Fiberoptics or Electro in Schedule 2.1 or 2.3.
Xxxxxx shall have received a copy of the Certificate of Formation of the
Company, certified by the Delaware Secretary of State, and a copy of the
limited liability company agreement of the Company, as it may exist prior to
the execution of the Limited Liability Company Agreement.
6.9 Form of Documents. The form and substance of all
certificates, instruments, opinions, schedules and other documents delivered to
Xxxxxx under this Agreement in connection with the Closing shall be
satisfactory in all reasonable respects to Xxxxxx and its counsel.
6.10 Certification of Authority. On or before the Closing Date,
the execution and delivery of this Agreement by CML, CML Fiberoptics and
Electro and the performance of their respective covenants and obligations
hereunder shall have been duly authorized by all necessary corporate action,
and Xxxxxx shall have received copies of all resolutions and consents
pertaining
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to that authorization, certified by the Secretary or Assistant Secretary of
CML, CML Fiberoptics and Electro, as the case may be.
6.11 LLC Agreement. The Company shall have been established and
Electro and Xxxxxx shall have entered into a Limited Liability Company
Agreement, a form of which is attached hereto as Exhibit A and incorporated
herein by reference, on or prior to the Closing Date. CML shall deliver, on or
prior to the Closing Date, a certificate in the form of Exhibit F attached
hereto.
6.12 Environmental Matters. CML, CML Fiberoptics and Electro shall
have taken such steps as Xxxxxx shall reasonably deem appropriate to undertake
the Compliance Measures set forth on Schedule 2.28(b) attached hereto.
6.13 Insurance. CML, CML Fiberoptics and Electro shall have made
arrangements to provide the Company with the same or substantially similar
insurance coverage as is provided to Electro and CML Fiberoptics under their
existing insurance policies, subject to variations in amounts required by the
ordinary operations of its business.
6.14 Plans. CML, CML Fiberoptics and Electro shall have made
arrangements, reasonably satisfactory to Xxxxxx, to amend their Plans (as
defined in Section 2.17) to permit the Company to participate as an employer
under such Plans and to permit the employees of Electro and CML Fiberoptics who
become employees of the Company to continue to participate in such Plans.
7. CONDITIONS PRECEDENT TO PERFORMANCE BY THE CML COMPANIES.
The CML Companies' obligations under this Agreement are subject to the
satisfaction by Xxxxxx, at or before the Closing, of all the following
conditions, which conditions Xxxxxx shall use all reasonable efforts to
satisfy. The CML Companies may waive any or all of these conditions (except as
otherwise required by law) in whole or in part without prior notice; provided,
however, that no such waiver of a condition shall constitute a waiver by the
CML Companies of any of their rights or remedies, at law or in equity, if
Xxxxxx shall be in default with any of its representations, warranties or
covenants under this Agreement.
7.1 Representations and Warranties at Closing. All
representations and warranties by Xxxxxx contained in this Agreement or in any
written statement delivered by Xxxxxx under this Agreement shall continue to be
true on and as of the Closing Date, except for representations and warranties
which speak as to a particular date, which representations and warranties shall
remain true and correct in all material respects as of such date.
7.2 Compliance of Xxxxxx. Xxxxxx shall have performed and
complied in all material respects with all covenants and agreements, and
satisfied all conditions that it is required by this Agreement to perform,
comply with or satisfy, before or at the Closing.
7.3 Xxxxxx'x Closing Certificate. CML shall have received a
certificate in the form attached hereto as Exhibit G, dated the Closing Date,
signed by an appropriate officer of Xxxxxx.
7.4 RESERVED.
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7.5 Opinion of Counsel for Xxxxxx. CML shall have received from
Xxxxxxxxxxx & Xxxxxxxx LLP an opinion dated the Closing Date in the form of
Exhibit H.
7.6 Assignments and Consents. All necessary agreements,
assignments and consents to the consummation by Xxxxxx of the transactions
contemplated by this Agreement, or otherwise pertaining to the matters covered
by it, shall have been obtained by Xxxxxx and delivered to CML on or prior to
the Closing Date.
7.7 Certificate of Good Standing; Certified Charter and By-Laws.
CML shall have received a certificate of good standing for Xxxxxx, as of a
date not more than ten (10) days before the Closing Date from the Secretary of
State Maryland, a copy of the Certificate of Incorporation or Articles of
Organization, as amended, of Xxxxxx, certified by the Maryland Secretary of
State, and copies of the by-laws of Xxxxxx, certified by the Secretary of
Xxxxxx. CML shall have received a certificate of good standing for Xxxxxx as
of a date not more than ten (10) days before the Closing Date, from its
jurisdiction of incorporation.
7.8 Form of Documents. The form and substance of all
certificates, instruments, opinions, schedules and other documents delivered to
the CML Companies under this Agreement shall be satisfactory in all reasonable
respects to CML and its counsel.
7.9 No Litigation. No Action has been instituted or threatened
which seeks to enjoin the consummation of the transactions as contemplated by
this Agreement or seeks substantial damages as a result of the consummation of
the transactions contemplated by this Agreement.
7.10 Certification of Authority. On or before the Closing Date,
the execution and delivery of this Agreement by Xxxxxx and the performance of
its covenants and obligations hereunder shall have been duly authorized by all
necessary corporate action, and CML, CML Fiberoptics and Electro shall have
received copies of all resolutions and consents pertaining to that
authorization, certified by the Secretary or Assistant Secretary of Xxxxxx.
7.11 LLC Agreement. The Company shall have been established and
Electro and Xxxxxx shall have entered into a Limited Liability Company
Agreement, a form of which is attached hereto as Exhibit A and incorporated
herein by reference, on or prior to the Closing Date.
7.12 Execution of Transfer Agreement by the Company. The Company
shall have executed and delivered the Transfer Agreement.
8. FURTHER ASSURANCES.
8.1 CML's Further Assurances. CML, at any time after the Closing
Date, shall (and shall cause CML Fiberoptics and Electro to) execute,
acknowledge and deliver any further assignments, conveyances and other
assurances, documents and instruments of transfer reasonably requested by Xxxxxx
and will take any other action consistent with the terms of this Agreement that
may be reasonably requested by Xxxxxx for the purpose of concluding the
transactions contemplated by this Agreement.
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8.2 Xxxxxx'x Further Assurances. Xxxxxx, at any time after
the Closing Date, shall execute, acknowledge and deliver any further
assignments, conveyances and other assurances, documents and instruments of
transfer reasonably requested by CML and will take any other action consistent
with the terms of this Agreement that may be reasonably requested by CML for
the purpose of concluding the transactions contemplated by this Agreement.
9. ALLOCATION OF TAX LIABILITY.
9.1 The CML Companies shall be responsible for all CML Taxes
regardless of when imposed and shall be entitled to retain any refunds
received with respect to such CML Taxes.
9.2 Xxxxxx shall be responsible for all Xxxxxx Taxes regardless of
when imposed and shall be entitled to retain any refunds received with respect
to such Xxxxxx Taxes.
9.3 The Company shall pay all sales, use, transfer, real property
transfer, recording, gains, stock transfer and other similar taxes and fees
("Transfer Taxes") arising out of or in connection with the transactions
effected pursuant to this Agreement. The Company shall file all necessary
documentation and returns with respect to such Transfer Taxes.
10. THE COMPANY'S COVENANTS AND OBLIGATIONS AFTER CLOSING.
The Company covenants that from the date of it shall comply with each
of the following covenants:
10.1 Insurance. The Company shall pay its allocable share of
premiums for the insurance coverage provided for the benefit of the Company by
the CML companies.
10.2 Plans. The Company shall pay the employer's share of such
amounts as are due with respect to its employees' participation in the CML
Companies' Plans (as defined in Section 2.17), and shall pay over such portion
of the employees' share of such amounts as the Company withholds or collects
from its employees.
10.3 Environmental Matters. The Company shall cooperate reasonably
with the CML Companies' efforts to undertake the Compliance Measures set forth
on Schedule 2.28(b) attached hereto.
11. DISPUTE RESOLUTION.
The parties hereto agree that, except as otherwise provided herein,
any disputes between the parties with respect to this Agreement or the Limited
Liability Company Agreement or the Transfer Agreement or any of the
transactions contemplated hereby or thereby shall be submitted to arbitration
in Boston, Massachusetts pursuant to the Commercial Arbitration Rules of the
American Arbitration Association in effect on the date hereof, attached hereto
as Exhibit I.
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12. INDEMNIFICATION.
12.1 Indemnification of Xxxxxx and the Company. Subject to the
limitations hereinafter set forth, the CML Companies shall indemnify and hold
Xxxxxx and the Company, and each of Xxxxxx'x shareholders, subsidiaries,
affiliates, officers and directors, and the Company's directors and officers,
harmless from, against, for and in respect of:
(a) any and all damages, losses, settlement payments, obligations,
liabilities and claims paid, and any costs and expenses (including reasonable
attorneys' fees) suffered, sustained, incurred or paid by any indemnified party
identified in Section 12.1 in connection with (i) each litigation, arbitration,
investigation or other proceeding commenced against the CML Companies prior to
the Closing Date or for which a cause of action existed on or prior to the
Closing Date (other than causes of action based upon or arising from Assumed
Liabilities) or (ii) any Excluded Liabilities;
(b) any and all damages, losses, settlement payments, obligations,
liabilities, claims, costs and expenses (including reasonable attorneys' fees)
suffered, sustained, incurred or paid by any indemnified party identified in
Section 12.1 by reason of the untruth, inaccuracy or breach of any
representation or warranty of CML, CML Fiberoptics or Electro contained or made
in connection with Sections 2.1 through 2.32 of this Agreement, or any covenant
of CML, CML Fiberoptics or Electro contained in this Agreement; provided that
no recovery shall be available under this Section 12.1(b) with respect to the
representations and warranties contained in Section 2.9 to the extent recovery
has occurred pursuant to Section 1.8;
(c) any and all damages, losses, settlement payments, obligations,
liabilities, costs and expenses (including reasonable attorneys' fees)
suffered, sustained, incurred or paid by an indemnified party identified in
Section 12.1 in connection with violations of law or governmental regulation,
including but not limited to violations of Environmental Laws by the CML
Companies or at the Sites which existed on or prior to the Closing Date, and
any continuing failure of the Company, after the Closing, to cure any
Non-Compliance described or set forth on Schedule 2.28(a) hereto or to take
such steps to cure any Non-Compliance as described or set forth on Schedule
2.28(b);
(d) CML Taxes; and
(e) any defective conditions existing on or prior to the Closing
Date in products manufactured and sold by CML Fiberoptics or Electro prior to
the Closing Date other than such warranty liabilities as are assumed under
Section 1.1(c)(3), and any actual or alleged liability for death or injury to
person or property as a result of any defective conditions existing on or prior
to the Closing Date in products manufactured by CML Fiberoptics or Electro
prior to the Closing Date.
The indemnified parties are entitled to indemnification from the CML Companies
under any of clauses (a) through (e) hereof. The inability of an indemnified
party to be indemnified pursuant to any one or more of such clauses (a) through
(e) shall not in any way affect its right to indemnification under any of the
other clauses (a) through (e) hereof which are applicable to the matter. No
indemnification shall be made with respect to any matter to the extent that the
Company shall have received proceeds of insurance (other than self-insurance)
from an insurer acknowledging coverage of such matter or with respect to any
matter attributable to acts or
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omissions of the Company subsequent to the Closing Date. Except with respect
to any indemnification provided under Section 12.1(c), (d) or (e), (1) no
indemnification shall be provided with respect to any matter involving an
amount of less than $75,000 unless the aggregate amount of such matters exceed
$75,000 and then indemnification shall be provided only to the extent that such
matters exceed $75,000, (2) the aggregate indemnification provided under this
Section 12.1 shall not exceed the Purchase Price and (3) no indemnification
shall be provided under this Section 12.1 unless a claim for indemnification
shall have been made in accordance with the provisions of Section 12.3 no later
than 2 years after the Closing Date. Each indemnification obligation arising
under Section 12.1(c), (d) and (e) shall survive until 90 days after the end
of the last limitation period to expire under the statute(s) of limitation
applicable to any cause of action giving rise to such indemnification
obligation.
