<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) December 24, 1996
---------------------
SpecTran Corporation
- - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-12489 04-2729372
- - --------------------------------------------------------------------------------
(State or other (Commission (IRS Employer
jurisdiction) File No.) Identification No.)
50 Hall Road, Sturbridge, MA 01566
- - --------------------------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code (508) 347-2261
---------------------
- - --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On December 24, 1996, SpecTran Corporation (the "Company") announced the
formation of General Photonics, LLC ("General Photonics"), a 50-50 joint venture
between the Company and General Cable Corporation ("General Cable"). To form the
joint venture, the Company's subsidiary, Applied Photonic Devices, Inc. ("APD"),
sold certain of its assets to General Cable Industries, Inc., a subsidiary of
General Cable ("GCI") for approximately $6.3 million, subject to adjustment
based on audited Financial Statements. GCI contributed the assets it purchased
from APD to General Photonics for a fifty percent equity interest in General
Photonics and APD contributed its remaining assets to General Photonics for a
fifty percent equity interest in General Photonics. General Photonics' primary
mission will be the design and manufacture of optical fiber cable for the
customer premises market in the United States, Canada and Mexico. Both the
Company and General Cable have agreed not to compete with General Photonics. In
addition, General Cable has agreed that it will not, without the Company's
consent, acquire any interest in the Company's securities for at least the life
of the joint venture. General Photonics will purchase its optical fiber from
SpecTran Communication Fiber Technologies, Inc. Fiber optic cable and other
products manufactured by General Photonics will be marketed primarily through
General Cable's direct sales force and sales representatives.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The following has been filed as a part of this report:
(a) Pro forma financial information.
Pro forma condensed consolidated Balance Sheet as of September 30, 1996 and
pro forma consolidated Statements of Operations for the year ended December 31,
1995 and nine months ended September 30, 1996.
(b) Exhibits
10.98 Limited Liability Company Agreement between Applied Photonic Devices,
Inc. and General Cable Industries, Inc. dated as of December 23, 1996.
10.99 Asset Purchase Agreement among Applied Photonic Devices, Inc.,
SpecTran Corporation, General Cable Industries, Inc. and General Cable
Corporation dated as of December 23, 1996.
10.100 Investor's Representations, Contribution Agreement and Subscription
Agreement among Applied Photonic Devices, Inc., SpecTran Corporation and General
Photonics, LLC dated as of December 23, 1996.
10.101 Non-Competition Agreement among General Cable Industries, Inc.,
General Cable Corporation, Applied Photonic Devices, Inc., SpecTran Corporation
and General Photonics, LLC dated December 23, 1996. (The Company has applied
for confidential treatment for portions of this Exhibit).
10.102 Standstill Agreement between General Cable Corporation and SpecTran
Corporation dated as of December 23, 1996.
10.103 Letter Amendment to Three Year Multimode Optical Fiber Supply
contract between Corning Incorporated and SpecTran Corporation dated as of
January 1, 1996. (The Company has applied for confidential treatment for
portions of this Exhibit).
10.104 Letter Amendment to Employment Agreement between SpecTran Specialty
Optics Company and William B. Beck dated April 18, 1996.
2
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SPECTRAN CORPORATION
-------------------------------
(Registrant)
Date: January 8, 1997 /s/ Bruce A. Cannon
------------------------------
Bruce A. Cannon
Secretary
3
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SPECTRAN CORPORATION
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
On December 23, 1996, the Company formed General Photonics, a 50-50 joint
venture between the Company and General Cable, a subsidiary of Wassall plc.
General Cable purchased certain assets of the Company's optical cable fiber
subsidiary, Applied Photonic Devices, Inc. ("APD") for approximately $6.3
million and then contributed them to General Photonics for a 50% equity
interest. APD contributed its remaining assets to General Photonics in exchange
for its 50% equity interest. See - "Pro forma Financial Information." The
Company will account for its interest in the joint venture under the equity
method.
The following pro forma condensed consolidated balance sheet at September
30, 1996 and pro forma condensed consolidated statements of operations for the
year ended December 31, 1995 and nine months ended September 30, 1996 present
the condensed consolidated balance sheet and results of operations of the
Company as if the joint venture with General Photonics existed as of January 1,
1995 and, as previously reported on Form 8-K dated December 31, 1996, as if the
December 1996 sale of $24 million of senior notes to investors and the
restructuring of bank loan agreements existed as of September 30, 1996
(in thousands, except per share data).
4
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<TABLE>
SPECTRAN CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<CAPTION>
September 30, 1996
--------------------------------------------
Pro forma
Historical Adjustments Pro forma
---------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents $ 2,174 $18,483 (1)(2)(3) $20,657
Current Portion of Marketable Securities 972 -- 972
Trade Accounts Receivable, net 10,201 (2,252) (1) 7,949
Inventories 8,967 (3,511) (1) 5,456
Prepaid Expenses and Other Current Assets 1,252 (12) (1) 1,240
------- ------- -------
Total Current Assets 23,566 12,708 36,274
Investment in Joint Venture -- 2,448 (1)(4) 2,448
Property, Plant and Equipment, net 14,702 (893) (1) 13,809
Other Assets:
Long-term Marketable Securities 1,422 -- 1,422
Other Long-Term Assets 6,871 (2,978) (1) 3,893
------- ------- -------
Total Other Assets 8,293 (2,978) 5,315
------- ------- -------
Total Assets $46,561 $11,285 $57,846
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities 7,398 (913) (1) 6,485
Long-term Debt 12,000 12,000 (2)(3) 24,000
Stockholders' Equity:
Common Stock, voting 539 -- 539
Common Stock, non-voting -- -- --
Paid-In Capital 26,745 -- 26,745
Net Unrealized Gain on Marketable Securities 15 -- 15
Retained Earnings (Deficit) (136) 198 (4)(10) 62
------- ------- -------
Total Stockholders' Equity 27,163 198 27,361
------- ------- -------
Total Liabilities and Stockholders' Equity $46,561 $11,285 $57,846
======= ======= =======
</TABLE>
See accompanying notes to pro forma financial statements.
5
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<TABLE>
SPECTRAN CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<CAPTION>
For the twelve months ended
December 31, 1995
---------------------------------------------
Pro forma
Historical Adjustments Pro forma
---------- ----------- ---------
<S> <C> <C> <C> <C>
Net Sales $ 38,581 $(3,499) (5)(10) $ 35,082
Cost of Sales 25,520 (2,010) (5)(10) 23,510
---------- ------- ----------
Gross Profit 13,061 (1,489) 11,572
Operating Expenses 12,496 (1,033) (6) 11,463
---------- ------- ----------
Income from Operations 565 (456) 109
Other Income 212 330 (7) 542
Equity in Earnings of Joint Venture -- 179 (8) 179
---------- ------- ----------
Income before Income Taxes 777 53 830
Income Tax Expense 235 (104) (9) 131
---------- ------- ----------
Net Income $ 542 $ 157 $ 699
========== ======= ==========
Weighted Average shares outstanding 5,582,752 5,582,752
========== ==========
Net Income per Share of Common Stock $ 0.10 $ 0.13
========== ==========
</TABLE>
<TABLE>
<CAPTION>
For the nine months ended
September 30, 1996
---------------------------------------------
Pro forma
Historical Adjustments Pro forma
---------- ----------- ---------
<S> <C> <C> <C> <C>
Net Sales $ 44,915 $(7,043) (5)(10) $ 37,872
Cost of Sales 28,621 (4,727) (5)(10) 23,894
----------- ------- ----------
Gross Profit 16,294 (2,316) 13,978
Operating Expenses 12,230 (1,659) (6) 10,571
----------- ------- ----------
Income from Operations 4,064 (657) 3,407
Other Income (Expense) (240) 270 (7) 30
Equity in Earnings of Joint Venture -- 220 (8) 220
----------- ------- ----------
Income before Income Taxes 3,824 (167) 3,657
Income Tax Expense 1,300 (208) (9) 1,092
----------- ------- ----------
Net Income $ 2,524 $ 41 $ 2,565
=========== ======= ==========
Weighted Average shares outstanding 5,929,796 5,929,796
=========== ==========
Net Income per Share of Common Stock $ 0.43 $ 0.43
=========== ==========
</TABLE>
See accompanying notes to pro forma financial statements.
6
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NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AND
STATEMENTS OF OPERATIONS
(1) To record the receipt of $6.3 million cash in exchange for certain assets
of Applied Photonic Devices purchased by General Cable and to record the
contribution of the remaining Applied Photonic Devices net assets and
liabilities to General Photonics in return for half the equity in the joint
venture.
(2) To record the elimination of $2.2 million of outstanding debt incurred with
the original purchase of Applied Photonic Devices.
(3) To record the receipt of $24 million cash from the issuance of a series of
senior secured notes on December 30, 1996 and the repayment of outstanding
borrowings from the proceeds of the notes.
(4) To record the investment in the new joint venture, General Photonics, and
related earnings for the period from January 1, 1995.
(5) To eliminate sales and cost of sales of Applied Photonic Devices, net of
intercompany sales and gross profit between subsidiaries.
(6) To eliminate operating expenses of Applied Photonic Devices.
(7) To increase interest income on the $4.1 million cash increase and decrease
interest expense for the $2.2 million repayment of debt.
(8) To record SpecTran's 50% share of the after-tax earnings of the
unconsolidated joint venture, General Photonics.
(9) To record the tax effect of the above adjustments.
(10) To eliminate the intercompany profit in ending inventory of General
Photonics.
7
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EXHIBIT INDEX
Exhibits
- - --------
10.98 Limited Liability Company Agreement between Applied Photonic Devices,
Inc. and General Cable Industries, Inc. dated as of December 23, 1996.
10.99 Asset Purchase Agreement among Applied Photonic Devices, Inc., SpecTran
Corporation, General Cable Industries, Inc. and General Cable
Corporation dated as of December 23, 1996.
10.100 Investor's Representations, Contribution Agreement and Subscription
Agreement among Applied Photonic Devices, Inc., SpecTran Corporation
and General Photonics, LLC dated as of December 23, 1996.
10.101 Non-Competition Agreement among General Cable Industries, Inc., General
Cable Corporation, Applied Photonic Devices, Inc., SpecTran Corporation
and General Photonics, LLC dated December 23, 1996. (The Company has
applied for confidential treatment for portions of this Exhibit).
10.102 Standstill Agreement between General Cable Corporation and SpecTran
Corporation dated as of December 23, 1996.
10.103 Letter Amendment to Three Year Multimode Optical Fiber Supply Contract
between Corning Incorporated and SpecTran Corporation dated as of
January 1, 1996. (The Company has applied for confidential treatment for
portions of this Exhibit).
10.104 Letter Amendment to Employment Agreement between SpecTran Specialty
Optics Company and William B. Beck dated April 18, 1996.
<PAGE> 1
LIMITED LIABILITY
COMPANY AGREEMENT
OF
GENERAL PHOTONICS, LLC
THE INTEREST REPRESENTED HEREBY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY APPLICABLE
STATE LAW. THE INTEREST HAS BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF (I) AN
EFFECTIVE REGISTRATION UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS, OR (II) AN OPINION OF COUNSEL SATISFACTORY TO GENERAL
PHOTONICS, LLC (THE "COMPANY") TO THE EFFECT THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT AND SUCH LAWS.
THE INTEREST REPRESENTED HEREBY IS SUBJECT TO THE TERMS OF THIS LIMITED
LIABILITY COMPANY AGREEMENT, WHICH PROVIDES THAT, UNDER CERTAIN CONDITIONS, THE
INTEREST REPRESENTED HEREBY SHALL OR MAY BE SOLD TO AND PURCHASED BY THE OTHER
PARTY HERETO AT THE PRICE AND ON THE TERMS SET FORTH IN THIS LIMITED LIABILITY
COMPANY AGREEMENT. ANY TRANSFER OR ACQUISITION IN VIOLATION OF THE AGREEMENT IS
NULL AND VOID. THE TERMS OF THIS LIMITED LIABILITY COMPANY AGREEMENT ARE
AUTOMATICALLY BINDING UPON ANY PERSON WHO ACQUIRES AN INTEREST IN THE COMPANY.
<PAGE> 2
TABLE OF CONTENTS
ARTICLE 1 NAME AND PURPOSES
Section 1.1 Formation ................................................1
Section 1.2 Name and Office ..........................................1
Section 1.3 Purpose ..................................................1
Section 1.4 Term .....................................................1
Section 1.5 Agent and Tax Matters Member .............................1
Section 1.6 Exhibits and Definitions .................................1
ARTICLE 2 CAPITAL CONTRIBUTIONS AND ADDITIONAL FUNDING .......................2
Section 2.1 Classes of Members .......................................2
Section 2.2 Capital Contributions ....................................2
Section 2.3 Loans ....................................................2
ARTICLE 3 RIGHTS AND OBLIGATIONS OF MEMBERS ..................................3
Section 3.1 Limitation of Liability ..................................3
Section 3.2 List of Members ..........................................3
Section 3.3 Company Books ............................................3
Section 3.4 Prohibition on Right to Withdraw or Resign ...............3
Section 3.5 Compliance with Operating Policies .......................3
Section 3.6 No Right to Sue in Company's Name ........................3
Section 3.7 Members Have No Exclusive Duty to the Company ............3
Section 3.8 Arm's-Length Transactions with Members and Affiliates ....3
Section 3.9 Transactions with Related Parties ........................4
Section 3.10 Representations and Warranties of Members ................4
ARTICLE 4 MEMBERS MEETINGS AND RECORD DATES ..................................5
Section 4.1 Annual Meeting ...........................................5
Section 4.2 Special Meetings .........................................5
Section 4.3 Place of Meeting .........................................6
Section 4.4 Notice of Meetings .......................................6
Section 4.5 Meeting of All Members ...................................6
Section 4.6 Closing of Fixing of Record Date .........................6
Section 4.7 Quorum .................................................. 6
Section 4.8 Member Action ............................................6
Section 4.9 Proxies ..................................................6
ARTICLE 5 MANAGERS ...........................................................7
Section 5.1 General Powers ...........................................7
Section 5.2 Classes and Number of Managers ...........................8
Section 5.3 Removal ..................................................8
Section 5.4 Regular Meetings .........................................9
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ARTICLE 5 (cont.)
Section 5.5 Special Meetings .........................................9
Section 5.6 Compliance with Operating Policies .......................9
Section 5.7 Participation by Telephonic Means ........................9
Section 5.8 Notice....................................................9
Section 5.9 Quorum ...................................................9
Section 5.10 Manner of Acting .........................................9
Section 5.11 Informal Action..........................................11
ARTICLE 6 OFFICERS ..........................................................11
Section 6.1 Number, Title and Compensation ..........................11
Section 6.2 Election and Term of Office .............................11
Section 6.3 Removal .................................................12
Section 6.4 Authority. ..............................................12
ARTICLE 7 ALLOCATIONS .......................................................12
Section 7.1 Capital Accounts ........................................12
Section 7.2 Special Allocations .....................................12
Section 7.3 Allocation of Profits and Losses ........................13
Section 7.4 Minimum Gain Chargeback Provisions ......................13
Section 7.5 Tax Allocations: Code Section 704(c) ....................14
Section 7.6 Other Allocation Rules ..................................15
ARTICLE 8 DISTRIBUTIONS .....................................................15
Section 8.1 Distributions to Members ................................15
Section 8.2 Limits on Distributions to Members ......................15
ARTICLE 9 NON-COMPETITION ...................................................16
Section 9.1 Non-Competition .........................................16
ARTICLE 10 TRANSFER OR ASSIGNMENT OF A MEMBER'S INTEREST ....................16
Section 10.1 General Restrictions on Transfer or Assignment ..........16
Section 10.2 No Pledge or Encumbrance ................................16
Section 10.3 Permitted Transfers .....................................16
Section 10.4 Initial Twelve Month Period .............................16
Section 10.5 Purchase Options ........................................17
Section 10.6 Change of Control .......................................18
Section 10.7 Assignment of Interest to Third Parties .................19
Section 10.8 Closing Under Article 10 ................................19
Section 10.9 Post-Closing Support Agreements .........................20
Section 10.10 Participant Becoming a Member ...........................20
ARTICLE 11 LIMITATION OF LIABILITY AND INDEMNIFICATION ......................20
Section 11.1 Limitation of Liability .................................20
Section 11.2 Indemnification .........................................21
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ARTICLE 12 WITHDRAWAL OF A MEMBER ...........................................21
Section 12.1 Event of Withdrawal Defined ..............................21
Section 12.2 Termination ..............................................22
ARTICLE 13 PROVISIONS APPLICABLE TO ALL ASSIGNMENTS AND
TRANSFERS ..............................................................22
Section 13.1 Section 6050K ............................................22
ARTICLE 14 TERMINATION OF THE COMPANY .......................................22
Section 14.1 Events Causing Termination ...............................22
Section 14.2 Procedure on Termination .................................23
Section 14.3 Rights of Members ........................................24
ARTICLE 15 ARBITRATION OF DISPUTES ..........................................24
Section 15.1 Arbitration ..............................................24
Section 15.2 Remedies Under the Non-Competition Agreement .............25
ARTICLE 16 FISCAL MATTERS ...................................................25
Section 16.1 Books and Records ........................................25
Section 16.2 Tax Returns ..............................................26
Section 16.3 Financial Statements .....................................26
Section 16.4 Company Year .............................................27
Section 16.5 Company Bank Accounts ....................................27
Section 16.6 Accounting Decisions .....................................27
Section 16.7 Federal Income Tax Elections .............................27
ARTICLE 17 GENERAL PROVISIONS ...............................................27
Section 17.1 Notices ..................................................27
Section 17.2 Integration ..............................................28
Section 17.3 Applicable Law ...........................................28
Section 17.4 Separability .............................................28
Section 17.5 Binding Effect ...........................................28
Section 17.6 Agreement for Further Execution ..........................28
Section 17.7 Certificates .............................................28
Section 17.8 Authority to Amend .......................................28
Section 17.9 Gender ...................................................28
Section 17.10 Counterparts .............................................28
EXHIBITS:
Exhibit A - List of Members, Contributions,and Class and
Percentage Interest 30
Exhibit B - Defined Terms .............................................31
Exhibit C - Managers and Officers .....................................42
Exhibit D - Certificate of Formation ..................................43
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LIMITED LIABILITY COMPANY AGREEMENT
OF
GENERAL PHOTONICS, LLC
THIS LIMITED LIABILITY COMPANY AGREEMENT is made and entered into
effective as of the 23rd day of December, 1996 by and between APPLIED PHOTONIC
DEVICES, INC., a Delaware corporation (the original "Class A Member"), and
GENERAL CABLE INDUSTRIES, INC., a Delaware corporation (the original "Class B
Member").
ARTICLE 1
NAME AND PURPOSES
-----------------
SECTION 1.1 FORMATION. The Members have caused the Company to be formed as
a Delaware limited liability company originally formed under the name Lindsay,
LLC, and by each Member's Capital Contribution of one dollar ($1). The Members
shall promptly cause the Company to amend the Certificate of Formation to change
the legal name of the Company to General Photonics, LLC.
SECTION 1.2 NAME AND OFFICE. The name of the Company shall be General
Photonics, LLC. The principal office and place of business of the Company shall
be located at 300 Lake Road, Dayville, Connecticut 06241, or such other place as
the Managers may from time to time determine.
SECTION 1.3 PURPOSE. The business and the purposes of the Company shall
be: (i) to conduct the Business in the Territory as defined herein; and (ii)
subject to the agreement of the parties, to engage in any lawful act or activity
for which a limited liability company may be formed under the Act.
SECTION 1.4 TERM. The duration of the Company shall be perpetual.
SECTION 1.5 AGENT AND TAX MATTERS MEMBER. Corporation Service Company
shall be the registered agent of the Company upon whom any process, notice or
demand may be served, and 1013 Centre Road, Wilmington, Delaware 19805 shall be
the initial registered office of the Company. The Class A Member shall be the
original tax matters Member for the Company for purposes of Section 6231(a)(7)
of the Code.
SECTION 1.6 EXHIBITS AND DEFINITIONS. Attached to this Agreement are four
exhibits: (1) Exhibit A, a list of the Members, their Capital Contributions, and
percentage and Class of Interest owned; (2) Exhibit B, which defines certain
terms used in this Agreement; (3) Exhibit C, a list of the original Managers and
Officers of the Company; and (4) Exhibit D, a copy of the original Certificate
of Formation and all amendments to such Certificate of Formation. Each of these
exhibits is incorporated by reference into this Agreement.
<PAGE> 6
ARTICLE 2
CAPITAL CONTRIBUTIONS AND ADDITIONAL FUNDING
--------------------------------------------
SECTION 2.1 CLASSES OF MEMBERS. There shall be two classes of Members, (i)
Class A Members, and (ii) Class B Members. The Class A Members shall have the
exclusive right to elect the Class A Managers. The Class B Members shall have
the exclusive right to elect the Class B Managers. Except for the rights with
respect to the election of their respective classes of Managers and as otherwise
provided in this Agreement, the Class A Members and the Class B Members shall
have identical rights, on a percentage basis to vote on any matter presented to
the Members, and to allocations and distributions.
SECTION 2.2 CAPITAL CONTRIBUTIONS.
(a) CAPITAL CONTRIBUTIONS. Each Member shall, upon the execution of
this Agreement, make a Capital Contribution to the Company, of cash or property
with an agreed upon value set forth opposite the Member's name on Exhibit A, and
on the terms of the Contribution Agreement between such Member and the Company.
There shall be issued to each Member an Interest in the Company of the class and
of the percentage specified in Exhibit A.
(b) ADDITIONAL CAPITAL CONTRIBUTIONS AND ADDITIONAL FUNDING.
(1) NO ADDITIONAL CAPITAL CONTRIBUTIONS REQUIRED. No Member
shall be required to make an additional Capital Contribution.
(2) ADDITIONAL FUNDING. The Members intend to fund the
Company's operations through the Members' original Capital Contributions and
through funds generated as a result of the operations of the Company. In the
event that additional funds in excess of such amounts are required by the
Company, the Managers shall attempt to acquire the additional funds through the
following methods and in the following order: (i) unsecured Company borrowings;
(ii) borrowings secured by Company Property; (iii) borrowings arranged for by
the Members and secured by corporate guarantees of the Members: in proportion to
the Percentage Interest held by each Member; and lastly, (iv) loans from the
Members to the Company. Without the Member's consent and the Super-Majority
Approval of the Managers, no Member shall be required to: (a) make a loan to the
Company; (b) guarantee any Company borrowing; or (c) pledge such Member's assets
to secure any Company borrowing. In the event that the additional funds cannot
be acquired through loans, with the approval of the Members, the Members may
make additional Capital Contributions on terms agreed upon by the Members and
the Company.
SECTION 2.3 LOANS. Any Member or an Affiliate of any Member may loan funds
to the Company on arm-length terms as specified in Section 3.8 of this
Agreement.
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ARTICLE 3
RIGHTS AND OBLIGATIONS OF MEMBERS
---------------------------------
SECTION 3.1 LIMITATION OF LIABILITY. Except as otherwise required by law,
a Member shall not be liable beyond the Member's Capital Contributions for any
debts, losses, or any liability of the Company or of its employees or agents.
SECTION 3.2 LIST OF MEMBERS. Upon written request of any Member, a Manager
shall provide a list showing the names, addresses, and type of and Percentage
Interest of all Members and Participants.
SECTION 3.3 COMPANY BOOKS. Except as provided in any Operating Policy of
the Company, each Member shall have the right, during ordinary business hours,
to inspect and copy Company documents at the Member's expense.
SECTION 3.4 PROHIBITION ON RIGHT TO WITHDRAW OR RESIGN.
(a) No Member has the right or the power to withdraw or resign from
the Company unless the withdrawal or resignation is approved by other Member(s).
A Member may. assign its Interest in strict compliance with the terms of Article
10 of this Agreement.
(b) No Member shall take any voluntary action which would be an
Event of Withdrawal under items (b) through (f) of the definition of an Event of
Withdrawal in Section 12.1, unless such Member provides written notice to the
Company and the other Members at least sixty (60) days in advance of the
effective date of such action.
SECTION 3.5 COMPLIANCE WITH OPERATING POLICIES. The Managers will adopt
and implement Operating Policies for the Company. The Members shall comply with
all such Operating Policies, specifically including, but not limited to, any
Operating Policy relating to the protection of confidential information or trade
secrets of the Company or any Member.
SECTION 3.6 NO RIGHT TO SUE IN COMPANY'S NAME. Except as provided in the
Act, no Member, in the capacity as a Member, shall have the right to bring a
suit in the name of the Company.
SECTION 3.7 MEMBERS HAVE NO EXCLUSIVE DUTY TO THE COMPANY. Except as
specified in Article 9 and the Non-Competition Agreement, any Member may have
other business interests and may engage in other activities in addition to those
relating to the Company, and neither the Company nor any Member shall have any
right (by virtue of this Agreement) to share in such other investments or
activities of the Member or to the income or proceeds derived therefrom.
SECTION 3.8 ARM'S-LENGTH TRANSACTIONS WITH MEMBERS AND AFFILIATES. Except
as otherwise provided in this Agreement or any Related Agreement, any
transaction between the Company and any Member (or Affiliate of any Member)
shall be on prices, terms, and
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<PAGE> 8
conditions (taken as a whole) no less favorable to the Company than those which
could reasonably be obtained by the Company from a third Person in an
arm's-length transaction.
SECTION 3.9 TRANSACTIONS WITH RELATED PARTIES. Except as otherwise
expressly provided in this Agreement or any Related Agreement: (i) no Member or
any of its Affiliates shall have any obligation to deal with the Company,
whether as buyer, seller, or otherwise; and (ii) the Company shall not have any
obligation to deal with a Member or any of its Affiliates, whether as buyer,
seller, or otherwise.
SECTION 3.10 REPRESENTATIONS AND WARRANTIES OF MEMBERS.
(a) The Class A Member hereby represents and warrants to the Class B
Member and the Company as follows:
(i) Applied Photonic Devices, Inc. is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Applied Photonic Devices, Inc. has the corporate power and authority
to own, lease, and operate its assets, properties, and businesses and to enter
into this Agreement and to carry, out its obligations hereunder. The execution,
delivery, and performance of this Agreement by Applied Photonic Devices, Inc.
have been duly authorized by all necessary corporate action on the part of
Applied Photonic Devices, Inc., and, this Agreement is legally binding upon
Applied Photonic Devices, Inc. in accordance with its terms, except that
enforcement of this Agreement is subject to bankruptcy, insolvency,
reorganization, moratorium and other similar laws now or hereafter in effect
relating to creditor's rights generally and that the remedy of specific
performance and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding
thereafter may be brought.
(ii) The execution, delivery, and performance by Applied
Photonic Devices, Inc. of this Agreement and the transactions contemplated
hereby will not: (i) violate the provisions of any order, judgment, or decree of
any court or other governmental agency or any arbitrator applicable to Applied
Photonic Devices, Inc. or the Certificate of Incorporation or Bylaws of Applied
Photonic Devices, Inc.; (ii) result in a material breach of or constitute (with
due notice or lapse of time or both) a material default under any contract or
agreement to which Applied Photonic Devices, Inc. is a party or by which it is
bound; or (iii) violate any provision of law of the United States of America or
any state thereof, the violation of which is likely to have a material adverse
effect on the business, operations or condition (financial or otherwise) of
Applied Photonic Devices, Inc. or the Company.
(iii) Neither Applied Photonic Devices, Inc. nor SpecTran
owns stock or other evidence of ownership of any Person where a super-majority
vote is required to control such other Person.
(b) The Class B Member hereby represents and warrants to the Class
A Member and the Company as follows:
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(i) General Cable Industries, Inc. is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. General Cable Industries, Inc. has the corporate power and authority
to own, lease, and operate its assets, properties, and businesses and to enter
into this Agreement and to carry out its obligations hereunder. The execution,
delivery, and performance of this Agreement by General Cable Industries, Inc.
have been duly authorized by all necessary corporate action on the part of
General Cable Industries, Inc., and, this Agreement is legally binding upon
General Cable Industries, Inc. in accordance with its terms, except that
enforcement of this Agreement is subject to bankruptcy, insolvency,
reorganization, moratorium and other similar laws now or hereafter in effect
relating to creditor's rights generally and that the remedy of specific
performance and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding
thereafter may be brought.
(ii) The execution, delivery, and performance by General Cable
Industries, Inc. of this Agreement and the transactions contemplated hereby will
not: (i) violate the provisions of any order, judgment, or decree of any court
or other governmental agency or any arbitrator applicable to General Cable
Industries, Inc. or the Certificate of Incorporation or Bylaws of General Cable
Industries, Inc.; (ii) result in a material breach of or constitute (with due
notice or lapse of time or both) a material default under any contract or
agreement to which General Cable Industries, Inc. is a party or by which it is
bound: or (iii) violate any provision of law of the United States of America or
any state thereof, the violation of which is likely to have a material adverse
effect on the business, operations or condition (financial or otherwise) of
General Cable Industries, Inc. or the Company.
(iii) Neither General Cable Industries, Inc. nor General
Cable Corporation nor any of their Affiliates owns stock or other evidence of
ownership of any Person where a super-majority vote is required to control such
other Person.
ARTICLE 4
MEMBERS MEETINGS AND RECORD DATES
---------------------------------
SECTION 4.1. ANNUAL MEETING. The annual meeting of the Members shall be
held in the fourth month following the close of the Company's fiscal year, or on
such other date as the Managers may from time to time determine. If the day
fixed for the annual meeting shall be a legal holiday, such meeting shall be
held on the next business day. If the election of Managers shall not be held on
the day designated for any annual meeting, or at any adjournment thereof, the
Managers shall cause the election to be held at a special meeting of the Members
to be held as soon thereafter as may be convenient.
SECTION 4.2. SPECIAL MEETINGS. Special meetings of the Members may be
called by any Member.
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SECTION 4.3. PLACE OF MEETING. The Managers may designate any place within
or without the State of Delaware as the place of meeting for any annual meeting
or for any special meeting. If no designation is made, the place of meeting
shall be at the location of the principal office of the Company, except as
otherwise provided in Section 4.5.
SECTION 4.4. NOTICE OF MEETINGS. Written notice stating the place, day and
hour of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than ten
(10) nor more than sixty (60) days before the date of the meeting, in the manner
specified in Section 17.1, by or at the direction of the Managers to each Member
of record entitled to vote at such meeting. Such notice shall be deemed to be
delivered at the time specified in Section 17.1.
SECTION 4.5. MEETING OF ALL MEMBERS. If all of the Members entitled to
vote at a meeting shall meet at any time and place, either within or without the
State of Delaware, and consent to the holding of a meeting, such meeting shall
be valid without call or notice, and at such meeting any Company action may be
taken.
SECTION 4.6. CLOSING OF FIXING OF RECORD DATE. If the record books are not
closed or no record date is fixed for the determination of Members entitled to
notice of or to vote at a meeting of Members, the first date on which notice of
the meeting is mailed shall be the record date for such determination of
Members. When a determination of Members entitled to vote at any meeting of
Members has been made as provided herein, such determination shall apply to any
adjournment thereof.
SECTION 4.7. QUORUM. Members representing fifty-one percent (51%) of the
total of the Percentage Interests of the Company, represented in person or by
proxy, shall constitute a quorum at any meeting of Members.
SECTION 4.8. MEMBER ACTION.
(a) ELECTION OF MANAGERS. The Class A Members shall have the
exclusive right to elect the Class A Managers, and the Class B Members shall
have the exclusive right to elect the Class B Managers. Such elections may be
held at a meeting of the Members, or by written consent of the Member of any
class, provided however, that an election by written consent shall not be deemed
complete until the Company and the Managers are given written notice of such
election.
(b) OTHER MATTERS REQUIRING A VOTE OF THE MEMBERS. Except as
specified in Section 4.8(a) above, the Members may act by affirmative vote, in
person or by proxy, of Members holding fifty-one percent (51%) of all Percentage
Interests of the Company.
SECTION 4.9. PROXIES. At all meetings of Members, A Member may vote by
proxy executed in writing by the Member or by the Member's duly authorized
attorney-in-fact. Such
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proxy shall be filed with the Company before or at the time of the meeting. The
revocation of a proxy is not effective until the Company has received written
notice of the revocation.