12.2 Indemnification of CML.
(a) Subject to the limitations hereinafter set forth, and except
to the extent of the indemnification responsibilities of CML under Section
12.1, the Company shall indemnify and hold CML and its affiliates (including
CML Fiberoptics and Electro), officers and directors harmless from, against,
for and in respect of any and all damages, losses, settlement payments,
obligations, liabilities, claims, costs and expenses suffered, sustained,
incurred or paid by any such indemnified party, with respect to any Assumed
Liability.
(b) Subject to the limitations hereinafter set forth, Xxxxxx shall
indemnify and hold CML and its affiliates, officers and directors harmless
from, against, for and in respect of any and all damages, losses, settlement
payments, obligations, liabilities, claims, costs and expenses suffered,
sustained, incurred or paid by any such indemnified party because of the
untruth, inaccuracy or breach of any representation, warranty or covenant of
Xxxxxx contained or made in connection with Sections 3.1 through 3.6 of this
Agreement. No indemnification shall be provided under this Section 12.2 unless
a claim for indemnification shall have been made in accordance with the
provisions of Section 12.3 no later than 2 years after the Closing Date.
(c) Xxxxxx shall indemnify and hold CML and its affiliates,
officers and directors harmless from, against, for and in respect of Xxxxxx
Taxes.
12.3 Rules Regarding Indemnification.
The obligations and liabilities of each indemnifying party hereunder
shall be subject to the following terms and conditions:
(a) The indemnified party shall give prompt written notice to the
indemnifying party of any claim which might give rise to a claim by the
indemnified party against the indemnifying party based on the indemnity
agreements contained in Sections 12.1 and 12.2 hereof, stating the nature and
basis of said claims and the amounts thereof, to the extent known.
(b) In the event any action, suit or proceeding is brought against
the indemnified party, with respect to which the indemnifying party may have
liability under the indemnity agreements contained in Sections 12.1 and 12.2
hereof, the action, suit or proceeding shall be defended (including all
proceedings on appeal or for review) by the indemnifying party. The
indemnified party shall have the right to employ its own counsel in any such
case, but the fees and expenses of such counsel shall be at the indemnified
party's own expense; provided, however, that in the event
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that the indemnifying party shall not undertake the defense of such action,
suit or proceeding, the indemnified party shall be permitted to undertake such
defense at the sole cost and expense of the indemnifying party. The
indemnifying party shall make available to the indemnified party and its
attorneys and accountants all books and records of the indemnifying party
(subject to appropriate confidentiality restrictions) relating to such
proceedings or litigation and the parties hereto agree to render to each other
such assistance as they may reasonably require of each other in order to ensure
the proper and adequate defense of any such action, suit or proceeding.
(c) The indemnified party shall not make any settlement of any
claims without the written consent of the indemnifying party, which consent
shall not be unreasonably withheld or delayed.
(d) The amount of any damages otherwise indemnifiable to any
indemnified party pursuant to this Agreement shall be reduced to the extent
that such indemnified party realizes, by reason of such damages, any tax
benefit, which tax benefit has been received by the indemnified party and is
not subject to change.
13. CONFIDENTIALITY.
(a) CML agrees that, prior to the Closing, it shall not disclose
any Confidential Information (as defined below in this Section 13) to any
person outside of CML's, CML Fiberoptics' or Electro's organizations, other
than to Xxxxxx or to CML's or Xxxxxx'x agents, attorneys, representatives and
advisers in connection with the transactions contemplated in this Agreement who
shall be subject to the same confidentiality requirements, except as required
by applicable law; and it shall not disclose to any person the Confidential
Information, except as required by applicable law. The term "Confidential
Information" shall include the following property and information of CML
Fiberoptics or Electro: financial information; systems, plans, procedures,
data, files and research and development; customer and vendor lists, marketing
plans and surveys and other marketing information; and other similar
information which CML Fiberoptics or Electro considers and treats as
confidential. (Notwithstanding the foregoing sentence, Confidential
Information shall not include any information that is: (i) available or
becomes available from public sources or in the public domain, through no fault
of CML or CML Fiberoptics; or (ii) received at any time from any third party
without breach of a non-disclosure obligation to CML Fiberoptics or Electro.)
(b) Xxxxxx agrees that it shall not disclose any Confidential
Information. Xxxxxx further agrees that it shall not disclose CML's financial
information, systems, plans, procedures, data, files and research and
development, customer and vendor lists, marketing plans and surveys and other
marketing information, and other similar information which CML considers and
treats as confidential, to any person outside of Xxxxxx'x organization, except
as disclosed to Xxxxxx'x agents, attorneys, representatives and advisers in
connection with the transactions contemplated in this Agreement who shall be
subject to the same confidentiality requirements, and except as required by
applicable law.
(c) CML agrees that it shall not disclose Xxxxxx'x financial
information, systems, plans, procedures, data, files and research and
development, customer and vendor lists, marketing plans and surveys and other
marketing information and other similar information which Xxxxxx considers and
treats as confidential, to any person outside of CML's organization, except as
disclosed to
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CML's agents, attorneys, representatives and advisers in connection with the
transactions contemplated in this Agreement who shall be subject to the same
confidentiality requirements, and except as required by applicable law.
14. COSTS AND BROKER'S FEES.
14.1 Costs Borne by Parties. All costs and expenses incurred in
negotiating and preparing this Agreement and in closing and carrying out the
transactions contemplated of such party by this Agreement shall be paid by
Xxxxxx, to the extent such costs and expenses are incurred by Xxxxxx, and by
CML, to the extent such costs and expenses are incurred by CML, CML Fiberoptics
or Electro,
14.2 Broker's Fees Liabilities. The parties represent and warrant
to each other, that they did not deal directly or indirectly with or through
any broker or finder in connection with the transactions contemplated by this
Agreement. Xxxxxx shall indemnify and hold CML harmless from and against any
claim against CML by any broker or finder for any fee or payment arising out of
the negotiation or execution of this Agreement or the consummation of the
transactions contemplated hereby by, through or out of any actions of Xxxxxx.
CML shall indemnify and hold Xxxxxx harmless from and against any claim against
Xxxxxx by any broker or finder for any fee or payment arising out of the
negotiation or execution of this Agreement or the consummation of the
transactions contemplated hereby, by, through or out of any actions of CML.
15. FORM OF AGREEMENT.
15.1 Headings. The subject headings of the Sections and
subsections of this Agreement are included for purposes of convenience only and
shall not affect the construction or interpretation of any of its provisions.
15.2 Entire Agreement; Amendments and Waivers. This Agreement,
together with the Limited Liability Company Agreement, the Transfer Agreement
and the other agreements, documents, deeds and instruments executed and
delivered pursuant hereto, which are incorporated herein by reference,
constitute the entire agreement among the parties pertaining to the subject
matter contained herein and supersedes all prior agreements, representations
and understandings of the parties. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by all the parties,
except for an assignment in accordance with the provisions of this Agreement or
the Limited Liability Company Agreement. No waiver of any of the provisions of
this Agreement shall be deemed a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver. No waiver shall
be binding unless executed in writing by the party making the waiver.
15.3 Counterparts. This Agreement may be executed simultaneously,
in one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
15.4 Gender. Where the context of this Agreement so requires, use
of masculine gender pronouns shall be deemed to mean or include the feminine or
neuter gender, and vice versa.
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15.5 Severability; Reformation. In case any one or more of the
provisions (or parts of a provision) contained in this Agreement shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
(or part of a provision) of this Agreement; and this Agreement shall, to the
fullest extent lawful, be reformed and construed as if such invalid, illegal or
unenforceable provision (or part of a provision) had never been contained
herein, and such provision (or part) reformed so that it will be valid, legal
and enforceable to the maximum extent possible.
16. PARTIES.
16.1 Other Parties. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under this Agreement on
any persons other than the parties to it and their respective successors and
permitted assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement, nor shall any provision give any third persons any right of
subrogation or action against any party to this Agreement.
16.2 Assignment. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns. Neither this Agreement nor any of the rights, interests and
obligations hereunder shall be assigned by any of the parties hereto without
the prior written consent of each of the other parties hereto, which consent
shall not be unreasonably withheld.
17. TERMINATION AND REMEDIES.
17.1 Termination. Anything in this Agreement to the contrary
notwithstanding:
(a) Mutual Consent. This Agreement may be terminated by the
mutual consent of the CML Companies and Xxxxxx.
(b) Default. In the event that a party hereto shall, contrary to
the terms of this Agreement, intentionally fail or refuse to consummate the
transactions contemplated hereby or to take any other action referred to herein
necessary to consummate the transactions contemplated hereby, then the
nondefaulting party, after affording the defaulting party a ten (10) day period
after notice in which to cure, shall have the right, in addition to the other
rights specified in Section 17.2 below, to terminate this Agreement by written
notice given to the other parties hereto.
(c) Upset Date. In the event that the Closing Date shall not have
occurred on or prior to March 31, 1997 then, unless otherwise agreed to in
writing by Xxxxxx and CML, this Agreement shall terminate on or following such
date (as such date may be postponed pursuant hereto), and upon written notice
given by Xxxxxx to CML, or by CML to Xxxxxx, provided that if the absence of
such occurrence shall be due to the intentional failure or refusal of Xxxxxx or
CML to perform their respective obligations hereunder or to take any other
action referred to herein necessary to consummate the transactions contemplated
hereby, then, in the case of a default by
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Xxxxxx, Xxxxxx shall not have the right, and in the case of a default by such
CML, such CML shall not have the right, to terminate the Agreement pursuant to
this Section 17.1(c).
(d) Legal Restraint. Either Xxxxxx or CML may, by written notice
to the other, terminate this Agreement if at the time the written notice of
termination is given, there is in effect a final and non-appealable permanent
injunction enjoining the sale, transfer or delivery of any of the Units or a
final order of any governmental agency prohibiting such sale or transfer.
17.2 Remedies.
(a) Damages. If this Agreement is terminated because of a
material breach of this Agreement by any of the CML Companies, on the one hand,
or Xxxxxx, on the other, then the nonbreaching party shall have the right to
xxx the other for damages including all reasonable costs and expenses
(including reasonable attorneys' fees) theretofore actually suffered and
sustained by the nondefaulting party.
(b) Effect of Termination. Except as set forth in Section 17.2(a)
above, any termination of this Agreement shall have the effect of causing this
Agreement to thereupon become void and of no further force or effect
whatsoever, and thereupon no party hereto will have any rights, duties,
liabilities or obligations of any kind or nature whatsoever against any other
party hereto based upon either this Agreement or the transactions contemplated
hereby, except in each case the obligations of any party for its own expenses
incurred in connection with the transactions contemplated by this Agreement and
the obligations of any party with respect to confidentiality.
18. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representations, warranties, opinions or other writings provided
for in the covenants and agreements of the respective parties before the
Closing Date shall be deemed to be continuing and shall survive the Closing
Date for a period of two (2) years, except for the representations and
warranties included in Sections 2.1, 2.3, 2.5, 2.6, 2.8, 3.1, 3.2, 3.3, 3.4,
and 3.6, which shall survive forever.
19. CML AND XXXXXX PRIMARILY LIABLE.
CML hereby unconditionally and absolutely guarantees the performance
of the covenants and agreements of CML, CML Fiberoptics and Electro in this
Agreement and the truth and accuracy of the representations and warranties
herein. Xxxxxx shall not be required to proceed against any other party before
resorting to CML for payment or performance hereunder. CML shall not be
required to proceed against any other party before resorting to Xxxxxx for
payment or performance hereunder.
20. NOTICES.
All notices, requests, demands and other communications under this
Agreement shall be in writing and delivered by personal delivery, mail,
overnight courier or facsimile transmission. Such communications shall be
deemed given, if by personal delivery, when received; on the date of facsimile
transmission of such notice, one day (two days if the recipient is outside of
the United States) after the sending of such notice by overnight courier
service; or eight days after
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mailing of such notice by certified mail, in each case addressed to the party
to whom notice is to be given as set forth below:
To Xxxxxx: Xxxxx X. Xxxxx
Xxxxxx Fiber Optics, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
and: Xxxxxxx Xxxxxxx, Esq.
Xxxxxx Corporation
0 Xxxxx Xxxxx
Xxxxxxx, XX 00000
With a Copy to: Xxxx X. Xxxxxxxx, Esq.
Xxxxxxxxxxx & Xxxxxxxx LLP
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
To CML, CML
Fiberoptics and
Electro: Chicago Miniature Lamp, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx Xxxx
With a Copy to: Xxxxx X. Xxxxx, Esq.
Xxxxxxx, Xxxx & Xxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Any party may change its address for purposes of this Section 20 by giving the
other parties notice of the new address in the manner set forth above:
provided, however, that any notice of change of address shall not be in effect
until received.
21. GLOSSARY OF TERMS
Title Section of Agreement
----- --------------------
"Actions" Section 2.24
"Agreement" Page 1
"Assumed Liabilities" Section 1.1
"Company Balance Sheet" Section 1.7
"Closing" Section 1.4
"Closing Date" Section 1.4
"CML" Page 1
"CML Fiberoptics" Page 1
"CML Taxes" Section 2.22
"Code" Section 2.18(a)
"Confidential Information" Section 13
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"Consents" Section 2.6
"Electro" Page 1
"Electro/CML Balance Sheet" Section 1.7
"Environmental Laws" Section 2.28
"Excluded Liabilities" Section 1.1
"Fiscal Year Balance Sheet Date" Section 2.9
"Fiscal Year Financial Statements" Section 2.9
"GAAP" Section 1.7
"Governmental Regulations" Section 2.12
"Hazardous Materials" Section 2.28
"Intellectual Property" Section 1.1
"IRS" Section 2.18
"Knowledge of CML" Section 2.33
"Option" Section 1.2
"Purchase Price" Section 1.3
"Real Property" Section 1.1
"Related Liabilities" Section 12.1
"Xxxxxx" Page 1
"Xxxxxx Process Agent" Section 23
"Xxxxxx Taxes" Section 2.22
"Sites" Section 1.1
"Transferred Assets" Section 1.1
"Transfer Taxes" Section 9.3
22. PUBLICITY.
CML and Xxxxxx acknowledge their mutual desire, and shall endeavor, to
avoid the disclosure to the general public of the purchase price and terms of
payment with respect to the transactions contemplated by this Agreement, except
such disclosure by any party as may be necessary in order to comply with
applicable requirements of United States federal and state laws and regulations
and similar applicable laws and regulations of the Federal Republic of Germany.
Any party issuing a press release with respect to the transactions contemplated
hereby shall first obtain the consent of the other parties, which consent shall
not be unreasonably withheld or delayed.
23. GOVERNING LAW.
This Agreement shall be construed in accordance with, and governed by,
the laws of The Commonwealth of Massachusetts, without giving effect to rules
governing choice of law. CML, CML Fiberoptics and Electro on the one hand,
and Xxxxxx, on the other hand, each hereby irrevocably submits to the
jurisdiction of any Massachusetts state or Federal court sitting in The
Commonwealth of Massachusetts in any action or proceeding arising out of or
related to this Agreement or the Limited Liability Company Agreement or the
Transfer Agreement and CML, CML Fiberoptics and Electro, on the one hand, and
Xxxxxx, on the other hand, each hereby irrevocably agrees that all claims in
respect of such action or proceeding may be heard and determined in such
Massachusetts state or Federal court. Each of CML, CML Fiberoptics and Electro
on the one hand, and Xxxxxx, on the other hand, hereby irrevocably waives, to
the fullest extent it may effectively do so, the defense of an inconvenient
forum to the maintenance of such action or proceeding. CML, CML Fiberoptics
and Electro hereby irrevocably appoint Xxxxxx
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Xxxxxxxxx, with a copy to Xxxxx Xxxxx at the address set forth in Section 20
(the "CML Process Agent") and Xxxxxx hereby irrevocably appoints Xxxxx X. Xxxxx,
with a copy to Xxxxxxx Xxxxxxx at the address set forth in Section 20 (the
"Xxxxxx Process Agent"), as their respective agents to receive on their behalf
service of copies of the summons and complaint and any other process which may
be served in any such action or proceeding. Such service may be made by mailing
or delivering a copy of such process, in the case of, CML, CML Fiberoptics or
Electro in care of the CML Process Agent at the CML Process Agent's above
address, and in the case of Xxxxxx, in care of the Xxxxxx Process Agent at the
Xxxxxx Process Agent's above address. CML, CML Fiberoptics and Electro each
hereby irrevocably authorizes and directs the CML Process Agent to accept such
service on its behalf and Xxxxxx hereby irrevocably authorizes and directs the
Xxxxxx Process Agent to accept such service on its behalf. As an alternative
method of service, CML, CML Fiberoptics and Electro on the one hand, and Xxxxxx,
on the other hand, also irrevocably consent to the service of any and all
process in any such action or proceeding by the mailing of copies of such
process to CML or to Xxxxxx, as the case may be, at its address specified in
Section 20 hereof. CML, CML Fiberoptics and Electro, on the one hand, and
Xxxxxx, on the other hand, each agrees that a final judgment in any such action
or proceeding, all appeals having been taken or the time period for such appeals
having expired, shall be conclusive and may be enforced in other jurisdictions
by suit on the judgment or in any other manner provided by law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as a sealed instrument as of the day and year first above
written.
XXXXXX CORPORATION
By:
---------------------------------
Its
CHICAGO MINIATURE LAMP, INC.
By: /s/ Xxxxx X. Xxxx
---------------------------------
Its
CML FIBEROPTICS, INC.
By: /s/ Xxxxx X. Xxxx
---------------------------------
Its
ELECTRO FIBEROPTICS CORP.
By: /s/ Xxxxx X. Xxxx
---------------------------------
Its
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XXXXXX-CML FIBEROPTICS LLC
By: /s/ Xxxxx X. Xxxx
---------------------------------
Its
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Exhibit A Limited Liability Company Agreement
Exhibit B Excluded Assets
Exhibit C Transfer Agreement (Xxxx of Sale, Contribution and
Assumption Agreement)
Exhibit D CML's Closing Certificate
Exhibit E Opinion of Xxxxxxx, Xxxx & Xxxxx LLP
Exhibit F CML's Certificate regarding LLC Agreement
Exhibit G Xxxxxx'x Closing Certificate
Exhibit H Opinion of Xxxxxxxxxxx & Xxxxxxxx LLP
Exhibit I Commercial Arbitration Rules of the American
Arbitration Association
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Schedule 1.1(a)(7) Claims held by Electro
Schedule 1.1(c)(1) Specified Indebtedness
Schedule 2.6 Consents Needed by CML
Schedule 2.9 Fiscal Year Financial Statements
Schedule 2.10 Exceptions from operation in the ordinary and usual
course of business
Schedule 2.11 Accounts and Notes Receivable
Schedule 2.12(a) Equipment, Inventory and Other Tangible Property
Schedule 2.13(a) Real Property
Schedule 2.13(b) Leased Real Property
Schedule 2.14 Intellectual Property
Schedule 2.16 Contracts
Schedule 2.17(a) Labor and Employment Matters
Schedule 2.17(b) Employment Obligations
Schedule 2.17(c) Exceptions to Compliance (Employment)
Schedule 2.17(d) Labor Disputes
Schedule 2.19 Insurance
Schedule 2.20 Accounts Payable
Schedule 2.21 Liabilities
Schedule 2.24 Actions
Schedule 2.25 Banks
Schedule 2.27 Largest Providers and Customers
Schedule 2.28(a) Environmental Laws, Hazardous Materials or Petroleum
Products
Schedule 2.28(b) Compliance Program
Schedule 3.6 Consents Needed by Xxxxxx
42
EXHIBIT A
FIRST AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
XXXXXX-CML FIBEROPTICS LLC
ARTICLE 1
GENERAL PROVISIONS
1.1 Formation. The Members, Electro Fiberoptics Corp. ("Electro") and
Xxxxxx Corporation ("Xxxxxx"), hereby amend and restate the Company's limited
liability company agreement and agree to maintain the Company as a limited
liability company under and pursuant to the Act (as hereinafter defined), and
this Agreement. Each Member shall have the number of Units (as hereinafter
defined) set forth on Exhibit A attached hereto, subject to Xxxxxx'x Option as
set forth in Section 2.2, below. Except as provided in this Agreement, the
rights, duties, liabilities and obligations of the Members and the
administration, dissolution, winding up and termination of the Company shall be
governed by the Act.
1.2 Name. The name of the Company shall be "Xxxxxx-CML Fiberoptics LLC."
1.3 Registered Office and Statutory Agent. The registered office and
statutory agent in Delaware required by the Act shall be as set forth in the
certificate of formation until such time as the registered office or statutory
agent is changed in accordance with the Act.
1.4 Principal Executive Office. The principal executive office for the
transaction of the business of the Company shall be at such location as the
Board may select from time to time.
1.5 Term. The term of the Company commenced on the date that the
certificate of formation of the Company was filed in the Office of the
Secretary of State of the State of Delaware, and shall continue in accordance
with the provisions of this Agreement until such time as the Company files a
certificate of cancellation in such office.
1.6 Purpose. The Company may engage in any lawful act or activity for
which limited liability companies may be formed under the Act. The Company
shall have the authority to take any and all actions necessary, appropriate, or
incidental to such purposes.
1.7 Qualification in Other Jurisdictions. The officers of the Company
shall cause
1
43
the Company to be qualified or registered under the laws in any jurisdiction in
which the Company owns property or engages in activities if such qualification
or registration is necessary to permit the Company lawfully to own property and
engage in the Company's business.
1.8 Joint Venture Formation Agreement. Each of the Members and the Company
hereby ratify the execution and delivery by the Company of that certain Joint
Venture Formation Agreement (as defined in Section 1.9) and the assumption
thereunder by the Company of certain obligations of Electro.
1.9 Definitions. For purposes of this Agreement the following terms have
the following meanings (unless indicated otherwise, all Article and Section
references are to Articles and Sections in this Agreement, and all Schedule
references are to Schedules to this Agreement):
"Act" means Title 6 Chapter 18 of the Delaware Code (the Delaware Limited
Liability Company Act), as from time to time in effect in the State of
Delaware, or any corresponding provision or provisions of any succeeding or
successor law of the State of Delaware.
"Additional Member" means any additional Person admitted to the Company
pursuant to Article 8.
"Affiliate" of a specified Person shall mean any other Person which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the Person specified. For
purposes of this definition, "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of management and
policies of a Person, whether by ownership of voting securities, by contract or
otherwise.
"Agreement" means this First Amended and Restated Limited Liability
Company Agreement, as it may be amended, modified, supplemented or restated
from time to time.
"Board" means the Board of Directors selected pursuant to Article 3.
"Capital Account" means the capital account maintained by the Company for
each Member as described in Section 5.1.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means all documents and information (including,
without limitation, confidential and proprietary information with respect to
customers, sales, marketing, production, costs and the design and development
of new products or services) of the Company except to the extent that such
information can be shown to have been (a) generally available to the public
other than as a result of a breach of the provisions of this
2
44
Agreement; (b) already in the possession of the receiving Person without
restriction and prior to any disclosure in connection with the Company or
pursuant to any of the terms of this Agreement; (c) lawfully disclosed to the
receiving Person by a third party who is free lawfully to disclose the same; or
(d) independently developed by the receiving Person without use of any
Confidential Information obtained in connection with the transactions leading
up to and contemplated by this Agreement and the operation of the Company or
its businesses.