ARTICLE 5
MANAGERS
---------
SECTION 5.1. GENERAL POWERS. The business and affairs of the Company shall
be managed by the Managers, subject to the limitations imposed by the Act, the
Certificate of Formation or this Agreement. Except for situations in which the
approval of the Members is expressly required by this Agreement or by
non-waivable provisions of applicable law, the Managers shall have full and
complete authority, power and discretion to manage and control the business,
affairs and properties of the Company, to make all decisions regarding those
matters and to perform any and all other acts or activities customary or
incident to the management of the Company's business. Each Manager shall have
unrestricted access to all books and records of the Company and the right to
copy the same; provided, however, that each Manager shall keep all information
so obtained confidential in compliance with the terms of this Agreement and all
Operating Policies. Without limiting the authority granted by this Section 5.1,
the Managers shall have power and authority, subject to the parameters set
forth in the Business Plan and the approval requirements of Section 5.10(b), on
behalf of the Company:
(a) to enter into any and all other agreements on behalf of the
Company with any other Person, in such forms as the Managers may approve;
(b) to acquire property from any Person;
(c) to borrow money for the Company from banks or other lending
institutions on such terms as the Managers deem appropriate, and in connection
with such borrowing, to hypothecate, encumber and grant security interests in
Company Property to secure repayment of the borrowed sums;
(d) to purchase liability and other insurance to protect Company
Property and the Company's operations;
(e) to hold and own any Company Property in the name of the Company;
(f) to invest any Company funds (by way of example but not
limitation) in time deposits, short-term governmental obligations, commercial
paper, stocks, bonds or other investments;
(g) to sell and lease Company Property;
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(h) to execute on behalf of the Company all instruments and
documents, including, without limitation, checks; drafts; notes and other
negotiable instruments; mortgages or deeds of trust; security agreements;
financing statements; documents providing for the acquisition, mortgage or
disposition of property; assignments; bills of sale; leases; and any other
instruments or documents necessary, in the opinion of the Managers, to the
business of the Company;
(i) to employ accountants, legal counsel, investment advisors,
managing agents or other experts to perform services for the Company and to
compensate them from Company funds;
(j) adopt Operating Policies of the Company; and
(k) to do and perform all other acts as may be necessary or
appropriate to the conduct of the Company's business.
Unless authorized to do so by this Agreement or by the Managers of the Company,
no attorney-in-fact, employee or other agent of the Company shall have any power
or authority to bind the Company in any way, to pledge its credit or to render
it liable for any purpose. No Member shall have any power or authority to bind
the Company unless the Member has been authorized by the Managers to act as an
agent of the Company in accordance with the previous sentence.
SECTION 5.2. CLASSES AND NUMBER OF MANAGERS. The Managers shall be divided
into two classes: (i) Class A Managers; and (ii) Class B Managers.
(a) CLASS A MANAGERS. The Class A Managers shall be elected by the
Class A Members, including the election of a Manager to fill a vacancy (for any
reason) in the Class A Managers. There shall be four (4) Class A Managers.
(b) CLASS B MANAGERS. The Class B Managers shall be elected by the
Class B Members, including the election of a Manager to fill a vacancy (for any
reason) in the Class B Managers. There shall be three (3) Class B Managers.
(c) COMPENSATION OF MANAGERS. Unless otherwise agreed by the
Members, Managers who are not officers of the Company will not be compensated by
the Company, and will receive their compensation (if any) solely from the Member
appointing such Manager. Managers who are officers will be compensated by the
Company in compliance with Section 6.1.
SECTION 5.3. REMOVAL. Any Manager may be removed from office only by the
Members of the same Class as the Manager that is being removed. No Member shall
have any right to remove a Manager of another Class (a class other than the
class of Members that elected such Manager).
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SECTION 5.4. REGULAR MEETINGS. A regular meeting of the Managers shall be
held without other notice than this provision, immediately after, and at the
same place as, the annual meeting of Members. The Managers shall meet no less
than two (2) times during each fiscal year of the Company. The Managers may
provide, by resolution, the time and place, whether within or without the State
of Delaware, for the holding of these two regular meetings or additional
regularly scheduled meetings without notice other than notice by such
resolution.
SECTION 5.5. SPECIAL MEETINGS. Special meetings of the Managers may be
called by or at the request of any Manager. The special meetings of the Managers
shall be held at the principal office of the Company, unless all Managers
consent to another location.
SECTION 5.6 COMPLIANCE WITH OPERATING POLICIES. The Managers will adopt and
implement Operating Policies for the Company. The Managers shall comply with all
such Operating Policies, specifically including, but not limited to, any
Operating Policy relating to the protection of confidential information or trade
secrets of the Company or any Member.
SECTION 5.7. PARTICIPATION BY TELEPHONIC MEANS. Any Manager may participate
in a meeting of the Managers by means of conference telephone or similar
communications equipment by means of which all Persons participating in the
meeting can hear and speak to each other at the same time or in sequence, and
participation in a meeting pursuant to this provision shall constitute presence
at the meeting.
SECTION 5.8. NOTICE. Notice of any special meeting of the Managers shall be
given at least ten (10) days prior thereto in the manner specified in Section
17.1. Such notice shall be deemed to be delivered at the time specified in
Section 17.1. Any Manager may waive notice of any meeting. The attendance of a
Manager at any meeting shall constitute a waiver of notice of such meeting,
except where a Manager attends a meeting for the express purpose of objecting to
the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular meeting of the Managers need be specified in the notice or waiver of
notice of such meeting. The purpose of any special meeting of the Managers must
be specified in the notice or waiver of notice of such special meeting.
SECTION 5.9. QUORUM. A quorum for the transaction of business at any
meeting of the Managers, shall consist of a not less than five (5) Managers. If
a quorum is not present at said meeting, a majority of the Managers present may
adjourn the meeting from time to time without further notice.
SECTION 5.10. MANNER OF ACTING.
(a) Except as provided by Section 5.10(b) below or by the Act, the
affirmative vote of a majority of the Managers present at a meeting at which a
quorum is present shall be required for any act of the Managers.
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(b) Notwithstanding Section 5.10(a) above, Super-Majority Approval
of the Managers shall be required for:
(1) the approval of the Initial Business Plan and any
subsequent Business Plan, or any change to the parameters contained in any
Business Plan including the authority granted in Section 6.4;
(2) any change in the Distribution Policy;
(3) extension of any one or series of loans to any third
Person, or the guarantee of payment or performance of any third Person, other
than in the ordinary course of the Company's business;
(4) surrendering or abandoning any property, tangible or
intangible, or any rights thereunder having a value in excess of fifty thousand
dollars ($50,000) other than in the ordinary course of the Company's business;
(5) the borrowing of money or issuance of debt not reflected
in the Business Plan, or the creation of any liens or encumbrances on any asset
of the Company in excess of fifty thousand dollars ($50,000), other than
purchase-money liens in connection with the Company's ordinary course of
business or liens arising by operation of law;
(6) the institution, termination, or settlement of any
litigation with any third Person where the amount in controversy exceeds fifty
thousand dollars ($50,000), or the retention of counsel in connection therewith;
(7) any amendment to the Certificate of Formation or this
Agreement;
(8) the issuance of any additional Interest in the Company;
(9) any transaction involving: (i) a sale or lease of a
material amount of the Company's assets; (ii) a material purchase of another
business or other material acquisition; (iii) an appointment or termination of a
sales organization or agents (other than the Company or General Cable
Industries, Inc. and its agents) for selling the Company's Products; (iv) a
voluntary termination of, or a material amendment to, any Related Agreement;
(v) a material change in the scope or conduct of the Business of the Company
from that as of the date of this Agreement; (vi) a decision to permit the sales
force of the Company to compete with the sales force of the Class B Member;
(vii) a material change in an employee pension, retirement or welfare plan of
the Company; or (viii) entering into or the termination of any material
agreement between the Company and any Member or an Affiliate of a Member, other
than a Related Agreement (it being understood that the Company may not
voluntarily terminate any of the Related Agreements without Super-Majority
Approval);
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<PAGE> 15
(10) any material change in the tax or accounting policies of
the Company or the adoption of new tax or accounting policies;
(11) the approval of any transaction where the Company is
party to a written agreement by which the Company agreed that it would not take
certain specified action without Super-Majority Approval;
(12) the approval of any action taken by the Managers under
Section 14.2(b);
(13) the approval of Company guidelines (including the
amendment or termination thereof) for the Company's export of optical fiber
cables for open architecture networking applications (i) intra-building and (ii)
inter-building in a customer campus setting outside the Territory; or
(14) the approval of any change in the management incentive
plan or plans of the Company or the adoption of any new plan.
SECTION 5.11. INFORMAL ACTION. Any action required or permitted to be
taken at a meeting of the Managers, or any action which may be taken at a
meeting of the Managers, may be taken without a meeting if a consent, in
writing, setting forth the action so taken shall be signed by all of the
Managers, and included in the minutes or filed with the Company records. Such
consent shall have the same effect as a unanimous vote.
ARTICLE 6
OFFICERS
---------
SECTION 6.1. NUMBER, TITLE AND COMPENSATION. The officers of the Company
shall consist of: (i) a President and Chief Executive Officer; (ii) a Chief
Financial Officer; and (iii) such other officers and assistant officers as the
Managers may from time to time determine. The officers shall conduct the
Company's day to day affairs and such other matters as determined by the
Managers. The Managers may establish the amount of compensation for the officers
of the Company.
SECTION 6.2. ELECTION AND TERM OF OFFICE.
(a) The President and Chief Executive Officer of the Company shall
be one the Class A Managers of the Company and shall be elected by the Class A
Members in the same manner as the election of the Class A Managers, subject to
the approval of the Managers. The initial President and Chief Executive Officer
shall be Crawford L. Cutts. The Class A Members shall not remove or replace the
President and Chief Executive Officer without the consent of the Class B
Members, which shall not unreasonably withhold or delay such consent.
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(b) The Chief Financial Officer of the Company shall be one of the
Class B Managers of the Company and shall be elected by the Class B Members in
the same manner as the election of the Class B Managers, subject to the approval
of the Managers. The initial Chief Financial Officer shall be John M. LaVitola.
The Class B Members shall not remove or replace the Chief Financial Officer
without the consent of the Class A Members, which shall not unreasonably
withhold or delay such consent.
(c) Except as specified in Sections 6.2(a) and 6.2(b) above, the
officers of the Company shall be elected at such frequency as determined by the
Managers, and each officer shall hold office until his or her successor shall
have been duly elected and shall have qualified or until his or her death or
until he or she shall resign or shall have been removed from office in the
manner hereinafter provided.
SECTION 6.3. REMOVAL. Any officer elected by the Managers under Section
6.2(c) may be removed by the Managers at any time, with or without cause, but
such removal shall be without prejudice to the contract rights, if any, of the
Person so removed. Election or appointment of an officer or agent shall not of
itself create contractual rights.
SECTION 6.4. AUTHORITY. Unless the Managers specify otherwise, the
officers of the Company shall have the authority to take actions under the
Business Plan with respect to matters therein having numerical quantitative
performance or spending targets or objectives that are ten percent (10%) above
or below the specified targets. When a change beyond those parameters is
proposed or when a matter is not described in the Business Plan, the matter
shall require Super-Majority Approval of the Managers then in office.
ARTICLE 7
ALLOCATIONS
-----------
SECTION 7.1 CAPITAL ACCOUNTS. The Members agree that each Member has
contributed assets to the Company of equal value and have equal Capital Accounts
on the date of this Agreement. No Member will make additional Capital
Contributions without the consent of the other Member. Except as otherwise
provided, the Members intend to have Profits and Losses allocated equally to
each Member.
SECTION 7.2 SPECIAL ALLOCATIONS. In the event any Member has a deficit
Capital Account in excess of the amount of the deficit the Member has agreed to
restore at the end of any Company fiscal year, each such Member shall be
specially allocated items of Company income and gain in the amount of such
excess deficit as quickly as possible, provided that an allocation pursuant to
this Section 7.2(a) shall be made if and only to the extent that such Member
would have a deficit Capital Account in excess of such sum after all other
allocations provided for in this Article 7 have been tentatively made as if this
Section 7.2(a) were not in this Agreement.
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SECTION 7.3 ALLOCATION OF PROFITS AND LOSSES.
(a) PROFITS. After giving effect to the special allocations set
forth in Section 7.2 hereof, Profits for any fiscal period shall be allocated as
follows:
(1) First, to the Members in proportion to the Losses
allocated to them by Section 7.3(b)(3) until the aggregate Profits allocated to
the Members pursuant to this Section 7.3(a)(1) for such fiscal year and all
previous fiscal years is equal to the aggregate Losses allocated to the Members
pursuant to Section 7.3(b)(3) for all previous fiscal years.
(2) Second, to the Members in proportion to the Losses
allocated to them by Section 7.3(b)(2) until the aggregate Profits allocated to
the Members pursuant to this Section 7.3(a)(2) for such fiscal year and all
previous fiscal years is equal to the aggregate Losses allocated to the Members
pursuant to Section 7.3(b)(2) for all previous fiscal years.
(3) Third, to the Members in proportion to the Losses
allocated to them by Section 7.3(b)(1) until the aggregate Profits allocated to
the Members pursuant to this Section 7.3(a)(3) for such fiscal year and all
previous fiscal years is equal to the aggregate Losses allocated to the Members
pursuant to Section 7.3(b)(1) for all previous fiscal years.
(4) The balance, if any, shall be allocated among the Members
based upon their Percentage Interest.
(b) LOSSES. After giving effect to the special allocations set forth
in Sections 7.2 hereof, Losses for any fiscal period shall be allocated as
follows:
(1) First, among the Members based upon their Percentage
Interest, except that losses shall not be allocated pursuant to this Section
7.3(b)(1) to the extent such allocation would cause any Member to have an
Adjusted Capital Account Deficit at the end of such fiscal year.
(2) Second, any Loss that cannot be allocated to any Member
because it would create an Adjusted Capital Account Deficit shall be allocated
to other Members for whom the allocation would not create an Adjusted Capital
Account Deficit based upon their Percentage Interest.
(3) Notwithstanding Sections 7.3(b)(1) and 7.3(b)(2), if both
Members have an Adjusted Capital Account Deficit, Losses will be allocated in
accordance with their respective Percentage Interest.
SECTION 7.4 MINIMUM GAIN CHARGEBACK PROVISIONS. Notwithstanding any other
provision of this Agreement, the following allocations shall be made prior to
any other allocation under this Agreement.
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<PAGE> 18
(a) If there is a net decrease in Company Minimum Gain during any
fiscal year so that an allocation is required by Regulations Section
1.704-2(f)(1), items of income and gain shall be allocated to Members in the
manner and to the extent required by such provision of the Regulations
(provided, however, that any reference to a partner in the Regulations shall be
deemed to refer to a Member). This provision is intended to be a minimum gain
chargeback within the meaning of Regulations Section 1.704-2(f) and shall be
interpreted and applied consistently therewith.
(b) If there is a net decrease in Member Nonrecourse Debt Minimum
Gain attributable to a Member Nonrecourse Loan during any fiscal year so that an
allocation is required by Regulations Section 1.704-2(i)(4), items of income and
gain shall be allocated in the manner and to the extent required by such
provision of the Regulations (provided, however, that any reference to a partner
in the Regulations shall be deemed to refer to a Member).
(c) Any Member Nonrecourse Deduction, as defined in Regulations
Section 1.704-2(i)(2) (substituting the word Member for any references therein
to a partner) shall be allocated to the Member who bears the economic risk of
loss with respect to the loan giving rise to such deduction within the meaning
of Regulations Section 1.752-2(a).
(d) For purposes of calculating the Members' shares of "excess
nonrecourse liabilities" of the Company (within the meaning of Regulations
Section 1.752-3(a)(3)), the Members intend that they be considered as sharing
the profits of the Company in proportion to their respective Percentage
Interests.
SECTION 7.5 TAX ALLOCATIONS: CODE SECTION 704(c). In accordance with Code
Section 704(c) and the Regulations thereunder, income, gain, loss and deduction
with respect to any property contributed to the capital of the Company shall,
solely for tax purposes, be allocated among the Members so as to take account of
any variation between the adjusted basis of such property to the Company for
Federal income tax purposes and its initial Gross Asset Value.
In the event the Gross Asset Value of any Company asset is adjusted,
subsequent allocations of income, gain, loss and deduction with respect to such
asset shall take account of any variation between the adjusted basis of such
asset for Federal income tax purposes and its Gross Asset Value, as adjusted, in
the same manner as under Code Section 704(c) and the Regulations thereunder,
including Regulations Section 1.704-1(b)(4)(i).
Any elections or other decisions relating to such allocations shall be
made by the Managers in any manner that reasonably reflects the purpose and
intention of this Agreement. Allocations pursuant to this Section 7.5 are solely
for purposes of Federal, state and local taxes and shall not affect, or in any
way be taken into account in computing, any Member's Capital Account, share of
Profits, Losses, and other items, or distributions pursuant to any provision of
this Agreement.
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SECTION 7.6 OTHER ALLOCATION RULES.
(a) In the event additional Members are admitted to the Company on
different dates during any fiscal year, or their interests in the Company
otherwise vary during the year, the Profits or Losses shall be allocated to the
1Members in accordance with Section 706 of the Code, using any convention
permitted by law and selected by the Managers by majority vote.
(b) For purposes of determining the Profits, Losses or any other
items allocable to any period for which this Section 7.6 is applicable, Profits,
Losses and any such other items shall be determined on a daily, monthly, or
other basis, as determined by the Managers using any permissible method under
Section 706 of the Code and the Regulations thereunder.
(c) Except as otherwise provided in this Agreement, all items of
Company income, gain, loss, deduction and any other allocations not otherwise
provided for shall be divided among the Members in the same proportions as they
share Profits or Losses for the year.
ARTICLE 8
DISTRIBUTIONS
-------------
SECTION 8.1 DISTRIBUTIONS TO MEMBERS.
(a) Under the terms of the Company's original Distribution Policy,
the Company shall distribute all of its Excess Cash. The Company's Distribution
Policy may be amended or revised from time to time in compliance with this
Agreement. Distributions to Members shall be made in accordance with the
Distribution Policy and be based upon their respective Percentage Interest as of
the record date for a distribution
(b) Distributions for other purposes will be made not later than
ninety (90) days after the end of each fiscal year, in amounts specified in the
then current Distribution Policy, provided that the amount of the distributions
do not exceed the amount of the Excess Cash.
SECTION 8.2 LIMITS ON DISTRIBUTIONS TO MEMBERS.
(a) The Company may make distributions in kind (other than in cash)
to any Member only with the consent of the distributee and the other Member(s).
(b) The Company shall not make any distribution to Members, if after
giving effect to the distribution, the Company's liabilities would exceed the
fair value of the Company's assets. For such purposes, the Company's liabilities
to Members on account of their Interests in the Company shall be disregarded
(i.e., not counted as liabilities of the Company).
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ARTICLE 9
NON-COMPETITION
---------------
SECTION 9.1 NON-COMPETITION. Each Member agrees (i) that the Company has
been organized to be the exclusive means of conducting the Business in the
Territory; (ii) to commit support to the Company's Business for the duration of
this Agreement; and (iii) that it would not have been willing to enter into this
Agreement if the other Member and its Affiliates did not agree to, and agree to
cause its Affiliates to comply with, the terms of the Non-Competition Agreement,
one of the Related Agreements as defined herein. Each Member shall comply and
will cause its Affiliates to comply with the terms of the Non-Competition
Agreement, and will not permit any of its Affiliates to, engage, alone or in
association with any other Person, in the Business in the Territory, in
violation of the Non-Competition Agreement.
ARTICLE 10
TRANSFER OR ASSIGNMENT OF A MEMBER'S INTEREST
---------------------------------------------
SECTION 10.1 GENERAL RESTRICTIONS ON TRANSFER OR ASSIGNMENT. During the
term of this Agreement, no party may transfer or assign, voluntarily or
involuntarily, any right in any Interest in the Company, except as expressly
provided herein. Any purported transfer or assignment of any Interest in the
Company that does not strictly comply with the requirements of this Agreement is
null and void.
SECTION 10.2 NO PLEDGE OR ENCUMBRANCE. No Member may pledge, mortgage, or
otherwise encumber any Interest in the Company as security for the payment of
any sum or the performance of any obligation of any person or party without the
prior written consent of the other Member.
SECTION 10.3 PERMITTED TRANSFERS. After a Member receives notice that the
other Member plans to take any voluntary action which would be an Event of
Withdrawal under items (b) through (f) of the definition of an Event of
Withdrawal in Section 12.1, the Member receiving the notice shall have the right
to freely assign and transfer all of its incidents of ownership of a five
percent (5 %) Interest in the Company, without the prior written consent of the
other Member.
SECTION 10.4 INITIAL TWELVE MONTH PERIOD.
(a) The Class A Member shall not unilaterally exercise any right to
terminate or dissolve the Company during the twelve (12) months following the
effective date of the first Limited Liability Company Agreement of the Company
unless the Class B Member or General Cable Corporation is in Bankruptcy or
creates an Irreconcilable Difference under item (ii) of the definition of an
Irreconcilable Difference (i.e., insolvency or Material Breach), and then, only
if the Class A Member, SpecTran and their respective Affiliates are not in
Material Breach.
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(b) The Class B Member shall not unilaterally exercise any right to
terminate or dissolve the Company during the twelve (12) months following the
effective date of the first Limited Liability Company Agreement of the Company
unless (A) the Class A Member, SpecTran or a relevant Affiliate is in
Bankruptcy, or (B) the Class A Member, SpecTran or a relevant Affiliate creates
an Irreconcilable Difference under item (i) of the definition of an
Irreconcilable Difference (i.e., insolvency or Material Breach), and then, only
if the Class B Member, General Cable Corporation, and their respective
Affiliates are not in Material Breach.
SECTION 10.5 PURCHASE OPTIONS.
(a) In the event of: (A) the insolvency of the Class B Member,
General Cable Corporation, or any relevant Affiliate, or a Material Breach by
the Class B Member, General Cable Corporation, or any relevant Affiliate, (B)
the occurrence of any Irreconcilable Difference, other than an Irreconcilable
Difference under item (i) of the definition of an Irreconcilable Difference
(i.e., insolvency or Material Breach of the Class A Member or SpecTran), after
one year from the date hereof, or (C) the occurrence of an Event of Withdrawal
of the Class B Member other than with the consent of the Class A Member; the
Class A Member shall have the option, which must be exercised by the delivery to
the Class B Member of written notice of its intent to exercise its option, and
by the exercise of such option within sixty (60) days after the occurrence of
such Irreconcilable Difference (the "Option Period"), to be assigned all and not
less than all of the Interest of the Class B Member at the Option Price. The
Option Period will automatically be extended for the period necessary to
establish the Option Price.
(b) In the event of: (A) the Bankruptcy or insolvency of the Class A
Member, SpecTran, or any relevant Affiliate, (B) a Material Breach by the Class
A Member, SpecTran or any relevant Affiliate, or (C) the Class A Member's
failure to exercise, within the Option Period, its option to acquire an
assignment of the Interest of the Class B Member pursuant to Section 10.5(a);
the Class B Member shall have the option to acquire an assignment of all and not
less than all of the Interest of the Class A Member at the Option Price. Such
option must be exercised by the delivery to the Class A Member of written notice
of its intent to exercise its option, and by the exercise of such option within
thirty (30) days after the Class B Member is notified of its option under this
Section 10.5(b) or the expiration of the Option Period.
(c) The term "Option Price" on a given date shall mean the "Fair
Value" of the Company multiplied by the Percentage Interest at issue in the
transaction. For this purpose, the Fair Value of the Company shall be the fair
market value of the Company as a going concern on the day before the
Irreconcilable Difference arose, determined by one or more "Appraisers" as
specified below. For purposes of this definition, "Appraiser" shall mean an
investment banking firm, accounting firm, or other firm which is qualified to
determine the value of a business like the Company, and which is unrelated to
the Company and its Members. The purchasing Member and the assigning Member
shall each promptly hire an Appraiser to determine the Fair Value of the Company
as a going concern on the day before the occurrence
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of the Irreconcilable Difference. The Members will then exchange these appraisal
reports. If the Fair Value of the Company in the two reports does not differ by
more than five percent, the Fair Value of the Company shall be the average of
the values of the Company specified in such reports. If the Fair Value of the
Company in the reports differs by more than five percent (5%), the Members
shall jointly select a third Appraiser (familiar with the industry, but with no
connection or business relationship with either of the Members or their
Affiliates) who will review the valuation reports, decide which report more
accurately reflects the Fair Value of the Company, and notify the Company and
the Members of such determination promptly and, in any event, within thirty (30)
days of his appointment, and the value established by such report shall be the
Fair Value of the Company.
SECTION 10.6 CHANGE OF CONTROL. In the event of: (i) a Change of Control of
SpecTran, or (ii) a Change of Control of General Cable Corporation; the parties
agree to the following procedure for the assignment of an Interest of the
Company.
(a) Effective upon a Change of Control of SpecTran, the Class A
Member shall cause the Person(s) that will own or control the Class A Member as
a result of the transactions that result in such Change of Control (the
"Acquirer") to agree, in writing for the benefit of the Class B Member, to
comply or cause the Acquirer and the Class A Member to comply with the bid
process set forth in Section 10.6(b) as required at the election of the Class B
Member by notice given within forty-five (45) days after the Change of Control.
(b) After a Change of Control of SpecTran, the Class B Member may
require the Acquirer to follow the bid process in this Section 10.6(b) by
providing notice to the Class A Member that the Class B Member will elect to
require the Acquirer to follow the bid process in this Section 10.6(b). Within
fifteen (15) days after the Class A Member's receipt of such notice, the
Acquirer first shall irrevocably offer in writing to acquire an assignment of
all and not less than all of the Interest of the other Member at a price and on
terms determined by the Acquirer. Thereafter, by delivery of written notice
within ten (10) days after its receipt of such initial offer, the other Member
shall either: (i) accept such offer; or (ii) offer to acquire by assignment all
and not less than all of the Interest of the Acquired Member at a price which
is greater than the previous offer under this Section 10.6(b) by the greater of
(A) one million dollars ($1,000,000), or (B) five percent (5%) of the amount of
the previous offer. If the other Member shall have offered to acquire by
assignment all and not less than all of the Interest of the Acquired Member, the
Acquirer shall, within ten (10) days of its receipt of such offer, either: (I)
accept such offer; or (II) offer to acquire by assignment all and not less than
all of the Interest of the other Member at a price which is greater than the
previous offer under this Section 10.6(b) by the greater of (A) one million
dollars ($1,000,000), or (B) five percent (5%) of the amount of the previous
offer. The parties shall continue such process until the highest bid for an
Interest of a Member is made.
(c) In the event of a Change of Control of General Cable
Corporation, the Class A Member shall have no right to purchase the Class B
Member's interest as a result thereof, but shall retain its rights under Section
10.5(a) to acquire an assignment of all and not
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<PAGE> 23
less than all of the Interest of the Class B Member at the Option Price in the
circumstances specified in Section 10.5(a).
SECTION 10.7 ASSIGNMENT OF INTERESTS TO THIRD PARTIES.
(a) Except as otherwise specifically provided in this Agreement, the
assignment by any Member of any of its Interest in the Company to any third
Person shall require the prior written consent of the other Member to the terms,
conditions and provisions of such assignment, which consent may be withheld in
the sole discretion of such other Member.
(b) If any third Person which was not originally a Member shall be
permitted to acquire any Interest (including an assignment) in the Company from
a Member, the Interest in the hands of such third Person shall be subject to the
same rights of purchase or sale as hereinabove set forth as if such Interest was
still owned by the original Member. The foregoing sentence shall apply to each
subsequent assignee or transferee of such third Person, and any required sale
under this Article 10 shall be enforceable against each successor, assignee or
transferee who acquires any Interest in the Company owned by the original
Member.
SECTION 10.8 CLOSING UNDER ARTICLE 10.
(a) Any closing pursuant to this Article 10 shall take place at the
offices of the Company. A closing shall take place within ten (10) days of: (i)
the exercise of the purchase right under Section 10.5(a) or 10.5(b) and
determination of the Option Price as specified in the definition of that term;
or (ii) the acceptance of the price and terms of the purchase under Section
10.6(b) hereof. In cases where the price is the Option Price, the closing may be
delayed until the Option Price is established.
(b) Except as specified below in this Section 10.8(b), at the
closing, the assignee or transferee shall pay the full amount of the purchase
price by official bank check, wire transfer in immediately available funds or
other agreed method. In all cases the assigning or transferring Member shall
execute such documents of transfer reasonably requested by the purchaser or
assignee. Payment in full at closing shall not be required for:
(1) a purchase under Section 10.5(a) when the Class B Member
has caused the Irreconcilable Difference or the Event of Withdrawal, in which
case, the Class A Member may pay the purchase price by payment at closing of no
less than twenty percent (20%) of the price at closing, with the balance
financed by the Class B Member and paid over a period not greater than three (3)
years from the date of purchase in three (3) equal annual installments of
thirty-three and one-third percent (33-1/3%) each, with the first installment
due one year after closing, with interest payable on the dates principal
payments are due at a rate equal to the Borrowing Rate on the unpaid principal
balance, with the Class A Member having an option to prepay at any time, and
with the assets of the Company and the Interest being assigned being pledged as
security for payment of the Option Price, accrued interest and costs of
collection under a security agreement acceptable to the seller; or
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<PAGE> 24
(2) a purchase under Section 10.5(a) when the cause of the
Irreconcilable Difference or the Event of Withdrawal cannot be attributed to
either Member, in which case, the Class A Member may pay the purchase price by
payment at closing of not less than twenty percent (20%) of the price at closing
with the balance financed by the Class B Member and paid over period not greater
than one year with an option to prepay, with interest at a rate equal to the
Borrowing Rate on the unpaid principal balance, and with the assets of the
Company and the Interest being assigned being pledged as security for payment of
the Option Price, accrued interest and costs of collection under security
agreement acceptable to the seller.
(c) The "Borrowing Rate" shall be an annual interest rate equal to
three percent (3%) in excess of the highest then outstanding borrowing rate of
SpecTran.
SECTION 10.9 POST-CLOSING SUPPORT AGREEMENTS. From and after the
acquisition of an assignment of any Interest in the Company pursuant to this
Article 10, the parties will agree to adhere to support agreements set forth in
the Fiber Supply Agreement and the Product Purchase Agreement during the
eighteen month period following such assignment.
SECTION 10.10 PARTICIPANT BECOMING A MEMBER. A Participant who becomes the
owner or assignee of any Interest in the Company may not exercise any management
rights of a Member unless the Participant becomes a Member upon compliance with
the following conditions:
(a) The remaining Members holding a majority of the outstanding
Percentage Interest, in their sole discretion, consent in writing to the
admission of the Participant as a Member.
(b) The Participant executes such instruments as the Managers may
deem necessary or desirable to effect such admission, and the Participant agrees
to pay all reasonable expenses in connection with such admission.
ARTICLE 11
LlMITATION OF LIABILITY AND INDEMNIFICATION
-------------------------------------------
SECTION 11.1 LIMITATION OF LIABILITY. No Manager or officer of the Company
shall have any liability to the Company or the Members for any losses sustained
or liabilities incurred as a result of any act or omission of such Manager or
officer if (i) the Manager or officer acted in good faith and in a manner he or
she reasonably believed to be in, or not opposed to, the interests of the
Company and (ii) the conduct of the Manager or officer did not constitute actual
fraud, gross negligence, or willful misconduct.
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SECTION 11.2 INDEMNIFICATION.
(a) The Company shall indemnify and hold harmless the Managers and
officers of the Company (individually, an "Indemnitee") from and against any and
all losses, claims, demands, costs, damages, liabilities, expenses of any nature
(including reasonable attorneys' fees and disbursements), judgments, fines,
settlements, and other amounts arising from any and all claims, demands,
actions, suits, or proceedings, civil, criminal, administrative, or
investigative, in which an Indemnitee may be involved, or threatened to be
involved, as a party or otherwise, arising out of or incidental to the business
of the Company, regardless of whether an Indemnitee continues to be a Manager or
officer at the time any such liability or expense is paid or incurred, if (i)
the Indemnitee acted in good faith and in a manner it or he or she reasonably
believed to be in, or not opposed to, the interests of the Company, and, with
respect to any criminal proceeding had no reason to believe his or her conduct
was unlawful and (ii) the Indemnitee's conduct did not constitute actual fraud,
gross negligence or willful misconduct.
(b) Expenses incurred by an Indemnitee in defending any claim,
demand, action, suit, or proceeding subject to this Section 11.2, at the
Company's election, may be advanced by the Company prior to the final
disposition of such claim, demand, action, suit, or proceeding upon receipt by
the Company of an undertaking by or on behalf of the Indemnitee to repay such
amounts if it is ultimately determined that such person is not entitled to be
indemnified as authorized in this Section 11.2. The indemnification provided by
this Section 11.2 shall be in addition to any other rights to which an
Indemnitee may be entitled under any agreement, consent of the Members, as a
matter of law or equity, or otherwise, shall continue as to an Indemnitee who
has ceased to serve in such capacity and shall inure to the benefit of the
heirs, successors, assigns and administrators of the Indemnitee. Subject to the
foregoing sentence, the provisions of this Section 11.2 are for the benefit of
the Indemnitees and shall not be deemed to create any rights for the benefit of
any other persons.
(c) The Company may maintain insurance, at its expense, to protect
itself and any Manager, officer, employee or agent of the Company or another
enterprise against any expense, liability or loss, whether or not the Company
would have the power to indemnify such Person against such expense, liability or
loss under the Act.