"Director" means a member of the Board.
"Fair Market Value" means, with respect to any asset, as of the date of
determination, the cash price at which a willing seller would sell, and a
willing buyer would buy, each being apprised of all relevant facts and neither
acting under compulsion, such asset in an arm's-length negotiated transaction
with an unaffiliated third party without time constraints.
"GAAP" means generally accepted accounting principles, consistently
applied with prior periods.
"Joint Venture Formation Agreement" means a certain Joint Venture
Agreement dated as of January 28,1997, by and among Chicago Miniature Lamp,
Inc., CML Fiberoptics, Inc. Electro and Xxxxxx, pursuant to which Electro and
Xxxxxx agree to enter into this Agreement.
"Member" means any Person that has been admitted as of the date hereof as
a Member of the Company and any other Person admitted as an Additional Member
of the Company pursuant to the provisions of this Agreement. A Person who is
not admitted on the date hereof as a member of the Company shall be deemed
admitted as a .Member upon satisfaction of the requirements of Article 8,
whichever shall be applicable, upon execution by or on behalf of such Person of
this Agreement or a counterpart hereof and the acceptance of such execution by
the Manager.
"Option" means Xxxxxx'x option to purchase 1,000 Units from Electro as set
forth in Section 2.2.
"Permitted Transfer" shall mean a Transfer by a Member to an Affiliate, so
long as such Transfer does not result in a Change of Control (as defined in
Section 8.6(c)) of the Company and provided the Permitted Transferee joins in
this Agreement.
"Permitted Transferee" shall mean any such Affiliate who shall have
acquired and who shall hold Units pursuant to a Permitted Transfer described in
this Section.
"Person" means any individual, corporation, partnership, limited liability
company, firm, joint venture, association, joint-stock company, trust, estate,
unincorporated organization, governmental or regulatory body or other entity.
"Taxes" means all taxes, charges, fees, levies or other assessments
imposed by any
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taxing authority, including, but not limited to, income, gross receipts,
excise, property, sales, use, transfer, payroll, license, ad valorem, value
added, withholding, social security, national insurance (or other similar
contributions or payments), franchise, estimated, severance and stamp taxes
(including any interest, fines, penalties or additions attributable to, or
imposed on or with respect to, any such taxes, charges, fees, levies or other
assessments) and "Tax Return" means any return, report, information return or
other document (including any related or supporting information) with respect
to Taxes.
"Transfer" of Units shall mean any sale, gift, bequest, pledge or
hypothecation, assignment of, grant of any security interest in, or creation of
any other encumbrance upon the Units. No Permitted Transfer shall be effective
unless and until the transferee of the Units so transferred executes and
delivers to the Company a counterpart of this Agreement and agrees to be bound
hereunder in the same manner and to the same extent as the Member from whom the
Units were transferred. From and after the date on which a Permitted Transfer
becomes effective, the Permitted Transferee of the Units so transferred shall
have the same rights and shall be bound by the same obligations under this
Agreement as the transferor of such Units.
"Units" means the common equity ownership interests in the Company.
ARTICLE 2
MEMBERS
2.1 Members. (a) The Members of the Company are Electro and Xxxxxx, who
own the number of Units set forth opposite their respective names on Exhibit A
attached hereto. The Members shall have the authority to establish by written
amendment to this Agreement from time to time one or more classes or groups of
Members having such relative rights, powers and duties, without limitation, as
shall be stated or expressed in such written amendment. In the absence of any
such amendment, there shall be only one class of Members, who own the Units.
The Company shall not issue further Units without the approval of both Electro
and Xxxxxx.
(b) By its execution of this Agreement, Electro hereby transfers to Xxxxxx
the number of Units set forth opposite Xxxxxx'x name on Exhibit A attached
hereto and, in connection with such transfer, Electro hereby represents and
warrants to Xxxxxx as follows:
(i) The Company is a limited liability company duly organized,
validly existing and in good standing under the laws of the State
of Delaware and has full power and authority to own, lease and
operate its properties and to carry on its business as now being
and as heretofore conducted. This Agreement has been duly
authorized, executed and delivered by Electro, and the Electro has
the power, authority and legal capacity to enter into and perform
the obligations to be performed by it under this Agreement.
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(ii) As of the date hereof, the authorized capitalization of
the Company consists of 100,000 Units, and the Company has issued
and outstanding 100,000 Units. All such outstanding Units of the
Company are duly and validly authorized, issued and outstanding,
fully paid and nonassessable. No other class of equity interest in
the Company is authorized, issued or outstanding. All of the
outstanding Units of the Company were, prior to the transfer to
Xxxxxx of the number of Units set forth opposite Xxxxxx'x name on
Exhibit A attached hereto, owned of record by Electro free and
clear of any liens, mortgages, claims, charges, security interests
or other encumbrances, restrictions or limitations of any nature
whatsoever, whether or not recorded.
(iii) Other than as specifically set forth in this Agreement,
there are no (i) options, warrants or rights to purchase from the
Company or subscribe for any equity securities or other ownership
interests of the Company, (ii) options or rights to sell any equity
securities or other ownership interests of the Company, (iii)
obligations of the Company, whether absolute or contingent, to
issue any shares of equity securities or other ownership interests,
or (iv) indebtedness or securities directly or indirectly
convertible into any equity securities of the Company.
2.2 Option. Subject to Section 8.7, Electro hereby grants to Xxxxxx the
irrevocable right and option to purchase from Electro 1,000 Units (or such
other number of Units that shall constitute a 1% equity interest in the Company
at the time of exercise, the "Option Units"), at an option price of $100.00,
exercisable at any time during the term of this Agreement. The Option may be
exercised by Xxxxxx by delivering to Electro a written notice stating that
Xxxxxx is exercising the Option, together with a check in the amount of $100.00
payable to the order of Electro, and sending a copy of such notice to the
Company. The Option Units shall be deemed to have been transferred and assigned
by Electro to Xxxxxx upon the Company's receipt of notice of Xxxxxx'x exercise
of the Option without further action by any party.
2.3 Meetings of the Members.
(a) The Members shall hold regular meetings (at least annually or at such
greater frequency established by the Members) at such time and place as shall
be determined by the Board. Special meetings of the Members may be called at
any time by the Board, or by Members representing at least ten percent (10%) of
the Units, by delivering a notice of meeting in accordance with Section 2.3(e)
hereof.
(b) Members may participate in a meeting of the Members by conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation shall
constitute presence in person at such meeting.
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(c) Any action required or permitted to be taken at any meeting of Members
may be taken without a meeting and without any notice to the Members upon their
unanimous written consent
(d) The Secretary of the Company shall keep written minutes of all
meetings of the Members.
(e) Notice of each regular meeting and each special meeting of the Members
shall be given by the Company to each Member at least ten (10 ) business days
before such meeting. Notices of special meetings shall contain a brief
description of the items of business to be conducted at such meeting, and the
action proposed to be taken thereon, and no business other than those items
(unless expressly agreed to by each of the Members entitled to vote thereon)
may be conducted at such special meeting. The notice provisions of this Section
2.3(e) shall be waived upon either the signing of a written waiver thereof or
attendance at a meeting by all of the Members.
2.4 Voting.
(a) A quorum of any meeting of the Members shall require the presence, in
person or by proxy, of the holders of all of the Units.
(b) Any action to be taken by the Members at a meeting at which a quorum
is present shall require the affirmative vote of all of the Units represented
by Members present in person or by proxy and voting on the matters brought
before the meeting.
2.5 Confidential Information. The Company and each Member shall not use or
disclose to others any Confidential Information received from the Company or
any other Member for any purpose except that the Company and any Member may use
information relating to the business of the Company for the benefit of the
Company, as determined by the Board, or as required by law.
ARTICLE 3
MANAGEMENT
3.1 Board. The board of the Company (the "Board") shall be composed of six
(6) persons elected by the Members (collectively the "Directors" and
individually a "Director"). The Directors shall be entitled to such reasonable
compensation as they may establish from time to time. Each Director is hereby
designated a "Manager" of the Company, as defined in Section 18-101(10) of the
Act. A Director may be removed at any time by a vote of the Members.
3.2 Election of Directors.
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(a) As long as Xxxxxx and/or one of its Permitted Transferees, either
singly or in the aggregate, hold of record or beneficially any Units, but less
than 50% of the Units, the number of Directors of the Company shall be fixed at
six (6) and the Members will vote their Units to elect as Directors (i) three
(3) persons to be designated by Electro, and (ii) two (2) persons to be
designated by Schott, and the sixth Director shall be elected by unanimous vote
of the Members. The initial Chairman of the Board of Directors shall be Xxxxx
Xxxx, who shall hold office until the next annual meeting of the Members.
Thereafter, the position of Chairman of the Board of Directors shall alternate
annually between a Xxxxxx Director-designee and an Electro Director-designee.
Following Xxxxxx'x exercise of its Option, the Members will vote their Units to
elect as Directors (i) three (3) persons to be designated by Electro, and (ii)
three (3) persons to be designated by Xxxxxx. The Members will vote their Units
as Electro may direct to remove Electro's Director-designee(s) at any time,
with or without cause, which removal shall be effective immediately upon notice
of such removal, and to elect such successor as Electro may direct. The Members
will vote their Units as Xxxxxx may direct to remove and replace the Xxxxxx'x
Director-designee(s) at any time, with or without cause, which removal shall be
effective immediately upon such notice, and to elect such successor as Xxxxxx
may direct. Notice of removal of a Director shall be given in writing.
(b) The initial Directors will be Xxxxx Xxxx, , , Xxxxx
X. Xxxxx, Xx. X. Xxxxxxxxx and Xxxx Xxxxxxx, each of whom will act as a
Director until such time as his resignation or removal pursuant to this
Agreement.
3.3 Powers of the Board.
(a) Except as reserved for the Members in this Agreement or in the
provisions of the Act or the certificate of formation, the business and affairs
of the Company shall be managed by the officers of the Company under the
ultimate direction of the Board. Without prejudice to such general powers, but
subject to the same limitations, it is hereby expressly declared that the Board
shall have the following powers:
i) To provide overall direction and supervision of the business and
affairs of the Company;
ii) To elect and remove the officers of the Company; and
iii) To act on behalf of the Company on all matters with respect to
which a board of directors of a Delaware corporation would have the power
to act.
(b) In addition to any activities for which the consent of the Board of
Directors must be obtained under applicable laws and under this Agreement, the
officers of the Company must obtain the prior consent of the Board of Directors
with respect to the following:
(i) All questions regarding Company policies, goals and objectives
as well as questions regarding the basic organizational structure of the
Company. All questions of
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business policy which may result in a material change of existing
conditions in customer relations.
(ii) Adoption or approval of the annual budgets and business plans,
including but not limited to, the financial plan, sales plan, profit plan,
investment plan and expense budget.
(iii) All charitable contributions.
(iv) The appointment of professional consultants or advisers
involving the expenditure of more than $100,000.
(v) The appointment of the Company's independent auditors.
(vi) The purchase, sale, lease or mortgage of any real property.
(vii) Any purchase, sale, lease or encumbrance of equipment or
machinery involving an amount in excess of $100,000.
(viii) Borrowing money (other than pursuant to lines of credit
previously approved by the Directors) or making loans. Extending trade
credit in excess of $200,000 to any customer.
(ix) Entering into, modifying or terminating any contract involving
more than $200,000 or lasting more than one year.
(x) Establishing, modifying or terminating any employee benefit
plan.
(xi) Any agreement related to the licensing of trademarks,
copyrights, patents, know how of the Company to any other party or the
creation of any joint ventures or partnerships with any other party.