ARTICLE 12
WITHDRAWAL OF A MEMBER
-----------------------
SECTION 12.1 EVENT OF WITHDRAWAL DEFINED. For purposes of this Agreement,
the term "Event of Withdrawal" shall mean any of the following events:
(a) A Member ceases to be a Member of the Company because the Member
has withdrawn from the Company and resigned as a Member with the approval of the
other Members as required under Section 3.4;
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(b) the Class A Member or SpecTran or any of its Affiliates that is
a party to a Related Agreement is in Bankruptcy, or the Class B Member or
General Cable Corporation or any of its Affiliates that is a party to a Related
Agreement is in Bankruptcy;
(c) In the case of a Member or any of its Affiliates that is a party
to a Related Agreement that is a partnership, the dissolution and commencement
of winding up of the partnership;
(d) In the case of a Member or any of its Affiliates that is a party
to a Related Agreement that is a trustee or is acting as a Member by virtue of
being a trustee of a trust, the termination of the trust (but not merely the
substitution of a new trustee);
(e) In the case of a Member or any of its Affiliates that is a party
to a Related Agreement that is a corporation, the filing of a certificate of
dissolution, or its equivalent, for the corporation or the revocation of its
charter; or
(f) In the case of a Member or any of its Affiliates that is a party
to a Related Agreement that is a separate limited liability company, the
dissolution and commencement of winding up for the separate limited liability
company.
SECTION 12.2 TERMINATION. Upon the occurrence of an Event of Withdrawal of
a Member, the Company shall be dissolved, wound up and terminated, unless,
within ninety (90) days after the Event of Withdrawal, the other Members
representing a majority of the Percentage Interest consent in writing to the
continuance of the Company.
ARTICLE 13
PROVISIONS APPLICABLE TO ALL
ASSIGNMENTS AND TRANSFERS
-------------------------
SECTION 13.1 SECTION 6050K. Upon the transfer of any Company Interest
governed by Section 6050K of the Code, the transferor or assignor must provide
to the Company the information set forth in Section 6050K of the Code, and the
Company shall furnish the required information to the Internal Revenue Service,
the transferor and the transferee as required by such section.
ARTICLE 14
TERMINATION OF THE COMPANY
--------------------------
SECTION 14.1 EVENTS CAUSING TERMINATION. The Company shall dissolve, wind
up and terminate upon the first to occur of the following:
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(a) the occurrence of an Event of Withdrawal, unless the business of
the Company is continued as provided in Article 12;
(b) upon the unanimous written consent of the Members;
(c) the insolvency of the Company;
(d) the number of Members is less than two (2), unless a single
remaining Member elects to continue the existence of the Company as provided in
Section 12.2;
(e) the Company's failure to obtain financing (after the Members' good
faith efforts to obtain such financing) for the benefit of the Company to meet
working capital needs of the Business as set forth in the Business Plan for any
fiscal year;
(f) SpecTran Communication Fiber Technologies, Inc. terminates the
Fiber Supply Agreement with respect to a particular Product (as defined therein)
and such termination materially impairs the Company's ability to meet the
objectives outlined in the Business Plan, as provided in Section 14 (Product
Discontinuance) of the Fiber Supply Agreement; or
(g) the Company terminates the Product Purchase Agreement with respect
to a particular Product (as defined therein) and such termination materially
impairs the Company's ability to meet the objectives outlined in the Business
Plan, as provided in Section 10 (Product Discontinuance) of the Product Purchase
Agreement.
SECTION 14.2 PROCEDURE ON TERMINATION. Upon the occurrence of an Event of
Withdrawal, one or more Managers shall proceed to liquidate and wind up the
business of the Company. Upon the winding up of the Company, the business of the
Company may be continued in order to maximize the Company's value as a going
concern for eventual sale. The Managers, in lieu of selling all or any of the
Company assets, may convey undivided interests in all or any of the assets to
the Members or distribute the assets in kind to one or more of the Members
provided that the distribution in kind has received the unanimous approval of
the Members.
The Company assets and the proceeds of any liquidation sale shall be
applied and distributed at the closing of any sale in the following order of
priority:
(a) To the payment of all debts and liabilities of the Company and all
expenses of liquidation;
(b) To the setting up of such reserves as the Managers may deem
necessary for any contingent liabilities of the Company. Any reserves shall be
deposited with an escrowee, to be applied to the discharge of any contingent
liabilities, and, at the expiration of whatever period the Managers may deem
advisable, the balance shall be distributed as provided in clause (c) below; and
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(c) The balance, if any, shall be distributed to the Members in
accordance with and in proportion to, the positive balances in their respective
Capital Accounts, as determined after taking into account all Capital Account
adjustments for the fiscal year during which such liquidation occurs.
SECTION 14.3 RIGHTS OF MEMBERS. Except as otherwise provided in this
Agreement, each Member shall look solely to the assets of the Company for the
return of his Capital Contribution and shall have no right or power to demand or
receive property other than cash from the Company. No Member shall have priority
over any other Member as to the return of his Capital Contributions,
distributions or, except as provided in Article 7 hereof, allocations.
ARTICLE 15
ARBITRATION OF DISPUTES
-----------------------
SECTION 15.1 ARBITRATION.
(a) Except as otherwise provided in this Agreement, if a Member (the
"Notifying Member") believes the other Member or any of its Affiliates that is a
party to a Related Agreement has committed a Material Breach, it shall serve
notice on the other Member or Affiliate (the "Recipient") describing the
Material Breach. Within ten (10) days, the Recipient will inform the Notifying
Member whether it acknowledges or denies that the Material Breach occurred. If
the Recipient acknowledges that a Material Breach occurred, then, except as
otherwise provided in this Agreement or in a Related Agreement, the parties will
determine within thirty (30) days what the cure will be and how much time will
be necessary, to implement that cure; provided that the parties will, whenever
practicable, implement a cure within such thirty (30) day period. If the
Recipient denies that a Material Breach occurred, then the Members and any
Member's Affiliates that is a party to a Related Agreement at issue will proceed
to arbitration.
(b) In case of arbitration, it will be held in Wilmington, Delaware in
accord with the rules of the American Arbitration Association, Wilmington,
Delaware ("AAA"). The law applied will be the law of Delaware without reference
to conflicts to laws provisions. There will be one arbitrator appointed either
by the parties or the AAA. The parties acknowledge and agree that the time
period from the giving of the initial notice describing a Material Breach to a
decision on the cure for a Material Breach found by the arbitrator will be no
more than sixty (60) days. Subject to a different allocation of time as may be
agreed by the parties, the parties agree that there will be a twenty-five (25)
day period beginning on the day after the day on which the Material Breach is
denied during which the arbitrator will be appointed and the parties will
conduct discovery. In that period, each party will make available to the other
documents, information and personnel for discovery purposes as requested that
are relevant to the issue. The arbitrator will hear the evidence and make a
determination in the next fifteen (15) days, unless it would work a substantial
injustice to a party. The arbitrator has the power to determine if a Material
Breach has occurred. If the arbitrator determines that a Material Breach did
occur,
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<PAGE> 29
then the parties will determine within twenty (20) days what the cure will be
and how much time will be necessary to implement that cure.
(c) In the event that any claim or dispute is submitted to
arbitration, the non-prevailing party to the arbitration shall pay all expenses
of the arbitration and all reasonable expenses incurred by the prevailing party
in connection with such arbitration, including but not limited to, reasonable
attorneys' fees.
(d) If a Member acknowledges that it is in Material Breach or if the
arbitrator determines that a Material Breach did occur, but the parties cannot
agree upon the cure and the period to implement such a cure within twenty (20)
days of the acknowledgment of the Material Breach or the decision of the
arbitrator, then the parties shall each submit their proposal for a cure to the
Material Breach to the arbitrator, who will determine which of the two proposals
is most appropriate. The decision of the arbitrator shall be binding upon the
parties and shall be final and nonappealable.
SECTION 15.2 REMEDIES UNDER THE NON-COMPETITION AGREEMENT. The provisions
of foregoing Section 15.1 shall not apply to limit any remedies available under
the Non-Competition Agreement and the Standstill Agreement (as referenced in the
definition of "Related Agreements" set forth herein).
ARTICLE 16
FISCAL MATTERS
--------------
SECTION 16.1 BOOKS AND RECORDS.
-----------------
(a) The Managers shall maintain full and accurate books of the Company
at the Company's principal place of business, showing all receipts and
expenditures, assets and liabilities, profits and losses, and all other records
necessary for recording the Company's business and affairs, including those
sufficient to record the allocations and distributions provided for in Article 7
and Article 8. The books of the Company shall be kept on an accrual basis for
financial accounting and tax purposes as determined by the Managers. Each Member
and its duly authorized representatives shall at all times during regular
business hours have access to and may inspect and copy any of such books and
records.
(b) Without limiting the generality of the foregoing, (i) the Company
shall, when reasonably requested by a Member, prepare and furnish to such
Member, at the expense of the Company, such financial and other data concerning
its affairs as may be reasonably required by such Member for tax, accounting,
reporting, oversight, or other legitimate business purposes of such Member, such
information to be prepared on such basis and in such format as such Member may
reasonably specify in order to meet the requirements of its accounting, tax,
oversight, and reporting systems, or the requirements of law to which it is
subject, and (ii) the President and Chief Executive Officer of the Company shall
cause to be prepared and distributed
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to each Manager, on a periodic basis as determined by the Managers, reports with
respect to the business and operations of the Company, including such
operational and financial data (including a comparison to projected results) as
will enable the Managers to understand the financial condition and the
operations of the Company and for the Managers to exercise their authority to
manage the business of the Company.
SECTION 16.2 TAX RETURNS. The Company shall promptly provide each Member
with copies of drafts of its United States partnership income tax return. At
least twenty (20) days prior to the due date (including extensions) of the
filing of such tax return, the Company shall provide each Member with: (i) the
Company's United States partnership income tax return; (ii) statements
indicating the allocable share of each Member in the Company's items of Profits,
Losses, Depreciation, tax credits and other tax attributes flowing through to
the Members for such taxable year; and (iii) any additional information a Member
may require for the preparation for its Federal, state and local tax returns.
Any Member may review such tax return, as well as the other information
specified in the previous sentence, prior to the Company's filing of the tax
return. The Company shall consult with the Members and negotiate in good faith
to resolve any issues arising as a result of the Members' review of such tax
return. Upon the resolution of all issues the Members and the Company shall
consent to the filing of such tax return. The Members and the Company shall use
all reasonable efforts to resolve any issue in dispute as promptly as possible,
but in any event prior to the due date (including extensions) for filing of such
tax return.
SECTION 16.3 FINANCIAL STATEMENTS.
(a) As soon as practicable following the end of each fiscal
year of the Company (and in any event not later than ninety (90) days after the
end of such fiscal year), the Company shall prepare or cause to be prepared, and
deliver to each Member and each Manager, a balance sheet of the Company as of
the end of such fiscal year and the related statements of income, Members'
equity, and cash flow for such fiscal year and for the month then ended,
together with appropriate notes to such financial statements, all of which shall
be prepared in accordance with United States generally accepted accounting
principles, consistently applied, and shall be certified without qualification
by the Company's independent public accountants. The Company shall also promptly
provide each Member with copies of final drafts of all such financial statements
prepared by the by the Company's independent public accountants.
(b) As soon as practicable following the end of each calendar
month (other than the last month of the fiscal year) and in any event not later
than thirty (30) days after the end of the month, the Company shall prepare or
cause to be prepared, and deliver to each Member and each Manager a balance
sheet of the Company as of the end of such month and the related statements of
income, Members' equity, and cash flow for such month and for the fiscal year to
date, together with appropriate notes to such financial statements, all of which
shall be prepared in accordance with United States generally accepted accounting
principles, and shall be certified by the Chief Financial Officer of the
Company.
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SECTION 16.4 COMPANY YEAR. The annual accounting period of the Company for
financial accounting and tax purposes shall be the calendar year.
SECTION 16.5 COMPANY BANK ACCOUNTS. The Managers shall receive all moneys
of the Company and shall deposit the same in one or more banking accounts. All
expenditures by any Manager shall be made by checks drawn against the Company
accounts. Withdrawals from Company accounts shall be made upon the signature of
such Persons as the Managers shall authorize.
SECTION 16.6 ACCOUNTING DECISIONS. All decisions as to accounting matters,
except as specifically provided to the contrary herein, shall be made by the
Managers.
SECTION 16.7 FEDERAL INCOME TAX ELECTIONS. No Member may cause the Company
to make a Section 754 election without the consent of the other Member.
ARTICLE 17
GENERAL PROVISIONS
------------------
SECTION 17.1 NOTICES. Except as othersvise provided in this Agreement, any
and all notices, consents, waivers, requests, votes or other instruments or
communications provided for under this Agreement shall be in writing, signed by
the party giving the same and shall be deemed properly given only if such
notice is:
(i) hand delivered, in which case such notice shall be deemed received
upon such delivery;
(ii) sent via certified United States mail return receipt requested,
postage prepaid, in which case such notice such shall be deemed received on
the date of delivery as shown on the postal return receipt; or
(iii) sent by facsimile transmission requesting a return phone call or
facsimile to verify such receipt, in which case such notice shall be deemed
received on the first business day after such facsimile is sent, or if
earlier, upon receipt of the confirming phone call or facsimile.
For notices sent by mail or by facsimile, the notice must be addressed (a) in
the case of the Company, to the Company at the principal place of business of
the Company or its primary facsimile number at such place of business, (b) in
the case of any Member to such Member at its address or facsimile number set
forth in the records of the Company, and (c) in the case of any Manager to such
Manager at his or her address or facsimile number set forth in the records of
the Company. Any Member or Manager may, by notice to the Company, specify any
other address or facsimile number for the receipt of such instruments or
communications. The
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Company may, by notice to the Members and Managers, specify any other facsimile
number for the receipt of such instruments or communications.
SECTION 17.2 INTEGRATION. This Agreement, including the exhibits
incorporated by reference, embodies the entire agreement and understanding among
the Members relating to the subject matter hereof.
SECTION 17.3 APPLICABLE LAW. This Agreement and the rights of the Members
shall be governed by and construed and enforced in accordance with the laws of
the State of Delaware excluding principles of conflicts of law.
SECTION 17.4 SEPARABILITY. In case any one or more of the provisions
contained in this Agreement or any application thereof shall be invalid, illegal
or unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein and any other application thereof
shall not in any way be affected or impaired thereby.
SECTION 17.5 BINDING EFFECT. Except as herein otherwise provided to the
contrary, this Agreement shall be binding upon, and inure to the benefit of, the
Members and their respective heirs, executors, administrators, successors and
permitted assigns.
SECTION 17.6 AGREEMENT FOR FURTHER EXECUTION. At any time or times upon the
request of the Managers, the Members agree to sign and acknowledge any amendment
or cancellation as required by law, to sign and acknowledge similar certificates
or affidavits or certificates of authorization or the like (and any amendments
or cancellations thereof) required by the laws of any other jurisdiction in
which the Company does, or proposes to do, business, and cause the filing of any
of the same for record wherever such filing shall be required by law.
SECTION 17.7 CERTIFICATES. The Managers are not required to deliver or mail
a copy of the Company's Certificate of Formation, certificate of authority or
any other certificate to any of the Members.
SECTION 17.8 AUTHORITY TO AMEND. Amendments to this Agreement shall be in
writing and shall require Super-Majority Approval.
SECTION 17.9 GENDER. Wherever the context shall so require, all words
herein in a particular gender shall be deemed to include other genders where
applicable. In addition, singular words shall include the plural and plural
words shall include the singular.
SECTION 17.10 COUNTERPARTS. This Agreement may be executed in several
counterparts and all so executed shall constitute one agreement binding on all
the parties hereto, notwithstanding that all the parties are not signatory to
the original counterpart.
-28-
<PAGE> 33
IN WITNESS WHEREOF, the parties have hereunto set their hands as of the day
and year first above written.
MEMBERS
General Cable Industries, Inc.,
a Delaware coporation
By: /s/ Robert J. Siverd
------------------------------------------
Robert J. Siverd, Executive Vice President
------------------------------------------
Name Title
Applied Photonic Devices, Inc.,
a Delaware corporation
By: /s/ Glenn E. Moore
-----------------------------------
Glenn E. Moore, CEO
-----------------------------------
Name Title
-29-
<PAGE> 34
LIMITED LIABILITY COMPANY AGREEMENT
OF
GENERAL PHOTONICS, LLC
<TABLE>
EXHIBIT A
---------
<CAPTION>
MEMBERS CONTRIBUTIONS PERCENTAGE
INTEREST
CLASS A MEMBER
<S> <C> <C>
Applied Photonic Devices, Inc. $6,278,000 Fifty Percent
CLASS B MEMBER
General Cable Industries, Inc. $6,278,000 Fifty Percent
</TABLE>
-30-
<PAGE> 35
LIMITED LIABILITY COMPANY AGREEMENT
OF
GENERAL PHOTONICS, LLC
EXHIBIT B
---------
DEFINED TERMS
-------------
Capitalized words and phrases used in this Agreement have the following
meanings:
(a) "Acquirer" has the meaning specified in Section 10.6(a) of this
Agreement.
(b) "Act" means the Delaware Limited Liability Act (currently codified in
Title 6, Section 18-101 to Section 18-1107 the Delaware Code) as amended from
time to time (or any corresponding provisions of succeeding law).
(c) "Adjusted Capital Account Deficit" means, with respect to any Member,
the deficit balance, if any, in such Member's Capital Account as of the end of
the relevant accounting period, after giving effect to the following
adjustments:
(i) credit to such Capital Account any amount which such Member
is obligated to restore under Section 1.704-1(b)(2)(ii)(c)of the Regulations or
has expressly agreed to restore, as well as any addition thereto pursuant to the
next to last sentence of Sections 1.704-2(g)(1) and (i)(5) of the Regulations,
after taking into account thereunder any changes during such year in partnership
minimum gain (as determined in accordance with Section 1.704-2(d) of the
Regulations) and the minimum gain attributable to any partner nonrecourse debt
(as determined under Section 1.7042(i)(3) of the Regulations); and
(ii) Debit to such Capital Account the items described in
Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations
and shall be interpreted consistently therewith.
(d) "Affiliate" means any Person which controls, is owned by or under
common control with, the specified other Person as evidenced by ownership of or
the power to vote a majority or more of the voting stock or other evidence of
ownership of such other Person or the ability to elect or control the vote of
the majority of the board of directors or other governing body of such other
Person, or where a super-majority vote is required to confer ownership or the
power to vote such voting stock or other evidence of ownership or to elect or
control the vote of the majority of the board of directors or other governing
body of such other Person, then such super-majority vote as is required in the
case of such other Person; provided, however, that the party citing such
super-majority requirement will certify
-31 -
<PAGE> 36
to the other party that such super-majority provision (i) existed prior to its
obtaining ownership or control of stock or board representatives, and (ii) was
not enacted at the behest of such party, and provided further, that the other
party will be entitled to make a full investigation to verify such(1), including
direct contact with the third party.
(e) "Agreement" or "Limited Liability Company Agreement" means this
agreement, as amended from time to time. Words such as "herein," "hereinafter,"
"hereof," "hereto" and "hereunder," refer to this Agreement as a whole, unless
the context otherwise requires.
(f) "Bankruptcy" shall mean a Person:
(i) makes an assignment for the benefit of its creditors;
(ii) files a voluntary petition seeking relief under Title 11 of
the United States Code, as now constituted or hereafter amended, or any other
applicable federal or state bankruptcy or other similar law;
(iii) is adjudged a bankrupt or insolvent or has entered against
such Person an order for relief in a bankruptcy or insolvency proceeding;
(iv) files a petition or answer seeking for itself any
reorganization arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any statute, law, or regulation;
- - ----------
[FN]
(1) The party making a full investigation of the existence of a super-majority
provision may (a) interview Persons involved directly or indirectly in the
transaction on behalf of the acquirer, including advisors to a party hereto
or its Affiliates, and Persons acting on behalf of the acquired party after
the acquisition including personnel and advisors of the party whose stock
or interest was acquired, and (b) inspect, review (and copy and analyze)
documents relating to the transaction; provided that such other party shall
have executed and delivered a confidentiality agreement identical in form
and substance to confidentiality agreement executed by the party claiming
it is bound by such super-majority provision (or if no such confidentiality
agreement is in place, then a confidentiality agreement containing standard
and customary terms and conditions). The party claiming it is bound by such
super-majority provision shall have the obligation to use reasonable
efforts to make people available for such interviews and to make documents
available for such inspections.
-32-
<PAGE> 37
(v) files an answer or other pleading admitting or failing to
contest the material allegation of a petition filed against such Person in any
proceeding in the nature described in item (iv) above;
(vi) seeks, or consents to or acquiesces in the appointment of a
trustee, receiver or liquidator of the Person of all or any substantial part of
its properties.
(g) "Borrowing Rate" has the meaning specified in Section 10.8(c) of this
Agreement.
(h) "Business" shall mean operations of the Company as defined herein and
as updated or supplemented from time to time as provided in this definition
below. The Business of the Company shall initially consist of the following:
(i) the development, manufacture, and marketing of optical fiber
cables for open architecture networking applications (i) intra-building and (ii)
inter-building in a customer campus setting in the Territory;
(ii) manufacturing and marketing of (a) OEM-specified/proprietary
and/or branded optical fiber cables or connectorized optical fiber cable
assemblies used to interconnect those OEM components, subsystem or systems, (b)
optical fiber cables used to monitor or control manufacturing equipment or
processes and (c) certain projects (e.g., New York Transit Authority) in
accordance with guidelines established by Super-Majority Approval of the
Managers.
The Business of the Company shall not include anything except as set forth
in (i) and (ii) above and excludes, for example, manufacturing and marketing of:
(a) uncabled fiber; (b) tactical military cables; (c) cables for geophysical
systems and exploration equipment; (d) cables for trains, subways and trams; (e)
cables for aerospace systems and platforms; (f) cables for medical devices,
instruments and systems; or (g) active or passive assemblies of any type (except
that some agreed amount of the Company's revenues may be derived from the sale
of the pre-connectorized cables and installation accessories including, but not
limited to splitters, breakout kits and cable pulling devices as are now
manufactured by the Class A Member having no added active or other passive
devices, if requested by bulk cable manufacturers.
The scope of the Business is to be interpreted to insure that the Company
remains competitive in its sales of Products in order to effectively serve the
applications described in parts (i) and (ii) of this definition of the term
Business in the Territory. The scope of the Business will be refined and updated
in the Business Plan and by Manager resolutions passed with Super-Majority
Approval both with regard to products being produced and markets being and to be
served.
-.33 -
<PAGE> 38
(i) "Business Plan" shall mean the annual plan specifying the scope and
operation of the Business of the Company, including its mission, financial and
profitability goals, marketing and sales strategy, capital and borrowing needs,
manufacturing operations, and other relevant matters, including a Distribution
Policy. The initial Business Plan may, by agreement of the Members, cover a
period shorter than one year, provided that an annual Business Plan for 1997 is
thereafter approved as provided herein. The parties hereby agree that the
Company shall operate the Business through designated officials within the terms
of such initial Business Plan. At least thirty (30) days prior to each calendar
year during the term of this Agreement, the Managers shall prepare and agree
upon a Business Plan for the one-year period commencing on such anniversary.
(j) "Capital Account" means, with respect to any Member, the Capital
Account maintained for such Member in accordance with the following provisions:
(i) To each Member's Capital Account there shall be credited such
Member's Capital Contributions, such Member's distributive share of Profits, any
items in the nature of income or gain which are specially allocated to such
Member (other than pursuant to Section 7.5 hereof), and the amount of any
Company liabilities assumed by such Member or secured by any Company Property
distributed to such Member.
(ii) To each Member's Capital Account there shall be debited the
amount of cash and the Gross Asset Value of any Company Property distributed to
such Member pursuant to any provision of this Agreement, such Member's
distributive share of Losses and any items in the nature of expenses or losses
which are specially allocated to such Member, and the amount of any liabilities
of such Member (other than pursuant to Section 7.5 hereof) assumed by the
Company or secured by property contributed by such Member to the Company.
(iii) In the event any Interest in the Company is transferred in
accordance with the terms of this Agreement, the transferee shall succeed to the
Capital Account of the transferor to the extent it relates to the transferred
Interest.
(iv) In determining the amount of any liability for purposes of
Subparagraphs (i) and (ii) hereof, there shall be taken into account Code
Section 752(c) and any other applicable provisions of the Code and Regulations.
The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Regulations Section 1.704-1(b), and shall be interpreted and applied in a manner
consistent with such Regulations. The Members shall make any appropriate
modifications, consistent with the economic arrangements of the parties, in the
event unanticipated events might otherwise cause this Agreement not to comply
with Regulations Section 1.704-1(b).
- 34 -
<PAGE> 39
(k) "Capital Contribution" means, with respect to any Member, the amount of
money and the initial Gross Asset Value of any property (other than money)
contributed to the Company by such Member.
(1) "Certificate of Formation" means the certificate filed with the
Delaware Secretary of State to form the Company as a Delaware limited liability
company, as such shall be amended and restated from time to time.
(m) "Change of Control" means an event whereby:
(i) any Person or Group (as such term is defined in Rule 13d-5 of
the Securities Exchange Act of 1934, as amended) of related Persons (other than
a wholly owned subsidiary) acquires all or substantially all of another Person's
assets;
(ii) any Person or Group acquires by way of merger,
consolidation, other business combination or otherwise greater than fifty
percent (50%) of the total voting power entitled to vote in the election of
directors, managers, or trustees of another Person or such other Person
surviving the transaction, as the case may be; or
(iii) during any period of two (2) consecutive years, individuals
who at the beginning of such period constituted the Board of Directors of a
Person (together with any new directors whose election by such Board of
Directors of whose nomination for election by the shareholders of such Person
was approved by a vote of two-thirds (2/3) of the directors then still in office
who were either directors at the beginning of such period or whose election for
nomination was previously so approved cease for any reason to constitute a
majority of the Board of Directors of such Person then in office.
(n) "Class A Managers" means the Managers of the Company elected by the
Class A Members.
(o) "Class A Member(s)" means one or more Members of the Company designated
as a Class A Member. The original Class A Member shall be Applied Photonic
Devices, Inc.
(p) "Class B Manager(s)" means the Managers of the Company elected by the
Class B Member.
(q) "Class B Member(s)" means one or more Members of the Company designated
as a Class B Member. The original Class B member shall be General Cable
Industries, Inc.
(r) "Code" means the Internal Revenue Code of 1986, as amended from time to
time (or any corresponding provisions of succeeding law).
- 35 -
<PAGE> 40
(s) "Company Minimum Gain" means the excess of liabilities to which
property of the Company is subject and for which no Member has any economic risk
of loss, over the adjusted basis of such property for federal income tax
purposes or, if such property is reflected on the Company's books at a value
that differs from its adjusted basis as permitted or required under Regulations
Section 1.704-1(b)(2)(iv)(d) or (f), over the adjusted "book value" of the
assets computed as required under Regulations Section 1.704-2(d)(3).
(t) "Company" means General Photonics, LLC and the limited liability
company continuing the business of this Company in the event of dissolution as
herein provided.
(u) "Company Property" means all real and personal property acquired by
the Company and any improvements thereto, and shall include both tangible and
intangible property.
(v) "Distribution Policy" means the policy of the Company specifying the
amount of Company's cash flow that will be either: (i) distributed to the
Members of the Company pursuant to Section 8.1 of this Agreement; or (ii)
retained for future use in the operation of the business of the Company.
(w) "Depreciation" means, for each fiscal year or other period, an amount
equal to the depreciation, amortization or other cost recovery. deduction
allowable with respect to an asset for such year or other period, except that if
the Gross Asset Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such year or other period, Depreciation
shall be an amount which bears the same ratio to such beginning Gross Asset
Value as the federal income tax depreciation, amortization or other cost
recovery deduction for such year or other period bears to such beginning
adjusted tax basis.
(x) "Event of Withdrawal" has the meaning specified in Section 12.1 of this
Agreement.
(y) "Excess Cash" means the cash balance at the end of the Company's fiscal
year as shown the Company's audited financial statements less: (i) the amount of
capital expenditures budgeted for the next fiscal as shown in the Business Plan;
and (ii) the working capital which is required for the Company's operations in
the next fiscal and is not expected to be funded by operations in such year.
(z) "Force Majeure Event" shall mean any act of God, civil disorder,
strike, governmental act or war, general unavailability of raw materials in the
market beyond the control of a party, and without limiting the foregoing, any
other cause not within the control of a party which prevents, restricts or
interferes with the performance of any obligation. In case a Force Majeure Event
occurs, the party so affected will give prompt notice (meaning within ten (10)
days) to the other party. and will be excused from performance to the extent
-36-
<PAGE> 41
of such prevention, restriction or interference; provided, that the party so
affected shall use its best reasonable efforts to avoid or remove such causes
for nonperformance and shall continue performance hereunder with the utmost
dispatch whenever such cause is removed.
(aa) "Gross Asset Value" means, with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset contributed by a
Member to the Company shall be the gross fair market value of such asset, as
determined by the contributing Member and the Company;
(ii) The Gross Asset Value of all Company assets shall be
adjusted to equal their respective gross fair market values, as determined by
the Members, as of the following times: (a) the acquisition of an additional
Interest in the Company by any new or existing Member in exchange for more than
a de minimis Capital Contribution; (b) the distribution by the Company to a
Member of more than a de minimis amount of Company Property as consideration for
an Interest in the Company, and (c) the liquidation of the Company within the
meaning of Regulations Section 1.704-1(b)(2)(ii)(g);
(iii) The Gross Asset Value of any Company asset distributed to
any Member shall be the gross fair market value of such asset on the date of
distribution as determined by the distributee and the Company; and
(iv) The Gross Asset Values of Company assets shall be increased
(or decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Code Section 7340(b) or Code Section 743(b), but only to the extent
that such adjustments are taken into account in determining Capital Accounts
pursuant to Regulations Section 1.704-1(b)(2)(iv)(m). If the Gross Asset Value
of an asset has been determined or adjusted, such Gross Asset Value shall
thereafter be adjusted by the Depreciation taken into account with respect to
such asset for purposes of computing Profits and Losses.
(bb) "Indemnitee" has the meaning specified in Section ll.2(a) of this
Agreement.
(cc) "Interest" means an interest in the Company as described in this
Agreement.
(dd) "Irreconcilable Difference" shall mean:
(i) the occurrence of any of the following events
(a) insolvency of the Class A Member or SpecTran or a
relevant Affiliate, or
- 37 -
<PAGE> 42
(b) a Material Breach of this Agreement or any other Related
Agreement by the Class A Member or SpecTran or a relevant Affiliate;
(ii) the occurrence of any of the following events
(a) insolvency of the Class B Member or General Cable
Corporation, or
(b) a Material Breach of this Agreement or any other Related
Agreement by the Class B Member or a relevant Affiliate; or
(iii) a failure of the Managers of the Company to agree upon any
matter requiring Super-Majority Approval within 120 days at two (2) successive
meetings held no more than sixty (60) days apart, provided that such failure is
brought forth in good faith by the Member contending that there has been such a
failure and the Members have used reasonable efforts to resolve the matter in
good faith.
(ee) "Manager" shall mean one or more managers of the Company, including
the Class A Managers, and Class B Managers, and all persons that succeed any
Manager in that capacity.
(ff) "Material Breach" means the failure by any Member or one of its
Affiliates to perform, observe or discharge any covenant or agreement on such
Member's or such Affiliate's part to be kept or performed under this Agreement
or any of the Related Agreements if such failure results in substantial monetary
damages or significant irreparable harm in light of the value of the
consideration paid or given under such agreement, which failure is not cured in
the manner and within the time period determined by the Members in accordance
with Section 15.1, except with respect to the Non-Competition Agreement and the
Standstill Agreement, which are not governed by Section 15.1. Without limitation
of the foregoing, the term "Material Breach" will mean the following with
respect to the following agreements: (i) with respect to this Agreement, the
voluntary transfer or assignment of any Interest in the Company that does not
comply with this Agreement; (ii) with respect to any Related Agreement, a
Material Breach (as defined herein) under any Related Agreement, and (iii) with
respect to this Agreement or any Related Agreement, a default in an obligation
to pay money to another party if such payment default is not cured within five
(5) days of notice of such default.
(gg) "Member(s)" means any Person who (i) is listed as such in Exhibit A,
attached, or has become a Member pursuant to the terms of this Agreement, and
(ii) has not ceased to be a Member pursuant to the terms of this Agreement.
(hh) "Member Nonrecourse Debt" has the meaning provided in Regu1ations
Section 1.704-2(b)(4) (substituting the word Member for partner therein).
-38-
<PAGE> 43
(ii) "Member Nonrecourse Debt Minimum Gain" means an amount determined in
accordance with Regulations Section 1.704-2(i)(3) (substituting the word Member
for partner therein) with respect to each Member Nonrecourse Debt that would be
Company Minimum Gain if such Member Nonrecourse Debt were a Nonrecourse
Liability.
(jj) "Member Nonrecourse Loan" means a loan to, or credit arrangement for
the benefit of, the Company by a Member or by a person related to a Member (as
defined in Regulations Section 1.752-4(b) (substituting the word Member for
partner therein)), which by its terms exculpates the Members from personal
liability on the debt, but under which such Member or related person bears the
ultimate economic risk of loss within the meaning of Regulations Section 1.752-2
(substituting the word Member for partner therein).
(kk) "Nonrecourse Deduction" has the meaning provided in Regulations
Section 1.704-2(b)(1).
(11) "Nonrecourse Liability" has the meaning provided in Regulations
Section 1.704-2(b)(3).
(mm) "Notifying Member" has the meaning specified in Section 15.l(a) of
this Agreement.
(nn) "Option Period" has the meaning specified in Section 10.5(a) of this
Agreement.
(oo) "Operating Policy(ies)" shall mean one or more prudent general
management, management reporting, financial reporting, record retention and
human resource policy and/or system for the operation of the Company not
requiring Super-Majority Approval or action by the Members.
(pp) "Option Price" has the meaning specified in Section 10.5(c) of this
Agreement.
(qq) "Participant" means a Person who has been assigned an Interest in the
Company as permitted by this Agreement and who has not been admitted to the
Company as an additional Member. For purposes of allocations and distributions
only (and not for purposes of management and voting) a Participant shall be
treated as a Member.
(rr) "Percentage Interest" means any Member's percentage ownership Interest
in the Company, as specified on Exhibit A to this Agreement.
(ss) "Person" means any individual, partnership, corporation, trust,
limited liability company or other entity.
- 39 -
<PAGE> 44
(tt) "Products" shall mean optical fiber cables manufactured and sold by
the Company from time to time.
(uu) "Profits" and "Losses" means, for each fiscal year or other period, an
amount equal to the Company's taxable income or loss for such year or period,
determined in accordance with Code Section 703(a) (for this purpose, all items
of income, gain, loss or deduction required to be stated separately pursuant to
Code Section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments:
(i) Any income of the Company that is exempt from federal income
tax and not otherwise taken into account in computing Profits or Losses shall be
added to such taxable income or loss;
(ii) Any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account
in computing Profits or Losses shall be subtracted from such taxable income or
loss;
(iii) In the event the Gross Asset Value of any Company asset is
adjusted, the amount of such adjustment shall be taken into account as gain or
loss from the disposition of such asset for purposes of computing Profits or
Losses.
(iv) Gain or loss resulting from any disposition of Company
Property with respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Gross Asset Value of the property
disposed of, notwithstanding that the adjusted tax basis of such property
differs from its Gross Asset Value;
(v) In lieu of the depreciation, amortization and other cost
recovery deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such fiscal year or other
period; and
(vi) Notwithstanding any other provision herein, any items which
are specially allocated shall not be taken into account in computing Profits or
Losses.
(vv) "Recipient" has the meaning specified in Section 15.1(a) of this
Agreement.
(ww) "Regulations" means the Income Tax Regulations promulgated under the
Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
(xx) "Related Agreements" means the following agreements, each of even date
herewith: (i) the Non-Competition Agreement among General Cable Industries,
Inc., General Cable Corporation, Applied Photonic Devices, Inc., SpecTran
Corporation and the
- 40 -
<PAGE> 45
Company; (ii) the Product Purchase Agreement among General Cable Industries,
Inc., General Cable Corporation, the Company, Applied Photonic Devices, Inc. and
SpecTran Corporation: (iii) the Fiber Supply Agreement among SpecTran
Communication Fiber Technologies, Inc., SpecTran Corporation, the Company,
General Cable Corporation and General Cable Industries, Inc.; (iv) the Sales and
Marketing Support Agreement among General Cable Industries, Inc., SpecTran
Corporation, Applied Photonic Devices, Inc., and the Company; (v) the Trademark
License between SpecTran Corporation and the Company; (vi) the Trademark License
between General Cable IP Corporation and the Company; (vii) the Assignment and
Assumption Agreement between Applied Photonic Devices, Inc. and the Company;
(viii) the Administrative Services and Technical Assistance Agreement among
General Cable Industries, Inc., SpecTran Corporation, SpecTran Communication
Fiber Technologies, Inc., and the Company; (ix) the Standstill Agreement among
General Cable Corporation, General Cable Industries, Inc., and SpecTran
Corporation; (x) the Investor's Representations, Contribution Agreement, and
Subscription Agreement among Applied Photonic Devices, Inc., SpecTran
Corporation, and the Company; (xi) the Investor's Representations and
Subscription Agreement between General Cable Industries, Inc. and the Company;
(xii) the Investor's Contribution Agreement among General Cable Industries,
Inc., General Cable Corporation, and the Company; and (xiii) the Asset Purchase
Agreement among Applied Photonic Devices, Inc., SpecTran Corporation, General
Cable Industries, Inc., and General Cable Corporation.
(yy) "SpecTran" shall mean SpecTran Corporation, a Delaware corporation,
which is the parent corporation of Applied Photonic Devices, Inc.
(zz) "Super-Majority Approval" means the approval by the affirmative vote
of at least the following number of Managers who are not officers of the
Company: (i) four Managers; (ii) two Class A Managers; and (iii) two Class B
Managers.
(aaa) "Territory" shall mean the North American Free Trade Area as
presently constituted, including the United States (including the District of
Columbia, Puerto Rico and its other territories), Canada and Mexico.
-41-
<PAGE> 46
LIMITED LIABILITY COMPANY AGREEMENT
OF
GENERAL PHOTONICS, LLC
EXHIBIT C
---------
MANAGERS AND OFFICERS
MANAGERS
CLASS A MANAGERS:
Crawford L. Cutts
Raymond E. Jaeger
Glenn E. Moore
Richard M. Donofrio
CLASS B MANAGERS:
John M. LaVitola
Kenneth McAllister
Stephen Rabinowitz
OFFICERS:
Crawford L. Cutts, President and Chief Executive Officer
John M. LaVitola, Vice President and Chief Financial Officer
- 42 -
<PAGE> 47
LIMITED LIABILITY COMPANY AGREEMENT
OF
GENERAL PHOTONICS, LLC
EXHIBIT D
---------
CERTIFICATE OF FORMATION
- 43 -
<PAGE> 48
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THAT ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
LIMITED LIABILITY COMPANY OF "LINDSAY, LLC", FILED IN THIS OFFICE ON THE
TWENTY-SEVENTH DAY OF AUGUST, A.D. 1996, AT 9 O'CLOCK A.M.
[SEAL] By: /s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION:
DATA:
<PAGE> 49
CERTIFICATE OF FORMATION
OF
LINDSAY, LLC
------------
The undersigned, an authorized natural person, for the purpose of forming a
limited liability company, under the provisions and subject to the requirements
of the State of Delaware (particularly Chapter 18, Title 6 of the Delaware code
and the acts amendatory thereof and supplemental thereto, and known, identified,
and referred to as the "Delaware Limited Liability Company Act"), hereby
certifies that:
FIRST: The name of the limited liability company (hereinafter called the
"limited liability company") is LINDSAY, LLC.
SECOND: The address of the registered office and the name and the address
of the registered agent of the limited liability company required to be
maintained by Section 18-104 of the Delaware Limited Liability Company Act are
Corporation Service Company, 1013 Centre Road, Wilmington, Delaware 19805.
Executed on August 24, 1996
By: /s/ Brian M. Hand
--------------------------------------
Brian M. Hand, Authorized Person
<PAGE> 1
ASSET PURCHASE AGREEMENT
------------------------
This Asset Purchase Agreement (the "Agreement") is made and entered into as
of December 23, 1996, by and among APPLIED PHOTONIC DEVICES, INC., a Delaware
corporation with its principal place of business at 50 Tiffany Street, Brooklyn,
Connecticut 06259 ("Seller"), SPECTRAN CORPORATION, a Delaware corporation and
the owner of all the issued and outstanding capital stock of Seller
("SpecTran"), GENERAL CABLE INDUSTRIES, INC., a Delaware corporation with its
principal place of business at 4 Tesseneer Drive, Highland Heights, Kentucky
41076 ("Buyer") and GENERAL CABLE CORPORATION, a Delaware corporation with its
principal place of business at 4 Tesseneer Drive, Highland Heights, Kentucky
41076 ("GCC").
WITNESSETH
WHEREAS, Seller engages in the business of developing, manufacturing and
marketing optical fiber cable (the "Business"); and
WHEREAS, Seller wishes to sell a portion of the assets of the Business, and
Buyer wishes to purchase such assets of the Business.
NOW, THEREFORE, in consideration of the foregoing premises and mutual
covenants of the parties contained herein, the parties hereby agree as follows:
ARTICLE I
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SALE OF ASSETS AND PURCHASE PRICE
---------------------------------
1.1 SALE OF ASSETS. Buyer hereby purchases, upon the terms and subject to
the conditions contained herein and in consideration of the Purchase Price (as
defined herein) and other good and valuable consideration, and Seller hereby
sells, delivers and transfers to Buyer the assets of Seller relating to the
Business consisting of all inventory of Seller and an amount of accounts
receivable equal to the Purchase Price (as defined below) less the amount of
inventory to be purchased hereunder (the "Assets").
1.2 NO ASSUMPTION OF LIABILITIES. Buyer is not assuming or agreeing to pay,
perform or discharge any obligation or liability of Seller, SpecTran, the
Assets or the Business of any nature whatsoever, whether imposed by operation of
law or otherwise, including but not limited to liabilities or obligations for
trade payables, product liability in respect of product made by Seller prior to
the Closing (whether or not sold), bank debts, attorneys fees, accounting fees,
taxes, environmental remediation or other environmental obligations, employee
benefits, severance pay, stock options and related rights, or otherwise. In no
event shall Buyer have any responsibility or obligation with respect to any such
liability or obligation.
<PAGE> 2
1.3 PURCHASE PRICE. The purchase price for the Assets (the "Purchase
Price") shall be as set forth below:
(a) An amount equal to (i) fifty percent (50%) of the Net Book Value
(as defined below) of Seller determined as of the Audit Date (as defined below)
in accordance with United States generally accepted accounting principles
("GAAP"), plus (ii) twenty percent (20%) of such Net Book Value, excluding cash
balances, less $231,000 representing an adjustment for certain work in process
inventories, plus (iii) $100,000.
(b) The estimated Purchase Price, calculated as provided in Section
1.3(a) based on Seller's unaudited balance sheet as of November 30, 1996, a true
and complete copy of which has been delivered to Buyer, is $6,278,000. The
estimated purchase will be paid as follows: $5,278,000 will be paid at the
closing to Seller's designated account and $1,000,000 will be paid into an
escrow account with Fleet Bank, N.A. pursuant to an Escrow Agreement of even
date herewith. As soon as practicable after the execution of this Agreement, but
in any event within sixty (60) days after the Closing, Buyer shall deliver to
Seller audited financial statements (and related notes and schedules thereto) of
Seller as of December 31, 1996 (the "Closing Financial Statements"), together
with the report thereon of Deloitte & Touche LLP (or other independent
accounting firm selected by Buyer and reasonably acceptable to Seller) showing
the Net Book Value of Seller as of December 31, 1996 (the "Audit Date") and
stating that the Closing Financial Statements have been prepared in accordance
with GAAP applied on a basis consistent with the preparation of the Financial
Statements (as defined in Section 2.7, below), with only such deviations from
GAAP or consistent application as are disclosed in the notes to the Financial
Statements.
(c) Seller will cooperate reasonably with Buyer and the independent
accounting firm in connection with the audit and preparation of the Closing
Financial Statements and the physical inventory of Seller and the Business.
Seller will provide such accounting firm with full access to Seller's books,
records, facilities and employees to the extent reasonably required to determine
Seller's financial condition, to prepare the Closing Financial Statements, and
to conduct the physical inventory.
(d) Promptly after the preparation of the Closing Financial
Statements and the calculation of Seller's Net Book Value as of the Audit Date,
Seller and Buyer will mutually calculate the final Purchase Price pursuant to
the formula set forth in Section 1.3(a) and such final Purchase Price will be
agreed to in writing. The final Purchase Price will be calculated effective as
of December 31, 1996, in accord with the Closing Financial Statements. If the
final Purchase Price is greater than the estimated Purchase Price shown in
Section 1.3(b), Buyer will pay to Seller, as an adjustment to the Purchase
Price, an amount equal to such increase. If the final Purchase Price is less
than the estimated Purchase Price shown in Section 1.3(b),
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Seller will pay to Buyer, as an adjustment to the Purchase Price, an amount
equal to such decrease.
(e) As used in this Agreement, the term "Net Book Value" will mean
the net book value of Seller determined in accordance with GAAP consistently
applied, but with respect to liabilities of Seller, such calculation of Net Book
Value will include only the liabilities listed on Exhibit B of the Investor's
Representations, Contribution Agreement and Subscription Agreement.
(f) All payments made pursuant to Section 1.3(d), will be made in
immediately available funds within ten (10) calendar days after delivery of the
Closing Financial Statements and shall be paid to such account as the receiving
party shall specify at least two (2) business days prior to the making of such
payment.
(g) Subject to Section 1.3(h), the Closing Financial Statements
delivered by Seller to Buyer shall be deemed to be final, binding and conclusive
on the parties hereto.
(h) Seller may dispute any amounts reflected on the Closing Financial
Statements on any reasonable basis, including, but not limited to, a claim that
such amounts were not arrived at in accordance with the same United States
generally accepted accounting principles applied on a consistent basis as were
applied in the preparation of the Financial Statements with only such deviations
from such generally accepted accounting principles and/or their consistent
application as are referred to in the notes to the Financial Statements. Within
ten (10) days after Seller's receipt of the Closing Financial Statements, Seller
shall notify Buyer in writing of each disputed item and the amount Seller
believes is the correct amount of each such disputed item, calculated using the
same United States generally accepted accounting principles applied on a
consistent basis as were applied in the preparation of the Financial Statements
with only such deviations from such generally accepted accounting principles
and/or their consistent application as are referred to in the notes to the
Financial Statements. Seller also shall furnish Buyer at such time with a
detailed, written explanation of the methodology used by Seller to determine
such amount. In the event of such dispute, Buyer and Seller shall attempt to
reconcile their differences and any resolution by them as to any disputed
amounts shall be final, binding and conclusive on the parties. Any amounts
which are not in dispute will be paid by the appropriate party in the manner set
forth herein.
If Buyer and Seller are unable to reach a resolution with such
effect within fifteen (15) days of Buyer's written notice of dispute to Seller,
then Buyer and Seller shall submit the items remaining in dispute to the firm of
Arthur Andersen, or if such firm has been retained by Buyer or Seller or any of
their respective Affiliates (as defined in the Limited Liability Company
Agreement of General Photonics, LLC) at the time of such submission, to an
independent accounting firm of national reputation
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mutually appointed by Buyer and Seller (the "Independent Accounting Firm"),
which shall, within twenty (20) days after submission, determine whether (A) the
disputed amount as reflected on the Closing Financial Statements was, in fact,
arrived at in accordance with the same United States generally accepted
accounting principles applied on a consistent basis as were applied in the
preparation of the Financial Statements with only such deviations from such
generally accepted accounting principles and/or their consistent application as
are referred to in the notes to the Financial Statements, in which case such
determination will be final, binding and conclusive on the parties, or (B) such
disputed amount was not arrived at in accordance with such generally accepted
accounting principles, in which case the amount of such disputed item as
determined by Seller pursuant to this Section will be final, binding and
conclusive on the parties. The Independent Accounting Firm shall have no
discretion to re-calculate the disputed amount using its own methodology, but
shall determine only whether the amount as reflected on the Closing Financial
Statements or the amount as calculated by Seller is correct using the same
United States generally accepted accounting principles applied on a consistent
basis as were applied in the preparation of the Financial Statements with only
such deviations from such generally accepted accounting principles and/or their
consistent application as are referred to in the notes to the Financial
Statements. The fees and disbursements of the Independent Accounting Firm and of
the prevailing party shall be paid by the party against whom the Independent
Accounting Firm ultimately rules.
(i) Any payment required to be made pursuant to Section 1.3(h) shall
include interest from the Audit Date through the date of payment equal to the
rate of interest per annum charged by PNC Bank, N.A., Wilmington, Delaware as
its prime lending rate.
1.4 ALLOCATION OF PURCHASE PRICE. The purchase price paid pursuant to
Section 1.3 hereof shall be allocated among the Assets as mutually agreed by the
parties and set forth on the attached EXHIBIT A.
1.5 CLOSING DELIVERIES.
(a) Contemporaneously with the execution of this Agreement, Seller
will execute and deliver the following:
(i) a bill of sale for the tangible personal property included
in the Assets, in the form of the attached EXHIBIT B;
(ii) possession of the Assets, free and clear of all liens,
encumbrances, interests or claims of any nature whatsoever;
(iii) resolutions, certified by the Secretary of Seller, of the
Board of Directors and the stockholders of Seller authorizing and approving the
execution,
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delivery and performance of this Agreement and each other agreement and
instrument executed in connection herewith to which Seller is a party,
including, without limitation, the Investor's Representations, Contribution
Agreement and Subscription Agreement relating to General Photonics, LLC, the
Limited Liability Company Agreement of General Photonics, LLC and each of the
Related Agreements (as such term is defined in such Limited Liability Company
Agreement);
(iv) duly executed originals of the Investor's Representations,
Contribution Agreement and Subscription Agreement relating to General Photonics,
LLC, the Limited Liability Company Agreement of General Photonics, LLC and each
of the Related Agreements (as such term is defined in such Limited Liability
Company Agreement);
(v) the opinion of Hackmyer & Nordlicht, counsel to Seller,
dated as of the date of the Closing, in form and substance reasonably
satisfactory to Buyer; and
(vi) all previously undelivered documents, instruments and
writings required to be delivered by Seller under this Agreement or reasonably
requested by Buyer or its legal counsel in connection herewith.
(b) Contemporaneously with the execution of this Agreement, Buyer
will execute and deliver the following:
(i) immediately available funds in the amount of the estimated
Purchase Price set forth in Section 1.3(b);
(ii) resolutions, certified by the Secretary of Buyer, of the
Board of Directors of Buyer authorizing and approving the execution, delivery
and performance of this Agreement and each other agreement and instrument
executed in connection herewith to which Buyer is a party, including, without
limitation, the Investor's Representations and Subscription Agreement relating
to General Photonics, LLC, the Investor's Contribution Agreement relating to
General Photonics, LLC, the Limited Liability Company Agreement of General
Photonics, LLC and each of the Related Agreements (as such term is defined in
such Limited Liability Company Agreement);
(iii) duly executed originals of the Investor's Representations
and Subscription Agreement relating to General Photonics, LLC, the Investor's
Contribution Agreement relating to General Photonics, LLC, the Limited Liability
Company Agreement of General Photonics, LLC and each of the Related Agreements
(as such term is defined in such Limited Liability Company Agreement);
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<PAGE> 6
(iv) the opinion of Robert J. Siverd, general counsel for Buyer,
dated as of the date of the Closing, in form and substance reasonably
satisfactory to Seller; and
(v) all previously undelivered documents, instruments and
writings required to be delivered by Buyer under this Agreement or reasonably
requested by Seller or its legal counsel in connection herewith.
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<PAGE> 7
ARTICLE 11
----------
REPRESENTATIONS AND WARRANTIES OF SELLER AND SPECTRAN
-----------------------------------------------------
Seller and SpecTran, jointly and severally, hereby represent and warrant to
Buyer as follows (except that SpecTran makes no representations or warranties
regarding the matters addressed in Sections 2.10 (Compliance with Law), 2.11
(Licenses), 2.12 (Taxes), 2.14 (Conduct of Operations), 2.15 (Undisclosed
Liabilities) and 2.18 (Environmental Matters)):
2.1 ORGANIZATION.
(a) Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, with all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted, and is duly licensed and qualified to do
business in all jurisdictions in which the conduct of its business or the
ownership or leasing of its assets requires it to be licensed or qualified to do
business. Schedule 2.1 contains a list of all jurisdictions where Seller is
qualified to do business and all licenses or other authorizations held by
Seller.
(b) Each of SpecTran and its Affiliates that is a party to any Operative
Agreement (as defined below) is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.
2.2 AUTHORITY. Each of Seller, SpecTran and their Affiliates that is a
party to any Operative Agreement has the corporate power and authority to enter
into and perform this Agreement, the Investor's Representations, Contribution
Agreement and Subscription Agreement relating to General Photonics, LLC, the
Limited Liability Company Agreement of General Photonics, LLC and each of the
Related Agreements (as such term is defined in such Limited Liability Company
Agreement) (collectively, the "Operative Agreements") to which it is a party and
to consummate the transactions contemplated hereby or thereby. The execution,
delivery and performance of this Agreement and the other Operative Agreements
and the transactions contemplated hereby and thereby have been duly and
effectively authorized by all necessary action of Seller and SpecTran and any
applicable Affiliate thereof. Each of the Operative Agreements to which Seller
or SpecTran or any applicable Affiliate is a party is a valid and binding
obligation of Seller and/or SpecTran and/or such Affiliate, as applicable,
enforceable against Seller and/or SpecTran and/or such Affiliate in accordance
with its terms, except as may be limited by bankruptcy, insolvency,
reorganization or other laws affecting creditors' rights generally, and subject
to judicial discretion in the enforcement of equitable remedies.
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2.3 TITLE TO ASSETS AND CONDITION. Seller owns outright and has good and
valid title to the Assets. The Assets are not subject to any claims, liens,
mortgages, charges or other encumbrances of any kind, except for the following
("Permitted Liens"): (a) liens for taxes, assessments, governmental charges and
liens not yet due and payable; (b) liens imposed by any federal, state or local
statute, rule, ordinance, regulation, rule, code, order or requirement, such as
materialmen's, mechanics, carriers, workmen's and repairmen's liens and other
similar liens arising by operation of law, which will not have a material
adverse effect on the Assets taken as a whole; and (c) liens upon any equipment
purchased or leased by Seller which are created directly in connection with such
purchase or lease to secure payment of the purchase price or lease obligation,
all of which are set forth on Schedule 2.3. Seller is not in violation of any
regulation, ordinance, law, order or other requirement relating to any of its
property, real or personal, connected with or related to the Assets or the
Business which would have a material adverse effect on the Assets or the
Business taken as a whole. To Seller's knowledge after due inquiry, there are no
changes in any such regulation, ordinance, law, order or other requirement
affecting any such property pending or threatened or under consideration, which
would prohibit Buyer from continuing the present use of such property or from
using such property for the purpose for which it was acquired, or which might
curtail the present use of such property.
2.4 NO VIOLATION; CONSENTS OF THIRD PARTIES. The execution, delivery and
performance by Seller of this Agreement and the other Operative Agreements by
and among Seller, SpecTran (or any Affiliate of SpecTran that is a party to any
Operative Agreement) and other parties, and the consummation of the transactions
contemplated hereby and thereby, do not and will not (a) violate or conflict
with the certificate of incorporation or by-laws of Seller or SpecTran or such
Affiliate; (b) subject to receipt of the consents and approvals referred to in
Schedule 2.4, conflict with, result in the breach or termination of, or
constitute a default or make effective a right of cancellation, acceleration or
first refusal under (i) any debt agreement or debt instrument or (ii) any other
material lease, agreement, contract, commitment or other instrument to which
Seller or SpecTran or such Affiliate is a party or by which the Assets are
bound; (c) constitute a violation of any law, statute, regulation, ordinance,
order or regulation applicable to Seller or the Assets or any of their
respective properties; or (d) result in the creation of any lien, encumbrance or
security interest upon any property of Seller, other than Permitted Liens. No
consent, approval or authorization of, or designation, declaration or filing
with, any governmental agency or body is required on the part of Seller or
SpecTran (or its Affiliates) in connection with the execution, delivery and
performance of this Agreement and the other Operative Agreements to which it is
a party, except for (a) transfer and other tax forms, if any, required in
connection with the transfer of the Assets and (b) items listed on Schedule 2.4.
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2.5 INVENTORY. Except to the extent indicated on Schedule 2.5, all
inventory included in the Assets consists of raw materials, work in process, or
finished goods, merchantable and suitable for filling current orders, and such
items are not obsolete, are of a quality and quantity usable and salable in the
ordinary course of business, and any inventory reserves or write-downs in the
Financial Statements are in accordance with GAAP.
2.6 ACCOUNTS RECEIVABLE. All accounts receivable included in the Assets
arise out of arm's-length sales made in the ordinary course of the Business and
not out of any sales to a person, firm, or corporation which is an employee or
Affiliate of Seller or SpecTran (except for receivables arising out of sales to
SpecTran Specialty Optics Company), or controlled by an employee or Affiliate of
Seller or SpecTran. All such accounts receivable are validly owing, are not in
dispute, are not subject to any setoff, allowance or right of return, and are
fully collectible in the ordinary course of business. The goods giving rise to
such accounts receivable have been shipped and delivered to the account debtor,
and to Seller's knowledge, accepted by the account debtor.
2.7 FINANCIAL STATEMENTS. The unaudited balance sheet of Seller as of
December 31, 1995, and the related statements of income and retained earnings,
and statements of cash flow for the year then ended, as provided to Buyer,
copies of which financial statements are attached hereto as Schedule 2.7 and
made a part hereof (collectively, the "Financial Statements"), are true, correct
and complete in all respects and fairly present in all material respects the
financial position of Seller as of such date and the results of its operations
and cash flows and changes in financial position for the period then ended, and
have been prepared in conformity with GAAP applied on a consistent basis. Since
December 31, 1995, there have been no material adverse changes in the financial
condition of Seller or the Assets and Seller has not had any increase in
liabilities since such date other than customary commercial payables arising in
the ordinary course of business.
2.8 ASSETS NECESSARY TO THE BUSINESS. The Assets constitute a portion of
the assets used in connection with the Business. The Assets, together with the
assets contributed, or to be contributed, to General Photonics, LLC by Seller
constitute all of the assets used to carry on the Business as presently
conducted.
2.9 LITIGATION. There is no litigation, proceeding, government
investigation or claim pending or, to Seller's knowledge, threatened against
Seller or SpecTran or relating to the Assets or the Business; nor does Seller or
SpecTran know of any basis for any such litigation, proceeding, government
investigation or claim.
2.10 COMPLIANCE WITH LAW. Since December 31,1995, Seller has conducted, and
is now conducting, its operations in compliance in all material respects with
all applicable laws, rules regulations and court or administrative orders and
processes
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<PAGE> 10
(including, without limitation, any that relate to health and safety,
environmental protection and pollution control, sale and distribution of
products and services, anti-competitive practices, ERISA, employee benefits,
anti-discrimination, equal opportunity and fair employment practices (including
the Americans with Disabilities Act) and improper payments). Seller has not
violated any statute, order, rule, or regulation which would prevent the
consummation of the transactions contemplated herein.
2.11 LICENSES. Attached hereto as Schedule 2.11 is a true and complete list
and brief description of all licenses, permits, franchises, authorizations and
approvals (collectively, "Licenses") issued or granted to, or held by Seller.
All such Licenses are valid and in full force and effect, and no proceedings or
actions with respect to the suspension, cancellation or any other aspect of any
of them is pending or, to Seller's knowledge, threatened, and Seller does not
know of any basis therefor. The Licenses are all of the licenses, permits,
franchises, authorizations and approvals necessary in connection with the
operation of the Business as it is presently conducted. Neither Seller nor any
third party has any obligation to pay or right to receive any royalty or other
payment with respect to any of the Licenses.
2.12 TAXES.
(a) Seller has filed all Tax Returns that it is or was required to
file before the Closing. The Affiliated Group has filed all income Tax returns
that it is or was required to file before the Closing. All such Tax Returns were
true, complete and correct in all respects. All Taxes due and payable by Seller
and the Affiliated Group (whether or not shown on any Tax Return) prior to the
Closing have been paid in full and there are no tax audits pending with respect
thereto and no notice of any deficiencies are outstanding or have been removed
with respect to any Taxes. No claim has been made and there are no pending
audits or investigations by any authority in a jurisdiction where Seller or any
other member of the Affiliated Group does not file Tax Returns that Seller or
such other member of an Affiliated Group is or may be subject to taxation by an
authority in that jurisdiction. The Financial Statements of Seller provided
adequate accruats for all warrants and reasonably anticipated taxes, interests
and penalties all pending prior to the date of the Closing. There are no tax
liens on any of the properties or assets of Seller, including the Assets, except
for Permitted Liens.
(b) Seller has withheld and properly paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, shareholder or other third party.
(c) There is no dispute or claim concerning any liability of Seller
or any other member of the Affiliated Group for any Taxes that has been claimed
or addressed by any authority of any jurisdiction.
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(d) Seller is not a party to a tax allocation or tax sharing
agreement other than any such agreement that has been or will be terminated
prior to the date of the Closing and that will have no effect after such
termination for any taxable year (whether the current year, a future year or a
past year).
(e) Seller has never been a member of any group of corporations for
which a consolidated, combined, unitary or other group Tax Return may be filed
other than the group of corporations of which Seller is a current member.
(f) Seller does not have any liability for the Taxes of any Person
(i) under any statute or regulation regarding consolidated, combined, unitary or
other group tax returns, (ii) as a transferee or successor, (iii) by contract or
(iv) otherwise.
(g) As used in this Section:
"Affiliated Group" means the group of corporations or other entities
which includes Seller or SpecTran and for which a consolidated, combined,
unitary or other group Tax Return is filed.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a trust, a joint venture, an
unincorporated organization or a governmental entity (or any department,
agency or political subdivision thereof).
"Tax" means any tax, fee or other charge imposed by any government or
other authority of any jurisdiction, together with any and all fines,
penalties, additions to tax and/or interest calculated by reference
thereto.
"Tax Return" means any return, declaration, report, claim for refund
or information return or statement relating to any Tax, including any
schedule or attachment thereto, and including any amendment thereof.
2.13 ACCURACY OF INFORMATION. Neither this Agreement, the Financial
Statements, the Schedules, the Exhibits, the Operative Agreements, nor any
certificate or document furnished or to be furnished to Buyer by or on behalf of
Seller or SpecTran pursuant to or in connection with the transactions
contemplated hereby or thereby contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements contained
herein or therein not misleading. Seller has delivered to Buyer true, correct
and complete copies of all documents, including all amendments, supplements or
modifications thereof or waivers currently in effect thereunder, described
herein or in any Schedule or Exhibit hereto or in any Operative Agreement.
2.14 CONDUCT OF OPERATIONS.
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(a) Since December 31, 1995, Seller has used commercially reasonable
efforts to preserve the Business intact, has operated the Business in the
ordinary course, and there have been no changes to the Business or operations
since that date, that has had or would have a material adverse effect on the
Business, the Assets, properties, operations or liabilities of Seller or any of
Seller's relationships with its employees or third parties (including, without
limitation, customers and suppliers).
(b) From September 30, 1996 to the date of the Closing:
(i) Seller has used its best efforts to preserve the Business
intact, has operated the Business in the ordinary course, and there have been no
changes to the Business or operations, that has had or would have a material
adverse effect on the Business, the Assets, properties, operations or
liabilities of Seller or any of Seller's relationships with its employees or
third parties (including, without limitation, customers and suppliers);
(ii) except as set forth in Schedule 2.14, there has not been any
outstanding commitment by Seller to make or commit to make any capital
expenditure, addition or improvement relating to the Assets or the Business; and
(iii) there has not been any declaration or payment by Seller of
any dividend or other distribution to the stockholders of Seller.
2.15 UNDISCLOSED LIABILITIES. Seller does not have any liability, whether
known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated and
whether due or to become due, except for (i) liabilities set forth on the face
of Seller's balance sheet included in the Financial Statements (rather than in
any notes thereto) and (ii) liabilities which have arisen since December 31,
1995, in the ordinary course of business consistent with past custom and
practice, none of which arises out of or relates to any breach of contract,
breach of warranty, tort, infringement or violation of law.
2.16 BROKERS, FINDERS, ETC. Neither Seller nor SpecTran has employed any
broker, agent or finder or incurred any liability for any brokerage fees,
agents' commissions or finders' fees in connection with the transactions
contemplated hereby or by any of the other Operative Agreements.
2.17 COMPLIANCE WITH APPLICABLE LEGAL REQUIREMENTS AND REGULATIONS. Seller
and SpecTran have complied with all applicable legal requirements and
governmental regulations which are required to be complied with by Seller or
SpecTran in order to consummate the transactions contemplated hereby and by the
other Operative Agreements.
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2.18 ENVIRONMENTAL MATTERS. Seller has not received any claim, notice,
order, directive, or information request from the United States Environmental
Protection Agency, any state environmental protection agency or from any other
agency or branch of local, state or federal government (each, an "Environmental
Agency"), or any claim or notice from any private corporation or person alleging
any violation of any federal or state environmental law, ordinance, regulation
or order applicable to Seller, the Business or its operations ("Environmental
Laws") since May 23, 1995 (collectively, "Environmental Claims"). To Seller's
actual knowledge, all Environmental Claims received by Seller during the time
period from, and including, September 1, 1986 to, and including, May 23, 1995
are set forth in Schedule 2.18. No investigation, administrative order, consent
order, and agreement, litigation or settlement with respect to any hazardous
substances (as defined by the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. [Section]9601 ET SEQ.) exists or, to
Seller's knowledge, is threatened with respect to Seller, the Business or its
operations. All environmental facility, operating and other permits,
registrations and authorizations ("Environmental Permits") required by any
Environmental Agency for Seller, the Business or its operations have been
obtained and are in effect. Seller has complied in all material respects with
and is not in default under any Environmental Laws. Except as set forth in
Schedule 2.18, neither the Assets nor any other assets of Seller have been
contaminated by hazardous waste (as defined by the Resource Conservation and
Recovery Act, 42 U.S.C. [Section]6901 ET SEQ.) or been used for solid or
hazardous waste storage or disposal.