(xii) Establishment or dissolution of subsidiaries. Electing
directors of any subsidiary. Acquisition or disposition of equity in any
other business entity. Acquisition or disposition of assets in amounts
exceeding $100,000 other than in the ordinary course of business.
(xiii) Changes in accounting policies.
(xiv) Distributions to Members.
(xv) Repayment of loans from Affiliates.
Until such time as Xxxxxx shall have exercised its Option, all decisions
made by the
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Directors with respect to matters described in this Section 3.3 (b) (i)-(xv)
shall be taken only at meetings of the Board held following two weeks advance
notice, which notice shall set forth the proposed resolutions with respect to
such decisions. An affirmative vote by a Director on a resolution shall be
deemed to constitute a waiver by such Director of this notice requirement with
respect to such resolution.
(c) Each Member, by execution of this Agreement, agrees to, consents to,
and acknowledges the delegation of powers and authority to the Directors, and
to the actions and decisions of the Directors within the scope of their
authority as provided herein.
3.4 Board Meetings.
(a) The Board shall hold regular meetings at such time and place as shall
be determined by the Board. Special meetings of the Board may be called at any
time by any Director by delivering a notice of meeting in accordance with
Section 3.4(e) hereof.
(b) The Chairman of the Board shall be appointed by the Board from time to
time. The Chairman shall preside at, and regulate the proceedings of, meetings
of the Board.
(c) Directors may participate in a meeting of the Board by conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation shall
constitute presence in person at such meeting.
(d) Any action required or permitted to be taken at any meeting of the
Board may be taken without a meeting and without any notice to the Directors
upon the unanimous written consent of the Directors.
(e) Notice of each regular meeting and each special meeting of the Board
shall be given to each Director in writing at least two weeks before such
meeting, with notice being deemed provided on (i) the date of facsimile
transmission of such notice, (ii) one day (two days if the recipient is outside
of the United States) after the sending of such notice by overnight courier
service or (iii) eight days after mailing of such notice by certified mail.
Until such time as Xxxxxx shall have exercised its Option, notices of any
meeting at which matters described in Section 3.3(b)(i)-(xv) will be considered
must set forth the resolutions with respect to such matters that are proposed
for consideration, and notices of special meetings shall contain a brief
description of the items of business to be conducted at such meeting and no
business other than those items (unless expressly and unanimously agreed to by
the Directors entitled to vote thereon) may be conducted at such special
meeting. An affirmative vote by a Director on a resolution shall be deemed to
constitute a waiver by such Director of this notice requirement with respect to
such resolution.
3.5 Voting. Except as provided in Section 3.4(d), any action that may be
taken by the Board shall require the affirmative vote of a majority of the
Directors then in office. A quorum of any meeting of the Board shall require
the presence (in person or by proxy) of a
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majority of the Directors then in office.
ARTICLE 4
OFFICERS
4.1 Enumeration. The Board shall elect a President, a Treasurer and a
Secretary of the Company, and it may, if it so determines, choose a Chairman of
the Board and a Vice Chairman of the Board from among the Directors. The Board
may also choose one or more Vice Presidents or other officers, one or more
Assistant Secretaries and one or more Assistant Treasurers. Each such officer
shall hold office until his successor is elected and qualified or until his
earlier resignation or removal. The Board may remove any officer with or
without cause at any time, but such removal shall be without prejudice to the
contractual rights, if any, of such officer with the Company.
4.2 President. Subject to the President's duty to consult the Management
Committee and subject to the control, supervision and oversight of the Board,
the President shall manage the day-to-day operations and the business of the
Company. The initial President shall be Xxxxxx Xxxxxx.
4.3 Vice President. The Vice President or if there shall be more than one,
the Vice Presidents, in the order of their seniority unless otherwise specified
by the Board, shall have all of the powers and perform all of the duties of the
President during the absence or inability to act of the President. Each Vice
President shall also have such other powers and perform such other duties as
shall from to time to time be prescribed by the Board, the Chairman or the
President.
4.4 Secretary. The Secretary shall record the proceedings of the meetings
of the Members and the Board in a book to be kept for that purpose, and shall
give notice as required by law or this Agreement of all such meetings. The
Secretary shall have custody of the seal of the Company, if any, and of all
books, records, and papers of the Company, except such as shall be in the
charge of the Treasurer or of some other person authorized to have custody and
possession thereof by resolution of the Board. The Secretary shall also have
such other powers and perform such other duties as are incident to the office
of the Secretary of a Company or as shall from time to time be prescribed by,
or pursuant to authority delegated by, the Board.
4.5 Treasurer. The Treasurer shall keep full and accurate accounts of the
receipts and disbursements of the Company in books belonging to the Company,
shall deposit all moneys and other valuable effects of the Company in the name
and to the credit of the Company in such depositories as may be designated by
the Board, and shall also have such other powers and perform such other duties
as are incident to the office of the treasurer of a Company or as shall from
time to time be prescribed by, or pursuant to authority delegated by, the
Board.
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4.6 Other Officers and Assistant Officers. The powers and duties of each
other officer or assistant officer who may from time to time be chosen by the
Board shall be as specified by, or pursuant to authority delegated by, the
Board at the time of the appointment of such other officer or assistant officer
or from time to time thereafter. In addition, each officer designated as an
assistant shall assist in the performance of the duties of the officer to which
he or she is assistant and shall have the powers and perform the duties of such
officer during the absence or inability to act for such officer.
4.7 Contracts. Any contract to be entered into by the Company may be
signed by the President or any Vice President or by another officer of the
Company as authorized to do so by the Board.
4.8 Management Committee.
(a) The President of the Company shall consult the Management Committee,
and the Management Committee shall provide advice to the President with respect
to all major questions of business policy, with respects to steps to be taken
to carry out the Strategic Plan (as described in Section 4.9, below), with
respect to the establishment, modification or termination of a product line,
and on basic issues of managerial responsibility. The Management Committee
shall serve a consultative role only, and no approval of the Management
Committee of any exercise by the officers of their duties hereunder shall be
required.
(b) The Management Committee shall consist of four individuals, who shall
be individuals who also serve as directors, officers or employees of the
Company. Two of the Management Committee-members shall be appointed by Electro
and shall be designated as "Electro's Committee Members" and two of the
Management Committee-members shall be appointed by Xxxxxx and shall be
designated as "Xxxxxx'x Committee Members." Electro may remove and replace
Electro's Committee Member(s) at any time, with or without cause, which removal
shall be effective immediately upon notice of such removal. Xxxxxx may remove
and replace the Xxxxxx'x Committee Member(s) at any time, with or without
cause, which removal shall be effective immediately upon such notice. Notice of
removal of a Management Committee member may be given in writing or orally.
(c) Regular meetings of the Management Committee may be held at such
places, and at such times, as the Management Committee may from time to time
determine. Special meetings of the Management Committee may be held at any time
or place called by any Management Committee-member. Management
Committee-members may participate in a meeting of the Management Committee by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other. The
Management Committee may establish rules and regulations relating to the
operation of the Management Committee at any time and from time to time.
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4.9 Company Strategy and Major Decisions.
(a) The Company's initial Strategic Plan is as follows:
The Company shall operate primarily in the "light guide"-based fiberoptics
business (the "Business"). The Members and the Company desire to grow the
Business of the Company to take advantage of its business opportunities. Schott
operates a broad range of glass-related businesses, including in several areas
of fiberoptics, such as "imaging" and "light guide." Electro and its affiliates
(including Chicago Miniature Lamp, Inc., hereinafter sometimes referred to
together with Electro as "CML") operate in lighting businesses. Schott and its
affiliates (other than Hoya-Xxxxxx Corporation) and CML and its affiliates will
cooperate to advance the Company's prospects and will support the Company to
the best of their abilities to maximize the profits of the Company. The Company
shall operate in a manner that maximizes the Company's growth and long-term
profitability and takes advantage of its business opportunities, with a primary
focus on the North American markets.
The Company, Xxxxxx and CML will establish regular communication and
cooperation among themselves and their affiliates. The Company will draw on the
resources of the Members, and the Members will make available their general
resources, such as cash management, human resources, accounting, legal and the
like. There will be no intercompany charges for internal costs incurred in
connection with such communication and cooperation. Appropriate charges/prices
will be worked out among the parties for other types of cooperative endeavors.
The light guide-based operations of Xxxxxx Glaswerke - GB Faser Optik,
located in Wiesbaden and Schott Fibre Optics (U.K.), Ltd. (such light
guide-based operations sometimes being referred to as "EE"), affiliates of
Schott, will handle their existing North American business through the Company
and, unless otherwise agreed, initially on a commission basis (probably
through September 1997). Any new North American business (customers) of EE will
be referred to the Company. Existing North American business (customers) of EE
will be continued by EE through the Company on a commission basis until an
appropriate means of more complete transfer can be worked out. (EE's KL range
of cold light sources/light guides -- used primarily in microscopy -will not be
included in the business being referred to the Company.) EE will be available
to provide sales assistance to the Company in Europe. Xxxxxx and EE offer their
other resources to the Company on commercially reasonable terms. Xxxxxx and CML
shall engage in transactions with the Company on terms at least as favorable as
they provide to any third parties in transactions of comparable subject and
scope. Xxxxxx and CML will provide the Company with reasonable access to
research and development information so long as the provision of such
information does not result in additional cost to the party providing the
information and so long as such access does not violate the terms of any
agreement between either Schott or CML and a third party. The Company will make
its decisions with respect to whether to manufacture or purchase products and
components in a manner that maximizes the Company's profitability.
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The continuation by Schott and its affiliates of their businesses,
including their light guide-based businesses, outside of North America, and the
continuation by Hoya-Xxxxxx Corporation of its business anywhere in the world,
shall not be deemed to be in contravention to the Strategic Plan of the
Company.
(b) The Strategic Plan may be supplemented and revised from time to time
by the Board of Directors.
(c) The Company will endeavor to maintain a debt-to-equity ratio of
approximately 65:35. Loans (other than the loans reflected on the Company's
balance sheet as of the date of this Agreement) may be provided to the Company
by the Members on an arms' length basis.
(d) The Company will use a fiscal year ending September 30. Ernst & Young
will be designated as the Company's initial auditors. Thereafter the Board of
Directors may designate the Company's auditors from time to time. The Company
shall provide the Members with annual financial statements, audited by the
Company's auditors, within 90 days after the end of each fiscal year.
4.10 Pro Rata Participation in Distributions, etc. All forms of
distributions (whether involving Units, cash or other property), other than
upon liquidation of the Company as provided in Section 9.2(b), and all
redemptions and repurchases of Units by the Company shall be made on a pro rata
basis with respect to each Unit of the Company so that all Members of the
Company will participate in proportion to the number of Units then held by each
of them.
ARTICLE 5
CAPITAL CONTRIBUTIONS
5.1 Capital Accounts.
(a) A single capital account shall be maintained for each Member
(regardless of the class of interests owned by such Member and regardless of
the time or manner in which such interests were acquired) in accordance with
the capital accounting rules of section 704(b) of the Code, and the regulations
thereunder (including particularly section 1.704-l(b)(2)(iv) of the Income Tax
Regulations).
(b) If Company property is distributed in kind (whether in connection with
liquidation and dissolution or otherwise), the capital accounts of the Members
shall first be adjusted to reflect the manner in which the unrealized income,
gain, loss and deduction inherent in such property (that has not been reflected
in the capital account previously) would be allocated among the Members if
there were a taxable disposition of such property for the fair market value of
such property on the date of distribution.
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(c) The Tax Matters Partner, as described in Section 7.1, shall direct the
Company's accountant to make all necessary adjustments in each Member's capital
account as required by the capital accounting rules of section 704(b) of the
Code and the regulations thereunder.