ARTICLE III
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REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer and GCC hereby represent and warrant to Seller and SpecTran as
follows:
3.1 ORGANIZATION. Each of Buyer and GCC is a corporation, duly organized,
validly existing and in good standing under the laws of the State of Delaware
with all requisite corporate power and authority to execute and perform this
Agreement, and is duly licensed and qualified to do business in all
jurisdictions in which the conduct of its business or the ownership or leasing
of its assets requires it to be licensed or qualified to do business.
3.2 AUTHORITY. Each of Buyer and GCC has the corporate power and authority
to enter into and perform this Agreement and the other Operative Agreements to
which it is a party and to consummate the transactions contemplated hereby or
thereby. The execution, delivery and performance of this Agreement and the other
Operative Agreements and the transactions contemplated hereby and thereby have
been duly and effectively authorized by all necessary corporate action of Buyer
and GCC. Each of the Operative Agreements to which Buyer or GCC is a
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<PAGE> 14
party is a valid and binding obligation of Buyer and/or GCC, as applicable,
enforceable against Buyer and/or GCC in accordance with its terms, except as may
be limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally, and subject to judicial discretion in the
enforcement of equitable remedies.
3.3 BROKERS, FINDERS, ETC. Neither Buyer nor GCC have employed any broker,
agent or finder or incurred any liability for any brokerage fees, agents'
commissions or finders' fees in connection with the transactions contemplated
hereby or by any of the other Operative Agreements.
3.4 NO VIOLATION; CONSENTS OF THIRD PARTIES. The execution, delivery and
performance of this Agreement and the other Operative Agreement to which Buyer
or GCC is a party, and the consummation of the transactions contemplated hereby
and thereby, do not and will not (a) violate or conflict with the certificate of
incorporation or by-laws of Buyer or GCC; (b) conflict with, result in the
breach or termination of, or constitute a default or make effective a right of
cancellation, acceleration or first refusal under (i) any debt agreement or debt
instrument or (ii) any other material lease, agreement, contract, commitment or
other instrument to which Buyer or GCC is a party or by which any of its
properties is bound; (c) constitute a violation in any material respect of any
law, statute, ordinance, order or regulation applicable to Buyer or any of its
properties; or (d) result in the creation of any lien, encumbrance or security
interest upon any property of Buyer. No consent, approval or authorization of,
or designation, declaration or filing with, any governmental agency or body is
required on the part of Buyer or GCC in connection with the execution, delivery
and performance of this Agreement and the other Operative Agreements to which it
is a party.
3.5 LITIGATION. There is no litigation, proceeding, government
investigation or claim pending, or, to Buyer's knowledge, threatened against
Buyer or GCC relating to this Agreement, the other Operative Agreements to which
Buyer or GCC is a party, or the transactions contemplated hereby or thereby; nor
does Buyer or GCC know of any basis for any such litigation, proceeding,
government investigation or claim.
3.6 COMPLIANCE WITH LAW. Buyer has not violated any statute, order, rule or
regulation which would prevent the consummation of the transactions contemplated
herein.
3.7 COMPLIANCE WITH APPLICABLE LEGAL REQUIREMENTS AND REGULATIONS. Buyer
and GCC have complied with all applicable legal requirements and governmental
regulations which are required to be complied with by Buyer or GCC in order to
consummate the transactions contemplated hereby and by the other Operative
Agreements.
14-
<PAGE> 15
3.8 ACCURACY OF INFORMATION. Neither this Agreement, the Operative
Agreements, nor any certificate or document furnished or to be furnished to
Seller by or on behalf of Buyer or GCC pursuant to or in connection with the
transactions contemplated hereby or thereby contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading. Buyer has delivered to Seller true,
correct and complete copies of all documents, including all amendments,
supplements or modifications thereof or waivers currently in effect thereunder,
described herein or in any Operative Agreement.
ARTICLE IV
----------
RECORDS RETENTION; FURTHER ASSURANCES
-------------------------------------
4.1 RECORDS RETENTION. After the Closing, Seller or General Photonics, LLC
will maintain all books, records, files and other documents relating to the
Assets and the Business in the same manner as heretofore done and in any event
in a safe and secure location consistent with prudent business practices. Seller
will permit Buyer and its representatives access to all such materials at all
reasonable times upon reasonable prior notice. Prior to any destruction of or
material modification to any such materials, Seller will notify Buyer thereof
and furnish Buyer a reasonable opportunity, at Buyer's sole option, to remove
such materials from Seller's possession and control and thereafter Buyer shall
maintain such materials at its sole expense.
4.2 FURTHER ASSURANCES. After the date hereof, Seller and SpecTran will, at
Buyer's request, from time to time and without further consideration, execute
and deliver or cause to be executed and delivered to Buyer such other
instruments of sale, transfer, conveyance, assignment and confirmation, and to
take such other action as Buyer may reasonably request so as to fully,
effectively and completely sell, assign, transfer to and vest in Buyer title to
and possession of the Assets.
ARTICLE V
---------
SURVIVAL
--------
All representations, warranties and covenants of Seller, SpecTran, Buyer
and GCC made in this Agreement or as provided herein shall survive the Closing
and any investigation made by Buyer, GCC, Seller or SpecTran, or their
respective representatives, and shall not expire. Notwithstanding anything to
the contrary contained herein, the indemnification obligations of SpecTran (but
not Seller) and GCC under Article Vl hereof shall expire five (5) years after
the date of the Closing.
ARTICLE VI
----------
-15-
<PAGE> 16
INDEMNIFICATION
---------------
6.1 Indemnification.
---------------
(a) Each of Seller and SpecTran agrees to defend, indemnify and hold
harmless Buyer and each of its shareholders, directors, officers, employees and
agents, and each of their successors and assigns (each, a "Buyer Indemnitee")
from and against, and to pay directly, or reimburse the applicable Buyer
Indemnitee(s) with respect to, all claims, suits, actions and proceedings
(formal and informal), and related judgments, deficiencies, damages,
settlements, taxes, liabilities (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated and whether due or to become due), losses,
costs, fees and expenses (including, without limitation, reasonable attorneys'
fees and disbursements) (collectively, "Losses") asserted by any person or
entity (including any other party hereto or any third party) against any Buyer
lndemnitee or incurred or suffered by any Buyer Indemnitee, which arise out of,
result from or relate to:
(i) any breach of any representation or warranty by Seller or
SpecTran, except that SpecTran shall have no liability whatsoever for
any breach of Sections 2.10, 2.11, 2.12, 2.14, 2.15 and 2.18;
(ii) any failure by Seller to perform any agreement or covenant,
or to make any payment, required by this Agreement;
(iii) any and all Losses arising out of or resulting from the
ownership of the Assets or the operation of the Business or any
predecessor of the Business (including without limitation, the
manufacture of products, regardless of whether sold before or after
the Closing, the provision of services and giving of warranties and
warnings by Seller or Seller's predecessors) on or before the Closing;
or
(iv) without duplication of any indemnification provided above,
any and all liabilities not assumed by Buyer under Section 1.2.
Buyer is not required to commence litigation or take any other action
against any third party prior to making a claim against Seller or SpecTran
hereunder. Notwithstanding anything to the contrary contained herein, in no
event will SpecTran have any indemnification obligations hereunder with respect
to item (iii) or (iv) of this Section 6.1(a) and Buyer will seek to enforce such
indemnification obligations only against Seller.
(b) Each of Buyer and GCC agrees to defend, indemnify and hold
harmless Seller and each of its shareholders, directors, officers, employees and
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<PAGE> 17
agents, and each of their successors and assigns (each, a "Seller Indemnitee")
from and against, and to pay directly, or reimburse the applicable Seller
Indemnitee(s) with respect to, all claims, suits, actions and proceedings
(formal and informal), and related judgments, deficiencies, damages,
settlements, taxes, liabilities (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated and whether due or to become due), losses,
costs, fees and expenses (including, without limitation, reasonable attorneys'
fees and disbursements) (collectively, "Losses") asserted by any person or
entity (including any other party hereto or any third party) against any Seller
Indemnitee or incurred or suffered by any Seller Indemnitee, which arise out of,
result from or relate to:
(i) any breach of any representation or warranty by Buyer or GCC
contained in this Agreement; or
(ii) any failure by Buyer to perform any agreement or covenant,
or to make any payment required by this Agreement.
Seller is not required to commence litigation or take any other action
against any third party prior to making a claim against Buyer or GCC hereunder.
6.2 INDEMNIFICATION PROCEDURE.
(a) The Buyer Indemnitee or Seller Indemnitee, as applicable, shall
give prompt (I.E., within twenty (20) days) written notice (a "Claim Notice") to
Seller, SpecTran, Buyer or GCC, as the case may be (the "Indemnitor"), of the
following (but any failure to give a Claim Notice will not relieve the
Indemnitor of any obligations hereunder except to the extent the Indemnitor can
demonstrate it is prejudiced by such failure):
(i) the claim by such Buyer Indemnitee or Seller Indemnitee of
any Losses under Section 6.1;
(ii) receipt by such Buyer Indemnitee or Seller Indemnitee of any
demand, claim or notice of any circumstances that might give rise to
Losses under Section 6.1; and
(iii) receipt by such Buyer Indemnitee or Seller Indemnitee of
notice of the commencement of any action, proceeding or investigation
(an "Action") that might result in Losses under Section 6.1.
(b) If a Claim Notice is based on an Action, the Indemnitor (upon
written notice to the Buyer Indemnitee or Seller Indemnitee, as applicable,
within fifteen (15) days after the date of the Claim Notice (a "Defense
Notice")) shall have
-17-
<PAGE> 18
the right to elect, exercising reasonable judgment, to defend or compromise such
Action at its own expense. Until receipt of a Defense Notice, the Indemnitee may
take at the expense of the Indemnitor any action it reasonably believes
necessary to preserve its rights with respect to such Action. The Indemnitor may
not settle any Action without the prior written consent of the Indemnitee, which
consent shall not be unreasonably withheld or delayed.
If a Claim Notice is not based on an Action, the lndemnitor shall give
notice to the Indemnitee within thirty (30) days whether it will indemnify or
assume responsibility for such a Loss.
(c) If the Indemnitor fails to issue a Defense Notice or otherwise
fails to defend any Action or claim, the Indemnitee shall have the right, but
not the obligation, to undertake the defense of and to compromise or settle
(exercising reasonable judgment), the Action or claim on behalf, for the account
and at the risk, of the lndemnitor.
(d) In all cases, the Indemnitor shall keep the other party informed
regarding any claim or proceeding it is defending on a timely basis. Each party
shall. cooperate reasonably with the other party in the investigation and
analysis of such claim or proceeding, and afford the other party reasonable
access to such relevant information as it may have in its possession and to its
personnel at its own expense.
6.3 LIMITATIONS.
(a) The amount of any Losses for which indemnification is provided
under this Article VI shall be net of any amounts actually recovered by the
Indemnitee with respect thereto under insurance policies; PROVIDED THAT no
Indemnitee shall have any obligation to seek recovery of any such amounts under
any insurance policies, and PROVIDED FURTHER that no indemnification payments
otherwise due under this Article Vl shall be delayed or offset in anticipation
of the receipt by an Indemnitee of any insurance proceeds. If an Indemnitee
receives any insurance payments with respect to Losses for which indemnification
payments have previously been made, such indemnitee shall promptly pay such
insurance proceeds to the Indemnitor.
(b) Notwithstanding anything in this Agreement to the contrary, (i)
none of SpecTran, Buyer or GCC shall have liability for any Losses for which
indemnification is provided hereunder until the total of all such Losses exceeds
$75,000 (but after the total of all such Losses exceeds $75,000, the applicable
Indemnitor shall be liable for the full amount of such Losses), and (ii) the
total indemnification obligations of SpecTran, on the one hand, and Buyer and
GCC, collectively on the other hand, for any and all Losses asserted under this
Article Vl shall in no event exceed the Purchase Price.
-18-
<PAGE> 19
(c) In no event will any Indemnitor (other than Seller) be liable for
any incidental, consequential, or special damages (including but not limited to
damages for lost profits) incurred by a Buyer Indemnitee or a Seller Indemnitee,
as the case may be, except to the extent that such damages are actually
determined or awarded to a third party and required to be paid by the Buyer
Indemnitee or Seller Indemnitee.
6.4 REMEDIES CUMULATIVE. The remedies provided herein shall be cumulative
and shall not preclude the assertion by any party hereto of any other rights or
the seeking of any other remedies against any other party hereto.
ARTICLE VII
-----------
CONDITIONS TO BUYER'S OBLIGATIONS
---------------------------------
Buyer's obligation to consummate the transactions contemplated hereby shall
be subject to the fulfillment, on or before the Closing Date, of the following
conditions, any of which may be waived in whole or in part by Buyer in a writing
delivered to Seller prior to the Closing:
7.1 AUTHORITY. All actions required to be taken by Seller and its
stockholders to authorize the execution, delivery and performance of this
Agreement and the other Operative Agreements and the consummation of the
transactions contemplated hereby and thereby shall have been duly and validly
taken by the Board of Directors and stockholders of Seller, and Buyer shall have
received evidence of such actions, which evidence shall be satisfactory to Buyer
and its counsel.
7.2 CONSENTS. All notices to, permits, authorizations, approvals, consents
and waivers from any governmental agencies and all third party consents required
in order to consummate the transactions contemplated hereby shall have been
received, made or obtained, and Buyer shall have received evidence of such
consents, which evidence shall be satisfactory to Buyer and its counsel.
7.3 OPINION OF COUNSEL. Buyer shall have received the opinion of Hackmyer &
Nordlicht, counsel for Seller, dated as of the Closing Date, in form reasonably
satisfactory to Buyer.
7.4 RELEASE OF LIENS. Seller shall have caused all liens, pledges,
encumbrances, charges and claims (legal or equitable) on all the Assets to have
been discharged or terminated, except for the Permitted Liens.
7.5 NO LEGAL PROHIBITION. No action, suit, investigation or other
proceeding shall have been instituted or threatened, and not thereafter
terminated, before any court, by any government or governmental agency or
instrumentality, or by any non-affiliated third party, either (A) to restrain,
prohibit or invalidate the transactions
-19-
<PAGE> 20
contemplated by this Agreement, (B) to impose any restrictions, limitations or
conditions with respect to such transactions or with respect to Buyer's
ownership of the assets to be acquired pursuant to this Agreement, or (C) to
obtain damages or other relief in connection with such transactions.
7.6 ABSENCE OF MATERIAL CHANGES. There shall not have occurred any material
adverse change in Seller's business, financial condition, assets, properties or
operations since December 31, 1995.
ARTICLE VIII
------------
CONDITIONS TO SELLER'S OBLIGATIONS
----------------------------------
Seller's obligation to consummate the transactions contemplated hereby
shall be subject to the fulfillment, on or before the Closing Date, of the
following conditions, any of which may be waived in whole or in part by Seller
in a writing delivered to Buyer prior to the Closing:
8.1 AUTHORITY. All actions required to be taken by Buyer and its
stockholders to authorize the execution, delivery and performance of this
Agreement and the other Operative Agreements and the consummation of the
transactions contemplated hereby and thereby shall have been duly and validly
taken by the Board of Directors and stockholders of Buyer, and Seller shall have
received evidence of such actions, which evidence shall be satisfactory to
Seller and its counsel.
8.2 NO LEGAL PROHIBITION. No action, suit, investigation or other
proceeding shall have been instituted or threatened, and not thereafter
terminated, before any court, by any government or governmental agency or
instrumentality, or by any non-affiliated third party, either (A) to restrain,
prohibit or invalidate the transactions contemplated by this Agreement, (B) to
impose any restrictions, limitations or conditions with respect to such
transactions or with respect to Seller's sale of the assets to be sold pursuant
to this Agreement, or (C) to obtain damages or other relief in connection with
such transactions.
8.3 OPINION OF COUNSEL. Seller shall have received the opinion of Robert J.
Siverd, general counsel for Buyer, dated as of the Closing Date, in form
reasonably satisfactory to Seller.
ARTICLE IX
----------
MISCELLANEOUS
-------------
9.1 EXPENSES. Each of the parties shall pay its own costs and expenses in
connection with this Agreement and the transactions contemplated hereby,
including
- 20-
<PAGE> 21
without limitation all legal and accounting fees (other than the accounting fees
with respect to the audit required under Section 1.3(d) hereof, which fees Buyer
and Seller will share equally). None of Seller's costs and expenses shall be
paid out of the Assets or otherwise be paid or borne, directly or indirectly, by
Buyer.
9.2 LIABILITY FOR SALES OR TRANSFER TAXES. Any sales or transfer taxes
(excluding income taxes) payable with respect to the transfer of the Assets to
Buyer shall be paid by Buyer.
9.3 BULK SALES ACT. The parties hereby waive compliance with the bulk sales
act or comparable statutory provisions of each applicable jurisdiction. Each
party shall indemnify the other and its officers, directors, employees and
agents in respect of, and hold such other party harmless from and against, any
and all losses suffered, occurred or sustained by such party, resulting from,
arising out of or relating to the failure to comply with the terms of any such
provisions applicable to the transactions contemplated by this Agreement.
9.4 PUBLICITY. Any news releases, press announcements and other publicity
concerning this Agreement, the Operative Agreements or any transaction
contemplated herein or therein shall be subject to the prior joint approval of
Buyer and Seller, unless compelled by applicable law or stock exchange
regulations, in which event prior notice of any such disclosure shall be given
to the other party. Nothing contained in this Section 9.4 is intended or will be
construed to limit the scope or effectiveness of the confidentiality agreement
between SpecTran and GCC dated October 16, 1995.
9.5 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the
principles of conflicts of laws.
9.6 ASSIGNMENT. This Agreement shall be binding upon, and inure to the
benefit of, the respective successors and permitted assigns of Buyer and Seller.
Except with respect to a permitted transferee under the Limited Liability
Company Agreement of General Photonics, LLC, this Agreement shall not be
assigned by Seller without the prior written consent of Buyer or by Buyer
without the prior written consent of Seller.
9.7 ENTIRE AGREEMENT. This Agreement, together with the schedules and
exhibits attached hereto and the documents referred to herein, constitutes the
entire agreement and understanding among the parties and supersedes any prior
written or oral understandings between them respecting the subject matter of
this Agreement. This Agreement may be amended or modified only in a writing
signed by Buyer and Seller that specifically refers to this Agreement.
-21-
<PAGE> 22
9.8 NOTICES. All notices, requests, instructions and other documents to be
given herein shall be deemed duly given if in writing and sent by registered or
certified mail:
-22-
<PAGE> 23
If to Seller: Applied Photonic Devices, Inc.
50 Tiffany Street
Brooklyn, Connecticut 06259
Attn: Crawford L. Cutts
Facsimile: (860) 774-1227
With a Copy to: Ira S. Nordlicht, Esq.
Hackmyer & Nordlicht
645 Fifth Avenue
New York, New York 10022
Facsimile: (212) 421-0499
If to SpecTran : SpecTran Corporation
SpecTran Industrial Park
50 Hall Road
Sturbridge, Massachusetts 01566
Attn: President
Facsimile: (508) 347-8626
With a Copy to: Ira S. Nordlicht, Esq.
Hackmyer & Nordlicht
645 Fifth Avenue
New York, New York 10022
Facsimile: (212) 421-0499
If to Buyer: General Cable Industries, Inc.
4 Tesseneer Drive
Highland Heights, Kentucky 41076
Attn: Kenneth McAllister
Facsimile: (606) 572-8444
If to GCC: General Cable Corporation
4 Tesseneer Drive
Highland Heights, Kentucky 41076
Attn: President
Facsimile: (606) 572-8444
Any of the parties may change its address for purposes of notice hereunder in
accordance with this Section 9.8.
9.9 PARTIAL INVALIDITY. The invalidity or unenforceability of any term or
provision of this Agreement shall not affect the validity or enforceability of
any of the remaining terms or provisions hereof.
- 23 -
<PAGE> 24
9.10 CAPTIONS. The captions contained in this Agreement are for reference
purposes only and are not part of this Agreement.
9.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be an original and all of which together will
constitute one and the same instrument.
- 24-
<PAGE> 25
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duty executed as of the day and year first above written.
SELLER: BUYER:
APPLIED PHOTONIC DEVICES, INC. GENERAL, CABLE INDUSTRIES, INC.
By:/s/ Glenn E. Moore By:/s/ Robert J. Siverd
--------------------------- ----------------------------
Print Name: Glenn E. Moore Print Name: Robert J. Siverd
------------------- --------------------
Title: C.E.O. Title: Executive Vice President
------------------------ -------------------------
SPECTRAN: GCC:
SPECTRAN CORPORATION GENERAL CABLE CORPORATION
By:/s/ R. E. Jaeger By:/s/ Robert J. Siverd
--------------------------- ----------------------------
Print Name: R. E. Jaeger Print Name: Robert J. Siverd
------------------- --------------------
Title: Title: Executive Vice President
------------------------ -------------------------
-24A-
<PAGE> 26
EXHIBIT A
ASSET PURCHASE PRICE ALLOCATION *
DESCRIPTION OF ASSET ASSET VALUE
-------------------- -----------
Inventory Net Book Value
- - ---------
Accounts Receivable Final Purchase Price less
- - ------------------- Net Book Value of
Inventory
* Net Book Value and asset valuations in this Exhibit will be determined as
of December 31, 1996 in accord with the Closing Financial Statements.
-25-
<PAGE> 27
EXHIBIT B
BILL OF SALE
This BILL OF SALE is executed and delivered pursuant to the Asset Purchase
Agreement by and between Applied Photonic Devices, Inc., SpecTran Corporation,
General Cable Industries, Inc. and General Cable Corporation dated as of
December 23, 1996 (the "Purchase Agreement"). Capitalized terms used herein and
not otherwise defined herein shall have the meanings given those terms in the
Purchase Agreement.
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, APPLIED PHOTONIC DEVICES, INC., a Delaware corporation
("Grantor"), hereby sells, assigns, transfers, conveys and delivers to GENERAL
CABLE INDUSTRIES, INC., a Delaware corporation ("Grantee"), the assets of
Grantor relating to the Business (as such term is defined in the Purchase
Agreement) described in Section 1.1 of the Purchase Agreement, being all of the
Assets (as such term is defined in the Purchase Agreement).
TO HAVE AND TO HOLD the same unto Grantee, its successors and assigns
forever.
Grantor hereby represents and covenants with Grantee that said property is
free and clear of any debts, liens, charges and security interests of any nature
whatsoever, other than Permitted Liens, and Grantor hereby reaffirms all of its
representations and warranties made with respect to the Assets in the Purchase
Agreement.
IN WITNESS WHEREOF, Grantor has caused this instrument to be duly executed
as of December 23, 1996.
GRANTOR:
APPLIED PHOTONIC DEVICES, INC.
By:
-------------------------------
Print Name:
-----------------------
Title:
----------------------------
-26-
<PAGE> 28
SPECTRAN-GCC
------------
Schedules to the Asset Purchase Agreement
Schedules to the Asset Purchase Agreement
Page 1 of 10
<PAGE> 29
Schedule 1.3 (b)
<TABLE>
Unaudited Balance Sheet as of November 30, 1996
<CAPTION>
Current
This Year
Net Value
<S> <C>
Fleet Bank Operating 0.00
Fleet Bank Payroll 0.00
First National 0.00
Fleet Bank & First (APO) 754,801.49
------------
Total Cash 754,801.49
Trade A/R 2,813,127.41
Allowance Doubtful Accounts (49,058.05)
------------
Total A/R 2,764,069.36
Incoming Inspection 0.00
Raw Materials-Fiber 943,016.00
Raw Materials-Other 413,141.00
Built in Inventory 424,356.00
Raw Material-Obsolescence Res 0.00
------------
Total Raw Material 1,780,513.00
Work in Process 1,926,023.00
Finished Goods 894,176.44
FGI-Obsolescence Reserve (37,500.00)
------------
Total FGI 856,676.44
Total Inventory 4,563,212.44
Prepaid Insurance 0.00
Prepaid Audit 0.00
Employee Advances 0.00
Misc Non-Trade Receivable 4,414.49
Other Current Assets 8,343.96
------------
Total Prepaid/Other Assets 12,758.45
Federal Deferred Tax Current 0.00
State Deferred Tax-Current 0.00
Allowance Deferred Tax Current 0.00
------------
Deferred Tax-Current 0.00
Total Current Assets 8,094,841.74
</TABLE>
Schedules to Asset Purchase Agreement
Page 2 of 10
<PAGE> 30
<TABLE>
<CAPTION>
Current
This Year
Net Value
<S> <C>
Buildings 0.00
Building Improvements 95,211.38
CIP - Building 0.00
Machinery & Equipment 1,094,655.90
CIP - Machinery & Equipment 140,882.26
Computer Equipment 99,290.43
Furniture & Fixtures 42,421.65
Automobiles 17,808.00
-------------
Total Assets 1,490,269.62
Accum Depr Buildings 0.00
Accum Depr Building Improvemen (30,987.90)
Accum Depr Machinery & Equip (459,486.94)
Accum Depr Computer Equipment (13,433.80)
Accum Depr Furniture & Fixture (7,308.66)
Accum Depr Automobiles (890.40)
-------------
Total Accum Depreciation (512,107.70)
Net Fixed Assets 978,161.92
I/C SSOC (93,726.73)
I/C CFT (3,940,575.36)
I/C Corporate (1,695,979.24)
-------------
Total I/C & Investments (5,730,281.33)
Federal Deferred Tax L/T 0.00
State Deferred Tax L/T 0.00
Allow Deferred Tax L/T 0.00
-------------
Total L/T Tax 0.00
Other Non-Current Assets 11,687.92
-------------
Total Other L/T Assets 11,687.92
Goodwill 3,255,165.48
Accum Amortization Goodwill (325,516.52)
-------------
Goodwill, Net 2,929,648.96
Total L/T Assets (1,810,782.53)
</TABLE>
<PAGE> 31
<TABLE>
<CAPTION>
Current
This Year
Net Value
<S> <C>
Total Assets 6,284,059.21
============
Trade A/P 242,613.40
Accrued Trade A/P 239,003.05
FICA Taxes Payable 0.01
Federal W/H Tax Payable 0.00
State W/H Tax Payable 0.00
United Way W/H Payable 0.00
401K W/H Payable 4,967.21
BAW W/H Payable 0.00
ESPP W/H Payable 387.50
Other Payroll W/H Payable (0.01)
Outstanding Funded Claims Pay 0.00
Sales Tax Payable 1,642.73
Sales A/P 0.00
------------
Total Accounts Payable 485,328.43
Accrued Salaries & Wages 124.63
Accrued Bonus 53,660.00
Accrued 401K Contribution 18,435.61
Accrued Defined Contribution 57,587.57
Accrued Vacation Pay 44,311.41
Accrued Insurance 11,670.00
Accrued Health Insurance 3,755.58
Accrued Legal Fees 0.00
Accrued Audit Fees 0.00
Accrued FICA Taxes 0.00
Accrued Unemployment Taxes 0.00
Accrued Defined Benefit 34,415.02
Accrued Other 0.00
Accrued Health Insurance Term 31,938.90
Accrued Commissions 0.00
------------
Accrued Rent Expense 0.00
Total Accrued Liabilities 255,898.72
Accrued Fed Tax Payable 0.00
Accrued State Tax Payable 0.00
------------
Accrued Tax Payable 0.00
Other L/T Liabilities 0.00
</TABLE>
<PAGE> 32
<TABLE>
<CAPTION>
Current
This Year
Net Value
<S> <C>
Total Liabilities 741,227.15
Common Stock 0.00
Intercompany Investment 4,412,377.74
Paid-In Capital 0.00
Prior Years Retained Earnings 112,192.49
Current Year Retained Earnings 0.00
------------
Total Liabilities & Equity 5,265,797.38
============
</TABLE>
<PAGE> 33
SCHEDULE 2.1
a) JURISDICTION WHERE INVESTOR IS QUALIFIED TO DO BUSINESS
Connecticut
b) SEE SCHEDULE 2.11 IN REGARD TO ALL LICENSES OR OTHER AUTHORIZATIONS HELD BY
INVESTOR.
Schedules to the Asset Purchase Agreement
Page 3 of 10
<PAGE> 34
SCHEDULE 2.3 LIENS
(a) LIENS FOR TAX ASSESSMENTS, GOVERNMENTAL CHARGES AND LIENS NOT YET DUE AND
PAYABLE.
None.
(b) MECHANICS LIENS AND OTHER SIMILAR LIENS ARISING BY OPERATION OF LAW.
None.
(c) LIENS UPON ANY EQUIPMENT PURCHASED OR LEASED BY INVESTOR WHICH ARE CREATED
DIRECTLY IN CONNECTION WITH SUCH PURCHASE OR LEASE TO SECURE PAYMENT OF THE
PURCHASE PRICE OR LEASE OBLIGATION.
1) Machinery and equipment are subject to a blanket UCC-1 financing statement
(lien) in favor of Fleet Bank of Massachusetts, National Association, 75 State
Street, Boston, Massachusetts, which will be released upon the closing of this
transaction.
2) Equipment/Bench Top Power Meter, signed 10/22/93 with Copelco
Leasing, customer #2734301, 1-800-247-8133 ext. 4103.
3) Auto/Volvo 1994, signed 5/16/94 with Volvo Auto Finance,
customer #326440846-5, 1-800-358-6600.
4) Auto/Dodge Caravan 1994, signed July 29, 1994 with G.E. Capital
Lease, #00-3030-28205, 1-800-488-5208.
Schedules to the Asset Purchase Agreement
Page 4 of 10
<PAGE> 35
SCHEDULE 2.4 CONSENTS AND APPROVALS
1) Consent for assignment of Permit to Discharge to the Waters of the State of
Connecticut pursuant to Connecticut General Statutes Section 22a-430 for APD
plant located in Brooklyn, Connecticut and pending Application for a Permit to
Discharge to the Waters of the State of Connecticut for APD plant located in
Dayville, Connecticut.
CONSENTS TO THE ASSIGNMENT OF THE FOLLOWING AGREEMENTS ARE REQUIRED FROM
THE OTHER PARTIES TO SUCH AGREEMENTS AND INVESTOR WILL USE ITS BEST EFFORTS TO
OBTAIN SUCH CONSENTS PROMPTLY FOLLOWING THE CLOSING:
2) Service Agreement among APD, Southern New England Telephone Company and SNET
America, Inc. dated March 18th, 1996.
3) Equipment Lease between APD and Copelco Leasing Corporation, One Mediq Plaza,
Pennsauken, New Jersey, 08110 dated October 22, 1993.
4) Lease Agreement between APD and Marc C. Yellin, 62 Cambridge lane, Boynton
Beach, Florida 33436 dated November 10, 1995 for property located at 50 Tiffany
Street, Brooklyn, Connecticut.
5) Lease Agreement between APD and Fabrilock, Inc. dated February 6, 1996 for
property located at 300 Lake Road, Dayville, Connecticut.
Schedules to the Investor Representations, Contribution Agreement
and Subscription Agreement
Page 5 of 10.
<PAGE> 36
SCHEDULE 2.5 INVENTORY EXCEPTIONS
None.
Schedules to the Asset Purchase Agreement
Page 6 of 10
<PAGE> 37
SCHEDULE 2.7 FINANCIAL STATEMENTS
Financial Statements consisting of Unaudited Balance Sheet of Investor as of
December 31, 1995, and related statements of income and retained earnings, and
statements of cash flow for the year then ended.
Schedules to the Asset Purchase Agreement
Page 7 of 10
<PAGE> 38
<TABLE>
Periods 12 to 12 Fiscal Year 1995
<CAPTION>
Current
This Year
Net Value
<S> <C>
Fleet Bank Operating 0.00
Fleet Bank Payroll 350.48
First National 0.00
Fleet Bank & First (APD) 170,204.84
------------
Total Cash 170,555.32
Trade A/R 1,657,775.48
Allowance Doubtful Accounts (46,681.13)
------------
Total A/R 1,611,094.35
Incoming Inspection 0.00
Raw Materials 841,484.20
Profit in Inventory 374,859.00
P Material - Obsolescence Res 0.00
------------
Total Raw Material 1,216,343.20
Work in Process 418,776.00
Finished Goods 287,110.90
FGI - Obsolescence Reserve (44,092.00)
------------
Total FGI 243,018.90
Total Inventory 1,878,138.10
Prepaid Insurance 0.00
Prepaid Audit 0.00
Employee Advances 0.00
Misc Non-Trade Receivable 0.00
Other Current Assets 0.00
------------
Total Prepaid/Other Assets 0.00
Federal Deferred Tax Current 0.00
State Deferred Tax - Current 0.00
Allowance Deferred Tax Current 0.00
------------
Total Deferred Tax Current 0.00
Total Current Assets 3,659,787.77
</TABLE>
<PAGE> 39
<TABLE>
Periods 12 to 12 Fiscal Year 1995
<CAPTION>
Current
This Year
Net Value
<S> <C>
Buildings 0.00
Building Improvements 23,459.70
CIP - Building 0.00
Machinery & Equipment 697,083.44
CIP - Machinery & Equipment 0.00
Computer Equipment 0.00
Furniture & Fixtures 9,425.00
Automobiles 0.00
------------
Total Assets 729,968.14
Accum Depr Buildings 0.00
Accum Depr Building Improvemen (18,652.00)
Accum Depr Machinery & Equip (350,844.81)
Accum Depr Computer Equipment 0.00
Accum Depr Furniture & Fixture (15,828.00)
Accum Depr Automobiles 0.00
------------
Total Accum Depreciation (385,324.81)
Net Fixed Assets 344,643.33
I/C SSOC 11,533.62
I/C CFT (1,852,089.34)
I/C Corporate (343,154.00)
------------
Total I/C & Investments (2,183,709.72)
Federal Deferred Tax L/T 0.00
State Deferred Tax L/T 0.00
Allow Deferred Tax L/T 0.00
------------
Total L/T Tax 0.00
Other Non-Current Assets 0.00
------------
Total Other L/T Assets 0.00
Goodwill 3,255,165.48
Accum Amortization Goodwill (126,589.77)
------------
Goodwill, Net 3,128,575.71
Total L/T Assets 1,289,509.32
</TABLE>
<PAGE> 40
Period 12 to 12 Fiscal Year 1995
Current
This Year
Net Value
Total Assets 4,949,297.09
============
Trade A/P 75,744.65
Accrued Trade A/P 271,426.88
FICA Taxes Payable 0.00
Federal W/H Tax Payable 0.00
State W/H Tax Payable 0.00
United Way W/H Payable 30.00
401K W/H Payable 3,022.91
BAW W/H Payable 0.00
ESPP W/H Payable 41.50
Other Payroll W/H Payable 0.00
Outstanding Funded Claims Pay 0.00
Sales Tax Payable 361.11
???? -A/P 0.00
------------
Total Accounts Payable 349,904.83
Accrued Salaries & Wages (7.00)
Accrued Bonus 0.00
Accrued 401K Contribution 1,228.09
Accrued Defined Contribution 12,407.00
Accrued Vacation Pay 29,255.04
Accrued Insurance 0.00
Accrued Health Insurance 0.00
Accrued Legal Fees 0.00
Accrued Audit Fees 0.00
Accrued FICA Taxes 0.00
Accrued Unemployment Taxes 0.00
Accrued Defined Benefit 0.00
Accrued Other 0.00
Accrued Health Insurance Term 31,938.00
Accrued Commissions 0.00
------------
Accrued Rent Expense 0.00
Total Accrued Liabilities 74,822.03
Accrued Fed Tax Payable 0.00
Accrued State Tax Payable 0.00
------------
Accrued Tax Payable 0.00
Other L/T Liabilities 0.00
<PAGE> 41
<TABLE>
Periods 12 to 12 Fiscal Year 1995
<CAPTION>
Current
This Year
Net Value
<S> <C>
Total Liabilities 424,726.86
Common Stock 0.00
Intercompany Investment 4,412,377.74
Paid-In Capital 0.00
Prior Years Retained Earnings 0.00
Current Year Retained Earnings 0.00
------------
Total Liabilities & Equity 4,837,104.60
============
</TABLE>
<PAGE> 42
SCHEDULE 2.11 LICENSES
1) See attached Notice of Acceptance of Use of the Trademark OPTI-PAK.
2) Permit to Discharge to the Waters of the State of Connecticut pursuant to
Connecticut General Statutes Section 22a-430 for APD plant located in Brooklyn,
Connecticut and pending Application for Permit to Discharge to the Waters of the
State of Connecticut for APD plant located in Dayville, Connecticut.
3) Zoning Permit, Town of Killingly, Connecticut, for change in use of Aquifer
Protection Zone with respect to property located at 300 Lake Road, Dayville,
Connecticut.
Schedules to the Asset Purchase Agreement
Page 8 of 10
<PAGE> 43
UNITED STATES DEPARTMENT OF COMMERCE
PATENT AND TRADEMARK OFFICE
WASHINGTON, D.C. 20231
JUN 17 1993
NOTICE OF ACCEPTANCE OF STATEMENT OF USE
TM 3 ATTORNEY
James E. Aiix REFERENCE NUMBER:
Chilton, Alix & Van Kirk
750 Main Street, Suite 610 APDI/T01/00/
Hartford, CT 06103-2708
- - --------------------------------------------------------------------------------
SERIAL NUMBER: 74/264120
MARK: OPTI-PAK
OWNER: Applied Photonic Devices, Inc.
- - --------------------------------------------------------------------------------
The statement of use filed in regard to the above-identified application has
been accepted. This acceptance signifies that the statement of use is accepted
in all respects and that the mark is entitled to be registered. Accordingly, the
registration will issue in due course barring any extraordinary circumstances.
<PAGE> 44
SCHEDULE 2.14 CAPITAL EXPENDITURES
Schedules to the Asset Purchase Agreement
Page 9 of 10
<PAGE> 45
<TABLE>
APD, INC.
CAPITAL PROJECTS 1996
<CAPTION>
PROJECT NUMBER DESCRIPTION SPENT TO DATE BALANCE REMAINING TOTAL PROJECT
- - -------------- ----------- ------------- ----------------- -------------
<S> <C> <C> <C> <C>
P200109 Gnata Hot Foil Printer $ 11,794.00 $ 27,519.00 $ 39,313.00
P200119 Leasehold Improvements $ 29,526.00 $ 3,474.00 $ 33,000.00
P200130 2 1/2" Sterling Extruder $ 38,436.00 $ 44,721.00 $ 83,157.00
P200134 Gem Solo 4 Opaque Printer $ 30,816.00 $ 4,644.00 $ 35,460.00
P200140 Parts for Tensil Tester $ 2,000.00 n/a $ 2,000.00
P200142 Expansion Units Phone n/a $ 6,762.00 $ 6,762.00
UV Inking Line n/a $175,000.00 $175,000.00
----------- ----------- -----------
Total $112,572.00 $181,762.00 $374,692.00
</TABLE>
<PAGE> 46
SCHEDULE 2.19 LICENSES AND TRADEMARKS OF SPECTRAN
1) Patent License Agreement between Western Electric Company Incorporated
(currently Lucent Technologies).
2) Agreement between Gulf & Western Manufacturing Company and SpecTran
Corporation dated October 18, 1983.
3) Agreement between Aetna Telecommunications Laboratories and SpecTran
Corporation dated January 21, 1985.
4) License Agreement between Corning, Inc. and SpecTran Corporation dated
January 1, 1991.
Schedules to the Investor Representations, Contribution Agreement
and Subscription Agreement
Page 10 of 14
<PAGE> 47
SCHEDULE 2.20 CONTRACTS AND LEASES (p.1 of 3)
a) THE FOLLOWING IS A LIST OF CONTRACTS OF APD INVOLVING MORE THAN $10,000.
1) Supplier Agreement with ATL Connect dated November 2, 1992.
2) Sales Agency Agreement with Thaw Sales and Marketing dated June 7, 1991.
3) Sales Agency Agreement with CMA, Inc. dated June 9, 1994.
4) Sales Agency Agreement with Manufacturers Agents Representatives dated June
1, 1992.
5) Sales Agency Agreement with C&W Fiber Optic dated February 1, 1993.
6) Sales Agency Agreement with KJS Marketing dated September 1, 1994.
7) Sales Agency Agreement with Nutech Electronics, Inc. dated September 1, 1994.
8) Sales Agency Agreement with Innovative Technical Sales, Inc. dated
March 1, 1993.
9) Sales Agency Agreement with Paul Ericson & Associates, Inc., dated January 1,
1994.
10) Sales Agency Agreement with Jaso & Associates, dated May 8, 1994.
11) Sales Agency Agreement with Cartwright & Bean, Inc. dated May 1, 1994.
12) Sales Agency Agreement with Data Connect, Inc. dated July 9, 1994.
13) Sales Agency Agreement with Westerly Associates, Inc. dated June 16, 1994.
14) Sales Agency Agreement with DCS Group, Inc., dated October 1, 1996.
15) Agreement with Copelco Leasing Corporation dated October 22, 1993.
16) Lease Agreement with Mark C. Yellin dated November 13, 1995 for 50 Tiffany
Street, Brooklyn, Connecticut.
Schedules to the Investor Representations, Contribution Agreement
and Subscription Agreement
Page 11 of 14
<PAGE> 48
SCHEDULE 2.20 CONTRACTS AND LEASES (CONT.) (p.2 of 3)
17) Lease Agreement with Fabrilock, Inc. dated February 6, 1996 for 300 Lake
Road, Dayville, Connecticut.
18) Employment Agreement among Irving N. Dwyer, Applied Photonic Devices, Inc.
and SpecTran Corporation dated May 23, 1995.
19) Employment Agreement among David P. Davia, Applied Photonic Devices, Inc.
and SpecTran Corporation dated May 23, 1995.
20) Non-Competition Agreement among Irving N. Dwyer, Applied Photonic Devices,
Inc., APD Acquisition Corp. and SpecTran Corporation dated May 23, 1995.
21) Non-Competition Agreement among David P. Davia, Applied Photonic Devices,
Inc., APD Acquisition Corp., and SpecTran Corporation dated May 23, 1995.
22) AT&T CustomNet (sm) Service Flex Plan, dated September 26, 1994.
23) Service Agreement with SNET America, Inc., dated March 18, 1996.
24) Agreement between Applied Photonic Devices, Inc. and Brugg Telecom, dated
December 18, 1995.
Schedules to the Investor Representations, Contribution Agreement
and Subscription Agreement
Page 12 of 14
<PAGE> 49
SCHEDULE 2.20 CONTRACTS AND LEASES (CONT.) (p.3 of 3)
*25) Loan and Security Agreement among SpecTran Corporation, SpecTran Specialty
Optics Company, Applied Photonic Devices, Inc., SpecTran Communication Fiber
Technologies, Inc. and Fleet National Bank, dated April 25, 1996.
With respect to the above Loan and Security Agreement, Fleet has agreed to
release the lien on the Assets of APD and to release APD from certain of the
restrictive covenants therein as further described in a letter to John F. Lynch,
Fleet National Bank from Bruce A. Cannon, SpecTran Corporation dated September
16, 1996, such release to be effective upon consummation of the transaction.
*26) $12,000,000 Revolving Note in favor of Fleet National Bank, dated April 25,
1996.
*27) $5,000,000 Term Note in favor of Fleet National Bank, dated April 25, 1996.
*28) $5,000,000 Mortgage Note in favor of Fleet National Bank, dated April 25,
1996.
b) CONTRACTS REQUIRING CONSENT TO ASSIGNMENT ARE SET FORTH ON
SCHEDULE 2.4 HERETO.
*These agreements will not be assigned to the Company.
Schedules to the Investor Representations, Contribution Agreement
and Subscription Agreement
Page 13 of 14
<PAGE> 50
SCHEDULE 2.18 ENVIRONMENTAL MATTERS
1) Seller holds from the Connecticut Department of Environmental Protection
one (1) Permit to Discharge to the Waters of the State of Connecticut pursuant
to Connecticut General Statutes Section 22a-430 for its plant in Brooklyn,
Connecticut and one (1) pending Application for a Permit to Discharge to the
Waters of the State of Connecticut for its plant in Dayville, Connecticut. These
permits are for water discharge consisting of contact cooling water from APD's
cable-applied, extrusion coating process for fiber optic cables for its plants
in Brooklyn, Connecticut and Dayville, Connecticut. The process waste water is
discharged to the local sanitary sewer.
2) Zoning Permit, Town of Killingly, Connecticut, for change in use of Aquifer
Protection Zone with respect to property located at 300 Lake Road, Dayville,
Connecticut.
3) Please refer to the copy of the Phase I Environmental Site Assessment of 50
Tiffany Street, Brooklyn, Connecticut prepared by Atlantic Environmental
Services, Inc. dated April 28, 1995 (revised May 4, 1995) which has been
previously provided by APD.
4) The plants at Brooklyn, Connecticut and Dayville, Connecticut are both small
quantities generators of hazardous waste. Both plants' quantities of hazardous
waste are disposed of by Laidlaw Environmental Services North East, Inc., 221
Sutton Street, North Andover, MA, (508)683-1002. APD files for its plants in
Brooklyn, Connecticut and Dayville, Connecticut biannual hazardous waste reports
with the Connecticut Department of Environmental Protection in connection with
waste disposal as a small quantities generator.
Schedules to the Asset Purchase Agreement
Page 10 of 10
<PAGE> 1
GENERAL PHOTONICS, LLC
INVESTOR'S REPRESENTATIONS,
CONTRIBUTION AGREEMENT, AND
SUBSCRIPTION AGREEMENT
The undersigned investor, Applied Photonic Devices, Inc., certifies and
warrants to General Photonics, LLC, a Delaware limited liability company (the
"Company"), that the limited liability company interest in the Company (the
"Interest") to be purchased by the investor is being acquired by the investor
for its own account for investment. The investor has no intention to assign,
transfer, sell or distribute all or any part of the Interest, nor does it have
any reason to anticipate any change in circumstances that might cause the
investor to assign, transfer, sell or distribute the Interest. No person other
than the investor will have any beneficial interest in the Interest.
The undersigned further hereby warrants and represents as follows:
A. INVESTOR'S REPRESENTATIONS.
--------------------------
1. The investor understands that the offering and sale of the Interest have
not been registered with any state or federal agency, partially in reliance
upon the representations herein. The investor acknowledges that the Interest
purchased hereunder was issued in a transaction believed to be exempt from the
registration provisions of the Securities Act of 1933, as amended (the "Act"),
pursuant to Section 4(2) thereof and the regulations thereunder and in a
transaction believed to be exempt from the registration provisions of the
appropriate state securities law.
2. The investor is an "accredited investor" as defined in Rule 501 of
Federal Securities Regulation D because the investor: (i) is a corporation with
total assets in excess of $5,000,000; and (ii) was not formed for the purpose of
acquiring the Interest.
3. The investor, either alone or with its purchaser representatives, has
such knowledge and experience in financial, business, and investment matters
that the investor is capable of evaluating the merits and risks of an investment
in the Interest, and the investor has considered and evaluated the merits and
risks of acquiring the Interest.
4. The investor recognizes that, prior to the offering and sale of the
Interest, there has been no public market for the Interest and there is no
likelihood that after the offering there will be such a market for the Interest.
The investor further recognizes that it must bear the risk of the investment
indefinitely.
5. The investor will not sell or otherwise distribute any part of the
Interest unless such transaction is registered under the Act and under the
securities laws of the states in which the Interest is to be sold, or unless the
investor delivers to the Company (i) a no-action letter from the Securities and
Exchange Commission and the appropriate state securities officials as to such
proposed sale or sales or (ii) an opinion of counsel, satisfactory to counsel
for the Company, to the effect that registration of the proposed sale and
distribution is not required
<PAGE> 2
under the Act and such state laws. In addition, the investor understands that it
will not be readily able to liquidate the investment in the Interest in case of
an emergency.
6. The investor understands and agrees that the Limited Liability Company
Agreement of the Company will bear the following legend:
THE INTEREST REPRESENTED HEREBY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY
APPLICABLE STATE LAW. THE INTEREST HAS BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF (I) AN EFFECTIVE REGISTRATION UNDER THE
SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (II) AN
OPINION OF COUNSEL SATISFACTORY TO GENERAL PHOTONICS, LLC (THE
"COMPANY") TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE SECURITIES ACT AND SUCH LAWS.
7. The investor understands and acknowledges that the Company is and will
be under no obligation to register any sale or other transfer of the Interest or
to comply with any exemption available for resale of the Interest without
registration under any securities laws.
8. The investor acknowledges that the Interest was not offered or sold to
the investor by means of any form of general solicitation, or general
advertising, or publicly disseminated advertisements or sales literature, nor is
the investor aware of any offers or sales made to other persons by such means.
9. The investor acknowledges that a commission or similar remuneration was
not or will not be paid or given, directly or indirectly, for the solicitation
of prospective purchasers in connection with the sale of the Interest.
10. The investor has been actively involved in the formation of the Company
and the investor participated in the negotiation of the terms of the Limited
Liability Company Agreement of the Company.
11. The investor has had the opportunity (i) to ask questions of, and to
receive answers from, the Company and any persons acting on its behalf
concerning the Company, its operations, and the terms, conditions and
consequences of the offering and sale of the Interest and (ii) to obtain any
additional information that the investor desired, including copies of any
documents requested about the Company or the transaction in which the Interest
is being offered and sold. No information or documents requested by the investor
have been denied to the investor.
-2-
<PAGE> 3
12. The investor understands that no governmental agency has made any
finding or determination as to the fairness of the terms of the offering or sale
of the Interest or any recommendation or endorsement of the Interest.
B. SUBSCRIPTION AND CONTRIBUTION.
-----------------------------
1. SUBSCRIPTION. Based on the foregoing representations (by which the investor
agrees to be bound), the undersigned hereby subscribes to purchase the Interest
in the amount designated below, on the following terms and conditions and
subject to the Company's acceptance thereof:
Tangible and Intangible Personal Property, Less the
Liabilities (as defined below), Having a
Net Value of: $6,278,000
Percentage of Total Membership
Interest in Company Represented
by the Interest: 50%
---
In consideration of the Interest, the investor will contribute to the
Company the assets listed and valued as reflected on the attached EXHIBIT A (the
"Assets") and the Company will assume the liabilities in the amounts reflected
on the attached EXHIBIT B (the "Liabilities"). The values listed in Exhibits A
and B and reflected above are based on the November 30, 1996 balance sheet of
Seller and are subject to adjustment in accordance with the Closing Financial
Statements effective as of December 31, 1996.
2. REPRESENTATIONS AND WARRANTIES. The investor, and the owner of all the
investor's issued and outstanding capital stock, SpecTran Corporation, a
Delaware corporation ("SpecTran"), jointly and severally, represent and warrant
to the Company and any other investor in the Company as follows (except that
SpecTran makes no representations or warranties to any other investor in the
Company regarding the matters addressed in Sections 2.10 (Compliance with Law),
2.11 (Licenses), 2.12 (Taxes), 2.14 (Conduct of Operations), 2.15 (Undisclosed
Liabilities), 2.20 (Contracts and Leases) and 2.21 (Environmental Matters)):
2.1 ORGANIZATION.
(a) The investor is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, with all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted, and is duly licensed and qualified
to do business in all jurisdictions in which the conduct of its business or the
ownership or leasing of its assets requires it to be licensed or qualified to do
business. Schedule 2.1 contains a list of all jurisdictions where the investor
is qualified to do business and all licenses or other authorizations held by the
investor.
-3-
<PAGE> 4
(b) Each of SpecTran and its Affiliates (as defined in the Limited
Liability Company Agreement of the Company) that is a party to any Operative
Agreement (as defined below) is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.
2.2 AUTHORITY. Each of the investor, SpecTran and their Affiliates that is
a party to any Operative Agreement has the corporate power and authority to
enter into and perform this Agreement, the Asset Purchase Agreement by and among
the investor, SpecTran, General Cable Industries, Inc. and General Cable
Corporation, the Limited Liability Company Agreement of the Company and each of
the Related Agreements (as such term is defined in such Limited Liability
Company Agreement) (collectively, the "Operative Agreements") to which it is a
party and to consummate the transactions contemplated hereby or thereby. The
execution, delivery and performance of this Agreement and the other Operative
Agreements and the transactions contemplated hereby and thereby have been duly
and effectively authorized by all necessary action of the investor and SpecTran
and any applicable Affiliate thereof. Each of the Operative Agreements to which
the investor or SpecTran or any applicable Affiliate is a party is a valid and
binding obligation of the investor and/or SpecTran and/or such Affiliate, as
applicable, enforceable against the investor and/or SpecTran and/or such
Affiliate in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization or other laws affecting creditors' rights generally,
and subject to judicial discretion in the enforcement of equitable remedies.
2.3 TITLE TO ASSETS AND CONDITION. The investor owns outright and has good
and valid title to the Assets. The Assets are not subject to any claims, liens,
mortgages, charges or other encumbrances of any kind, except for the following
("Permitted Liens"): (a) liens for taxes, assessments, governmental charges and
liens not yet due and payable; (b) liens imposed by any federal, state or local
statute, rule, ordinance, regulation, rule, code, order or requirement, such as
materialmen's, mechanics, carriers, workmen's and repairmen's liens and other
similar liens arising by operation of law, which will not have a material
adverse effect on the Assets taken as a whole; and (c) liens upon any equipment
purchased or leased by the investor which are created directly in connection
with such purchase or lease to secure payment of the purchase price or lease
obligation, all of which are set forth on Schedule 2.3. The investor is not in
violation of any regulation, ordinance, law, order or other requirement relating
to any of its property, real or personal, connected with or related to the
Assets or the investor's business. There are no changes in any such regulation,
ordinance, law, order or other requirement affecting any such property pending
or, to the best knowledge of the investor, threatened or under consideration,
which might prohibit the Company from continuing the present use of such
property or from using such property for the purpose for which it was acquired,
or which might curtail the present use of such property.
2.4 NO VIOLATION; CONSENTS OF THIRD PARTIES. The execution, delivery and
performance by the investor of this Agreement and the other Operative Agreements
by and among the investor, SpecTran (or any Affiliate of SpecTran that is a
party to any Operative Agreement) and other parties, and the consummation of
the transactions contemplated hereby
-4-
<PAGE> 5
and thereby, do not and will not (a) violate or conflict with the certificate of
incorporation or by-laws of the investor or SpecTran or such Affiliate; (b)
subject to receipt of the consents and approvals referred to in Schedule 2.4,
conflict with, result in the breach or termination of, or constitute a default
or make effective a right of cancellation, acceleration or first refusal under
(i) any debt agreement or debt instrument or (ii) any other material lease,
agreement, contract, commitment or other instrument to which the investor or
SpecTran or such Affiliate is a party or by which any of their respective
properties is bound; (c) constitute a violation of any law, statute, regulation,
ordinance, order or regulation applicable to the investor or SpecTran or any of
their respective properties; or (d) result in the creation of any lien,
encumbrance or security interest upon any property of the investor or SpecTran
(or its Affiliates), other than Permitted Liens. No consent, approval or
authorization of, or designation, declaration or filing with, any governmental
agency or body is required on the part of the investor or SpecTran (or its
Affiliates) in connection with the execution, delivery and performance of this
Agreement and the other Operative Agreements to which it is a party, except for
(a) transfer and other tax forms, if any, required in connection with the
transfer of the Assets and (b) items listed on Schedule 2.4.
2.5 INVENTORY. Except to the extent indicated on Schedule 2.5, all
inventory included in the Assets consists of raw materials, work in process, or
finished goods, merchantable and suitable for filling current orders, and such
items are not obsolete, are of a quality and quantity usable and salable in the
ordinary course of business, and any inventory reserves or write-downs in the
Financial Statements are in accordance with GAAP.
2.6 ACCOUNTS RECEIVABLE. All accounts receivable included in the Assets and
the Liabilities arise out of arm's-length sales made in the ordinary course of
the investor's business and not out of any sales to a person, firm, or
corporation which is an employee or Affiliate of the investor or SpecTran
(except for receivables arising out of sales to SpecTran Specialty Optics
Company), or controlled by an employee or Affiliate of the investor or
SpecTran. All such accounts receivable are validly owing, are not in dispute,
are not subject to any setoff, allowance or right of return, and are fully
collectible in the ordinary course of business. The goods giving rise to such
accounts receivable have been shipped and delivered to the account debtor, and
to the investor's knowledge, accepted by the account debtor.
2.7 FINANCIAL STATEMENTS. The unaudited balance sheet of the investor as of
December 31, 1995, and the related statements of income and retained earnings,
and statements of cash flow for the year then ended, as provided to the Company,
copies of which financial statements are attached hereto as Schedule 2.7 and
made a part hereof (collectively, the "Financial Statements"), are true, correct
and complete in all respects and fairly present in all material respects the
financial position of the investor as of such date and the results of its
operations and cash flows and changes in financial position for the period then
ended, and have been prepared in conformity with GAAP applied on a consistent
basis. Since December 31, 1995, there have been no material adverse changes in
the financial condition of the investor or the Assets and the investor has not
had any increase in liabilities since such date other than customary commercial
payables arising in the ordinary course of business.
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<PAGE> 6
2.8 ASSETS NECESSARY TO THE BUSINESS. The Assets constitute a portion of
the assets used in connection with the investor's business. The Assets, together
with the assets purchased, or to be purchased, by General Cable Industries, Inc.
from the investor and contributed to the Company constitute all of the assets
used to carry on the investor's business as presently conducted.
2.9 LITIGATION. There is no litigation, proceeding, government
investigation or claim pending or, to the investor's knowledge, threatened
against the investor or SpecTran or relating to the Assets, the Liabilities, or
the investor's business; nor does the investor or SpecTran know of any basis for
any such litigation, proceeding, government investigation or claim.
2.10 COMPLIANCE WITH LAW. Since December 31, 1995, the investor has
conducted, and is now conducting, its operations in compliance in all material
respects with all applicable laws, rules, regulations and court or
administrative orders and processes (including, without limitation, any that
relate to health and safety, environmental protection and pollution control,
sale and distribution of products and services, anti-competitive practices,
ERISA, employee benefits, anti-discrimination, equal opportunity and fair
employment practices (including the Americans with Disabilities Act) and
improper payments). The investor has not violated any statute, order, rule, or
regulation which would prevent the consummation of the transactions contemplated
herein.
2.11 LICENSES. Attached hereto as Schedule 2.11 is a true and complete list
and brief description of all licenses, permits, franchises, authorizations and
approvals (collectively, "Licenses") issued or granted to, or held by the
investor. All such Licenses are valid and in full force and effect, and no
proceedings or actions with respect to the suspension, cancellation or any other
aspect of any of them is pending or, to the investor's knowledge, threatened,
and the investor does not know of any basis therefor. The Licenses are all of
the licenses, permits, franchises, authorizations and approvals necessary in
connection with the operation of the investor's business as it is presently
conducted. Neither the investor nor any third party has any obligation to pay or
right to receive any royalty or other payment with respect to any of the
Licenses.
2.12 TAXES.
(a) The investor has filed all Tax Returns that it is or was required
to file before the date hereof. Each Affiliated Group has filed all income Tax
returns that it is or was required to file before the date hereof. All such Tax
Returns were true, complete and correct in all respects. All Taxes due and
payable by the investor or any Affiliated Group (whether or not shown on any Tax
Return) prior to the date hereof have been paid in full and there are no tax
audits pending with respect thereto and no notice of any deficiencies are
outstanding or have been removed with respect to any Taxes. No claim has been
made and there are no pending audits or investigations by any authority in a
jurisdiction where the investor or any other member of any Affiliated Group does
not file Tax Returns that the investor or such other member of an Affiliated
Group is or may be subject to taxation by an authority in that jurisdiction. The
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<PAGE> 7
Financial Statements of the investor provided adequate accruals for all warrants
and reasonably anticipated taxes, interests and penalties all pending prior to
the date hereof. There are no tax liens on any of the properties or assets of
the investor, including the Assets.
(b) The investor has withheld and properly paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, shareholder or other third party.
(c) There is no dispute or claim concerning any liability of the
investor or any other member of any Affiliated Group for any Taxes that has been
claimed or addressed by any authority of any jurisdiction.
(d) The investor is not a party to a tax allocation or tax sharing
agreement other than any such agreement that has been or will be terminated
prior to the date hereof and that will have no effect after such termination for
any taxable year (whether the current year, a future year or a past year).
(e) The investor has never been a member of any group of corporations
for which a consolidated, combined, unitary or other group Tax Return may be
filed other than the group of corporations of which the investor is a current
member.
(f) The investor does not have any liability for the Taxes of any
Person (i) under any statute or regulation regarding consolidated, combined,
unitary or other group tax returns, (ii) as a transferee or successor, (iii) by
contract or (iv) otherwise.
(g) As used in this Section:
"Affiliated Group" means the group of corporations or other entities
which includes the investor or SpecTran and for which a consolidated,
combined, unitary or other group Tax Return is filed.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a trust, a joint venture, an
unincorporated organization or a governmental entity (or any department,
agency or political subdivision thereof).
"Tax" means any tax, fee or other charge imposed by any government or
other authority of any jurisdiction, together with any and all fines,
penalties, additions to tax and/or interest calculated by reference
thereto.
"Tax Return" means any return, declaration, report, claim for refund
or information return or statement relating to any Tax, including any
schedule or attachment thereto, and including any amendment thereof.
-7-
<PAGE> 8
2.13 ACCURACY OF INFORMATION. Neither this Agreement, the Financial
Statements, the Schedules, the Exhibits, the Operative Agreements, nor any
certificate or document furnished or to be furnished to the Company by or on
behalf of the investor or SpecTran pursuant to or in connection with the
transactions contemplated hereby or thereby contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading. The investor has delivered to the
Company true, correct and complete copies of all documents, including all
amendments, supplements or modifications thereof or waivers currently in effect
thereunder, described herein or in any Schedule or Exhibit hereto or in any
Operative Agreement.
2.14 CONDUCT OF OPERATIONS.
(a) Since December 31, 1995, the investor has used commercially
reasonable efforts to preserve its business intact, has operated its business in
the ordinary course, and there have been no changes to its business or
operations since that date, that has had or would have a material adverse effect
on the business, assets, properties, operations or liabilities of the investor
or any of the investor's relationships with its employees or third parties
(including, without limitation, customers and suppliers).
(b) From September 30, 1996 to the date hereof:
(i) the investor has used its best efforts to preserve its
business intact, has operated its business in the ordinary course, and there
have been no changes to its business or operations, that has had or would have a
material adverse effect on the Assets, Liabilities, properties or operations of
the investor or any of the investor's relationships with its employees or third
parties (including, without limitation, customers and suppliers);
(ii) there has not been any outstanding commitment by the
investor to make or commit to make any capital expenditure, addition or
improvement relating to the Assets or the investor's business; and
(iii) there has not been any declaration or payment by the
investor of any dividend or other distribution to the stockholders of the
investor.
2.15 UNDISCLOSED LIABILITIES. The investor does not have any liability,
whether known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated and
whether due or to become due, except for (i) liabilities set forth on the face
of the investor's balance sheet included in the Financial Statements (rather
than in any notes thereto) and (ii) liabilities which have arisen since December
31, 1995, in the ordinary course of business consistent with past custom and
practice, none of which arises out of or relates to any breach of contract,
breach of warranty, tort, infringement or violation of law.
-8-
<PAGE> 9
2.16 BROKERS, FINDERS. ETC. Neither the investor nor SpecTran has employed
any broker, agent or finder or incurred any liability for any brokerage fees,
agents' commissions or finders' fees in connection with the transactions
contemplated hereby or by any of the other Operative Agreements.
2.17 COMPLIANCE WITH APPLICABLE LEGAL REQUIREMENTS AND REGULATIONS. The
investor and SpecTran have complied with all applicable legal requirements and
governmental regulations which are required to be complied with by the investor
or SpecTran in order to consummate the transactions contemplated hereby and by
the other Operative Agreements.
2.18 INVESTOR'S PATENTS, TRADEMARKS, ETC. Schedule 2.18 contains a list and
brief description of all domestic and foreign patents, all rights therefor or
applications therefor, patent and know-how licenses, trade names, trademark
registrations and applications, common law trademarks, copyright registrations,
common law copyrights, and applications for any of the foregoing
("Intangibles"), owned or used in the conduct of the business of the investor,
and (ii) specifies the jurisdiction in or by which such Intangibles have been
registered, filed or issued. All such Intangibles are valid, maintained and in
full force and effect. The investor owns, or possesses adequate rights to use,
all Intangibles and all inventions, technology, processes, products, designs,
know-how, trade secrets and formulae used in the conduct of its business and (i)
there are no actual or threatened, claims, assertions or litigation (nor is
there any basis therefor) relating to its ability to use, or challenging the
validity of, the foregoing and (ii) neither the investor nor, to the knowledge
of the investor, any person employed (including as a consultant) by the investor
within the past three years has disclosed any information relating thereto, or
entered into any confidentiality agreement relating thereto, to or with any
person except (A) to or with a government authority as required by applicable
law, (B) with respect to publicly available information or (C) in the course of
his or her employment by the investor. To the knowledge of the investor, there
are no Intangibles, inventions, technology, processes, products, designs,
know-how, trade secrets or formulae currently being sold or employed or
possessed by any person that (i) may infringe any rights of the investor or (ii)
relates to the development or manufacture of any of the products developed or
manufactured by the investor. None of the operations, processes or products of
the investor infringe or violate the rights of any third party. The investor has
and continues to use all of the trademarks listed on Schedule 2.18. The investor
has affixed all required patent and trademark notices to its products in
accordance with applicable laws so as to fully protect its proprietary rights
therein.