5.2 Contributions of Capital. Electro has made the contributions to the
capital of the Company, subject to the Company's assumptions of certain
liabilities of Electro, all as set forth on Exhibit B attached hereto. Xxxxxx
has acquired from Electro, 49% of Electro's capital account as of the date
hereof (prior to the contribution of $300,000 by Electro as contemplated by
Section 1.9(a) of the Joint Venture Formation Agreement) and will acquire an
additional 1% of Electro's capital account upon the exercise of the Option.
5.3 Member Obligations. No Member shall have any obligation to restore any
portion of any deficit balance in such Member's Capital Account, whether upon
liquidation of its interest in the Company, liquidation of the Company or
otherwise.
5.4 Withdrawals of Capital Accounts. No Member shall be entitled to
withdraw any amount from its Capital Account prior to dissolution of the
Company except as determined by the Board.
5.5 Interest on Capital Accounts. No interest or compensation shall be
paid on or with respect to the Capital Account or capital contributions of any
of the Member, except as otherwise expressly provided herein.
ARTICLE 6
ALLOCATIONS OF PROFITS, LOSSES, ETC.; DISTRIBUTIONS
6.1 Allocations of Income, Losses, Etc. A Member's distributive share of
income, gain, loss, deduction or credit (or items thereof) as shown on the
annual federal income tax return prepared by the Company's accountants or as
finally determined by the Internal Revenue Service or the courts, and as
modified by the capital accounting rules of section 704(b) of the Code and the
regulations thereunder as implemented by Article 6 hereof, as applicable, shall
be determined as provided in this Article 6.
(a) Solely for tax purposes, in determining each Member's allocable share
of the taxable income or loss of the Company, depreciation, depletion,
amortization and gain or loss with respect to any contributed property, or with
respect to revalued property where Company property is revalued pursuant to
paragraph (b)(2)(iv)(f) of section 1.704-1 of the Income Tax Regulations, shall
be allocated to the Members under the traditional method as provided in Section
1.704-3(b) of the Income Tax Regulations.
(b) Notwithstanding anything to the contrary in this Article 6, if there
is a net
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decrease in "Partnership Minimum Gain" or "Partner Nonrecourse Debt Minimum
Gain" (as such terms are defined in sections 1.704-2(b) and 1.704-2(i)(2),
respectively, of the Income Tax Regulations) during a Company taxable year,
then each Member shall be allocated items of Company income and gain for such
year (and, if necessary, for subsequent years), to the extent required by, and
in the manner provided in, section 1.704-2 of the Income Tax Regulations. This
provision is intended to be a "minimum gain chargeback" within the meaning of
sections 1.704-2(f) and 1.704-2(i)(4) of the Income Tax Regulations and shall
be interpreted and implemented as therein provided.
(c) Subject to the provisions of Section 6.1(b), but otherwise
notwithstanding anything to the contrary in this Article 6, if any Member's
capital account has a deficit balance in excess of such Member's obligation to
restore its capital account balance, computed in accordance with the rules of
paragraph (b)(2)(ii)(d) of section 1.704-1 of the Income Tax Regulations
(including such Member's share of Partnership Minimum Gain and Partner
Nonrecourse Debt Minimum Gain as provided in sections 1.704-2(g) and
1.704-2(i)(5) of the Income Tax Regulations), then sufficient amounts of gross
income and gain (consisting of a pro rata portion of each item of Company gross
income and gain for such year) shall be allocated to such Member in an amount
and manner sufficient to eliminate such deficit as quickly as possible. This
provision is intended to be a "qualified income offset" within the meaning of
section 1.704-l(b)(2)(ii)(d) of the Income Tax Regulations and shall be
interpreted and implemented as therein provided.
(d) Except as provided in Sections 6.1(e) and (f) hereof or as otherwise
required by law, if any Units are transferred during any taxable year, all
items to be allocated to the Members for such entire taxable year shall be
prorated on the basis of the portion of such taxable year which precedes each
such change and the portion of such taxable year on and after each such change
according to the number of days in each such portion, and the items so
allocated for each such portion shall be allocated to the Members in the manner
in which such items are allocated as provided in this Article 6 during each
such portion of the taxable year in question.
(e) Any special allocation of income or gain pursuant to Section 6.1(b) or
6.1(c) hereof shall be taken into account in computing subsequent allocations
of income and gain pursuant to this Article 6 so that the net amount of all
such allocations to each Member shall, to the extent possible, be equal to the
net amount that would have been allocated to each such Member pursuant to the
provisions of this Article 6 if such special allocations of income or gain
under Section 6.1(c) hereof had not occurred.
(f) Losses.
i) Items of deduction and loss attributable to recourse liabilities
of the Company (within the meaning of section 1.752-1(a)(1) of the Income
Tax Regulations, but excluding "Partner Nonrecourse Debt" within the
meaning of section 1.704-2(b)(4) of the Income Tax Regulations) shall be
allocated among the Members in accordance
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with the ratio in which the Members share the economic risk of loss
(within the meaning of section 1.752-2 of the Income Tax Regulations) for
such liabilities.
ii) Items of deduction and loss attributable to "Partner Nonrecourse
Debt" within the meaning of section 1.704-2(b)(4) of the Income Tax
Regulations shall be allocated to the Members bearing the economic risk of
loss with respect to such debt in accordance with section 1.704-2(i) of
the Income Tax Regulations.
iii) Items of deduction and loss attributable to the Company's
"Nonrecourse Liabilities" within the meaning of section 1.704-2(b)(3) of
the Income Tax Regulations shall be allocated among the Members
proportionately in accordance with their ownership of Units to the extent
permitted by law.
iv) All other items of operating net loss ("Net Loss") shall be
allocated among the Members, proportionately in accordance with their
ownership of Units, except that Net Loss shall not be allocated to any
Member to the extent it would create a deficit balance in excess of such
Member's obligation to restore its capital account balance, computed in
accordance with the rules of Section 1.704-1(b)(2)(ii)(d) of the Income
Tax Regulations (including such Member's share of Partnership Minimum Gain
and Partner Nonrecourse Debt Minimum Gain as provided in sections
1.704-2(g) and 1.704-2(i)(5) of the Income Tax Regulations). Any Net Loss
which cannot be allocated to a Member because of the limitation set forth
in the previous sentence shall be allocated first to the other Members to
the extent such other Members would not be subject to such limitation and
second any remaining amount to the Members in the manner required by the
Code and the Income Tax Regulations.
(g) Subject to the provisions of Sections 6.1(b) through (f), items of
income and gain shall be allocated to the Members in the following priority:
i) First, if allocations of Net Loss have been made to the Members
under Section 6.1(f)(iv), then in the amount of, and proportionate to, the
amount of such Net Loss.
ii) Second, to those Members who have had items of loss or deduction
allocated to them under Section 6.1(f)(i), in the amount of, and
proportionate to, the amount of such items of loss or deduction.
iii) Third, the balance among the Members in proportion to their
ownership of Units.
6.2 Conformity of Reporting. The Members hereby agree to be bound by the
provisions of this Article 6 in reporting their shares of Company income, loss,
credits and other items for income tax purposes.
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6.3 Distribution of Assets by the Company.
(a) Distributions, whether in cash or in kind, shall be made to the
Members at such times and in such amounts as shall be determined by the Board.
The amount of any in-kind distribution shall be the distributed on the basis of
the property's then fair market value.
(b) Except as provided in Section 6.3(c), distributions shall be made
among the Members in accordance with their respective ownership of Units
consistent with the allocation of profits and losses pursuant to Section 6.1.
(c) Upon liquidation of the Company, within the meaning of Income Tax
Regulations section 1.704-1(b)(2)(ii)(g), distributions shall be made among the
Members as provided in Section 9.2(b).
ARTICLE 7
TAX MATTERS AND REPORTS; ACCOUNTING
7.1 Tax Matters Partner.
(a) The "Tax Matters Partner" of the Company, within the meaning of
section 6231(a)(7) of the Code, shall be designated by the Members. The initial
Tax Matters Partner shall be Electro, which shall serve as such until the next
annual meeting of the Members. Unless otherwise expressly provided herein, the
Tax Matters Partner is authorized to take any action that it determines to be
necessary or appropriate with respect to all tax matters.
(b) The Tax Matters Partner shall promptly advise the other Members of all
audits or other actions by the Internal Revenue Service and shall furnish to
the Company and to each Member a copy of each notice or other communication
received by the Tax Matters Partner from the Internal Revenue Service except
such notice or communication sent directly to the Members by the Internal
Revenue Service. All expenses incurred by the Tax Matters Partner in its
capacity as such shall be expenses of the Company and shall be paid by the
Company. The Tax Matters Partner shall not take any action without the
concurrence of the Members. All material to be submitted to the revenue
authorities shall be submitted in advance to the Members for review and
comment. The Members shall have the right to be present at all meetings with
the revenue authorities. The Tax Matters Partner shall represent the Company on
behalf of the Members in connection with all administrative and judicial
proceedings with respect to Company affairs involving or resulting from
examinations by any and all federal, state or other tax authorities (including,
but not limited to, examinations by the Internal Revenue Service), and may
expend Company funds for reasonable professional services and costs in
connection therewith as it deems advisable and necessary; provided that, except
as otherwise provided in this Agreement or by law, the Tax Matters Partner does
not assume any obligations or responsibilities with respect to the foregoing.
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(c) To the fullest extent permitted by law, the Company shall indemnify
the Tax Matters Partner on an after-tax basis against any liabilities incurred
while acting as the Tax Matters Partner of the Company but only to the extent
such Person acts within the scope of its authority as Tax Matters Partner under
this Agreement.
7.2 Tax Reports to Current and Former Members. After the end of each
fiscal year, the Company shall, in a timely manner, prepare and mail, or cause
its accountants to prepare and mail, to each Member and, to the extent
necessary, to each former Member (or its legal representatives), a report
setting forth in sufficient detail such information as is required to be
furnished to members or partners by law and as shall enable such Member or
former Member (or its legal representatives) to prepare their respective
federal and state income tax or informational returns in accordance with the
laws, rules and regulations then prevailing.
7.3 Accounting Records; Independent Audit. Complete books and records
accurately reflecting the accounts, business, transactions and Members of the
Company shall be maintained and kept by the Company. The accounting records of
the Company shall be maintained to assure preparation of the financial
statements in accordance with GAAP. Subject to the provisions of Section
4.9(d), the accounting records of the Company shall be audited by a firm of
independent certified public accountants selected by the Board.
7.4 Fiscal Year. Except as may otherwise be required by the federal tax
laws, the fiscal year of the Company for both financial and tax reporting
purposes shall end on September 30.
7.5 Tax Accounting Method. The books and accounts of the Company shall be
maintained using the accrual method of accounting for tax purposes. Those
documents relating to allocations of items of partnership income, gain, loss,
deduction or credit and Capital Accounts shall be kept under federal income tax
accounting principles as provided herein.
7.6 Withholding. Notwithstanding any other provision of this Agreement,
the Tax Matters Partner is authorized to take any action that it determines to
be necessary or appropriate to cause the Company to comply with any Federal,
state and local withholding requirement with respect to any allocation, payment
or distribution by the Company to any Member or other Person. All amounts
withheld to satisfy any Federal, state or local withholding requirement with
respect to a Member shall be treated as distributions to such Member. If any
such withholding requirement with respect to any Member exceeds the amount
distributable to such Member under this Agreement, or if any such withholding
requirement was not satisfied with respect to any amount previously allocated
or distributed to such Member, such Member and any successor or assignee with
respect to such Member's interest in the Company hereby, to the fullest extent
permitted by law, indemnifies and agrees to hold harmless the Members and the
Company for such excess amount or such withholding requirement, as the case may
be.
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7.7 Tax Elections. Upon the request of a transferee of a Unit or a
distributee of a Company distribution, the Company may, at the sole discretion
of the Board, make the election under section 754 of the Code.
ARTICLE 8
TRANSFER AND ASSIGNMENT OF INTERESTS
RESOLUTION OF DISPUTES; ADDITIONAL CAPITAL
8.1 Restrictions on Issuance of New Units. The Company shall not issue
further Units without the approval of both Members. The Members agree, for so
long as both are Members of the Company, to exercise their powers as Members
and to direct the Directors of the Company to assure that the Company shall not
issue any further Units except as expressly agreed in writing by both Members
8.2 Restrictions on Transfer. No Member may Transfer any Units which he or
it may hold unless such Units are Transferred (i) in a Permitted Transfer; or
(ii) in a Transfer made in compliance with the provisions of Section 8.3, if
applicable, Section 8.4, if applicable, and the provisions of Section 8.5
hereof.
8.3 Deadlock Provisions.
(a) In the event of a deadlock of the Board of Directors, at two
consecutive meetings, with respect to the Strategic Plan or another matter
that, as a result of such deadlock, threatens to have a materially adverse
effect on the financial condition or operations of the Company, including
matters relating to the Strategic Plan or Section 3.3 (b), each Member, acting
through its Chief Executive Officer or other designated representative, shall
consult in good faith during the period of 120 days following the second such
Board of Directors meeting (the "Consultation Period") in an effort to resolve
the deadlock. The Consultation Period may be extended by mutual consent of the
Members, and the Members may submit the dispute to binding arbitration if they
so elect. If no agreement has been reached between the Members with respect to
the dispute within 30 days after the end of the Consultation Period, the
Members shall endeavor to negotiate the purchase by one Member or all of the
Units of the other Member. In the event that the Members are unable to
negotiate an acceptable arrangement with respect to such a purchase of Units,
either party may make the offer described in paragraph 8.3(b)
(b) Either Member shall have the right to offer in writing to either buy
all of the Units of the other Member or sell all of its Units to the other
Member at the price per Unit and on the terms stated by the offering Member in
his written offer (the "Offered Price and Terms"). The other Member shall,
within ninety (90) days of the receipt of the written offer from the offering
Member, either agree to buy the offered Units at the Offered Price and Terms or
agree to sell all of its own Units to the offering Member at the Offered Price
and Terms. The other
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Member shall notify the offering Member of such election in writing and the
offering Member shall be bound by such election. In the event that the other
Member fails to elect in writing within such 90 day period either to buy or
sell, the other Member shall be deemed to have entered into a binding contract
to either sell its Units to the Offering Member or buy the Units of the
Offering Member, in either case at the Offered Price and Terms, as the Offering
Member shall elect.
(c) Closing. The payment of the purchase price and the Transfer of the
Units shall occur within sixty (60) days after the end of the 90 day period
described in paragraph 8.3(b). Upon the payment of the purchase price, the
purchased Units shall be deemed to have been transferred to the purchaser by
the seller without the need for further action by the parties.
8.4 Members' Parallel Exit Rights.
(a) Transfers by One Member. In the event that a Member proposes to
Transfer Units other than in a Permitted Transfer, then prior to any such
Transfer, the Member proposing such Transfer (the "Selling Member") shall give
notice of such proposed Transfer to the other Member, which notice shall set
forth (i) the number and class of Units proposed for Transfer; (ii) a
description of the proposed Transfer; (iii) the name and address of each bona
fide prospective purchaser including, in the case of any prospective purchaser
who is not an individual, the names and addresses of the individuals directly
or indirectly controlling such prospective purchaser; and (iv) all other
material terms of the proposed Transfer, including without limitation, the
purchase price and the manner in which such purchase price is proposed to be
paid (such notice is hereinafter referred to as the "Offer").
(b) Election to Participate. Within sixty (60) days of receipt of the
Offer given pursuant to Section 8.4(a) hereof, the other Member may elect (in
the event that the other Member does not exercise its rights under Section 8.5
hereof), by written notice to the Selling Member, to participate on a pro rata
basis in such Transfer. The other Member may Transfer that number of Units
which bears the same proportion to the aggregate number of Units held by the
other Member as the number of Units proposed for Transfer by the Selling Member
bears to the aggregate number of Units which the Selling Member then holds. In
the event that the other Member elects to participate in a Transfer pursuant to
this Section 8.4(b), the other Member shall be entitled to receive from the
proposed purchaser of the Units written confirmation that such proposed
purchaser is prepared to purchase the Selling Member's Units on the terms
described to the other Member in the Offer and no Transfer may proceed unless
and until such prospective purchaser provides such confirmation to the other
Member making such an election.
8.5 Right of First Refusal.
(a) Offer. In the event that either Member proposes to Transfer Units
other than in a Permitted Transfer, then, prior to any such Transfer, such
Member (the "Selling Member") shall offer such Units to the other Member by
delivery of the Offer described in Section 8.4.
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Such Offer shall constitute an irrevocable offer to sell such Units to the
other Member either (a) on the terms and conditions set forth in the Offer or
(b) on the terms and conditions determined pursuant to Section 8.5( c), below,
until the earlier of (i) the date on which all of the Offered Units are
accepted by the other Member as provided in Section 8.5(b) hereof or (ii) sixty
(60) days following the Offer Date (as defined in Section 8.5(b)).
(b) Election by the Other Member. Within sixty (60) days after the receipt
of the notice by the other Member (which date of receipt shall be deemed to be
three (3) days after the date of hand delivery or mailing and is referred to as
the "Offer Date"), the other Member may elect to purchase all of the Offered
Units by delivering a written notice as described above.
(c) Formula-Based Purchase Price. As an alternative to electing to
purchase the offered Units on the terms and conditions set forth in the Offer,
the other Member shall have the right to elect to purchase the offered Units at
a cash purchase price per Unit determined as follows:
(i) The value of the Company would be established by multiplying the
average annual earnings, before interest and taxes, of the Company during the
previous three complete fiscal years (or such lesser period as the Company
shall have been in existence) by six (6).
(ii) The value so determined would be divided by the total number of
issued and outstanding Units.
(d) Condition to Effective Election. Notwithstanding the provisions of
Section 8.5(b) hereof, no election to purchase Offered Units shall be effective
unless the election has been made under Section 8.5(b) to purchase, in the
aggregate, all and not less than all of the Offered Units.
(e) Non-Cash Offers. Should any Offer contain terms by which the Offered
Units are to be Transferred for consideration other than cash or cash
equivalents, then the cash value of such Offer shall be determined by an
independent investment banking firm of national standing and reputation to be
jointly selected by the Selling Member and the other Member. The other Member
shall have the opportunity to accept such Offer as provided in Section 8.5(b)
at the cash value so determined. The costs and expenses of such investment
banking firm shall be borne by the Selling Member.
(f) Price and Terms of Acceptance. The other Member shall pay either the
purchase price set forth in the Offer at its cash value as determined pursuant
to Section 8.5(e) or the purchase price determined pursuant to Section 8.5(c).
At the closing of such purchase, which shall take place within sixty (60) days
after the later of the other Member's election to purchase the Units or the
determination of the purchase price under Section 8.5(e), the other Member
shall deliver the consideration for such Offered Units and the Selling Member
shall
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be deemed to have delivered to the other Member the Offered Units without
further action.
(g) Rights to Transfer Following an Offer. If the Offered Units are not
purchased by the other Member pursuant to the foregoing provisions of this
Section 8.5, the Selling Member may Transfer such Offered Units to the
Transferee upon the Terms set forth in the Offer. Any Units so Transferred will
thereafter be subject to all restrictions or obligations set forth in this
Agreement. If the Selling Member fails to make any such Transfer within ninety
(90) days after the Offer Date, such Offered Units shall again become subject
to all of the restrictions of this Agreement. If, in the course of negotiations
with a prospective Transferee, terms are agreed upon which are more favorable
to the prospective Transferee than the Terms described in the Offer, the
Selling Member shall not Transfer such Offered Units without first submitting
another Offer to the other Member which shall set forth such new Terms, and the
other Member shall have the right to accept such Offer in accordance with this
Section 8.5.
8.6 Bankruptcy or Change of Control of Member.
(a) Offer. In the event that a Member becomes Bankrupt (as defined in
Section 8.6(b)) or undergoes a Change of Control (as defined in Section
8.6(c)), such Member shall be deemed to have made an irrevocable offer to sell
all of such Member's Units to the other Member at the price per Unit determined
pursuant to Section 8.5(c).
(b) Bankrupt. For purposes of this Section 8.6, a Member shall be deemed
"Bankrupt" in the event of the adjudication of the Member as a bankrupt or
insolvent, or entry of an order, remaining unstayed by appeal or otherwise for
thirty (30) days, appointing a receiver or trustee for the Member, or for all
or any of its property, or approving a petition seeking reorganization or other
similar relief under the bankruptcy or other similar laws of the United States
or of any state or of any other competent jurisdiction; or the filing by the
Member of a petition seeking any of the foregoing or consenting thereto, or the
filing of a petition to take advantage of any debtors' act, or making a general
assignment for the benefit of creditors, or admitting in writing its inability
to pay its debts as they mature; or the filing of an involuntary petition with
respect to the Member seeking relief under the bankruptcy or similar laws of
the United States or of any state or any other competent jurisdiction, which
petition is not dismissed within sixty (60) days.
(c) Change of Control. A "Change of Control" shall be deemed to have
occurred with respect to a Member in the event that: (i) a Member effects a
consolidation or merger with another limited liability company or corporation
(other than a consolidation or merger in which such Member is the continuing
Company or a consolidation or merger with an Affiliate); or (ii) fifty percent
(50%) or more of the outstanding shares of capital stock of the Member are
acquired by one person or an affiliated group of persons who are not currently
Affiliates of the Member.
(d) Election by the Other Member. Within sixty (60) days after the receipt
of the notice by the other Member (which date of receipt shall be deemed to be
the date of the other
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Member's first actual knowledge of the Bankruptcy or Change of Control), the
other Member may elect to purchase all of the Offered Units by delivering a
written notice as described above.
(e) Closing. The payment of the purchase price and the Transfer of the
Units shall occur within sixty (60) days after the other Member's election to
purchase.
8.7 Permitted Transferees; Option. For purposes of Sections 8.3 through
8.6, a Permitted Transferee holding Units transferred by a Member shall be
deemed to participate with the Member in the processes set forth in such
sections, and the Member shall be deemed to have an irrevocable power of
attorney, coupled with an interest, to act on behalf of its Permitted
Transferees for purposes of such sections. In the event that Xxxxxx sells all
of its Units pursuant to the provisions of any of Sections 8.3 through 8.6 and,
at the time of such sale Xxxxxx continues to hold its Option, the Option shall
be included as part of the Units sold and Xxxxxx shall receive payment of the
amount that it would have received had it exercised the Option prior to such
sale.
ARTICLE 9
DISSOLUTION AND LIQUIDATION
9.1 Events of Dissolution. The Company shall be dissolved upon (i) the
filing of the certificate of cancellation as described in Section 1.5 hereof,
(ii) the entry of a decree of judicial dissolution pursuant to Section 18-802
of the Act, (iii) the unanimous vote of the Members or (iv) the death,
retirement, resignation, expulsion, bankruptcy or dissolution of a Member
unless the business of the Company is continued by the consent of all remaining
Members within 90 days following the occurrence of any such event.
9.2 Order of Dissolution. In settling accounts upon winding up and
liquidation of the Company, the assets of the Company shall be applied and
distributed as expeditiously as possible in the following order:
(a) To pay (or make reasonable provision for the payment of) all creditors
of the Company, including to the extent permitted by law, Members or their
Affiliates who are creditors, in satisfaction of liabilities of the Company in
the order of priority provided by law, including expenses relating to the
dissolution and winding up of the affairs of the Company (including, without
limitation, expenses of selling assets of the Company, discharging the
liabilities of the Company, distributing the assets of the Company and
terminating the Company as a limited liability company in accordance with this
Agreement and the Act); and
(b) To the Members as follows: Electro (and/or its Permitted Transferee(s)
or other successors and assigns) shall receive, in the aggregate, the first
$300,000 to be distributed to the Members and, thereafter, distributions shall
be made to the Members in accordance with their respective ownership of Units.