2.19 SPECTRAN'S PATENT LICENSES. With regard to the intellectual property
which SpecTran practices or uses relating to the design, manufacture, use and/or
sale of optical fibers:
(a) SpecTran is not aware of any legal action or threatened legal
action which alleges that SpecTran's manufacture, use and/or sale of optical
fiber infringes (or contributes to or induces the infringement of) any patent,
trademark or any other intellectual property owned by any third party;
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<PAGE> 10
(b) all license agreements under which SpecTran has any rights in the
field of optical fibers in the intellectual property of third parties are set
forth in Schedule 2.19;
(c) each of the agreements listed in Schedule 2.19 is a valid and
binding obligation of the parties thereto and enforceable against them according
to its terms and is in full force and effect and SpecTran is not, and to
SpecTran's knowledge the other parties thereto are not, in default of any
material term or provision thereof;
(d) SpecTran is, and to SpecTran's knowledge the other parties thereto
are, in compliance with all material terms of each agreement listed in Schedule
2.19 and there have been no threatened cancellations thereof nor outstanding
material disputes thereunder and there is no litigation, proceeding, government
investigation or claim pending or threatened against SpecTran relating to any
patent covered by any such agreement, nor does SpecTran know or have any
reasonable grounds to know of any basis for any such litigation, proceeding,
government investigation or claim; and
(e) the agreements set forth in Schedule 2.19 will permit SpecTran to
manufacture the types, quality, and quantity of optical fibers required by the
Operative Agreements, as well as to sell that optical fiber to the Company at
the prices specified in the Operative Agreements.
2.20 CONTRACTS AND LEASES. Schedule 2.20 contains a list and brief
description of all contracts, agreements, commitments, undertakings and leases
of real or personal property, in each case involving more than $10,000
(collectively, "Contracts"), to which the investor is a party relating to the
investor's business. Each of the Contracts is a valid and binding obligation of
the parties thereto and enforceable against them according to its terms and is
in full force and effect and the investor is not, and to the investor's
knowledge the other parties thereto are not, in default of any material term or
provision thereof. The investor is, and to the investor's knowledge the other
parties thereto are, in compliance with all material terms thereof and there
have been no threatened cancellations thereof nor outstanding material disputes
thereunder. Except as set forth in Schedule 2.20, the investor's rights under
the Contracts are fully assignable without the consent of any party thereto or
any third party. True, correct and complete copies of all Contracts have been
delivered to the Company.
2.21 ENVIRONMENTAL MATTERS. The investor has not received any claim,
notice, order, directive, or information request from the United States
Environmental Protection Agency, any state environmental protection agency or
from any other agency or branch of local, state or federal government (each, an
"Environmental Agency"), or any claim or notice from any private corporation or
person alleging any violation of any federal or state environmental law,
ordinance, regulation or order applicable to the investor, the investor's
business or its operations ("Environmental Laws") since May 23, 1995
(collectively, "Environmental Claims"). To the investor's actual knowledge, all
Environmental Claims received by the investor during the time period from, and
including, September 1, 1986 to, and including, May 23, 1995 are set forth in
Schedule 2.21. No investigation, administrative order, consent order, and
agreement,
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<PAGE> 11
litigation or settlement with respect to any hazardous substances (as defined
by the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. [Sections] 9601 ET SEQ.) exists or, to the investor's knowledge, is
threatened with respect to the investor, the investor's business or its
operations. All environmental facility, operating and other permits,
registrations and authorizations ("Environmental Permits") required by any
Environmental Agency for the investor, the investor's business or its
operations have been obtained and are in effect. The investor has complied in
all material respects with and is not in default under any Environmental Laws.
Except as set forth in Schedule 2.21, neither the Assets nor any other assets
of the investor have been contaminated by hazardous waste (as defined by the
Resource Conservation and Recovery, Act, 42 U.S.C. [Sections] 6901 ET SEQ.)
or been used for solid or hazardous waste storage or disposal.
3. INDEMNIFICATION; INDEMNIFICATION PROCEDURE, ETC.
-----------------------------------------------
3.1 INVESTOR INDEMNIFICATION. Each of the investor and SpecTran agrees to
defend, indemnify and hold harmless the Company and each of its members,
officers, employees and agents, and each of their successors and assigns (each,
a "Company Indemnitee") from and against, and to pay directly, or reimburse the
applicable Company Indemnitee(s) with respect to, all claims, suits, actions and
proceedings (formal and informal), and related judgments, deficiencies, damages,
settlements, taxes, liabilities (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated and whether due or to become due), losses,
costs, fees and expenses (including, without limitation, reasonable attorneys'
fees and disbursements) (collectively, "Losses") asserted by any person or
entity (including any other party hereto or any third party) against any Company
Indemnitee or incurred or suffered by any Company Indemnitee, which arise out
of, result from or relate to:
(i) any breach of any representation or warranty by the
investor or SpecTran, except that SpecTran shall have no liability
whatsoever for any breach of Sections 2.10, 2.11, 2.12, 2.14, 2.15,
2.20 and 2.21;
(ii) any failure by the investor to perform any agreement or
covenant, or to make any payment, required by this Agreement;
(iii) any and all Losses arising out of or resulting from the
ownership of the Assets, assumption of the Liabilities or the
operation of the investor's business or any predecessor of the
investor's business (including without limitation, the manufacture of
products, regardless of whether sold before or after the date hereof,
the provision of services and giving of warranties and warnings by the
investor or the investor's predecessors) on or before the date hereof;
(iv) without duplication of any indemnification provided above,
any and all liabilities not assumed by the Company under this
Agreement; and
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<PAGE> 12
(v) any and all Losses arising out of or resulting from the
failure to obtain any consent required for the transfer to the Company
of the lease agreement dated November 10, 1995 between the investor
and Marc C. Yellin and the lease agreement dated February 6, 1996
between the investor and Fabrilock, Inc.
The Company or any Company Indemnitee is not required to commence
litigation or take any other action against any third party prior to making a
claim against the investor or SpecTran hereunder. Notwithstanding anything to
the contrary contained herein, in no event will SpecTran have any
indemnification obligations hereunder with respect to item (iii) or (iv) of this
Section 3.1, and the Company will seek to enforce such indemnification
obligations only against the investor.
3.2 COMPANY INDEMNIFICATION. The Company agrees to defend, indemnify and
hold harmless the investor and SpecTran and their respective directors,
officers, stockholders, employees and agents, and each of their successors and
assigns (each, an "Investor Indemnitee") from and against, and to pay directly,
or reimburse the applicable Investor Indemnitee(s) with respect to, all claims,
suits, actions and proceedings (formal and informal), and related judgments,
deficiencies, damages, settlements, taxes, liabilities (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated and whether due or to
become due), losses, costs, fees and expenses (including, without limitation,
reasonable attorneys' fees and disbursements) (collectively, "Losses") asserted
by any person or entity (including any other party hereto or any third party)
against any Investor Indemnitee or incurred or suffered by any Investor
Indemnitee, which arise out of, result from, or relate to the ownership or use
of the Assets after the date hereof or the Liabilities assumed by the Company
hereunder.
Neither the investor nor SpecTran is required to commence litigation
or take any other action against any third party prior to making a claim against
the Company hereunder.
3.3 INDEMNIFICATION PROCEDURE.
(a) The Company Indemnitee or the Investor Indemnitee, as the case
may be (the "Indemnitee"), shall give prompt (I.E., within twenty (20) days)
written notice (a "Claim Notice") to the investor, SpecTran or the Company, as
the case may be (the "Indemnitor"), of the following (but any failure to give a
Claim Notice will not relieve the Indemnitor of any obligations hereunder except
to the extent the Indemnitor can demonstrate it is prejudiced by such failure):
(i) the claim by such Indemnitee of any Losses under Section 3.1
or Section 3.2;
(ii) receipt by such Indemnitee of any demand, claim or notice of
any circumstances that might give rise to Losses under Section 3.1 or
Section 3.2; and
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<PAGE> 13
(iii) receipt by such Indemnitee of notice of the commencement of
any action, proceeding or investigation (an "Action") that might
result in Losses under Section 3.1 or Section 3.2.
(b) If a Claim Notice is based on an Action, the Indemnitor (upon
written notice to the applicable Indemnitee within fifteen (15) days after the
date of the Claim Notice (a "Defense Notice")) shall have the right to elect,
exercising reasonable judgment, to defend or compromise such Action at its own
expense. Until receipt of a Defense Notice, the Indemnitee may take at the
expense of the Indemnitor any action it reasonably believes necessary to
preserve its rights with respect to such Action. The Indemnitor may not settle
any Action without the prior written consent of the applicable Indemnitee, which
consent shall not be unreasonably withheld or delayed.
If a Claim Notice is not based on an Action, the Indemnitor shall give
notice to the applicable Indemnitee within thirty (30) days whether it will
indemnify or assume responsibility for such a Loss.
(c) If the Indemnitor fails to issue a Defense Notice or otherwise
fails to defend any Action or claim, the Indemnitee shall have the right, but
not the obligation, to undertake the defense of and to compromise or settle
(exercising reasonable judgment), the Action or claim on behalf, for the account
and at the risk, of the Indemnitor.
(d) In all cases, the Indemnitor shall keep the Indenmitee informed
regarding any claim or proceeding it is defending on a timely basis. Each party
shall cooperate reasonably with the other party in the investigation and
analysis of such claim or proceeding, and afford the other party reasonable
access to such relevant information as it may have in its possession and to its
personnel at its own expense.
3.4 LIMITATIONS.
(a) The amount of any Losses for which indemnification is provided
under Section 3.1 shall be net of any amounts actually recovered by the Company
Indemnitee with respect thereto under insurance policies; PROVIDED THAT no
Company Indemnitee shall have any obligation to seek recovery of any such
amounts under any insurance policies, and PROVIDED FURTHER that no
indemnification payments otherwise due under Section 3.1 shall be delayed or
offset in anticipation of the receipt by a Company Indemnitee of any insurance
proceeds. If a Company Indemnitee receives any insurance payments with respect
to Losses for which indemnification payments have previously been made, such
Company Indemnitee shall promptly pay such insurance proceeds to the Indemnitor.
(b) Notwithstanding anything in this Agreement to the contrary, (i)
the indemnification obligations of SpecTran under this Section 3 shall expire
five (5) years after the date hereof, (ii) SpecTran shall have no liability for
any Losses for which indemnification is provided hereunder until the total of
all such Losses exceeds $75,000 (but after the total of all
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<PAGE> 14
such Losses exceeds $75,000, SpecTran shall be liable for the full amount of
such Losses), and (iii) the total indemnification obligations of SpecTran for
any and all Losses asserted under this Section 3 shall in no event exceed an
amount equal to the Purchase Price as defined in the Asset Purchase Agreement by
and among the investor, SpecTran, General Cable Industries, Inc. and General
Cable Corporation.
(c) In no event will any Indemnitor (other than the investor) be
liable for any incidental, consequential, or special damages (including but not
limited to damages for lost profits) incurred by any Indemnitee, except to the
extent that such damages are actually determined or awarded to a third party and
required to be paid by the Indemnitee.
3.5 REMEDIES CUMULATIVE. The remedies provided herein shall be cumulative
and shall not preclude the assertion by any party hereto of any other rights or
the seeking of any other remedies against any other party hereto.
4. MISCELLANEOUS.
-------------
4.1 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the
principles of conflicts of laws.
4.2 ASSIGNMENT. This Agreement shall be binding upon, and inure to the
benefit of, the parties hereto and their respective successors and permitted
assigns. Except with respect to a permitted transferee under the Limited
Liability Company Agreement of the Company, this Agreement shall not be assigned
by the investor without the prior written consent of the Company or by the
Company without the prior written consent of the investor.
4.3 ENTIRE AGREEMENT. This Agreement, together with the schedules and
exhibits attached hereto and the documents referred to herein, constitutes the
entire agreement and understanding among the parties and supersedes any prior
written or oral understandings between them respecting the subject matter of
this Agreement. This Agreement may be amended or modified only in a writing
signed by the investor and the Company that specifically refers to this
Agreement.
4.4 CAPTIONS. The captions contained in this Agreement are for reference
purposes only and are not part of this Agreement.
4.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be an original and all of which together will
constitute one and the same instrument.
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<PAGE> 15
IN WITNESS WHEREOF, the panics hereto have caused this Agreement to be duly
executed as of December 23, 1996.
APPLIED PHOTONIC DEVICES, INC.
By: /s/ Glenn E. Moore
------------------------------
Print Name: GLENN E. MOORE
----------------------
Title: C.E.O.
---------------------------
SPECTRAN CORPORATION
By: Raymond E. Jaeger
------------------------------
Print Name: Raymond E. Jaeger
----------------------
Title: Chairman
---------------------------
ACCEPTED AND AGREED TO:
GENERAL PHOTONICS, LLC
By: /s/ Crawford L. Cutts
--------------------------
Print Name: Crawford L. Cutts
------------------
Title: President
-----------------------
Date: December 23, 1996
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<PAGE> 16
EXHIBIT A
ASSETS*
Description of Asset Asset Value
- - -------------------- -----------
Accounts Receivable $1,049,067.00
Prepaid/Other Assets $ 12,758.00
Fixed Assets, net $ 978,162.00
Other Non-current Assets $ 11,688.00
Goodwill, net $4,807,673.00
-------------
Total: $6,859,348.00
-------------
* Amounts listed above are based on November 30, 1996 balance sheet and are
subject to adjustment in accord with Closing Financial Statements effective
as of December 31, 1996.
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<PAGE> 17
EXHIBIT B
LIABILITIES*
Description of Liability Amount
- - ------------------------ ------
Trade A/P $242,613.00
Accrued Trade A/P $239,003.00
Sales Tax Payable $1,643.00
Accrued Salaries & Wages $125.00
Accrued Bonus $53,660.00
Accrued Vacation Pay $44,311.00
-----------
Total: $581,355.00
-----------
* Amounts listed above are based on November 30, 1996 balance sheet and are
subject to adjustment in accord with Closing Financial Statements effective
as of December 31, 1996.
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<PAGE> 18
SPECTRAN-GCC
------------
Schedules to the Investor Representations, Contribution Agreement
and Subscription Agreement
Schedules to the Investor Representations, Contribution Agreement and
Subscription Agreement
Page 1 of 14
<PAGE> 19
SCHEDULE 2.1
a) JURISDICTION WHERE INVESTOR IS QUALIFIED TO DO BUSINESS
Connecticut
b) SEE SCHEDULE 2.11 IN REGARD TO ALL LICENSES OR OTHER AUTHORIZATIONS HELD BY
INVESTOR.
Schedules to the Investor Representations, Contribution Agreement and
Subscription Agreement
Page 2 of 14
<PAGE> 20
SCHEDULE 2.3 LIENS
(a) LIENS FOR TAX ASSESSMENTS, GOVERNMENTAL CHARGES AND LIENS NOT YET DUE AND
PAYABLE.
None.
(b) MECHANICS LIENS AND OTHER SIMILAR LIENS ARISING BY OPERATION OF LAW.
None.
(c) LIENS UPON ANY EQUIPMENT PURCHASED OR LEASED BY INVESTOR WHICH ARE CREATED
DIRECTLY IN CONNECTION WITH SUCH PURCHASE OR LEASE TO SECURE PAYMENT OF THE
PURCHASE PRICE OR LEASE OBLIGATION.
1) Machinery and equipment are subject to a blanket UCC-1 financing statement
(lien) in favor of Fleet Bank of Massachusetts, National Association, 75 State
Street, Boston, Massachusetts, which will be released upon the closing of this
transaction.
2) Equipment/Bench Top Power Meter, signed 10/22/93 with Copelco Leasing,
customer #2734301, 1-800-247-8133 ext. 4103.
3) Auto/Volvo 1994, signed 5/16/94 with Volvo Auto Finance, customer
#326440846-5, 1-800-358-6600.
4) Auto/Dodge Caravan 1994, signed July 29, 1994 with G.E. Capital Lease,
#00-3030-28205, 1-800-488-5208.
Schedules to the Investor Representations, Contribution Agreement and
Subscription Agreement
Page 3 of 14
<PAGE> 21
SCHEDULE 2.4 CONSENTS AND APPROVALS
1) Consent for assignment of Permit to Discharge to the Waters of the State of
Connecticut pursuant to Connecticut General Statutes Section 22a-430 for APD
plant located in Brooklyn, Connecticut and pending Application for a Permit to
Discharge to the Waters of the State of Connecticut for APD plant located in
Dayville, Connecticut.
CONSENTS TO THE ASSIGNMENT OF THE FOLLOWING AGREEMENTS ARE REQUIRED FROM
THE OTHER PARTIES TO SUCH AGREEMENTS AND INVESTOR WILL USE ITS BEST EFFORTS TO
OBTAIN SUCH CONSENTS PROMPTLY FOLLOWING THE CLOSING:
2) Service Agreement among APD, Southern New England Telephone Company and SNET
America, Inc. dated March 18th, 1996.
3) Equipment Lease between APD and Copelco Leasing Corporation, One Mediq Plaza,
Pennsauken, New Jersey, 08110 dated October 22, 1993.
4) Lease Agreement between APD and Marc C. Yellin, 62 Cambridge Lane, Boynton
Beach, Florida 33436 dated November 10, 1995 for property located at 50 Tiffany
Street, Brooklyn, Connecticut.
5) Lease Agreement between APD and Fabrilock, Inc. dated February 6, 1996 for
property located at 300 Lake Road, Dayville, Connecticut.
Schedules to the Investor Representations, Contribution Agreement and
Subscription Agreement
Page 4 of 14
<PAGE> 22
SCHEDULE 2.5 INVENTORY EXCEPTIONS
None.
Schedules to the Investor Representations, Contribution Agreement and
Subscription Agreement
Page 5 of 14
<PAGE> 23
SCHEDULE 2.7 FINANCIAL STATEMENTS
Financial Statements consisting of Unaudited Balance Sheet of Investor as of
December 31, 1995, and related statements of income and retained earnings, and
statements of cash flow for the year then ended.
Schedules to the Investor Representations, Contribution Agreement and
Subscription Agreement
Page 6 of 14
<PAGE> 24
<TABLE>
Periods 12 to 12 Fiscal Year 1995
<CAPTION>
<S> <C>
Current
This Year
Net Value
Fleet Bank Operating 0.00
Fleet Bank Payroll 350.48
First National 0.00
Fleet Bank & First (APD) 170,204.48
------------
Total Cash 170,555.32
Trade A/R 1,657,775.48
Allowance Doubtful Accounts 46,681.13(-)
------------
Total A/R 1,611,094.35
Incoming Inspection 0.00
Raw Materials 841,484.20
Profit in Inventory 374,859.00
Profit Material-Obsolescence Res 0.00
------------
Total Raw Material 1,216,343.20
Work in Process 418,776.00
Finished Goods 287,110.90
FGI-Obsolescence Reserve 44,092.00(-)
------------
Total FGI 243,018.90
Total Inventory 1,878,138.10
Prepaid Insurance 0.00
Prepaid Audit 0.00
Employee Advances 0.00
Misc. Non-Trade Receivable 0.00
Other Current Assets 0.00
------------
Total Prepaid/Other Assets 0.00
Federal Deferred Tax Current 0.00
State Deferred Tax - Current 0.00
Allowance Deferred Tax Current 0.00
------------
Total Deferred Tax - Current 0.00
Total Current Assets 3,659,787.77
</TABLE>
<PAGE> 25
<TABLE>
Periods 12 to 12 Fiscal Year 1995
<CAPTION>
Current
This Year
Net Value
<S> <C>
Buildings 0.00
Building Improvements 23,459.70
CIP - Building 0.00
Machinery & Equipment 697,083.44
CIP - Machinery & Equipment 0.00
Computer Equipment 0.00
Furniture & Fixtures 9,425.00
Automobiles 0.00
----------
Total assets 729,968.14
Accum Depr Buildings 0.00
Accum Depr Building Improvement (18,652.00)
Accum Depr Machinery & Equip (350,844.81)
Accum Depr Computer Equipment 0.00
Accum Depr Furniture & Fixture (15,828.00)
Accum Depr Automobiles 0.00
------------
Total Accum Depreciation (385,324.81)
Net Fixed Assets 344,643.33
I/C SSOC 11,533.62
I/C CFT (1,852,089.34)
I/C Corporate (343,154.00)
------------
Total I/C & Investment (2,183,709.72)
Federal Deferred Tax L/T 0.00
Store Deferred Tax L/T 0.00
Allow Deferred Tax L/T 0.00
------------
Total L/T Tax 0.00
Other Non-Current Assets 0.00
------------
Total Other L/T Assets 0.00
Goodwill 3,255,165.48
Accum Amortization Goodwill (126,589.77)
-------------
Goodwill, Net 3,128,575.71
Total L/T Assets 1,289,509.32
</TABLE>
<PAGE> 26
<TABLE>
Periods 12 to 12 Fiscal Year 1995
<CAPTION>
Current
This Year
Net Value
<S> <C>
Total Assets 4,949,297.09
============
Trade A/P 75,744.65
Accrued Trade A/P 271,426.88
FICA Taxes Payable 0.00
Federal W/H Tax Payable 0.00
State W/H Tax Payable 0.00
United Way W/H Payable 30.00
401K W/H Payable 3,022.91
BAW W/H Payable 0.00
ESPP W/H Payable 41.50
Other Payroll W/H Payable 0.00
Outstanding Funded Claims Pay 0.00
Sales Tax Payable 361.11
Other - A/P 0.00
------------
Total Accounts Payable 349,904.83
Accrued Salaries & Wages (7.00)
Accrued Bonus 0.00
Accrued 401K Contribution 1,228.09
Accrued Defined Contribution 12,407.00
Accrued Vacation Pay 29,255.04
Accrued Insurance 0.00
Accrued Health Insurance 0.00
Accrued Legal Fees 0.00
Accrued Audit Fees 0.00
Accrued FICA Taxes 0.00
Accrued Unemployment Taxes 0.00
Accrued Defined Benefit 0.00
Accrued Other 0.00
Accrued Health Insurance Term 31,938.90
Accrued Commissions 0.00
------------
Accrued Rent Expense 0.00
Total Accrued Liabilities 74,822.03
Accrued Fed Tax Payable 0.00
Accrued State Tax Payable 0.00
------------
Accrued Tax Payable 0.00
Other L/T Liabilities 0.00
</TABLE>
<PAGE> 27
<TABLE>
Periods 12 to 12 Fiscal Year 1995
<CAPTION>
Current
This Year
Net Value
<S> <C>
Total Liabilities 424,726.86
Common Stock 0.00
Intercompany Investment 4,412,377.74
Paid-In Capital 0.00
Prior Years Retained Earnings 0.00
Current Year Retained Earnings 0.00
------------
Total Liabilities & Equity 4,837,104.60
============
</TABLE>
<PAGE> 28
SCHEDULE 2.11 LICENSES
1) See Schedule 2.18
2) Permit to Discharge to the Waters of the State of Connecticut pursuant to
Connecticut General Statutes Section 22a-430 for APD plant located in Brooklyn,
Connecticut and pending Application for Permit to Discharge to the Waters of the
State of Connecticut for APD plant located in Dayville, Connecticut.
3) Zoning Permit, Town of Killingly, Connecticut, for change in use of Aquifer
Protection Zone with respect to property located at 300 Lake Road, Dayville,
Connecticut.
Schedules to the Investor Representations, Contribution Agreement and
Subscription Agreement
Page 7 of 14
<PAGE> 29
SCHEDULE 2.14 CAPITAL EXPENDITURES
Schedules to the Investor Representations, Contribution Agreement and
Subscription Agreement
Page 8 of 14
<PAGE> 30
<TABLE>
APD, INC.
CAPITAL PROJECTS 1996
<CAPTION>
PROJECT NUMBER DESCRIPTION SPENT TO DATE BALANCE REMAINING TOTAL PROJECT
- - -------------- ----------- ------------- ----------------- -------------
<S> <C> <C> <C> <C>
P200109 Gnata Hot Foil Printer $ 11,794.00 $ 27,519.00 $ 39,313.00
P200119 Leasehold Improvements $ 29,526.00 $ 3,474.00 $ 33,000.00
P200130 2 1/2" Sterling Extruder $ 38,436.00 $ 44,721.00 $ 83,157.00
P200134 Gem Solo 4 Opaque Printer $ 30,816.00 $ 4,644.00 $ 35,460.00
P200140 Parts for Tensil Tester $ 2,000.00 n/a $ 2,000.00
P200142 Expansion Units Phone n/a $ 6,762.00 $ 6,762.00
UV Inking Line n/a $175,000.00 $175,000.00
----------- ----------- -----------
Total $112,572.00 $181,762.00 $374,692.00
</TABLE>
<PAGE> 31
SCHEDULE 2.18 PATENTS AND TRADEMARKS
1) See attached Notice of Acceptance of Use for the Trademark OPTI-PAK.
Schedules to the Investor Representations, Contribution Agreement and
Subscription Agreement
Page 9 of 14
<PAGE> 32
UNITED STATES DEPARTMENT OF COMMERCE
PATENT AND TRADEMARK OFFICE
WASHINGTON, D.C. 20231
JUN 17 1993
NOTICE OF ACCEPTANCE OF STATEMENT OF USE
TM 3 ATTORNEY
James E. Alix REFERENCE NUMBER:
Chilton, Alix & Van Kirk
750 Main Street, Suite 610 APDI/TO1/00/
Hartford, CT 06103-2708
- - --------------------------------------------------------------------------------
SERIAL NUMBER: 74/264120
MARK: OPTI-PAK
OWNER: Applied Photonic Devices, Inc.
- - --------------------------------------------------------------------------------
The statement of use filed in regard to the above-identified application has
been accepted. This acceptance signifies that the statement of use is accepted
in all respects and that the mark is entitled to be registered. Accordingly, the
registration will issue in due course barring any extraordinary circumstances.
- - --------------------------------------------------------------------------------
<PAGE> 33
SCHEDULE 2.19 LICENSES AND TRADEMARKS OF SPECTRAN
1) Patent License Agreement between Western Electric Company Incorporated
(currently Lucent Technologies).
2) Agreement between Gulf & Western Manufacturing Company and SpecTran
Corporation dated October 18, 1983.
3) Agreement between Aetna Telecommunications Laboratories and SpecTran
Corporation dated January 21, 1985.
4) License Agreement between Corning, Inc. and SpecTran Corporation dated
January 1, 1991.
Schedules to the Investor Representations, Contribution Agreement and
Subscription Agreement
Page 10 of 14
<PAGE> 34
SCHEDULE 2.20 CONTRACTS AND LEASES (P.1 OF 3)
a) THE FOLLOWING IS A LIST OF CONTRACTS OF APD INVOLVING MORE THAN $10,000.
1) Supplier Agreement with ATL Connect dated November 2, 1992.
2) Sales Agency Agreement with Thaw Sales and Marketing dated June 7, 1991.
3) Sales Agency Agreement with CMA, Inc. dated June 9, 1994.
4) Sales Agency Agreement with Manufacturers Agents Representatives dated June
1, 1992.
5) Sales Agency Agreement with C&W Fiber Optic dated February 1, 1993.
6) Sales Agency Agreement with KJS Marketing dated September 1, 1994.
7) Sales Agency Agreement with Nutech Electronics, Inc. dated September 1, 1994.
8) Sales Agency Agreement with Innovative Technical Sales, Inc. dated March 1,
1993.
9) Sales Agency Agreement with Paul Ericson & Associates, Inc., dated January 1,
1994.
10) Sales Agency Agreement with Jaso & Associates, dated May 8, 1994.
11) Sales Agency Agreement with Cartwright & Bean, Inc. dated May 1, 1994.
12) Sales Agency Agreement with Data Connect, Inc. dated July 9, 1994.
13) Sales Agency Agreement with Westerly Associates, Inc. dated June 16, 1994.
14) Sales Agency Agreement with DCS Group, Inc., dated October 1, 1996.
15) Agreement with Copelco Leasing Corporation dated October 22, 1993.
16) Lease Agreement with Mark C. Yellin dated November 13, 1995 for 50 Tiffany
Street, Brooklyn, Connecticut.
Schedules to the Investor Representations, Contribution Agreement and
Subscription Agreement
Page 11 of 14
<PAGE> 35
SCHEDULE 2.20 CONTRACTS AND LEASES (CONT.) (p.2 of 3)
17) Lease Agreement with Fabrilock, Inc. dated February 6, 1996 for 300 Lake
Road, Dayville, Connecticut.
18) Employment Agreement among Irving N. Dwyer, Applied Photonic Devices, Inc.
and SpecTran Corporation dated May 23, 1995.
19) Employment Agreement among David P. Davia, Applied Photonic Devices, Inc.
and SpecTran Corporation dated May 23, 1995.
20) Non-Competition Agreement among Irving N. Dwyer, Applied Photonic Devices,
Inc., APD Acquisition Corp. and SpecTran Corporation dated May 23, 1995.
21) Non-Competition Agreement among David P. Davia, Applied Photonic Devices,
Inc., APD Acquisition Corp., and SpecTran Corporation dated May 23, 1995.
22) AT&T CustomNet (sm) Service Flex Plan, dated September 26, 1994.
23) Service Agreement with SNET America, Inc., dated March 18, 1996.
24) Agreement between Applied Photonic Devices, Inc. and Brugg Telecom, dated
December 18, 1995.
Schedules to the Investor Representations, Contribution Agreement and
Subscription Agreement
Page 12 of 14
<PAGE> 36
SCHEDULE 2.20 CONTRACTS AND LEASES (CONT.) (p.3 of 3)
*25) Loan and Security Agreement among SpecTran Corporation, SpecTran Specialty
Optics Company, Applied Photonic Devices, Inc., SpecTran Communication Fiber
Technologies, Inc. and Fleet National Bank, dated April 25, 1996.
With respect to the above Loan and Security Agreement, Fleet has agreed to
release the lien on the Assets of APD and to release APD from certain of the
restrictive covenants therein as further described in a letter to John F. Lynch,
Fleet National Bank from Bruce A. Cannon, SpecTran Corporation dated September
16, 1996, such release to be effective upon consummation of the transaction.
*26) $12,000,000 Revolving Note in favor of Fleet National Bank, dated April 25,
1996.
*27) $5,000,000 Term Note in favor of Fleet National Bank, dated April 25, 1996.
*28) $5,000,000 Mortgage Note in favor of Fleet National Bank, dated April 25,
1996.
b) CONTRACTS REQUIRING CONSENT TO ASSIGNMENT ARE SET FORTH ON SCHEDULE 2.4
HERETO.
*These agreements will not be assigned to the Company.
Schedules to the Investor Representations, Contribution Agreement and
Subscription Agreement
Page 13 of 14
<PAGE> 37
SCHEDULE 2.21 ENVIRONMENTAL MATTERS
1) Investor holds from the Connecticut Department of Environmental Protection
one (1) Permit to Discharge to the Waters of the State of Connecticut pursuant
to Connecticut General Statutes Section 22a-430 for its plant in Brooklyn,
Connecticut and one (1) pending Application for a Permit to Discharge to the
Waters of the State of Connecticut for its plant in Dayville, Connecticut. These
permits are for water discharge consisting of contact cooling water from APD's
cable-applied, extrusion coating process for fiber optic cables for its plants
in Brooklyn, Connecticut and Dayville, Connecticut. The process waste water is
discharged to the local sanitary sewer.
2) Zoning Permit, Town of Killingly, Connecticut, for change in use of Aquifer
Protection Zone with respect to property located at 300 Lake Road, Dayville,
Connecticut.
3) Please refer to the copy of the Phase I Environmental Site Assessment of 50
Tiffany Street, Brooklyn, Connecticut prepared by Atlantic Environmental
Services, Inc. dated April 28, 1995 (revised May 4, 1995) which has been
previously provided by APD.
4) The plants at Brooklyn, Connecticut and Dayville, Connecticut are both small
quantities generators of hazardous waste. Both plants' quantities of hazardous
waste are disposed of by Laidlaw Environmental Services North East, Inc., 221
Sutton Street, North Andover, MA, (508)683-1002. APD files for its plants in
Brooklyn, Connecticut and Dayville, Connecticut biannual hazardous waste reports
with the Connecticut Department of Environmental Protection in connection with
waste disposal as a small quantities generator.
Schedules to the Investor Representations, Contribution Agreement and
Subscription Agreement
Page 14 of 14
<PAGE> 1
** Confidential Treatment Requested
EXHIBIT 10.101
NON-COMPETITION AGREEMENT
-------------------------
NON-COMPETITION AGREEMENT dated December 23, 1996 among General Cable
Industries, Inc., a Delaware corporation ("GCI"), General Cable Corporation, a
Delaware corporation ("GCC"), Applied Photonic Devices, Inc., a Delaware
corporation ("APD"), SpecTran Corporation, a Delaware corporation ("SpecTran"),
and General Photonics, LLC, a Delaware limited liability company (the "JV
Company").