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9.3 Orderly Winding Up. Notwithstanding anything to the contrary in
Sections 9.1 and 9.2 upon winding up and liquidation, if required to maximize
the proceeds of liquidation, the Members may, upon approval of the holders of
all of the Units, transfer the assets of the Company to a liquidating trustee
or trustees.
ARTICLE 10
INDEMNIFICATION AND EXCULPATION; CERTAIN AGREEMENTS
10.1 Indemnification of the Members. The Company shall indemnify, hold
harmless and place in funds the Members, the Directors, their respective
Affiliates, and their respective agents and/or the legal representatives of any
of them, and each other Person who may incur liability as a Member or otherwise
in connection with the management or ownership of the Company (each, an
"Indemnified Party"), against all liabilities and expenses (including amounts
paid in satisfaction of judgments, in compromise, as fines and penalties, and
as counsel fees) reasonably incurred by him, her or it in connection with the
investigation, defense or disposition of any action, suit or other proceeding,
whether civil or criminal (a "Proceeding"), in which any Indemnified Party may
be involved or with which he, she or it may be threatened, while a Member or
serving in such other capacity or thereafter, by reason of him, her or it being
or having been a Member, or by serving in such other capacity, except with
respect to any matter which constitutes willful misconduct, bad faith, gross
negligence or reckless disregard of the duties of his office, or criminal
intent. The Company shall have the right to approve any counsel selected by any
Indemnified Party and to approve the terms of any proposed settlement. The
rights accruing to a Member and each other Indemnified Party under this Section
10.1 shall not exclude any other right to which he, she or they may be lawfully
entitled; provided that any right of indemnity or reimbursement granted in this
Section 10.1 or to which any Indemnified Party may be otherwise entitled may
only be satisfied out of the assets of the Company, and no Member shall be
personally liable with respect to any such claim for indemnity or
reimbursement. Notwithstanding any of the foregoing to the contrary, the
provisions of this Section 10.1 shall not be construed so as to provide for the
indemnification of a Member or any other Indemnified Party for any liability to
the extent (but only to the extent) that such indemnification would be in
violation of applicable law or such liability may not be waived, modified or
limited under applicable law, but shall be construed so as to effectuate the
provisions of this Section 10.1 to the fullest extent permitted by law. The
right to indemnification conferred in this Article 10 shall be a contract right
and shall include the right to be paid by the Company the expenses (including
reasonable attorneys' fees) incurred in defending any Proceeding in advance of
its final disposition (an "Advancement of Expenses"); provided, however, that,
if Delaware law so requires, an Advancement of Expenses incurred by an
Indemnified Party shall be made only upon delivery to the Company of an
undertaking (an "Undertaking"), by or on behalf of such Indemnified Party, to
repay all amounts so advanced if it shall ultimately be determined by final
judicial decision from which there is no further right to appeal that such
Indemnified Party is not
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entitled to be indemnified for such expenses under Article 10.
10.2 Reimbursement and Indemnity. If a Member shall, pursuant to
authorization of or approval by the Board or a final judgment of a court of
competent jurisdiction or in compliance with law or order of any governmental
agency, pay any amount on behalf of or for the account of the Company with
respect to any liability, obligation, undertaking, damage, or claim for which
the Company shall or may, pursuant to contract or applicable law, be liable or
responsible, or with respect to making good any loss or damage sustained by, or
paying any duty, cost, claim, or damage incurred by, the Company, then the
Company shall reimburse such Member for such amount as shall have been so paid
by such Member.
10.3 Right of Indemnified Party to Bring Suit. If a claim under Section
10.1 hereof is not paid in full by the Company within sixty days after a
written claim has been received by the Company, except in the case of a claim
for an Advancement of Expenses, in which case the applicable period shall be
thirty days, the Indemnified Party may at any time thereafter bring suit
against the Company to recover the unpaid amount of the claim. If successful in
whole or in part in any such suit, or in a suit brought by the Company to
recover an Advancement of Expenses pursuant to the terms of an Undertaking, the
Indemnified Party shall be entitled to be paid also the expense of prosecuting
or defending such suit. In (i) any suit brought by the Indemnified Party to
enforce a right to indemnification hereunder (but not in a suit brought by the
Indemnified Party to enforce a right to an Advancement of Expenses) it shall be
a defense that, and (ii) in any suit by the Company to recover an Advancement
of Expenses pursuant to the terms of an Undertaking the Company shall be
entitled to recover such expenses upon a final adjudication that, the
Indemnified Party has not met the applicable standard of conduct set forth in
Delaware law. Neither the failure of the Company (including its board of
directors, independent legal counsel, or its Members) to have made a
determination prior to the commencement of such suit that indemnification of
the Indemnified Party is proper in the circumstances because the Indemnified
Party has met the applicable standard of conduct set forth in Delaware law, nor
an actual determination by the Company (including its board of directors,
independent legal counsel, or its Members ) that the Indemnified Party has not
met such applicable standard of conduct, shall create a presumption that the
Indemnified Party has not met the applicable standard of conduct or, in the
case of such a suit brought by the Indemnified Party to enforce a right to
indemnification or to an Advancement of Expenses hereunder, or by the Company
to recover an Advancement of Expenses pursuant to the terms of an Undertaking,
the burden of proving that the Indemnified Party is not entitled to be
indemnified, or to such Advancement of Expenses, under this Article 10 or
otherwise shall be on the Company.
10.4 Exculpation. No Director, officer, Company employee, Member or
Affiliate thereof or their respective agents and/or the legal representatives
of any of them shall be liable to any Member or the Company for mistakes of
judgment or for action or inaction which such Person reasonably believed to be
in or not opposed to the best interests of the Company unless such action or
inaction constitutes willful misconduct, bad faith, gross negligence or
reckless disregard of his or its duties and, with respect to any criminal
action, such party reasonably
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believes his conduct was lawful. Each Member may (on its own behalf or on the
behalf of any Representative, any Affiliates of such Member or their respective
agents and/or legal representatives of any of them), consult with counsel,
accountants and other experts in respect of the Company's affairs and such
Person shall be fully protected and justified in any action or inaction which
is taken in accordance with the advice or opinion of such counsel, accountants
or other experts; provided that they shall have been selected with reasonable
care. Notwithstanding any of the foregoing to the contrary, the provisions of
this Section 10.4 shall not be construed so as to relieve (or attempt to
relieve) a Member or any other Person of any liability, to the extent (but only
to the extent) that such liability may not be waived, modified or limited under
applicable law, but shall be construed so as to effectuate the provisions of
this Section 10.4 to the fullest extent permitted by law.
10.5 Joint Venture Formation Agreement. Nothing contained in Sections
10.1, 10.2, 10.3 or 10.4 of this Agreement shall be deemed to modify or
supersede the obligations of the parties to the Joint Venture Formation
Agreement and, in the event of a conflict between any provisions of the Joint
Venture Formation Agreement and any provisions of Sections 10.1, 10.2, 10.3 or
10.4 of this Agreement, the provisions of the Joint Venture Formation Agreement
shall control.
ARTICLE 11
MISCELLANEOUS
11.1 Legend. Certificates, if any, evidencing Units shall be stamped or
endorsed with a legend in substantially the following form:
TRANSFER RESTRICTED
The Units represented by this certificate are subject to restrictions on
transfer contained in a Limited Liability Company Agreement dated
_____________, 1997 (the "Agreement") among Xxxxxx-CML Fiberoptics LLC
(the "Company"), and its Members and may not be sold, pledged,
transferred, encumbered or otherwise disposed of except in accordance
therewith. A copy of the Agreement is on file at the office of the
Company and may be obtained without charge upon written request to the
President of the Company.
11.2 Notices. Notices or any other communication provided for in this
Agreement shall be given in writing and, except as otherwise expressly provided
herein, shall be effective on (i) the date of facsimile transmission of such
notice, (ii) one day (two days if the recipient is outside of the United
States) after the sending of such notice by overnight courier service or (iii)
eight days after mailing of such notice by certified mail addressed as follows:
To the Company: Xxxxxx-CML Fiberoptics LLC
00 Xxxxxxxx Xxxxxx
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Marlborough, Massachusetts
Attention: President
To Electro: Electro Fiberoptics Corp.
c/o Chicago Miniature Lamp, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Mr. Xxxxx Xxxx
With a Copy to: Xxxxx X. Xxxxx, Esq.
Xxxxxxx, Xxxx & Xxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
To Xxxxxx: Xxxxx X. Xxxxx
Xxxxxx Fiber Optics, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
and: Xxxxxxx Xxxxxxx, Esq.
Xxxxxx Company
0 Xxxxx Xxxxx
Xxxxxxx, XX 00000
With a Copy to: Xxxx X. Xxxxxxxx, Esq.
Xxxxxxxxxxx & Xxxxxxxx LLP
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
unless and until notice of another or different address shall be given as
provided herein.
11.3 Modification and Waiver. Except as otherwise provided herein, this
Agreement may be modified or amended and any obligation or restriction herein
may be waived only with the prior written consent of all of the parties hereto.
11.4 Governing Law. This Agreement shall be governed by, interpreted, and
construed in accordance with the laws of the State of Delaware, without regard
to Delaware choice of law provisions.
11.5 Waiver of Partition. Each Member hereby irrevocably waives any and
all rights that it may have to maintain an action for partition of any of the
Company's property.
11.6 Consents. All consents, agreements and approvals required or
permitted by this Agreement shall be in writing and a signed copy thereof shall
be filed and kept with the books
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of the Company.
11.7 Successors. All rights and duties of the Members hereunder shall
inure to the benefit of and be binding upon their respective successors and
assigns.
11.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
11.9 Severability. Each provision of this Agreement shall be considered
severable and if for any reason any provision which is not essential to the
effectuation of the basic purposes of the Agreement is determined by a court of
competent jurisdiction to be invalid or unenforceable and contrary to existing
or future applicable law, such invalidity shall not impair the operation of or
affect those provisions of this Agreement which are valid. In that case, this
Agreement shall be construed so as to limit any term or provision so as to make
it enforceable or valid within the requirements of any applicable law, and in
the event such term or provision cannot be so limited, this Agreement shall be
construed to omit such invalid or unenforceable provisions.
11.10 Survival. All indemnities and reimbursement obligations made
pursuant to this Agreement shall survive dissolution and liquidation of the
Company until expiration of the longest applicable statute of limitations
(including extensions and waivers) with respect to the matter for which a party
would be entitled to be indemnified or reimbursed, as the case may be.
11.11 No Third Party Beneficiaries. Nothing contained in this Agreement
is intended to, or shall, confer upon any Person other than the parties hereto
any rights or remedies
11.12 Binding Agreement. This Agreement shall be binding upon the parties
hereto and shall inure to the benefit of their respective legal
representatives, heirs, executors, administrators, successors and assigns.
11.13 Entire Agreement. Except to the extent other agreements are
specifically referred to herein, this Agreement constitutes the entire
agreement between the Members with respect to the matters covered hereby and
thereby and supersedes all prior agreements, understandings, offers and
negotiations, oral or written.
11.14 Miscellaneous. Captions have been inserted solely for convenience of
reference and in no way shall define or limit any term of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as an
agreement under seal as of the date first above written.
Electro Fiberoptics Corp.
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By:
------------------------------
Name:
Title:
Xxxxxx Corporation
By:
------------------------------
Name:
Title:
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EXHIBIT A
Members Number of Units
------------------------- ---------------
Electro Fiberoptics Corp. 51,000
Xxxxxx Corporation 49,000
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EXHIBIT B
(Capital Contribution by Electro and Liabilities of Electro Assumed by the
Company)
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