RECITALS
WHEREAS, APD and GCI are parties to an Asset Purchase Agreement dated
December 23, 1996 (the "Asset Purchase Agreement") pursuant to which APD sold
and GCI acquired specified assets of APD (the "Purchased Assets");
WHEREAS, APD and GCI have formed the JV Company and have entered into the
Investor's Representations and Subscription Agreement dated December 22, 1996
and the Investor's Contribution Agreement, the Investor's Representations,
Contribution Agreement and Subscription Agreement,, the Investor's Contribution
Agreement and the Limited Liability Company Agreement (the "JV Company
Agreements"), all dated December 23, 1996, which among other things, provide for
the contribution by GCI of the Purchased Assets and by APD of its remaining
assets and certain specified liabilities to the JV Company, receipt by each of
APD and GCI of a fifty percent (50%) Interest in the JV Company, and the
agreement of APD and GCI regarding the governance and operation of the JV
Company and respective rights and obligations as members of the JV Company;
WHEREAS, the JV Company, APD, GCI and/or certain of their respective
Affiliates have entered into certain other Related Agreements all dated December
23, 1996, including this Non-Competition Agreement (the Asset Purchase
Agreement, JV Company Agreements and Related Agreements are sometimes
collectively referred to herein as the Operative Agreements");
WHEREAS, the parties intend that the JV Company will be the exclusive means
of serving the Business in the Territory;
WHEREAS, as an inducement to APD and GCI to execute, deliver and consummate
the transactions contemplated by the Operative Agreements, and as an inducement
for APD, GCI and their respective Affiliates to execute, deliver and consummate
the transactions contemplated by the Related Agreements to which they are
parties,
<PAGE> 2
and for other good and valuable consideration, APD and SpecTran, on the one
hand, and GCI and GCC, on the other hand, have agreed to enter into this
Non-Competition Agreement on the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the premises and the respective
covenants and agreements herein contained, the parties, intending to be legally
bound, hereby agree as follows:
1. Certain Definitions.
-------------------
(a) "Business" has the meaning set forth in the Limited Liability
Company Agreement, and where used in reference to The Eighteen Month Period
(defined below) means the Business actually conducted upon the termination of
the Interest of either (i) APD (or any wholly-owned subsidiary of SpecTran to
whom APD may assign its Interest pursuant to the terms of the Limited Liability
Company Agreement) or (ii) GCI (or any wholly-owned subsidiary of GCC to whom
GCI may assign its Interest pursuant to the terms of the Limited Liability
Agreement).
(b) "Competing Business" has the meaning set forth in Section 5(b)(i)
hereof.
(c) "Direct Competitor" means a company, other entity or Person which
has a business which competes with the Business in the Territory (i) whose
revenues derived from the Business in the Territory exceed one-third of total
company revenues and which is not its largest business segment or (ii) whose
business that competes with the Business in the Territory is the largest
business segment of such company, other entity or Person and the revenues
derived from the Business in the Territory account for more than twenty (20)
percent of total revenues of such company, other entity or Person.
(d) "Fiber Supply Agreement" means the Fiber Supply Agreement among
the JV Company, SpecTran Communication Fiber Technologies, Inc., SpecTran and
GCI and GCC.
(e) "Force Majeure" means if the performance of this Agreement or of
any obligation hereunder, other than the payment of any money, is prevented,
restricted or interfered with by reason of any act of God, civil disorder,
strike, governmental act, war, general unavailability of raw materials in the
market beyond the control of a party, or, without limiting the foregoing, by any
other cause not within the control of a party hereto, then the party so
affected, upon giving prompt notice to the other party, shall be excused from
such performance to the extent of such prevention, restriction or interference;
provided that the party so affected shall use its best reasonable efforts to
avoid or remove such causes for nonperformance and shall continue performance
hereunder with the utmost dispatch whenever such cases are removed.
2
<PAGE> 3
(f) "General Cable Group" means GCC, GCI and their respective
subsidiaries.
(g) "Material Breach" means (a) any breach of this Agreement which is
not cured within thirty days after receipt of written notice thereof from the
non-breaching party, (b) a breach of the Standstill Agreement which is not cured
within thirty days after receipt of written notice thereof from the
non-breaching party or (c) a material breach of any of the Operative Agreements,
other than this Agreement or the Standstill Agreement, as determined by the
arbitrator under Section 15.1 of the LLC Agreement.
(h) "Members" means GCI and APD.
(i) "Product Purchase Agreement" means the Product Purchase Agreement
between GCC, GCI, the JV Company, APD and SpecTran dated of even date herewith.
(j) "Products" means optical fiber cables for the use in the Business
in the Territory.
(k) "Standstill Agreement" means the Standstill Agreement among GCC,
GCI, SpecTran and APD dated of even date herewith.
(l) "Territory" means the North American Free Trade Area as presently
constituted (United States, Canada, Mexico).
(m) "The Eighteen Month Period" has the meaning set forth in Section 3
of this Non-Competition Agreement.
(n) Capitalized terms used herein and not otherwise defined shall have
the meanings ascribed in the Limited Liability Company Agreement.
2. BUSINESS TO BE CONDUCTED EXCLUSIVELY THROUGH THE JV COMPANY. Each
Member commits to the mutual support of the JV Company as provided in the
Operative Agreements for the duration of this Agreement and agrees that the JV
Company will be the exclusive means by which they participate in the Business in
the Territory, and that for the duration of this Agreement, they will not
compete with it in the Business in the Territory or sell or distribute competing
products in the Territory except as provided in the Operative Agreements. In
support of this objective, the Members, GCC and SpecTran will not, and will
cause their Affiliates to not, compete with the Business of the JV Company in
the Territory.
3. TERM. The term of this Non-Competition Agreement will be for so long
as GCI (or an Affiliate thereof) and APD (or an Affiliate thereof) both have an
ownership interest in the JV Company and thereafter, with regard to a party no
longer having an
3
<PAGE> 4
ownership interest in the JV Company and that party's Affiliates, for a period
of eighteen (18) months after the date that such party (or Affiliates thereof)
ceases to have an ownership interest in the JV Company (for ease of reference,
this portion of the term of the Non-Competition Agreement may be referred to as
"The Eighteen Month Period"). Notwithstanding the foregoing, this
Non-Competition Agreement will terminate if the Members voluntarily agree to
dissolve the JV Company. In addition, if either Member or one of its Affiliates
that is a party to an Operative Agreement commits a Material Breach of any of
the Operative Agreements not remedied during any applicable cure period, then
this Non-Competition Agreement will terminate as to the other Member and its
Affiliates, so long as none of them has also committed a Material Breach of any
of the Operative Agreements.
4. NON-COMPETITION AND NON-SOLICITATION. Subject to Sections 5 and 7
below, the parties agree that during the term of this Agreement, each shall not,
and shall not permit any of its Affiliates, for its own account, as a general
partner, joint venturer, consultant, stockholder or otherwise, alone or in
association with any other Person (i) to engage in any activity that would be
competitive with the Business in the Territory, including but not limited to [A]
solicitation of the JV Company's customers, suppliers, partners, joint
venturers, agents, distributors, licensors, or licensees with the intention of
competing with the Business, [B] permitting its name or any part thereof to be
used or employed anywhere in the world in connection with any enterprise which
is or would be competing with the Business in the Territory and [C] knowingly
arranging for or permitting products manufactured outside the Territory which
would be competitive with the JV Company's Products to be shipped, distributed
or sold in the Territory; or (ii) to knowingly solicit, induce or actively
attempt to influence any employee or consultant to terminate his or her
employment or consultancy with the JV Company, except to the extent that APD may
replace the Chief Executive Officer and GCI may replace the Chief Financial
Officer as provided in the Limited Liability Company Agreement.
5. CERTAIN PERMITTED ACTIVITIES. Notwithstanding Section 4 hereof, with
regard to investments and acquisitions, the parties agree as follows:
(a) The General Cable Group and SpecTran and its Affiliates may
acquire an interest in a Direct Competitor of the JV Company of no greater than
five (5) percent of the voting stock (all references to stock, if an entity does
not have stock, shall be deemed to be references to voting power) of such
entity. GCC will cause all Affiliates of GCC and GCI, other than the General
Cable Group, to not acquire any interest in a Direct Competitor of the JV
Company other than up to a maximum of ten (10) percent of the voting stock of
such entity. A party holding less than the maximum permitted interest may at any
time, including the Eighteen
4
<PAGE> 5
** Confidential Treatment Requested
Month Period, increase such interest up to such maximum. In both of these
exceptions described in the first two sentences of this Section 5(a), all
interests acquired in the voting stock of a Direct Competitor shall be for
investment only and not with an intent to operate, control the operations of or
participate in management decisions of a Direct Competitor. Furthermore,
confidential or non-public information about a Direct Competitor in which an
interest is being or has been acquired as described above in this Section 5(a)
shall not (i) in the case where SpecTran or the General Cable Group is the
acquiror, be disclosed to the acquiring company or its Affiliates and (ii) in
the case where any Affiliate of GCC or GCI, other than the General Cable Group,
is the acquiror, be disclosed to the General Cable Group. Notwithstanding the
foregoing, it is understood and agreed that SpecTran and the General Cable Group
may acquire control of a corporation or other entity which in turn has an
interest in a Director Competitor of more than five (5) percent and the
Affiliates of GCC and GCI other than the General Cable Group may acquire control
of a corporation or other entity which in turn has an interest in a Direct
Competitor of more than ten (10) percent, provided that in any such case, the
acquirer will cause its acquired company to divest itself of its interest in
such Direct Competitor as soon as commercially practicable, but in no event more
than three months after the acquisition thereof or such longer period as may be
required by law.
(b) (i) *********************************************************
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5
<PAGE> 6
** Confidential Treatment Requested
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(ii) ********************************************************
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(iii) During The Eighteen Month Period, the parties remaining
bound by this Non-Competition Agreement (or any successor thereto), and their
Affiliates may not acquire Control of a company which has a Competing Business,
whether or not it is a Direct Competitor.
6
<PAGE> 7
** Confidential Treatment Requested
(c) During the Eighteen Month Period, GCI, GCC and SpecTran may not,
and will cause their respective Affiliates to not, acquire a non-Controlling
interest in a company which is not a Direct Competitor, unless (i) the
investment is held at the time the JV Company terminates through the Buy/Sell
process described in the Limited Liability Company Agreement, provided the owner
does not increase its interest (e.g., its stock ownership or rights to elect
directors) during the term of such Eighteen Month Period, and (ii) the owner
takes steps so that its Affiliates do not provide support with respect to the
investment any greater than provided before the beginning of The Eighteen Month
Period. The parties acknowledge that during The Eighteen Month Period, the
parties remaining bound by this Non-Competition Agreement (or any successor
thereto) and their Affiliates shall not increase their interest (e.g., its stock
ownership or similar evidence of ownership or rights to elect directors or other
governing officials) in a company which is not a Direct Competitor in which it
holds a non-Controlling interest or take any new interest in another company
which is not a Direct Competitor.
(d) GCI, GCC and SpecTran may not, and shall cause their respective
Affiliates to not, acquire Control of any company located outside the Territory
which has a Competing Business that exports competing products into the
Territory, unless either (i) that company ceases such exports to the Territory
upon the completion of the acquisition or during an unwinding transitional
period during which time existing contractual obligations and accepted orders
are fulfilled, but no new contracts are entered into or new orders are accepted,
or (ii) the acquiring company puts the Competing Business to JV Company as its
one permitted put as set forth in Section 5(b)(i) above.
6. EFFECT OF AGREEMENT ON NEW AFFILIATES. During the term of this
Non-Competition Agreement, if an entity that is not an Affiliate of a party
hereto as of the date of the execution hereof subsequently becomes an Affiliate,
then the provisions relating to Affiliates will apply to such entity; provided,
however, that nothing herein is intended to prevent any Person which has an
existing business that is competitive with the JV Company from continuing such
business in the event such Person acquires any party or an Affiliate thereof
which is subject to this Non-Competition Agreement. During the term of this
Non-Competition Agreement, if an Affiliate of a party ceases to be an Affiliate,
then the provisions hereof relating to Affiliates will cease to apply to such
entity.
7. CERTAIN EXCEPTIONS. Notwithstanding anything in this Non-Competition
Agreement to the contrary:
(a) the parties agree that from and after an assignment of any
Interest in the JV Company pursuant to Article 10 of the LLC Agreement, the
activities contemplated by Section 6 of the Fiber
7
<PAGE> 8
** Confidential Treatment Requested
Supply Agreement and Section 7 of the Product Purchase Agreement shall not be
deemed a violation of this Non-Competition Agreement; and
(b) SpecTran's Affiliate, SpecTran Specialty Optics Company ("SSOC"),
may manufacture and market (i) OEM-specified/proprietary and/or branded optical
fiber cables or connectorized optical fiber cable assemblies used to
interconnect those OEM's components, subsystems or systems (provided, however,
that SSOC will not compete with the JV Company with respect to the private label
business for standard open architecture customer premise systems currently
conducted by APD), (ii) optical fiber cables used to monitor or control
manufacturing equipment or processes and (iii) certain projects (e.g., New York
Transit Authority) in accordance with guidelines established by Super-majority
Approval of the Managers of the JV Company.
8. REPRESENTATIONS AND WARRANTIES. Each of SpecTran and APD, on the one
hand, and GCC and GCI, on the other hand, represent and warrant that neither
they nor any of their respective Affiliates currently have an interest in any
Person where a super-majority vote is required to confer ownership or the power
to vote voting stock or other evidence of ownership or to elect or control the
vote of the majority of the board of directors or other governing body of such
Person, other than the interest of one of GCC and GCI's Affiliates in Qindago
York Transportation Co., Ltd.
9. SEVERABILITY. In the event that the restrictions on competition set
forth herein shall be determined by a court of competent jurisdiction to be
unenforceable or invalid in any respect, including by reason of its extent,
duration or geographic scope, such restrictions shall remain and be interpreted
as valid and enforceable to the maximum extent permitted by applicable law,
which maximum extent, duration and geographic scope shall be interpreted and
determined by such court in such action.
10. EQUITABLE REMEDIES. The parties hereto, on behalf of themselves and
their respective Affiliates, each agrees and acknowledges that all restrictions
contained in this Agreement are necessary and fundamental to the protection of
the Business and the goodwill attributable thereto and that a breach by any of
the parties or any of their respective Affiliates of any covenant or provision
in this Agreement would result in immediate and irreparable damage to the JV
Company that could not adequately be compensated for by monetary award.
Accordingly, it is expressly agreed by each of GCC, GCI, SpecTran and APD, that,
in addition to all other remedies available to them, the non-breaching parties
and the JV Company shall be entitled to the immediate remedy of a restraining
order, interim injunction or other form of injunctive relief as may be decreed
or issued by any court of competent jurisdiction to restrain or enjoin the
breaching party from breaching or threatening to breach any such covenant or
provision,
8
<PAGE> 9
and the breaching party will not raise as a defense that the non-breaching
parties or the JV Company have an adequate remedy at law.
11. ENTIRE AGREEMENT. This Agreement (together with applicable provisions
of the other Operative Agreements referenced herein) constitutes the entire
understanding and agreement of the parties with respect to the subject matter
hereof. All previous agreements, promises, representations, commitments and
understandings, whether verbal or written, between the parties regarding the
subject matter hereof are merged into and superseded by this Agreement. This
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective legal representatives, successors and permitted assigns of the
parties hereto. Nothing contained in this Agreement, express or implied, is
intended to confer upon any person or entity other than the parties hereto and
their respective successors and permitted assigns any rights or remedies under
or by reason of this Agreement.
12. AMENDMENT. This Agreement may be amended or modified only by a written
agreement signed by each of the parties hereto.
13. WAIVER. No waiver by any party of any default or breach of any term,
condition or covenant of this Agreement shall be deemed to be a waiver of any
subsequent default or breach of the same or any other term, condition or
covenant contained herein, nor shall it be effective unless in writing and
signed by the party to be charged therewith. The failure of any party hereto to
enforce at any time or for any period of time any provision hereof in accordance
with its terms shall not be construed to be a waiver of such provision or of the
right of such party thereafter to enforce any provision hereof.
14. ASSIGNMENT. This Agreement may not be assigned by any party hereto
without the prior written consent of the other party hereto, provided, however,
that the parties agree that APD and GCI may assign their rights and obligations
under this Agreement to any permitted transferee of an Interest in the JV
Company as provided in the Limited Liability Company Agreement.
15. NOTICES. All notices, consents, waivers or other communications which
are required or permitted hereunder shall be in writing and shall be sufficient
if delivered personally (including by means of recognized courier service for
which a written receipt is given) or by registered or certified mail, return
receipt requested, postage prepaid, or by facsimile transmission providing a
receipt, as follows (or to such other address as shall be set forth in a notice
given in the same manner):
9
<PAGE> 10
If to Spectran or APD:
SpecTran Corporation
SpecTran Industrial Park
50 Hall Road
Sturbridge, Massachusetts 01566
Attn: Glenn E. Moore, Chief Executive Officer
FAX: 508-347-8626
If to GCI or GCC:
General Cable Industries, Inc.
4 Tesseneer Drive
Highland Heights, Kentucky 41076
Attn: Kenneth McAllister
FAX: (606) 572-8444
If to the JV Company:
GENERAL PHOTONICS, LLC
50 Tiffany Street
Brooklyn, Connecticut 06234
Attn: Crawford L. Cutts, President
FAX: (860) 774-2571
All such notices shall be deemed to have been given on the date personally
delivered, upon possession of a receipt establishing a facsimile transmission
was received or five (5) days after being mailed in the manner provided above.
16. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of New York without giving effect to the principles of conflicts of laws.
10
<PAGE> 11
IN WITNESS WHEREOF, this Non-Competition Agreement has been executed the
day and year first above written.
GENERAL CABLE CORPORATION (on behalf of
itself and the General Cable Group)
By: /s/ Robert J. Siverd, Executive Vice President
----------------------------------------------
[NAME AND TITLE]
GENERAL CABLE INDUSTRIES, INC.(on behalf
of itself and the General Cable
Group)
By: /s/ Robert J. Siverd, Executive Vice President
----------------------------------------------
[NAME AND TITLE]
SPECTRAN CORPORATION (on behalf of itself
and its subsidiaries)
By: /s/ Raymond E. Jaeger
----------------------------------------------
Raymond E. Jaeger
Chairman of the Board
APPLIED PHOTONIC DEVICES, INC.
By: /s/ Glenn E. Moore
----------------------------------------------
Glenn E. Moore
Chief Executive Officer
GENERAL PHOTONICS, LLC
By: /s/ Crawford L. Cutts
----------------------------------------------
Crawford L. Cutts
President
11
<PAGE> 1
STANDSTILL AGREEMENT
--------------------
STANDSTILL AGREEMENT (the "Agreement"), dated as of December 23, 1996, by
and between General Cable Corporation ("GCC") and SpecTran Corporation
("SpecTran").
General Cable Industries, Inc., a Delaware corporation and direct
wholly-owned subsidiary of GCC ("GCI"), and Applied Photonics, Inc., a Delaware
corporation and direct wholly-owned subsidiary of SpecTran ("APD"), are parties
to a Limited Liability Company Agreement of General Photonics LLC, dated as of
the date hereof (the "LLC Agreement"), which sets forth certain rights,
obligations and understandings as to various matters, including, without
limitation, the capital structure, operation and management of their joint
venture.
In order to induce SpecTran to cause APD to enter into the LLC Agreement,
GCC agreed to enter into this Agreement with SpecTran.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto hereby agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall have
the following respective meanings:
(a) "Material Breach" means, with respect to this Agreement, any breach
of this Agreement which is not cured within 30 days after receipt of written
notice thereof from the non-breaching party.
(b) "Non-Competition Agreement" means the Non-Competition Agreement,
dated as of the date hereof, among GCI, GCC, APD, SpecTran and General
Photonics, LLC.
(c) "SpecTran Securities" means securities issued by SpecTran and/or
any of its subsidiaries and any rights or options to acquire such securities.
(d) All other capitalized terms used but not otherwise defined herein
shall have the meaning ascribed to such terms in the LLC Agreement.
2. STANDSTILL. GCC hereby agrees that it will not, and will cause its
Affiliates (and their respective officers and directors) not to, directly or
indirectly, alone or in association with any other person or entity, act or take
any of the following actions, without the prior written consent of the Company:
(a) act alone or as part of a "group" (as such term is defined under
Section 13(d) of the Securities Exchange Act of 1934, as amended ("Exchange
Act")), to acquire, by purchase, offer to purchase, merger or otherwise, any
SpecTran Securities;
(b) make, or in any way participate in, any "solicitation" of "proxies"
to vote (as such terms are used under the rules of the Exchange Act) or seek to
advise or influence any
<PAGE> 2
person or entity with respect to the voting of any SpecTran Securities or
initiate any stockholder proposal;
(c) induce or attempt to induce any person to seek election to
SpecTran's Board of Directors or seek the removal of any member of such Board;
(d) make any public announcement with respect to any transaction or
proposed or contemplated transaction between SpecTran (or any of its
subsidiaries) or any of its (or their) security holders and GCC and any of its
Affiliates, including, without limitation, any tender or exchange offer, merger
or other business combination or acquisition of a material portion of the assets
of SpecTran;
(e) make any public announcement or disclose an intention to other
persons concerning any plans, proposals or intentions of GCC with respect to the
matters referenced in clauses (a) or (b); or
(f) advise, assist or knowingly encourage, finance or arrange financing
for any other person in connection with any of the foregoing.
3. GCC'S REPRESENTATIONS. GCC represents and warrants to SpecTran that, as
of the date hereof, neither it nor any of its Affiliates is the beneficial owner
of any SpecTran Securities nor, to its knowledge, does any of its or their
respective directors or officers beneficially own any SpecTran Securities. GCC
further represents and warrants to SpecTran that (a) the execution, delivery and
performance of this Agreement by it has been duly authorized by all necessary
corporate action on its part, and (b) this Agreement has been duly and validly
executed and delivered by GCC, and assuming this Agreement constitutes the valid
and binding agreement of SpecTran, constitutes the valid and binding agreement
of GCC, enforceable against it in accordance with its terms, subject as to
enforceability to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to general
principles of equity.
4. PERMITTED TRANSACTIONS. Notwithstanding anything in this Agreement to
the contrary, nothing herein is intended to preclude (a) GCC from acquiring (i)
a person or entity that owns SpecTran Securities provided GCC disposes of such
SpecTran Securities as soon thereafter as is commercially practicable or (ii)
APD's Interest in General Photonics LLC pursuant to Article 10 of the LLC
Agreement or (b) any director or officer of GCC or any of its Affiliates from
acquiring, directly or indirectly, up to one percent (1%) of any class of
SpecTran Securities then issued and outstanding.
5. TERM. This Agreement shall be effective upon the execution and delivery
hereof and shall remain in full force and effect until the earlier to occur of
(a) the expiration or termination of the Non-Competition Agreement as to GCC or,
if GCC is subject to the Eighteen Month Period (as defined in the
Non-Competition Agreement), one year after the expiration of such period and (b)
the occurrence of any of the following (i) an insolvency or Bankruptcy of
-2-
<PAGE> 3
SpecTran or any of its Affiliates that is a party to the LLC Agreement or any of
the Related Agreements, (ii) a Material Breach by SpecTran or any of its
Affiliates under the LLC Agreement or any of the Related Agreements or (iii) the
occurrence of an Irreconcilable Difference under clause (iii) of the definition
thereof that was initiated by a proposal by any of the Class A Managers that
results in a termination of the LLC Agreement.
6. REMEDIES FOR BREACH. GCC agrees that irreparable damage would occur in
the event of a Material Breach. Accordingly, GCC agrees that SpecTran shall be
entitled to an injunction or injunctions to prevent Material Breaches of this
Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy which it may be entitled at law or equity.
7. CHANGES: WAIVERS. This Agreement may not be changed in any manner except
by a written agreement signed by both parties. The failure of either party to
enforce at any time any of the provisions of this Agreement shall in no way be
construed to be a waiver of any such provision, nor in any way affect the
validity of this Agreement or any part thereof or the right of either party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to be a waiver of any other or subsequent breach.
8. COUNTERPARTS. This Agreement may be executed in two or more
counterparts each of which shall be deemed to be an original, but all of such
counterparts together shall be deemed to be one and the same instrument.
9. CONTENTS OF AGREEMENT, PARTIES OF INTEREST. This Agreement sets forth
the entire understanding and agreement of the parties hereto with respect to the
subject matter hereof. All previous agreements, promises, representations,
commitments and understandings, whether verbal or written, between the parties
regarding the subject matter hereof are merged into and superseded by this
Agreement. All covenants, terms and conditions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
legal representatives, successors and permitted assigns of the parties hereto.
Nothing contained in this Agreement, express or implied, is intended to confer
upon any person or entity other than the parties hereto and their respective
successors and permitted assigns any rights or remedies under or by reason of
this Agreement.
10. ASSIGNMENT. This Agreement may not be assigned (by operation of law or
otherwise) by either party without the prior written consent of the other.
11. SECTION HEADINGS AND GENDER. The section headings herein have been
inserted for convenience of reference only and shall in no way modify or
restrict any of the terms or provisions hereof. The use of masculine or any
other pronoun herein when referring to any party is for convenience only and
shall be deemed to refer to the particular party intended regardless of the
actual gender of such party.
-3-
<PAGE> 4
12. NOTICES. All notices, consents, waivers or other communications which
are required or permitted hereunder shall be in writing and shall be sufficient
if delivered personally (including by means of recognized courier service for
which a written receipt is given) or by registered or certified mail, return
receipt requested, postage prepaid, or by facsimile transmission providing a
receipt, as follows (or to such other address as shall be set forth in a notice
given in the same manner);
If to Company:
Glenn E. Moore
President and Chief Executive Officer
SpecTran Corporation
SpecTran Industrial Park
50 Hall Road
Sturbridge, Massachusetts 01566
Fax: 508-347-8826
With a required copy to:
Ira S. Nordlicht, Esq.
Hackmyer & Nordlicht
645 Fifth Avenue
New York, New York 10022
Fax: 212-421-0499
If to GCC:
Stephen Rabinowitz
President and Chief Executive Officer
General Cable Corporation
4 Tesseneer Drive
Highland Heights, Kentucky 41076
Fax: 606-572-8440
With a required copy to:
Robert J. Siverd
Executive Vice President and General Counsel
General Cable Corporation
4 Tesseneer Drive
Highland Heights, Kentucky 41076
Fax: 606-572-8444
-4-
<PAGE> 5
All such notices shall be deemed to have been given on the date
personally delivered, upon possession of a receipt establishing a facsimile
transmission was received or five (5) days after being mailed in the manner
provided above.
13. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of New York without giving effect to
principles of conflicts of laws.
14. CONSENT TO JURISDICTION. The parties agree to submit to the exclusive
jurisdiction of the state and federal courts in New York, New York with respect
to any litigation arising from or related to this Agreement and will not seek to
have such litigations dismissed or removed on the grounds of forum
non-conveniens.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by,
the duly authorized officers of the parties hereto and shall be effective as of
the date first hereinabove written.
GENERAL CABLE CORPORATION
By: /s/ Robert J. Siverd
------------------------------
Name: Robert J. Siverd
Title: Executive Vice President
SPECTRAN CORPORATION
By: /s/ R.E. Jaeger
------------------------------
Name:
Title: Chairman
-5-
<PAGE> 1
** Confidential Treatment Requested
EXHIBIT 10.103
[SPECTRAN LETTERHEAD]
November 5, 1996
Mr. John R. Sicotte
Manager, NA Sales & Engineering
Corning Incorporated
Telecommunications Products Division
Corning, NY 14831
Dear John,
Thank you for your June 28, 1996 letter dated October 17, 1996 requesting
additional multimode fiber purchase amounts pursuant to Section 1.1 of our
Supply Agreement. As we discussed, SpecTran confirms that it will supply to
Corning, and Corning confirms that it will purchase from SpecTran, *******
kilometers of multimode fiber **********************************************
*******************. As a result, ****************************************
*****************************************************************************
******************************* under our Supply Agreement.
*****************************************************************************
*****************************************************************************
*****************************************************************************
*****************************************************************************
**********************************
Also pursuant to Section 1.1 of our Supply Agreement, SpecTran commits to
supply to Corning and Corning commits to purchase from SpecTran ********
**********************************. On or before *****************
*****************************************************************************
******************************************************************
These additional commitments by Corning and SpecTran increase the minimum
amount of multimode fiber to be purchased by Corning and supplied by SpecTran
under our Supply Agreement from ******************************************].
All other terms and conditions of our Supply Agreement will remain unchanged.
Please acknowledge your agreement to the terms detailed in this letter by
signing below, faxing the signed letter back to me by Monday, November 11th, to
be followed by one original copy as soon as possible. Please feel free to call
me at (508) 347-8534 if you have any questions.
Sincerely yours,
/s/ Edward T. Connor
- - ----------------------------
Edward T. Connor
Vice President, Sales & Marketing
cc: Dr. Raymond E. Jaeger
Thomas L. Shillinglaw, Esq.
Ira S. Nordlicht, Esq.
AGREED TO AND ACCEPTED
CORNING INCORPORATED
/s/ Wendell P. Weeks
By: ____________________________________
Wendell P. Weeks
Name: __________________________________
Vice President & Gen. Manager
Telecommunications Products Div.
Title: _________________________________
11/26/96
Date: __________________________________
<PAGE> 1
EXHIBIT 10.104
SPECTRAN SPECIALTY OPTICS COMPANY
150 Fisher Drive
Avon, Connecticut 06001-1260
April 18, 1996
William B. Beck
SpecTran Specialty Optics Company
150 Fisher Drive
P.O. Box 1260
Avon, CT 06001
Dear Bill:
It has come to my attention that the Agreement executed as of February
18, 1994 between you and SpecTran Specialty Optics Company (the "Corporation"
or "SSOC") has expired, which was not our intent. We want to ensure that the
Employment Agreement remains effective, provide a mechanism for its automatic
regular renewal and make certain clarifying amendments.
As such we would like to agree on certain modifications to the original
agreement as described below, which SSOC and yourself would do by signing this
letter:
1. Your Employment Agreement will be deemed never to have elapsed and
to have been renewed from February 19, 1995 for an additional two year period.
Further, the next to last sentence of Article 1 of your Employment Agreement,
which presently reads "The Base Term may be extended for successive one-year
periods, upon terms mutually agreed to by the parties, subject to prior
termination in accordance with the provisions of Article 12 hereof.", is hereby
deleted and replaced with the following sentence: "The Base Term shall be
automatically extended for successive one-year periods unless either party
provides notice to the other to the contrary at least five (5) business days
prior to the end of the Base Term or any extension thereof, subject to prior
termination in accordance with the provisions of Article 12 hereof."
2. In Article 5 of your Employment Agreement on page 6, line number 5
from the top, after the word "Corporation" and before the "," insert "and/or
its Affiliates".
3. Article 9(b) of your Employment Agreement will be amended by the
addition of the following at the end thereof:
"For example, if a disability benefit is available under a program
referred to in Article 9(a) above and it provides the same or greater
benefit than provided in Article 7 hereof, then no benefit will be paid
out under Article 7 hereof. If a
<PAGE> 2
disability benefit available under Article 9(a) above is less
than that provided in Article 7 hereof, then supplemental
payments would be available under Article 7 hereof to the extent
that the total of the payments would equal the aggregated
benefits provided by Article 7."
4. For the purposes of Article 10 of your Employment Agreement, the phrase
"the Corporation" shall mean the Corporation and its Affiliates.
5. The last sentence of Article 10, which presently reads "In the event
that Executive violates any provision of this Article 10, then in addition to
any other remedies available to the Corporation, the Corporation shall have the
right immediately to terminate any payments or benefits provided or to be
provided to Executive under this Agreement," is hereby deleted and replaced with
the following sentence: "In the event that Executive violates any provision of
this Article 10 or of Article 5, then in addition to any other remedies
available to the Corporation (which can include obtaining injunctive relief as
the parties acknowledge that irreparable damage not compensable by money can
result), the Corporation shall have the right immediately to terminate any
payments or benefits provided or to be provided to Executive under this
Agreement.
6. An additional sentence shall be added at the end of Article 12(c) of
your Employment Agreement as follows: "Nonetheless, the Corporation may notify
Executive that it wishes Executive not to compete and to be available as a
consultant in accordance with and for the compensation set out in Article 10."
7. Article 3(b)(ii) of your Employment Agreement will be replaced in its
entirety by the following: (ii) Executive will participate in the Key Employee
Incentive Plan established by the Corporation or related transition or successor
plans.
If you are in agreement to these amendments to your Employment Agreement as
mentioned above, please countersign in the space provided below both copies of
this letter. Please retain one for your files and return the other to me. A
conformed copy of your employment agreement will then be generated and provided
to you and to us by counsel for ease of reference. Thank you very much.
Sincerely yours,
/s/ Glenn E. Moore
Glenn E. Moore, Chief Executive Officer
SpecTran Specialty Optics Company
AGREED
/s/ William B. Beck 4/18/96
- - -----------------------------------
William B. Beck
